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Medicare Program: Changes to the Hospital Outpatient Prospective Payment System and CY 2010 Payment Rates; Changes to the Ambulatory Surgical Center Payment System and CY 2010 Payment Rates

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AGENCY:

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

ACTION:

Final rule with comment period.

SUMMARY:

This final rule with comment period revises the Medicare hospital outpatient prospective payment system (OPPS) to implement applicable statutory requirements and changes arising from our continuing experience with this system. In this final rule with comment period, we describe the changes to the amounts and factors used to determine the payment rates for Medicare hospital outpatient services paid under the prospective payment system. These changes are applicable to services furnished on or after January 1, 2010.

In addition, this final rule with comment period updates the revised Medicare ambulatory surgical center (ASC) payment system to implement applicable statutory requirements and changes arising from our continuing experience with this system. In this final rule with comment period, we set forth the applicable relative payment weights and amounts for services furnished in ASCs, specific HCPCS codes to which these changes will apply, and other pertinent ratesetting information for the CY 2010 ASC payment system. These changes are applicable to services furnished on or after January 1, 2010.

DATES:

Effective Date: The provisions of this rule are effective January 1, 2010.

Comment Period: We will consider comments on the subject areas listed in the SUPPLEMENTARY INFORMATION section of this rule that are received at one of the addresses provided in the ADDRESSES section of this rule no later than 5 p.m. EST on December 29, 2009.

Application Deadline for New Class of New Technology Intraocular Lenses: Request for review of applications for a new class of new technology intraocular lenses must be received by 5 p.m. EST on March 8, 2010.

ADDRESSES:

In commenting, please refer to file code CMS-1414-FC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

You may submit comments in one of four ways (no duplicates, please):

1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the instructions for “Comment or Submission” and enter the file code to find the document accepting comments.

2. By regular mail. You may mail written comments (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1414-FC, P.O. Box 8013, Baltimore, MD 21244-1850.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

3. By express or overnight mail. You may send written comments (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1414-FC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

4. By hand or courier. If you prefer, you may deliver (by hand or courier) your written comments (one original and two copies) before the close of the comment period to one of the following addresses:

a. Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201.

(Because access to the interior of the HHH Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)

b. 7500 Security Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address, please call the telephone number (410) 786-9994 in advance to schedule your arrival with one of our staff members.

Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.

For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section.

Applications for a new class of new technology intraocular lenses: Requests for review of applications for a new class of new technology intraocular lenses must be sent by regular mail to ASC/NTOL, Division of Outpatient Care, Mailstop C4-05-17, Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

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FOR FURTHER INFORMATION CONTACT:

Alberta Dwivedi, (410) 786-0378, Hospital outpatient prospective payment issues.

Dana Burley, (410) 786-0378, Ambulatory surgical center issues.

Michele Franklin, (410) 786-4533, and Jana Lindquist, (410) 786-4533, Partial hospitalization and community mental health center issues.

James Poyer, (410) 786-2261, Reporting of quality data issues.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

Comment Subject Areas: We will consider comments on the following subject areas discussed in this final rule with comment period that are received by the date and time indicated in the DATES section of this final rule with comment period:

(1) The payment classifications assigned to HCPCS codes identified in Addenda B, AA, and BB to this final rule with comment period with the “NI” comment indicator;

(2) Recognition of plasma protein fraction as a blood product or a biological for OPPS payment, as discussed in section II.A.1.d.(2) of this final rule with comment period;

(3) Potential alternative coding schemes for reporting hospital clinic visits for new and established patients, as discussed in section IX.B.1. of this final rule with comment period;

(4) The possibility of extending the direct supervision requirements for hospital-based partial hospitalization program services to those same services in community mental health centers, as discussed in section XII.D.3. of this final rule with comment period; and

(5) The possibility of establishing direct physician supervision requirements for ASC services, as discussed in section XV.A.3. of this final rule with comment period.

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: http://www.regulations.gov. Follow the search Start Printed Page 60317instructions on that Web site to view public comments.

Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244, on Monday through Friday of each week from 8:30 a.m. to 4 p.m. EST. To schedule an appointment to view public comments, phone 1-800-743-3951.

Electronic Access

This Federal Register document is also available from the Federal Register online database through GPO Access, a service of the U.S. Government Printing Office. Free public access is available on a Wide Area Information Server (WAIS) through the Internet and via asynchronous dial-in. Internet users can access the database by using the World Wide Web; the Superintendent of Documents' home page address is http://www.gpoaccess.gov/​index.html, by using local WAIS client software, or by telnet to swais.access.gpo.gov, then login as guest (no password required). Dial-in users should use communications software and modem to call (202) 512-1661; type swais, then login as guest (no password required).

Alphabetical List of Acronyms Appearing in This Final Rule

ACEP American College of Emergency Physicians

AHA American Hospital Association

AHIMA American Health Information Management Association

AMA American Medical Association

AMP Average manufacturer price

AOA American Osteopathic Association

APC Ambulatory payment classification

ASC Ambulatory Surgical Center

ASP Average sales price

AWP Average wholesale price

BBA Balanced Budget Act of 1997, Public Law 105-33

BBRA Medicare, Medicaid, and SCHIP [State Children's Health Insurance Program] Balanced Budget Refinement Act of 1999, Public Law 106-113

BCA Blue Cross Association

BCBSA Blue Cross and Blue Shield Association

BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, Public Law 106-554

CAH Critical access hospital

CAP Competitive Acquisition Program

CBSA Core-Based Statistical Area

CCR Cost-to-charge ratio

CERT Comprehensive Error Rate Testing

CKD Chronic kidney disease

CMHC Community mental health center

CMS Centers for Medicare & Medicaid Services

CORF Comprehensive outpatient rehabilitation facility

CPT [Physicians'] Current Procedural Terminology, Fourth Edition, 2009, copyrighted by the American Medical Association

CR Cardiac rehabilitation

CRNA Certified registered nurse anesthetist

CY Calendar year

DMEPOS Durable medical equipment, prosthetics, orthotics, and supplies

DMERC Durable medical equipment regional carrier

DRA Deficit Reduction Act of 2005, Public Law 109-171

DSH Disproportionate share hospital

EACH Essential Access Community Hospital

E/M Evaluation and management

EPO Erythropoietin

ESRD End-stage renal disease

FACA Federal Advisory Committee Act, Public Law 92-463

FAR Federal Acquisition Regulations

FDA Food and Drug Administration

FFS Fee-for-service

FSS Federal Supply Schedule

FTE Full-time equivalent

FY Federal fiscal year

GAO Government Accountability Office

GME Graduate medical education

HCPCS Healthcare Common Procedure Coding System

HCRIS Hospital Cost Report Information System

HHA Home health agency

HIPAA Health Insurance Portability and Accountability Act of 1996, Public Law 104-191

HOPD Hospital outpatient department

HOPQDRP Hospital Outpatient Quality Data Reporting Program

ICD-9-CM International Classification of Diseases, Ninth Edition, Clinical Modification

ICR Intensive cardiac rehabilitation

IDE Investigational device exemption

IME Indirect medical education

I/OCE Integrated Outpatient Code Editor

IOL Intraocular lens

IPPS [Hospital] Inpatient prospective payment system

IVIG Intravenous immune globulin

KDE Kidney disease education

MAC Medicare Administrative Contractor

MedPAC Medicare Payment Advisory Commission

MDH Medicare-dependent, small rural hospital

MIEA-TRHCA Medicare Improvements and Extension Act Under Division B, Title I of the Tax Relief Health Care Act of 2006, Public Law 109-432

MIPPA Medicare Improvements for Patients and Providers Act of 2008, Public Law 110-275

MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Public Law 108-173

MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public Law 110-173

MPFS Medicare Physician Fee Schedule

MSA Metropolitan Statistical Area

NCCI National Correct Coding Initiative

NCD National Coverage Determination

NTIOL New technology intraocular lens

OIG [HHS] Office of the Inspector General

OMB Office of Management and Budget

OPD [Hospital] Outpatient department

OPPS [Hospital] Outpatient prospective payment system

PBD Provider-based department

PHP Partial hospitalization program

PM Program memorandum

PPI Producer Price Index

PPS Prospective payment system

PR Pulmonary rehabilitation

PRA Paperwork Reduction Act

QAPI Quality Assessment and Performance Improvement

QIO Quality Improvement Organization

RAC Recovery Audit Contractor

RFA Regulatory Flexibility Act

RHQDAPU Reporting Hospital Quality Data for Annual Payment Update [Program]

RHHI Regional home health intermediary

SBA Small Business Administration

SCH Sole community hospital

SDP Single Drug Pricer

SI Status indicator

TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Public Law 97-248

TOPS Transitional outpatient payments

USPDI United States Pharmacopoeia Drug Information

WAC Wholesale acquisition cost

In this document, we address two payment systems under the Medicare program: the hospital outpatient prospective payment system (OPPS) and the revised ambulatory surgical center (ASC) payment system. The provisions relating to the OPPS are included in sections I. through XIV., and XVI. through XXI. of this final rule with comment period and in Addenda A, B, C (Addendum C is available on the Internet only; we refer readers to section XVIII.A. of this final rule with comment period), D1, D2, E, L, and M to this final rule with comment period. The provisions related to the revised ASC payment system are included in sections XV., XVI., and XVIII. through XXI. of this final rule with comment period and in Addenda AA, BB, DD1, DD2, and EE to this final rule with comment period. (Addendum EE is available on the Internet only; we refer readers to section XVIII.B. of this final rule with comment period.)

Table of Contents

I. Background and Summary of the CY 2010 OPPS/ASC Final Rule With Comment Period

A. Legislative and Regulatory Authority for the Hospital Outpatient Prospective Payment System

B. Excluded OPPS Services and Hospitals

C. Prior Rulemaking

D. Advisory Panel on Ambulatory Payment Classification (APC) Groups

1. Authority of the APC Panel

2. Establishment of the APC Panel

3. APC Panel Meetings and Organizational Structure

E. Background and Summary of the CY 2010 OPPS/ASC Proposed Rule

1. Updates Affecting OPPS PaymentsStart Printed Page 60318

2. OPPS Ambulatory Payment Classification (APC) Group Policies

3. OPPS Payment for Devices

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

5. Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals, Radiopharmaceuticals, and Devices

6. OPPS Payment for Brachytherapy Sources

7. OPPS Payment for Drug Administration Services

8. OPPS Payment for Hospital Outpatient Visits

9. Payment for Partial Hospitalization Services

10. Procedures That Will Be Paid Only as Inpatient Services

11. OPPS Nonrecurring Technical and Policy Changes and Clarifications

12. OPPS Payment Status and Comment Indicators

13. OPPS Policy and Payment Recommendations

14. Updates to the Ambulatory Surgical Center (ASC) Payment System

15. Reporting Quality Data for Annual Payment Rate Updates

16. Healthcare-Associated Conditions

17. Regulatory Impact Analysis

F. Public Comments Received in Response to the CY 2010 OPPS/ASC Proposed Rule

G. Public Comments Received in Response to the November 18, 2008 OPPS/ASC Final Rule With Comment Period

II. Updates Affecting OPPS Payments

A. Recalibration of APC Relative Weights

1. Database Construction

a. Database Source and Methodology

b. Use of Single and Multiple Procedure Claims

c. Calculation of CCRs

(1) Development of the CCRs

(2) Charge Compression

2. Data Development Process and Calculation of Median Costs

a. Claims Preparation

b. Splitting Claims and Creation of “Pseudo” Single Claims

(1) Splitting Claims

(2) Creation of “Pseudo” Single Claims

c. Completion of Claim Records and Median Cost Calculations

d. Calculation of Single Procedure APC Criteria-Based Median Costs

(1) Device-Dependent APCs

(2) Blood and Blood Products

(3) Single Allergy Tests

(4) Echocardiography Services

(5) Nuclear Medicine Services

(6) Hyperbaric Oxygen Therapy

(7) Payment for Ancillary Outpatient Services When Patient Expires (CA Modifier)

e. Calculation of Composite APC Criteria-Based Median Costs

(1) Extended Assessment and Management Composite APCs (APCs 8002 and 8003)

(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC 8001)

(3) Cardiac Electrophysiologic Evaluation and Ablation Composite APC (APC 8000)

(4) Mental Health Services Composite APC (APC 0034)

(5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 8008)

3. Calculation of OPPS Scaled Payment Weights

4. Changes to Packaged Services

a. Background

b. Packaging Issues

(1) Packaged Services Addressed by the February 2009 APC Panel Recommendations

(2) Packaged Services Addressed by the August 2009 APC Panel Recommendations

(3) Other Service-Specific Packaging Issues

B. Conversion Factor Update

C. Wage Index Changes

D. Statewide Average Default CCRs

E. OPPS Payment to Certain Rural and Other Hospitals

1. Hold Harmless Transitional Payment Changes Made by Public Law 110-275 (MIPPA)

2. Adjustment for Rural SCHs Implemented in CY 2006 Related to Pub. L. 108-173 (MMA)

F. Hospital Outpatient Outlier Payments

1. Background

2. Outlier Calculation

3. Final Outlier Calculation

4. Outlier Reconciliation

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

H. Beneficiary Copayments

1. Background

2. Copayment Policy

3. Calculation of an Adjusted Copayment Amount for an APC Group

III. OPPS Ambulatory Payment Classification (APC) Group Policies

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

1. Treatment of New Level II HCPCS Codes and Category I CPT Vaccine Codes and Category III CPT Codes

2. Process for New Level II HCPCS Codes and Category I and Category III CPT Codes for Which We Are Soliciting Public Comments on the CY 2010 OPPS/ASC Final Rule With Comment Period

B. OPPS Changes—Variations Within APCs

1. Background

2. Application of the 2 Times Rule

3. Exceptions to the 2 Times Rule

C. New Technology APCs

1. Background

2. Movement of Procedures From New Technology APCs to Clinical APCs

D. OPPS APC-Specific Policies

1. Cardiovascular Services

a. Cardiovascular Telemetry (APC 0209)

b. Implantable Loop Recorder Monitoring (APC 0689)

c. Transluminal Balloon Angioplasty (APC 0279)

2. Gastrointestinal Services

a. Change of Gastrostomy Tube (APC 0676)

b. Laparoscopic Liver Cryoablation (APC 0131)

c. Cholangioscopy (APC 0151)

d. Laparoscopic Hernia Repair (APC 0131)

3. Genitourinary Services

a. Percutaneous Renal Cryoablation (APC 0423)

b. Hemodialysis (APC 0170)

c. Radiofrequency Remodeling of Bladder Neck (APC 0165)

d. Change of Bladder Tube (APC 0121)

4. Nervous System Services

a. Pain-Related Procedures (APCs 0203, 0204, 0206, 0207, 0221, 0224, and 0388)

b. Magnetoencephalography (APCs 0065 and 0067)

5. Ocular Services

a. Insertion of Anterior Segment Aqueous Drainage Device (APC 0234)

b. Backbench Preparation of Corneal Allograft

6. Orthopedic and Musculoskeletal Services

a. Arthroscopic Procedures (APCs 0041 and 0042)

b. Knee Arthroscopy (APCs 0041 and 0042)

c. Shoulder Arthroscopy (APC 0042)

d. Fasciotomy Procedures (APC 0049)

e. Fibula Repair (APC 0062)

f. Forearm Orthopedic Procedures (APCs 0050, 0051, and 0052)

g. Low Energy Extracorporeal Shock Wave Therapy (Low Energy ESWT)

h. Insertion of Posterior Spinous Process Distraction Device (APC 0052)

7. Radiation Therapy Services

a. Proton Beam Therapy (APCs 0664 and 0667)

b. Stereotactic Radiosurgery (SRS) Treatment Delivery Services (APCs 0065, 0066, 0067, and 0127)

c. Clinical Brachytherapy (APCs 0312 and 0651)

8. Other Services

a. Low Frequency, Non-Contact, Non-Thermal Ultrasound (APC 0013)

b. Skin Repair (APCs 0134 and 0135)

c. Group Psychotherapy (APC 0325)

d. Portable X-Ray Services

e. Home Sleep Study Tests (APC 0213)

IV. OPPS Payment for Devices

A. Pass-Through Payments for Devices

1. Expiration of Transitional Pass-Through Payments for Certain Devices

2. Provisions for Reducing Transitional Pass-Through Payments To Offset Costs Packaged Into APC Groups

a. Background

b. Final Policy

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

1. Background

2. APCs and Devices Subject to the Adjustment Policy

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

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

1. Background

2. Drugs and Biologicals With Expiring Pass-Through Status in CY 2009

3. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing Pass-Through Status in CY 2010

4. Pass-Through Payments for Implantable Biologicals

a. Background

b. Policy for CY 2010

5. Definition of Pass-Through Payment Eligibility Period for New Drugs and Biologicals

6. Provision for Reducing Transitional Pass-Through Payments for Diagnostic Start Printed Page 60319Radiopharmaceuticals and Contrast Agents To Offset Costs Packaged Into APC Groups

a. Background

b. Payment Offset Policy for Diagnostic Radiopharmaceuticals

c. Payment Offset Policy for Contrast Agents

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

1. Background

2. Criteria for Packaging Payment for Drugs, Biologicals, and Radiopharmaceuticals

a. Background

b. Cost Threshold for Packaging of Payment for HCPCS Codes That Describe Certain Drugs, Nonimplantable Biologicals, and Therapeutic Radiopharmaceuticals (“Threshold-Packaged Drugs”)

c. Packaging Determination for HCPCS Codes That Describe the Same Drug or Biological But Different Dosages

d. Packaging of Payment for Diagnostic Radiopharmaceuticals, Contrast Agents, and Implantable Biologicals (“Policy-Packaged” Drugs and Devices)

3. Payment for Drugs and Biologicals Without Pass-Through Status That Are Not Packaged

a. Payment for Specified Covered Outpatient Drugs (SCODs) and Other Separately Payable and Packaged Drugs and Biologicals

b. Payment Policy

4. Payment for Blood Clotting Factors

5. Payment for Therapeutic Radiopharmaceuticals

a. Background

b. Payment Policy

6. Payment for Nonpass-Through Drugs, Biologicals, and Radiopharmaceuticals With HCPCS Codes, But Without OPPS Hospital Claims Data

VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals, Radiopharmaceuticals, and Devices

A. Background

B. Estimate of Pass-Through Spending

VII. OPPS Payment for Brachytherapy Sources

A. Background

B. OPPS Payment Policy

VIII. OPPS Payment for Drug Administration Services

A. Background

B. Coding and Payment for Drug Administration Services

IX. OPPS Payment for Hospital Outpatient Visits

A. Background

B. Policies for Hospital Outpatient Visits

1. Clinic Visits: New and Established Patient Visits

2. Emergency Department Visits

3. Visit Reporting Guidelines

X. Payment for Partial Hospitalization Services

A. Background

B. PHP APC Update for CY 2010

C. Separate Threshold for Outlier Payments to CMHCs

XI. Procedures That Will Be Paid Only as Inpatient Procedures

A. Background

B. Changes to the Inpatient List

XII. OPPS Nonrecurring Technical and Policy Changes and Clarifications

A. Kidney Disease Education Services

1. Background

2. Payment for Services Furnished by Providers of Services Located in a Rural Area

B. Pulmonary Rehabilitation, Cardiac Rehabilitation, and Intensive Cardiac Rehabilitation Services

1. Legislative Changes

2. Payment for Services Furnished to Hospital Outpatients in a Pulmonary Rehabilitation Program

3. Payment for Services Furnished to Hospital Outpatients Under a Cardiac Rehabilitation or an Intensive Cardiac Rehabilitation Program

4. Physician Supervision for Pulmonary Rehabilitation, Cardiac Rehabilitation, and Intensive Cardiac Rehabilitation Services

C. Stem Cell Transplants

D. Physician Supervision

1. Background

2. Issues Regarding the Physician Supervision of Hospital Outpatient Services Raised by Hospitals and Other Stakeholders

3. Policies for Direct Supervision of Hospital and CAH Outpatient Therapeutic Services

4. Policies for Direct Supervision of Hospital and CAH Outpatient Diagnostic Services

5. Summary of CY 2010 Physician Supervision Final Policies

E. Direct Referral for Observation Services

XIII. OPPS Payment Status and Comment Indicators

A. OPPS Payment Status Indicator Definitions

1. Payment Status Indicators To Designate Services That Are Paid Under the OPPS

2. Payment Status Indicators To Designate Services That Are Paid Under a Payment System Other Than the OPPS

3. Payment Status Indicators To Designate Services That Are Not Recognized Under the OPPS But That May Be Recognized by Other Institutional Providers

4. Payment Status Indicators To Designate Services That Are Not Payable by Medicare on Outpatient Claims

B. Comment Indicator Definitions

XIV. OPPS Policy and Payment Recommendations

A. MedPAC Recommendations

B. APC Panel Recommendations

C. OIG Recommendations

XV. Updates to the Ambulatory Surgical Center (ASC) Payment System

A. Background

1. Legislative Authority for the ASC Payment System

2. Prior Rulemaking

3. Policies Governing Changes to the Lists of Codes and Payment Rates for ASC Covered Surgical Procedures and Covered Ancillary Services

B. Treatment of New Codes

1. Treatment of New Category I and III CPT Codes and Level II HCPCS Codes

2. Treatment of New Level II HCPCS Codes Implemented in April and July 2009

C. Update to the List of ASC Covered Surgical Procedures and Covered Ancillary Services

1. Covered Surgical Procedures

a. Additions to the List of ASC Covered Surgical Procedures

b. Covered Surgical Procedures Designated as Office-Based

(1) Background

(2) Changes to Covered Surgical Procedures Designated as Office-Based for CY 2010

c. ASC Covered Surgical Procedures Designated as Device-Intensive

(1) Background

(2) Changes to List of Covered Surgical Procedures Designated as Device-Intensive for CY 2010

d. ASC Treatment of Surgical Procedures Removed From the OPPS Inpatient List for CY 2010

2. Covered Ancillary Services

D. ASC Payment for Covered Surgical Procedures and Covered Ancillary Services

1. Payment for Covered Surgical Procedures

a. Background

b. Update to ASC Covered Surgical Procedure Payment Rates for CY 2010

c. Adjustment to ASC Payments for No Cost/Full Credit and Partial Credit Devices

2. Payment for Covered Ancillary Services

a. Background

b. Payment for Covered Ancillary Services for CY 2010

E. New Technology Intraocular Lenses (NTIOLs)

1. Background

2. NTIOL Application Process for Payment Adjustment

3. Classes of NTIOLs Approved and New Requests for Payment Adjustment

a. Background

b. Request To Establish New NTIOL Class for CY 2010 and Deadline for Public Comment

4. Payment Adjustment

5. ASC Payment for Insertion of IOLs

6. Announcement of CY 2010 Deadline for Submitting Requests for CMS Review of Appropriateness of ASC Payment for Insertion of an NTIOL Following Cataract Surgery

F. ASC Payment and Comment Indicators

1. Background

2. ASC Payment and Comment Indicators

G. ASC Policy and Payment Recommendations

H. Revision to Terms of Agreements for Hospital-Operated ASCs

1. Background

2. Changes to the Terms of Agreements for ASCs Operated by Hospitals

I. Calculation of the ASC Conversion Factor and ASC Payment Rates

1. Background

2. Calculation of the ASC Payment Rates

a. Updating the ASC Relative Payment Weights for CY 2010 and Future Years

b. Updating the ASC Conversion Factor

3. Display of ASC Payment Rates

XVI. Reporting Quality Data for Annual Payment Rate Updates

A. Background

1. OverviewStart Printed Page 60320

2. Hospital Outpatient Quality Data Reporting Under Section 109(a) of Public Law 109-432

3. Reporting ASC Quality Data for Annual Payment Update

4. HOPQDRP Quality Measures for the CY 2009 Payment Determination

5. HOP QDRP Quality Measures for the CY 2010 Payment Determination

a. Background

b. Maintenance of Technical Specifications for Quality Measures

c. Publication of HOP QDRP Data

B. Quality Measures for the CY 2011 Payment Determination

1. Considerations in Expanding and Updating Quality Measures Under the HOP QDRP Program

2. Retirement of HOP QDRP Quality Measures

3. HOP QDRP Quality Measures for the CY 2011 Payment Determination

C. Possible Quality Measures Under Consideration for CY 2012 and Subsequent Years

D. Payment Reduction for Hospitals That Fail To Meet the HOP QDRP Requirements for the CY 2010 Payment Update

1. Background

2. Reporting Ratio Application and Associated Adjustment Policy for CY 2010

E. Requirements for HOPD Quality Data Reporting for CY 2011 and Subsequent Years

1. Administrative Requirements

2. Data Collection and Submission Requirements

a. General Data Collection and Submission Requirements

b. Extraordinary Circumstance Extension or Waiver for Reporting Quality Data

3. HOP QDRP Validation Requirements

a. Data Validation Requirements for CY 2011

b. Data Validation Approach for CY 2012 and Subsequent Years

c. Additional Data Validation Conditions Under Consideration for CY 2012 and Subsequent Years

F. 2010 Publication of HOP QDRP Data

G. HOP QDRP Reconsideration and Appeals Procedures

H. Reporting of ASC Quality Data

I. Electronic Health Records

XVII. Healthcare-Associated Conditions

A. Background

1. Preventable Medical Errors and Hospital-Acquired Conditions (HACs) Under the IPPS

2. Expanding the Principles of the IPPS HACs Payment Provision to the OPPS

3. Discussion in the CY 2009 OPPS/ASC Final Rule With Comment Period

B. Public Comments and Recommendations on Issues Regarding Healthcare-Associated Conditions From the Joint IPPS/OPPS Listening Session

C. CY 2010 Approach to Healthcare-Associated Conditions Under the OPPS

XVIII. Files Available to the Public via the Internet

A. Information in Addenda Related to the CY 2010 Hospital OPPS

B. Information in Addenda Related to the CY 2010 ASC Payment System

XIX. Collection of Information Requirements

A. Legislative Requirements for Solicitation of Comments

B. Associated Information Collections Not Specified in Regulatory Text

1. Hospital Outpatient Quality Data Reporting Program (HOP QDRP)

2. HOP QDRP Quality Measures for the CY 2010 and CY 2011 Payment Determinations

3. HOP QDRP Validation Requirements

4. HOP QDRP Reconsideration and Appeals Procedures

5. Additional Topics

XX. Response to Comments

XXI. Regulatory Impact Analysis

A. Overall Impact

1. Executive Order 12866

2. Regulatory Flexibility Act (RFA)

3. Small Rural Hospitals

4. Unfunded Mandates

5. Federalism

B. Effects of OPPS Changes in This Final Rule With Comment Period

1. Alternatives Considered

2. Limitations of Our Analysis

3. Estimated Effects of This Final Rule With Comment Period on Hospitals

4. Estimated Effects of This Final Rule With Comment Period on CMHCs

5. Estimated Effects of This Final Rule With Comment Period on Beneficiaries

6. Conclusion

7. Accounting Statement

C. Effects of ASC Payment System Changes in This Final Rule With Comment Period

1. Alternatives Considered

2. Limitations of Our Analysis

3. Estimated Effects of This Final Rule With Comment Period on Payments to ASCs

4. Estimated Effects of This Final Rule With Comment Period on Beneficiaries

5. Conclusion

6. Accounting Statement

D. Effects of Requirements for Reporting of Quality Data for Annual Hospital Payment Update

E. Executive Order 12866

Regulation Text

Addenda

Addendum A—Final OPPS APCs for CY 2010

Addendum AA—Final ASC Covered Surgical Procedures for CY 2010 (Including Surgical Procedures for Which Payment Is Packaged)

Addendum B—Final OPPS Payment by HCPCS Code for CY 2010

Addendum BB—Final ASC Covered Ancillary Services Integral to Covered Surgical Procedures for CY 2010 (Including Ancillary Services for Which Payment Is Packaged)

Addendum D1—Final OPPS Payment Status Indicators for CY 2010

Addendum DD1—Final ASC Payment Indicators for CY 2010

Addendum D2—Final OPPS Comment Indicators for CY 2010

Addendum DD2—Final ASC Comment Indicators for CY 2010

Addendum E— HCPCS Codes That Are Paid as Inpatient Procedures for CY 2010

Addendum L-CY 2010 OPPS Out-Migration Adjustment

Addendum M—HCPCS Codes for Assignment to Composite APCs for CY 2010

I. Background and Summary of the CY 2010 OPPS/ASC Final Rule With Comment Period

A. Legislative and Regulatory Authority for the Hospital Outpatient Prospective Payment System

When Title XVIII of the Social Security Act (the Act) was enacted, Medicare payment for hospital outpatient services was based on hospital-specific costs. In an effort to ensure that Medicare and its beneficiaries pay appropriately for services and to encourage more efficient delivery of care, the Congress mandated replacement of the reasonable cost-based payment methodology with a prospective payment system (PPS). The Balanced Budget Act (BBA) of 1997 (Pub. L. 105-33) added section 1833(t) to the Act authorizing implementation of a PPS for hospital outpatient services. The OPPS was first implemented for services furnished on or after August 1, 2000. Implementing regulations for the OPPS are located at 42 CFR part 419.

The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act (BBRA) of 1999 (Pub. L. 106-113) made major changes in the hospital outpatient prospective payment system (OPPS). The following Acts made additional changes to the OPPS: the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA) of 2000 (Pub. L. 106-554); the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 (Pub. L. 108-173); the Deficit Reduction Act (DRA) of 2005 (Pub. L. 109-171), enacted on February 8, 2006; the Medicare Improvements and Extension Act under Division B of Title I of the Tax Relief and Health Care Act (MIEA-TRHCA) of 2006 (Pub. L. 109-432), enacted on December 20, 2006; the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 2007 (Pub. L. 110-173), enacted on December 29, 2007; and the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008 (Pub. L. 110-275), enacted on July 15, 2008.

Under the OPPS, we pay for hospital outpatient services on a rate-per-service basis that varies according to the ambulatory payment classification (APC) group to which the service is assigned. We use the Healthcare Common Procedure Coding System (HCPCS) codes (which include certain Current Procedural Terminology (CPT) codes) and descriptors to identify and Start Printed Page 60321group the services within each APC group. The OPPS includes payment for most hospital outpatient services, except those identified in section I.B. of this final rule with comment period. Section 1833(t)(1)(B)(ii) of the Act provides for payment under the OPPS for hospital outpatient services designated by the Secretary (which includes partial hospitalization services furnished by community mental health centers (CMHCs)) and hospital outpatient services that are furnished to inpatients who have exhausted their Part A benefits, or who are otherwise not in a covered Part A stay. Section 611 of Public Law 108-173 added provisions for Medicare coverage for an initial preventive physical examination, subject to the applicable deductible and coinsurance, as an outpatient department service, payable under the OPPS.

The OPPS rate is an unadjusted national payment amount that includes the Medicare payment and the beneficiary copayment. This rate is divided into a labor-related amount and a nonlabor-related amount. The labor-related amount is adjusted for area wage differences using the hospital inpatient wage index value for the locality in which the hospital or CMHC is located.

All services and items within an APC group are comparable clinically and with respect to resource use (section 1833(t)(2)(B) of the Act). In accordance with section 1833(t)(2) of the Act, subject to certain exceptions, services and items within an APC group cannot be considered comparable with respect to the use of resources if the highest median (or mean cost, if elected by the Secretary) for an item or service in the APC group is more than 2 times greater than the lowest median cost for an item or service within the same APC group (referred to as the “2 times rule”). In implementing this provision, we generally use the median cost of the item or service assigned to an APC group.

For new technology items and services, special payments under the OPPS may be made in one of two ways. Section 1833(t)(6) of the Act provides for temporary additional payments, which we refer to as “transitional pass-through payments,” for at least 2 but not more than 3 years for certain drugs, biological agents, brachytherapy devices used for the treatment of cancer, and categories of other medical devices. For new technology services that are not eligible for transitional pass-through payments, and for which we lack sufficient data to appropriately assign them to a clinical APC group, we have established special APC groups based on costs, which we refer to as New Technology APCs. These New Technology APCs are designated by cost bands which allow us to provide appropriate and consistent payment for designated new procedures that are not yet reflected in our claims data. Similar to pass-through payments, an assignment to a New Technology APC is temporary; that is, we retain a service within a New Technology APC until we acquire sufficient data to assign it to a clinically appropriate APC group.

B. Excluded OPPS Services and Hospitals

Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to designate the hospital outpatient services that are paid under the OPPS. While most hospital outpatient services are payable under the OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for ambulance, physical and occupational therapy, and speech-language pathology services, for which payment is made under a fee schedule. Section 614 of Public Law 108-173 amended section 1833(t)(1)(B)(iv) of the Act to exclude payment for screening and diagnostic mammography services from the OPPS. The Secretary exercised the authority granted under the statute to also exclude from the OPPS those services that are paid under fee schedules or other payment systems. Such excluded services include, for example, the professional services of physicians and nonphysician practitioners paid under the Medicare Physician Fee Schedule (MPFS); laboratory services paid under the clinical diagnostic laboratory fee schedule (CLFS); services for beneficiaries with end-stage renal disease (ESRD) that are paid under the ESRD composite rate; and services and procedures that require an inpatient stay that are paid under the hospital inpatient prospective payment system (IPPS). We set forth the services that are excluded from payment under the OPPS in § 419.22 of the regulations.

Under § 419.20(b) of the regulations, we specify the types of hospitals and entities that are excluded from payment under the OPPS. These excluded entities include: Maryland hospitals, but only for services that are paid under a cost containment waiver in accordance with section 1814(b)(3) of the Act; critical access hospitals (CAHs); hospitals located outside of the 50 States, the District of Columbia, and Puerto Rico; and Indian Health Service hospitals.

C. Prior Rulemaking

On April 7, 2000, we published in the Federal Register a final rule with comment period (65 FR 18434) to implement a prospective payment system for hospital outpatient services. The hospital OPPS was first implemented for services furnished on or after August 1, 2000. Section 1833(t)(9) of the Act requires the Secretary to review certain components of the OPPS, not less often than annually, and to revise the groups, relative payment weights, and other adjustments that take into account changes in medical practices, changes in technologies, and the addition of new services, new cost data, and other relevant information and factors.

Since initially implementing the OPPS, we have published final rules in the Federal Register annually to implement statutory requirements and changes arising from our continuing experience with this system. These rules can be viewed on the CMS Web site at: http://www.cms.hhs.gov/​HospitalOutpatientPPS/​. We published in the Federal Register on November 18, 2008 the CY 2009 OPPS/ASC final rule with comment period (73 FR 68502). In that final rule with comment period, we revised the OPPS to update the payment weights and conversion factor for services payable under the CY 2009 OPPS on the basis of claims data from January 1, 2007, through December 31, 2007, and to implement certain provisions of Public Law 110-173 and Public Law 110-275. In addition, we responded to public comments received on the provisions of the November 27, 2007 final rule with comment period (72 FR 66580) pertaining to the APC assignment of HCPCS codes identified in Addendum B to that rule with the new interim (“NI”) comment indicator, and public comments received on the July 18, 2008 OPPS/ASC proposed rule for CY 2009 (73 FR 41416).

Subsequent to publication of the CY 2009 OPPS/ASC final rule with comment period, we published in the Federal Register on January 26, 2009, a correction notice (74 FR 4343 through 4344) to correct certain technical errors in the CY 2009 OPPS/ASC final rule with comment period.

On July 20, 2009, we issued in the Federal Register (74 FR 35232) a proposed rule for the CY 2010 OPPS/ASC payment system to implement statutory requirements and changes arising from our continuing experience with both systems.Start Printed Page 60322

D. Advisory Panel on Ambulatory Payment Classification (APC) Groups

1. Authority of the APC Panel

Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of Public Law 106-113, and redesignated by section 202(a)(2) of Public Law 106-113, requires that we consult with an outside panel of experts to review the clinical integrity of the payment groups and their weights under the OPPS. The Act further specifies that the panel will act in an advisory capacity. The Advisory Panel on Ambulatory Payment Classification (APC) Groups (the APC Panel), discussed under section I.D.2. of this final rule with comment period, fulfills these requirements. The APC Panel is not restricted to using data compiled by CMS, and it may use data collected or developed by organizations outside the Department in conducting its review.

2. Establishment of the APC Panel

On November 21, 2000, the Secretary signed the initial charter establishing the APC Panel. This expert panel, which may be composed of up to 15 representatives of providers (currently employed full-time, not as consultants, in their respective areas of expertise) subject to the OPPS, reviews clinical data and advises CMS about the clinical integrity of the APC groups and their payment weights. The APC Panel is technical in nature, and it is governed by the provisions of the Federal Advisory Committee Act (FACA). Since its initial chartering, the Secretary has renewed the APC Panel's charter four times: on November 1, 2002; on November 1, 2004; on November 21, 2006; and on November 2, 2008. The current charter specifies, among other requirements, that: the APC Panel continues to be technical in nature; is governed by the provisions of the FACA; may convene up to three meetings per year; has a Designated Federal Officer (DFO); and is chaired by a Federal official designated by the Secretary.

The current APC Panel membership and other information pertaining to the APC Panel, including its charter, Federal Register notices, membership, meeting dates, agenda topics, and meeting reports, can be viewed on the CMS Web site at: http://www.cms.hhs.gov/​FACA/​05_​AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.

3. APC Panel Meetings and Organizational Structure

The APC Panel first met on February 27 through March 1, 2001. Since the initial meeting, the APC Panel has held 16 meetings, with the last meeting taking place on August 5 and 6, 2009. Prior to each meeting, we publish a notice in the Federal Register to announce the meeting and, when necessary, to solicit nominations for APC Panel membership and to announce new members.

The APC Panel has established an operational structure that, in part, includes the use of three subcommittees to facilitate its required APC review process. The three current subcommittees are the Data Subcommittee, the Visits and Observation Subcommittee, and the Packaging Subcommittee. The Data Subcommittee is responsible for studying the data issues confronting the APC Panel and for recommending options for resolving them. The Visits and Observation Subcommittee reviews and makes recommendations to the APC Panel on all technical issues pertaining to observation services and hospital outpatient visits paid under the OPPS (for example, APC configurations and APC payment weights). The Packaging Subcommittee studies and makes recommendations on issues pertaining to services that are not separately payable under the OPPS, but whose payments are bundled or packaged into APC payments. Each of these subcommittees was established by a majority vote from the full APC Panel during a scheduled APC Panel meeting, and their continuation as subcommittees was last approved at the August 2009 APC Panel meeting. At that meeting, the APC Panel recommended that the work of these three subcommittees continue, and we accept those recommendations of the APC Panel. All subcommittee recommendations are discussed and voted upon by the full APC Panel.

Discussions of the other recommendations made by the APC Panel at the August 2009 meeting are included in the sections of this final rule with comment period that are specific to each recommendation. For discussions of earlier APC Panel meetings and recommendations, we refer readers to previously published hospital OPPS/ASC proposed and final rules, the CMS Web site mentioned earlier in this section, and the FACA database at: http://fido.gov/​facadatabase/​public.asp.

Comment: Several commenters requested that CMS include ASC representation on the APC Panel. Because the revised ASC payment system is based upon the same APC groups and relative payment weights as the OPPS, the commenters believed that ASC representation on the APC Panel would ensure input from representatives of all care settings that provide surgical services whose payment groups and payment weights are affected by the OPPS. Further, the commenters urged CMS to revise the APC Panel's charter to reflect the current alignment of the OPPS and the revised ASC payment system by including representation from the ASC industry on the APC Panel, as the commenters believed is permitted by the statute.

Response: We acknowledge that the revised ASC payment system provides Medicare payments to ASCs for surgical procedures that are based, in most cases, on the relative payment weights of the OPPS. However, CMS is statutorily required to have an appropriate selection of representatives of “providers” as members of the APC Panel. The current APC Panel charter requires that “Each Panel member must be employed full-time by a hospital, hospital system, or other Medicare provider subject to payment under the OPPS,” which does not include ASCs because ASCs are not providers. We refer readers to section 1833(t)(9)(A) of the Act and § 400.202 of our regulations for specific requirements and definitions. ASCs are suppliers, not providers. The charter must comply with the statute, which does not include representatives of suppliers on the APC Panel. Therefore, although we understand the concerns of the commenters regarding ASC input on the APC Panel now that the ASC payment system is based on the OPPS relative payment weights, we cannot revise the charter to include ASC representation.

E. Background and Summary of the CY 2010 OPPS/ASC Proposed Rule

A proposed rule appeared in the July 20, 2009 Federal Register (74 FR 35232) that set forth proposed changes to the Medicare hospital OPPS for CY 2010 to implement statutory requirements and changes arising from our continuing experience with the system. In addition, we set forth proposed changes to the revised Medicare ASC payment system for CY 2010, including updated payment weights, covered surgical procedures, and covered ancillary items and services based on the proposed OPPS update. Finally, we set forth proposed quality measures for the Hospital Outpatient Quality Data Reporting Program (HOP QDRP) for reporting quality data for annual payment rate updates for CY 2011 and subsequent calendar years, the requirements for data collection and submission for the annual payment Start Printed Page 60323update, and a proposed reduction in the OPPS payment for hospitals that fail to meet the HOP QDRP requirements for the CY 2010 payment update, in accordance with the statutory requirement. The following is a summary of the major proposed changes included in the CY 2010 OPPS/ASC proposed rule:

1. Updates Affecting OPPS Payments

In section II. of the proposed rule, we set forth—

  • The methodology used to recalibrate the APC relative payment weights.
  • The proposed changes to packaged services.
  • The proposed update to the conversion factor used to determine payment rates under the OPPS. In this section, we set forth proposed changes in the amounts and factors for calculating the full annual update increase to the conversion factor.
  • The proposed retention of our current policy to use the IPPS wage indices to adjust, for geographic wage differences, the portion of the OPPS payment rate and the copayment standardized amount attributable to labor-related cost.
  • The proposed update of statewide average default CCRs.
  • The proposed application of hold harmless transitional outpatient payments (TOPs) for certain small rural hospitals.
  • The proposed payment adjustment for rural SCHs.
  • The proposed calculation of the hospital outpatient outlier payment.
  • The calculation of the proposed national unadjusted Medicare OPPS payment.
  • The proposed beneficiary copayments for OPPS services.

2. OPPS Ambulatory Payment Classification (APC) Group Policies

In section III. of the proposed rule, we discussed—

  • The proposed additions of new HCPCS codes to APCs.
  • The proposed establishment of a number of new APCs.
  • Our analyses of Medicare claims data and certain recommendations of the APC Panel.
  • The application of the 2 times rule and proposed exceptions to it.
  • The proposed changes to specific APCs.
  • The proposed movement of procedures from New Technology APCs to clinical APCs.

3. OPPS Payment for Devices

In section IV. of the proposed rule, we discussed the proposed pass-through payment for specific categories of devices and the proposed adjustment for devices furnished at no cost or with partial or full credit.

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

In section V. of the proposed rule, we discussed the proposed CY 2010 OPPS payment for drugs, biologicals, and radiopharmaceuticals, including the proposed payment for drugs, biologicals, and radiopharmaceuticals with and without pass-through status.

5. Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals, Radiopharmaceuticals, and Devices

In section VI. of the proposed rule, we discussed the estimate of CY 2010 OPPS transitional pass-through spending for drugs, biologicals, and devices.

6. OPPS Payment for Brachytherapy Sources

In section VII. of the proposed rule, we discussed payment for brachytherapy sources.

7. OPPS Payment for Drug Administration Services

In section VIII. of the proposed rule, we set forth our proposed policy concerning coding and payment for drug administration services.

8. OPPS Payment for Hospital Outpatient Visits

In section IX. of the proposed rule, we set forth our proposed policies for the payment of clinic and emergency department visits and critical care services based on claims data.

9. Payment for Partial Hospitalization Services

In section X. of the proposed rule, we set forth the proposed payment for partial hospitalization services, including the proposed separate threshold for outlier payments for CMHCs.

10. Procedures That Will Be Paid Only as Inpatient Procedures

In section XI. of the proposed rule, we discussed the procedures that we proposed to remove from the inpatient list and assign to APCs for payment under the OPPS.

11. OPPS Nonrecurring Technical and Policy Changes and Clarifications

In section XII. of the proposed rule, we discussed nonrecurring technical issues, proposed policy changes, and provided policy clarifications.

12. OPPS Payment Status and Comment Indicators

In section XIII. of the proposed rule, we discussed our proposed changes to the definitions of status indicators assigned to APCs and presented our proposed comment indicators for the final rule with comment period.

13. OPPS Policy and Payment Recommendations

In section XIV. of the proposed rule, we addressed recommendations made by the Medicare Payment Advisory Commission (MedPAC) in its March 2009 report to Congress, by the Office of Inspector General (OIG), and by the APC Panel regarding the OPPS for CY 2010.

14. Updates to the Ambulatory Surgical Center (ASC) Payment System

In section XV. of the proposed rule, we discussed the proposed updates of the revised ASC payment system and payment rates for CY 2010.

15. Reporting Quality Data for Annual Payment Rate Updates

In section XVI. of the proposed rule, we discussed the proposed quality measures for reporting hospital outpatient (HOP) quality data for the annual payment update factor for CY 2011 and subsequent calendar years; set forth the requirements for data collection and submission for the annual payment update; and discussed the reduction in the OPPS payment for hospitals that fail to meet the HOP Quality Data Reporting Program (QDRP) requirements for CY 2010.

16. Healthcare-Associated Conditions

In section XVII. of the proposed rule, we discussed public responses to a December 2008 CMS public listening session addressing the potential extension of the principle of Medicare not paying more under the IPPS for the care of preventable hospital-acquired conditions experienced by a Medicare beneficiary during a hospital inpatient stay to medical care in other settings that are paid under other Medicare payment systems, including the OPPS, for those healthcare-associated conditions that occur or result from care in those other settings.

17. Regulatory Impact Analysis

In section XXI. of the proposed rule, we set forth an analysis of the impact the proposed changes would have on affected entities and beneficiaries.Start Printed Page 60324

F. Public Comments Received in Response to the CY 2010 OPPS/ASC Proposed Rule

We received approximately 1,527 timely pieces of correspondence containing multiple comments on the CY 2010 OPPS/ASC proposed rule. We note that we received some public comments that were outside of the scope of the CY 2010 OPPS/ASC proposed rule. These out-of-scope public comments are not addressed in this final rule with comment period.

New (and substantially revised) CY 2010 HCPCS codes are designated with comment indicator “NI” in Addenda B, AA, and BB of this final rule with comment period to signify that their CY 2010 interim OPPS and/or ASC treatment are open to public comment on this final rule with comment period. Summaries of the public comments that are within the scope of the CY 2010 proposals and our responses to those comments are set forth in the various sections of this final rule with comment period under the appropriate headings.

G. Public Comments Received in Response to the November 18, 2008 OPPS/ASC Final Rule With Comment Period

We received approximately 41 timely pieces of correspondence on the CY 2009 OPPS/ASC final rule with comment period, some of which contained multiple comments on the interim APC assignments and/or status indicators of HCPCS codes identified with comment indicator “NI” in Addendum B of that final rule with comment period. Summaries of those public comments on topics open to comment in the CY 2009 OPPS/ASC final rule with comment period and our responses to them are set forth in the various sections of this final rule with comment period under the appropriate headings.

II. Updates Affecting OPPS Payments

A. Recalibration of APC Relative Weights

1. Database Construction

a. Database Source and Methodology

Section 1833(t)(9)(A) of the Act requires that the Secretary review and revise the relative payment weights for APCs at least annually. In the April 7, 2000 OPPS final rule with comment period (65 FR 18482), we explained in detail how we calculated the relative payment weights that were implemented on August 1, 2000 for each APC group.

For CY 2010, we proposed to use the same basic methodology that we described in the April 7, 2000 OPPS final rule with comment period to recalibrate the APC relative payment weights for services furnished on or after January 1, 2010, and before January 1, 2011 (CY 2010). That is, we proposed to recalibrate the relative payment weights for each APC based on claims and cost report data for hospital outpatient department (HOPD) services. We proposed to use the most recent available data to construct the database for calculating APC group weights. Therefore, for the purpose of recalibrating the APC relative payment weights for CY 2010, we used approximately 141 million final action claims for hospital outpatient department services furnished on or after January 1, 2008, and before January 1, 2009. (For exact counts of claims used, we refer readers to the claims accounting narrative under supporting documentation for this final rule with comment period on the CMS Web site at: http://www.cms.hhs.gov/​HospitalOutpatientPPS/​HORD/​.)

Of the 141 million final action claims for services provided in hospital outpatient settings used to calculate the CY 2010 OPPS payment rates for this final rule with comment period, approximately 107 million claims were the type of bill potentially appropriate for use in setting rates for OPPS services (but did not necessarily contain services payable under the OPPS). Of the 107 million claims, approximately 50 million claims were not for services paid under the OPPS or were excluded as not appropriate for use (for example, erroneous cost-to-charge ratios (CCRs) or no HCPCS codes reported on the claim). From the remaining 58 million claims, we created approximately 99 million single records, of which approximately 68 million were “pseudo” single or “single session” claims (created from 26 million multiple procedure claims using the process we discuss later in this section). Approximately 657,000 claims were trimmed out on cost or units in excess of +/−3 standard deviations from the geometric mean, yielding approximately 99 million single bills for median setting. As described in section II.A.2. of this final rule with comment period, our data development process is designed with the goal of using appropriate cost information in setting the APC relative weights. The bypass process is described in section II.A.1.b. of this final rule with comment period. This section discusses how we develop “pseudo” single claims, with the intention of using more appropriate data from the available claims. In some cases, the bypass process allows us to use some portion of the submitted claim for cost estimation purposes, while the remaining information on the claim continues to be unusable. Consistent with the goal of using appropriate information in our data development process, we only use claims (or portions of each claim) that are appropriate for ratesetting purposes. Ultimately, we were able to use for CY 2010 ratesetting some portion of 95 percent of the CY 2008 claims containing services payable under the OPPS.

As proposed, the APC relative weights and payments for CY 2010 in Addenda A and B to this final rule with comment period were calculated using claims from CY 2008 that were processed before January 1, 2009 and continue to be based on the median hospital costs for services in the APC groups. We selected claims for services paid under the OPPS and matched these claims to the most recent cost report filed by the individual hospitals represented in our claims data. We continue to believe that it is appropriate to use the most current full calendar year claims data and the most recently submitted cost reports to calculate the median costs underpinning the APC relative payment weights and the CY 2010 payment rates.

We did not receive any public comments on our proposal to base the CY 2010 APC relative weights on the most currently available cost reports and on claims for services furnished in CY 2008. Therefore, for the reasons noted above in this section, we are finalizing our data source for the recalibration of the CY 2010 APC relative payment weights as proposed, without modification, as described in this section of this final rule with comment period.

b. Use of Single and Multiple Procedure Claims

For CY 2010, in general, we proposed to continue to use single procedure claims to set the medians on which the APC relative payment weights would be based, with some exceptions as discussed below in this section. We generally use single procedure claims to set the median costs for APCs because we believe that the OPPS relative weights on which payment rates are based should be derived from the costs of furnishing one procedure and because, in many circumstances, we are unable to ensure that packaged costs can be appropriately allocated across multiple procedures performed on the same date of service.

We agree that, optimally, it is desirable to use the data from as many claims as possible to recalibrate the APC relative payment weights, including Start Printed Page 60325those claims for multiple procedures. As we have for several years, we continued to use date of service stratification and a list of codes to be bypassed to convert multiple procedure claims to “pseudo” single procedure claims. Through bypassing specified codes that we believe do not have significant packaged costs, we are able to use more data from multiple procedure claims. In many cases, this enables us to create multiple “pseudo” single claims from claims that were submitted as multiple procedure claims spanning multiple dates of service, or claims that contained numerous separately paid procedures reported on the same date on one claim. We refer to these newly created single procedure claims as “pseudo” single claims. The history of our use of a bypass list to generate “pseudo” single claims is well documented, most recently in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68512 through 68519). In addition, for CY 2008, we increased packaging and created the first composite APCs. This also increased the number of bills that we were able to use for median calculation by enabling us to use claims that contained multiple major procedures that previously would not have been usable. Further, for CY 2009, we expanded the composite APC model to one additional clinical area, multiple imaging services (73 FR 68559 through 68569), which also increased the number of bills we were able to use to calculate APC median costs. We refer readers to section II.A.2.e. of this final rule with comment period for discussion of the use of claims to establish median costs for composite APCs.

In the CY 2010 OPPS/ASC proposed rule (74 FR 35239 through 35241), we proposed to continue to apply these processes to enable us to use as much claims data as possible for ratesetting for the CY 2010 OPPS. This process enabled us to create, for this final rule with comment period, approximately 68 million “pseudo” single claims, including multiple imaging composite “single session” bills (we refer readers to section II.A.2.e.(5) of this final rule with comment period for further discussion), to add to the approximately 32 million “natural” single bills. For this final rule with comment period, “pseudo” single and “single session” procedure bills represent 68 percent of all single bills used to calculate median costs.

In the CY 2010 OPPS/ASC proposed rule (74 FR 35239 through 35241), we proposed to bypass 438 HCPCS codes for CY 2010. Since the inception of the bypass list, we have calculated the percent of “natural” single bills that contained packaging for each HCPCS code and the amount of packaging on each “natural” single bill for each code. Each year, we generally retain the codes on the previous year's bypass list and use the update year's data (for CY 2010, data available for the February 2009 APC Panel meeting from CY 2008 claims processed through September 30, 2008 and CY 2007 claims data processed through June 30, 2008 used to model the final payment rates for CY 2009) to determine whether it would be appropriate to propose to add additional codes to the previous year's bypass list. For CY 2010, we proposed to continue to bypass all of the HCPCS codes on the CY 2009 OPPS bypass list. We also proposed to add to the bypass list for CY 2010 all HCPCS codes not on the CY 2009 bypass list that, using both CY 2009 final rule and February 2009 APC Panel data, met the same previously established empirical criteria for the bypass list that are summarized below. Because we must make some assumptions about packaging in the multiple procedure claims in order to assess a HCPCS code for addition to the bypass list, we assume that the representation of packaging on “natural” single claims for any given code is comparable to packaging for that code in the multiple claims. The proposed criteria for the bypass list were:

  • There are 100 or more “natural” single claims for the code. This number of single claims ensures that observed outcomes are sufficiently representative of packaging that might occur in the multiple claims.
  • Five percent or fewer of the “natural” single claims for the code have packaged costs on that single claim for the code. This criterion results in limiting the amount of packaging being redistributed to the separately payable procedures remaining on the claim after the bypass code is removed and ensures that the costs associated with the bypass code represent the cost of the bypassed service.
  • The median cost of packaging observed in the “natural” single claims is equal to or less than $50. This criterion also limits the amount of error in redistributed costs. Throughout the bypass process, we do not know the dollar value of the packaged cost that should be appropriately attributed to the other procedures on the claim. Ensuring that redistributed costs associated with a bypass code are small in amount and volume protects the validity of cost estimates for low cost services billed with the bypassed service.
  • The code is not a code for an unlisted service.

In addition, we proposed to continue to include on the bypass list HCPCS codes that CMS medical advisors believe have minimal associated packaging based on their clinical assessment of the complete CY 2010 OPPS proposal. Some of these codes were identified by CMS medical advisors and some were identified in prior years by commenters with specialized knowledge of the packaging associated with specific services, especially on a multiple procedure claim. We also proposed to continue to include on the bypass list certain HCPCS codes in order to purposefully direct the assignment of packaged costs to a companion code where services always appear together and where there would otherwise be few single claims available for ratesetting. For example, we have previously discussed our reasoning for adding HCPCS code G0390 (Trauma response team associated with hospital critical care service) and the CPT codes for additional hours of drug administration to the bypass list (73 FR 68513 and 71 FR 68117 through 68118).

As a result of the multiple imaging composite APCs that we established in CY 2009, we note that the program logic for creating “pseudo” singles from bypassed codes that are also members of multiple imaging composite APCs changed. When creating the set of “pseudo” single claims, claims that contain “overlap bypass codes,” that is, those HCPCS codes that are both on the bypass list and are members of the multiple imaging composite APCs, were identified first. These HCPCS codes were then processed to create multiple imaging composite “single session” bills, that is, claims containing HCPCS codes from only one imaging family, thus suppressing the initial use of these codes as bypass codes. However, these “overlap bypass codes” were retained on the bypass list because, at the end of the “pseudo” single processing logic, we reassessed the claims without suppression of the “overlap bypass codes” under our longstanding “pseudo” single process to determine whether we could convert additional claims to “pseudo” single claims. (We refer readers to section II.A.2.b. of this final rule with comment period for further discussion of the treatment of “overlap bypass codes.”) This process also created multiple imaging composite “single session” bills that could be used for calculating composite APC median costs. “Overlap bypass codes” that would be members of the proposed multiple imaging composite APCs were Start Printed Page 60326identified by asterisks (*) in Table 1 of the CY 2010 OPPS/ASC proposed rule (74 FR 35242 through 35252).

At the February 2009 APC Panel Meeting, the APC Panel recommended that CMS place CPT code 76098 (Radiological examination, surgical specimen) on the bypass list and reassign the code to APC 0260 (Level I Plain Film Except Teeth) in response to a public presentation requesting that CMS makes these changes. Although CPT code 76098 would not be eligible for addition to the bypass list because the frequency and magnitude of packaged costs in its “natural” single claims exceed the empirical criteria, the presenter suggested that the “natural” single claims represented aberrant billing with inappropriate packaged services and pointed out that the packaged services support the surgical procedures that commonly are also reported on claims for CPT code 76098. The presenter suggested that bypassing CPT code 76098 would properly allocate packaged costs to surgical procedures on these claims, and would increase the number of single claims available for ratesetting for both CPT code 76098 and the associated surgical breast procedures. The APC Panel indicated that the issues raised by the presenter appeared to be consistent with clinical practice and subsequently made the recommendation to bypass CPT code 76098 and reassign the code to APC 0260 based on the code's revised cost.

Based on the APC Panel's specific recommendation for CPT code 76098, we studied the billing patterns for the code in the “natural” single and multiple major claims in the CY 2008 claims data available for the February 2009 APC Panel. The presenter asserted that CPT code 76098 is commonly billed with surgical breast procedures and our claims data from the multiple procedure claims confirm this observation. However, as noted above, there are also a significant number of “natural” single bills in those data (1,303), and these “natural” single claims include costly packaged services, such as CPT code 19290 (Preoperative placement of needle localization wire, breast) and CPT 77032 code (Mammographic guidance for needle placement, breast (eg, for wire localization or for injection), each lesion, radiological supervision and interpretation). We have received anecdotal information indicating that hospitals may place guidance wires prior to surgery in the hospital's radiology department and then examine the surgical specimen in the radiology department after its surgical removal. This information, along with the number of observed “natural” single claims, suggests that the packaged costs might appropriately be associated with the radiological examination of the breast specimen. Although bypassing CPT code 76098 would allow for the creation of more “pseudo” single claims for ratesetting, it would also require the assumption that all packaging on the claim would be correctly assigned to the remaining major procedure where it exists and that on “natural” single bills no packaging would be appropriately associated with CPT code 76098. Given the number of “natural” single bills for CPT code 76098 and the significant packaged costs on these claims, we are not confident that placement of this code on the bypass list is appropriate.

While we did not propose to place CPT code 76098 on the bypass list, we wanted to continue to provide separate payment for this procedure when appropriate. We believe that CPT code 76098 is generally ancillary and supportive to surgical breast procedures. In CY 2008 we established a group of conditionally packaged codes, called “T-packaged codes,” whose payment is packaged when one or more separately paid surgical procedures with status indicator “T” are provided during a hospital encounter. In order to provide separate payment for CPT code 76098 when not provided with a separately payable surgical procedure and also to recognize its ancillary and supportive nature when it accompanies separately payable procedures, we proposed to conditionally package CPT code 76098 as a “T-packaged code” for CY 2010, identified with status indicator “Q2” in Addendum B to the CY 2010 OPPS/ASC proposed rule. As a “T-packaged code,” CPT code 76098 would receive separate payment except where it appears with a surgical procedure, in which case its payment would be packaged. Designating CPT 76098 in this way allows the separate payment to appropriately account for the packaged costs that appear on the code's “natural” single bills, while also allowing us to use more multiple procedure claims that include both a surgical procedure and CPT code 76098 to set the payment rates for the related surgical procedures. The CPT code-specific median cost of CPT code 76098 in the CY 2008 claims data available for the February 2009 APC Panel meeting was approximately $346, consistent with its CY 2009 assignment to APC 0317 (Level II Miscellaneous Radiology Procedures), which had an observed APC median cost in those data of approximately $339. In contrast, the median cost of APC 0260, the APC reassignment recommended by the APC Panel, was much lower in the APC Panel data, approximately $46. Therefore, we did not accept the APC Panel's recommendation to reassign CPT code 76098. Instead, we proposed to continue its assignment to APC 0317 for CY 2010 in those cases where CPT code 76098 is separately paid.

Comment: Several commenters requested that CMS add CPT code 76098 to the bypass list and reassign it to APC 0260. The commenters believed that CPT 76098 is similar with respect to resource use to the other codes assigned to APC 0260. The commenters also claimed that including CPT code 76098 on the bypass list would appropriately make more claims available for ratesetting purposes for the CPT code itself and the surgical breast procedures that appear with CPT code 76098 in the multiple major procedure claims. Another commenter supported the proposal to not include CPT code 76098 on the CY 2010 bypass list.

Response: The hospital claims data show that there is significant packaging associated with CPT code 76098. Therefore, we believe CPT code 76098 is not appropriate for inclusion on the bypass list.

In examining the billing patterns for CPT 76098, we noted its failure to meet the empirical criteria for inclusion on the bypass list. The significant number of “natural” single claims suggests that these claims are an accurate representation of hospital billing practices in certain clinical situations. Further, we believe the packaging on these claims is properly associated with the code. Anecdotal information on the placement of wires prior to surgery suggests that the packaging on the “natural” single claims reflects appropriate billing in some clinical scenarios, such as when hospitals place guidance wires prior to surgery in the hospital's radiology department and then examine the surgical specimen in the radiology department after its surgical removal. This example illustrates appropriate billing on “natural” single claims for CPT code 76098 because the hospital has accurately reported all services that the hospital provided to the patient on the claim. In this case, the hospital did not provide the associated surgical breast procedure; therefore, all packaging would be appropriately associated with CPT code 76098, which is the separately payable service that the hospital provided to the patient. This scenario contradicts the commenter's belief that the significant packaging on the “natural” single claims for CPT code Start Printed Page 6032776098 would represent aberrant hospital billing. As a result, for the CY 2010 proposed rule, we did not propose to add CPT code 76098 to the bypass list. However, based on our examination of the claims data for the proposed rule, we agreed that CPT 76098 is generally ancillary and supportive to surgical breast procedures. In order to provide appropriate separate payment for CPT code 76098 when the service is not furnished with a separately payable surgical procedure, and also to recognize its ancillary and supportive nature when it accompanies separately payable procedures, we proposed to conditionally package CPT code 76098 as a “T-packaged code” for CY 2010, identified with status indicator “Q2” in Addendum B to the proposed rule. Designating CPT code 76098 as a “T-packaged code” allows the separate payment to appropriately account for the packaged costs that appear on the code's “natural” single bills, while also allowing us to use more multiple procedure claims that include a surgical procedure and CPT code 76098 to set the payment rates for the related surgical procedures. In turn, we are able to use more data from the multiple procedure claims with CPT code 76098 to set payment rates for the surgical breast procedures on those claims. We continue to believe that classifying CPT code 76098 as a conditionally packaged code with status indicator “Q2” is the proper policy to both provide appropriate payment when the service is billed by itself and appropriate payment for the associated surgical breast procedures that it supports.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal, without modification, to assign status indicator “Q2” to CPT code 76098. When the service is furnished with a separately payable surgical procedure with status indicator “T” on the same day, payment for CPT code 76098 is packaged. Otherwise, payment for CPT code 76098 is made separately through APC 0317, which has a final APC median cost of approximately $374. We are not adding CPT code 76098 to the bypass list for CY 2010.

Comment: Many commenters supported the current methodology of bypassing HCPCS codes and the goal of using more data from the multiple major claims. A few commenters noted that some of the HCPCS codes on the proposed CY 2010 bypass list do not meet the empirical criteria described above and observed that many codes that meet the empirical criteria were not included on the proposed bypass list. The commenters highlighted findings from supporting data analysis to illustrate their points. Several commenters also raised concerns about the transparency of the bypass process. The commenters suggested that the empirical criteria were not explained clearly and were applied inconsistently. Other commenters believed that there is a lack of transparency regarding the addition of codes to the bypass list and the bypass process in general.

The commenters requested detailed explanations about which codes are included on the bypass list, asking that CMS identify any codes on the bypass list that do not meet the empirical criteria and the reason for their inclusion. Several commenters believed that modifying the specific empirical criteria that the median packaged cost be less than $50 on less than 5 percent of “natural” single bills would increase the number of potential bypass codes and “pseudo” single claims. Some commenters suggested adopting a different threshold of some low percentage of total packaged costs on the code's single claims as a percent of total costs on all single claims. They believed that a percentage approach could provide more stability in the ratesetting process. One commenter also suggested that more generous empirical thresholds could be appropriate for a select set of HCPCS codes by subtracting the average packaged cost of the bypass code from other costs on the date of service where the code appears and is used as a bypass code, specifically to increase the number of claims available for setting payment rates for APCs for low dose rate brachytherapy services. A few commenters recommended that the median packaged cost threshold of $50 on less than 5 percent of “natural” single bills be updated as CMS has not updated the threshold since its introduction, and one commenter claimed the packaged cost threshold was arbitrary. Several commenters also indicated that the HCPCS codes CMS proposed to add to the CY 2010 OPPS bypass list were not actually incorporated into CMS' ratesetting process.

Response: As discussed above in this section, we only apply the empirical criteria to the “natural” single claims. The bypass list is intended to consist of services that have minimal or no associated packaging, and in recent years, also includes codes for services that we wish to explicitly treat as not having packaged costs for purposes of OPPS payment. We refer readers to our previous discussions regarding the inclusion of additional hours of drug administration services (73 FR 68513) and HCPCS G0390 (71 FR 68117 through 68118) on the bypass list for further detail. Extracting “pseudo” single bills or unique estimates of a single service's total resource cost from claims containing multiple procedures requires making some assumptions about the amount of packaging associated with every service. As reflected in the CY 2005 proposed rule (69 FR 50474 through 50475), our empirical criteria of 100 “natural” single claims, 5 percent or fewer “natural” single claims with packaging, and median packaged cost less than $50 are intended to be conservative, that is, to limit the amount and impact of redistributed packaging from expanding the bypass list. These criteria ensure that the packaged costs associated with bypass codes are limited, based on the best information that we have in the “natural” single procedure claims. Bypassing codes with significant associated packaging would inappropriately redistribute these packaged costs to major procedures billed with the bypass codes in the multiple procedure claims, when the individual line-items for the bypass codes are removed to create “pseudo” single claims. Because we recognize that the “natural” single claims are not always good representations of the code when it is reported on multiple major claims, for example, a service with only 20 “natural” single claims, we also judiciously include procedures on the bypass list that both CMS' medical advisors and public commenters identify as not including significant packaging and for which our own data analyses do not suggest that inclusion on the bypass list would result in an inappropriate redistribution of packaged costs. Finally, our general policy each year has been to retain codes from the previous year's bypass list without reevaluation of these codes in the context of the empirical criteria based upon updated data. We listed and discussed these empirical criteria most recently in the CY 2010 OPPS/ASC proposed rule (74 FR 35240 through 35241). The empirical criteria have remained unchanged since first implemented because it has been our experience that they effectively limit the inappropriate redistribution of packaged costs when we create “pseudo” single procedure claims.

In examining the empirical data provided by commenters supporting their requests for additions to the bypass list, we believe that the research supporting these public comments applied the empirical criteria to all single claims rather than only to the “natural” single claims. We note that Start Printed Page 60328this application of the empirical criteria is inconsistent with our methodology of generalizing about packaging in the multiple procedure claims from the “natural” single procedure claims. We do not believe that it would be appropriate to expand the bypass list by assuming that our packaging redistribution after application of the current bypass list should be used to identify additional candidates for the bypass list. Clearly comparing all single bills, not just “natural” single bills, would lead to the conclusion that many more codes are eligible for inclusion on the bypass list but could also compound any inappropriate cost redistribution created by the current “pseudo” single claim development process. The OPPS pays for individual items and services and some APCs do not contain many services and some of these services are low cost. Further, some payment rates are based on a small sample of single procedure claims. Because redistributing even a small amount of packaging could have a potentially large impact on median costs for small volume or low cost APCs, we believe our current empirical criteria and reliance on “natural” single procedure claims provide the most appropriate bypass policy.

Some commenters indicated that a packaged cost threshold based on a percentage of low packaged costs out of total costs for all single bills would be more appropriate. We believe that using a percentage could allow some significant packaged costs to be redistributed. Specifically, implementing this change to the empirical criteria could redistribute a low percentage of packaged cost out of total cost for all single bills to a very inexpensive service, leading to potential distortions in the APC relative weights. This would be contrary to one primary purpose of the empirical criteria, which is to limit the inappropriate redistribution of packaged costs in the bypass process. We also do not understand how adopting this policy would introduce greater stability. If the policy increased the size of the bypass list, it could introduce greater instability by inappropriately redistributing more variable packaged costs from year to year. With regard to the suggestion that we subtract an average packaged cost for the bypass code from each multiple procedure claim, we believe that this would inappropriately remove cost information from the claims used for ratesetting and assume that the removal of that average cost is appropriate in most cases.

While we are not adopting the commenters' suggested revisions to the empirical criteria for the CY 2010 OPPS bypass list, we acknowledge that the $50 median packaged cost threshold has not been updated for several years and that the real value of this packaged cost threshold criterion has declined due to inflation. Consequently, we will consider whether it would be appropriate to update the $50 dollar packaged cost threshold for inflation when identifying potential bypass codes in future rulemaking.

The bypass list we used to calculate payment rates for this final rule with comment period omits 11 of the 14 HCPCS codes that we newly proposed to add to the bypass list for the CY 2010 OPPS. Although these 14 proposed codes met the empirical criteria for inclusion on the bypass list for CY 2010 and although we listed them in Table 1 of the proposed rule (74 FR 35242 through 35352), we inadvertently omitted them from the bypass list that we used to calculate the median costs and payment rates that we proposed for CY 2010. To ensure consistency between the proposed rule and the final rule with comment period, we began our modeling for this final rule with comment period using the same list of bypass codes that we used to create the median costs and payment rates that we proposed for CY 2010. Three proposed radiation oncology code additions are an exception to this approach. In this final rule with comment period, we are including these three proposed bypass codes both because they meet the empirical criteria and because commenters on the CY 2010 OPPS/ASC proposed rule specifically requested that we add them to the CY 2010 bypass list. These three codes are: CPT code 77300 (Basic radiation dosimetry, central axis depth dose calculation, TDF, NSD, gap calculation, off axis factor, tissue inhomogeneity factors, calculation of non-ionizing radiation surface and depth dose, as required during course of treatment, only when prescribed by the treating physician); CPT code 77331 (Special dosimetry (e.g., TLD, microdosimetry)(specify), only when prescribed by the treating physician); and CPT code 77370 (Special medical radiation physics consultation).

Thus, the bypass list that we used to calculate the payment rates in this final rule with comment period does not include 11 of the 14 codes proposed for inclusion on the CY 2010 bypass list. These 11 HCPCS codes are identified in Table 1 of this final rule with comment period. In response to commenters' requests that we document additions to the bypass list, we have included a column in the list of bypass codes in Table 2 to identify additions for the CY 2010 update year, and we will continue to identify new additions in future rulemaking.

Comment: A few commenters noted that CMS removed radiation oncology HCPCS codes that did not meet the empirical criteria from the bypass list for the CY 2009 OPPS/ASC final rule with comment period. Observing that this action had an adverse effect on the median costs for those codes and services frequently billed with those codes, the commenters requested that a number of the radiation oncology CPT codes be added to the bypass list, including CPT codes 77295 (Therapeutic radiology simulation-aided field setting, 3-dimensional); 77299 (Unlisted procedure, therapeutic radiology clinical treatment planning); 77300 (Basic radiation dosimetry calculation, central axis depth dose calculation, TDF, NSD, gap calculation, off axis factor, tissue inhomogeneity factors, calculation of non-ionizing radiation surface and depth dose, as required during course of treatment, only when prescribed by treating physician); 77301 (Intensity modulated radiotherapy plan, including dose-volume histograms for target and critical structure partial tolerance specifications); 77310 (Teletherapy, isodose plan (whether hand or computer calculated); intermediate (three or more treatment ports directed to a single area of interest)); 77315 (Teletherapy. Isodose plan (whether hand or computer calculated); complex (mantle or inverted Y, tangential ports, the use of wedges, compensators, complex blocking, rotational beam, or special beam considerations)); 77327 (Brachytherapy isodose plan; intermediate (multiplane dosage calculations, application involving 5 to10 sources/ribbons, remote afterloading brachytherapy, 9 to 12 sources)); 77328 (Brachytherapy isodose plan; complex (multiplane isodose plan, volume implant calculations, over 10 sources/ribbons used, special spatial reconstruction, remote afterloading brachytherapy, over 12 sources)); 77331 (Special dosimetry (e.g., TLD, microdosimetry) (specify), only when prescribed by the treating physician); 77336 (Continuing medical physics consultation, including assessment of treatment parameters, quality assurance of dose delivery, and review of patient treatment documentation in support of the radiation oncologist, reporter per week of therapy); 77370 (Special medical radiation physics consultation); 77371 (Radiation treatment delivery, stereotactic radiosurgery (SRS), Start Printed Page 60329complete course of treatment of cranial lesion(s) consisting of 1 session; multi-source Cobalt 60 based); 77401 (Radiation treatment delivery, superficial and/or ortho voltage); 77470 (Special treatment procedure (e.g., total body irradiation, hemibody radiation, per oral, endocavitary or intraoperative cone irradiation)); 77600 (Hyperthermia, externally generated; superficial (i.e., heating to a depth of 4 cm or less)); 77783 (Remote afterloading high intensity brachytherapy; 9-12 source positions or catheters); and 77789 (Surface application of radiation source).

Response: Some of the HCPCS codes that commenters suggested that we add to the bypass list are already included on the bypass list for this final rule with comment period, including CPT codes 77301, 77315, 77336, and 77401. These codes met the empirical criteria in earlier years and, because of our policy to retain codes once they have been added to the bypass list, these codes continue on the bypass list. However, many of the codes that commenters requested for addition the CY 2010 bypass list do not meet the empirical criteria because the percentage of “natural” single procedure claims with packaging exceeds 5 percent and, for some, the low volume of “natural” single claims prevents us from making an accurate assessment about packaging in the multiple procedure claims. Most of these codes have a low packaged median cost in the “natural” single procedure claims.

We examined the billing patterns for these HCPCS codes in the multiple major claims to better understand the potential impact that adding the recommended codes that do not meet the empirical criteria to the bypass list might have on the redistribution of packaged costs. We specifically analyzed the amount of packaged cost on the same date of service as the suggested bypass codes and other codes in the same clinical series as the recommended bypass codes in the multiple procedure claims, as well as the number of other procedures appearing on the same date of service, the APCs associated with these procedures, and whether any of these other procedures were already included on the bypass list. For three codes, specifically CPT codes 77600 (Hyperthermia, externally generated; superficial (i.e. heating to a depth of 4cm or less)); 77605 (Hyperthermia, externally generated; deep (i.e. heating to depths greater than 4 cm)); and 77610 (Hyperthermia generated by interstitial probe(s); 5 or fewer interstitial applicators), we did not observe a significant amount of additional packaging on the multiple procedure claims or many other services, so we believe that including these codes on the bypass list would result in a limited amount of redistributed packaged cost. Therefore, we added these three codes to the CY 2010 bypass list. We also observed packaged costs associated with CPT code 77327, but the amount was proportionally limited relative to the procedure costs on the same date of service, and we believe that we can appropriately add this code to the CY 2010 bypass list.

As discussed above in this section, we also are adding the radiation oncology codes that we proposed to include on the CY 2010 bypass list, specifically CPT codes 77300, 77331, and 77370, because these codes meet the empirical criteria, they were proposed for addition to the bypass list, and several commenters specifically requested these codes be included on the bypass list. However, several codes in the commenters' suggested additions to the bypass list not only failed the empirical criteria in the “natural” single procedure claims, but also were associated with significant packaged costs proportional to the costs of the other procedures appearing on the same date of service and the presence of many other separately paid procedures. Most of this packaged cost on claims for the candidate bypass codes was reported as revenue code charges without HCPCS codes, and we could not ascertain whether some of the packaging should be associated with the suggested bypass code or with one of the many other procedures appearing on the same date of service in the multiple claims. Because we would be unable to allocate the packaged cost among services or to determine that it was not associated with the candidate bypass list code, we believe it would be inappropriate to add these HCPCS codes to the bypass list. Although previous commenters have suggested that packaging of radiation guidance services in CY 2008 reduced the number of claims available for setting payment rates for radiation oncology services, it is notable that only a small portion of the packaged costs on the claims for radiation oncology services could be attributed to the radiation guidance services. In summary, we are not adding CPT codes 77295, 77299, 77310, 77328, 77371, 77470, 77783, and 77789 to the final CY 2010 bypass list.

We always appreciate the empirical information that commenters submitted regarding their suggested additions to the bypass list. However, we note that, due to the redistributive properties of the bypass list and our process for creating “pseudo” single procedure claims, we always must examine the redistributive impact of additions to the bypass list on all HCPCS code and APC median costs. Future recommendations from the public for additions to the bypass list should consider the global impact on APCs and HCPCS codes of changes to the bypass list in order to facilitate our evaluation of codes suggested for inclusion on the bypass list in the future.

Comment: Some commenters supported the inclusion of the HCPCS codes for additional hours of drug administration on the bypass list. In addition, several commenters requested that CPT 90768 (Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify substance or drug); concurrent infusion (List separately in addition to code for primary procedure)) be made separately payable and added to the bypass list to ensure consistent treatment of codes for additional hours of drug administration under the bypass list.

Response: We appreciate the commenters' support and have continued to include the separately payable codes for additional hours of drug administration on the CY 2010 bypass list. Bypassing these drug administration codes, and associating all the packaging with the code for the initial hour of drug administration, enables us to use many correctly coded claims for initial drug administration services that would otherwise not be available for ratesetting. We did not include CPT 90768 on the CY 2010 bypass list because we proposed to unconditionally package its successor code (CPT code 96368 (Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify substance or drug); concurrent infusion (List separately in addition to code for primary procedure))) in CY 2010 and, therefore, CPT code 90768 is not a candidate for the bypass list. Our final CY 2010 policy to package payment for CPT code 96368 is discussed in section VIII.B. of this final rule with comment period.

As discussed above, the bypass list consists of separately paid services with no or minimal packaging or separately paid services that CMS knowingly prices without including packaged costs and associates any packaging with the other service(s) billed on the same date of service. The purpose of the bypass list is to help develop better estimates of total resource costs for a given separately payable procedure through creating “pseudo” single procedure claims from the multiple procedure claims by removing line-items without Start Printed Page 60330packaging from each claim's date of service. Including packaged codes on the bypass list would remove valid packaging from a multiple procedure claim and would not allow CMS to derive more estimates of a service's total resource costs from multiple procedure claims. We have previously discussed our reasons for packaging CPT code 90768 in the CY 2009 OPPS/ASC final rule with final period (73 FR 68674).

Comment: Several commenters supported the inclusion of HCPCS code G0340 (Image-guided robotic linear accelerator-based stereotactic radiosurgery, delivery including collimator changes and custom plugging, fractionated treatment, all lesion, per session, second through fifth session, maximum) on the bypass list.

Response: We appreciate the commenters' support and have continued to include HCPCS code G0340 on the CY 2010 bypass list.

Comment: One commenter requested that CMS examine whether changes to the bypass list or other edits included in CMS' ratesetting processes negatively affected the proposed CY 2010 payment rates for APC 0651 (Complex Interstitial Radiation Source Application) and composite APC 8001(LDR Prostate Brachytherapy Composite).

Response: In analyzing the impact of the final CY 2010 bypass list changes on APCs 0651 and 8001, we noted modest changes in both single procedure claim frequency and median costs. In the case of composite APC 8001, bypass list changes increased the single procedure claims available for ratesetting purposes and reduced the median cost by roughly 2 percent. APC 0651 experienced a modest increase of 3 percent in the single procedure claims available for ratesetting and its median cost also increased by about 3 percent. Neither APC 0651 nor composite APC 8001 experienced significant fluctuations in median cost or single procedure claim frequency due to the line-item trim discussed in section II.A.2.(a) of this final rule with comment period.

After consideration of the public comments received, we are adopting, as final, our proposed methodology to use a bypass list to create “pseudo” single claims. To ensure consistency between the CY 2010 proposed and final rules, we began our consideration of comments using the same list of bypass codes for this final rule with comment period that we used to calculate the median costs and payment rates that we proposed for CY 2010, which was the CY 2009 final rule bypass list. We added HCPCS codes to the CY 2010 bypass list based on whether they met the empirical criteria and, if they did not, whether we believe that the amount of redistributed packaged cost that their inclusion on the bypass list would generate would be appropriate. We ultimately added seven codes to the CY 2010 bypass list. The list of CY 2010 bypass code additions that we proposed in the CY 2010 OPPS/ASC proposed rule but did not implement in this final rule with comment period appears in Table 1. Table 2 below is the final list of bypass codes for CY 2010. “Overlap bypass codes” that are members of the multiple imaging composite APCs are identified by asterisks (*) in Table 2. HCPCS codes that have been added for CY 2010 are also identified by asterisks (*) in Table 2.

Table 1—Proposed CY 2010 Bypass Code Additions Excluded from Final CY 2010 Bypass List

CY 2010 HCPCS CodeCY 2010 Short descriptor
57452Exam of cervix w/scope.
76120Cine/video x-rays.
76813Ob us nuchal meas, 1 gest.
88314Histochemical stain.
88367Insitu hybridization, auto.
92700Ent procedure/service.
94660Pos airway pressure, CPAP.
95971Analyze neurostim, simple.
99406Behav chng smoking 3-10 min.
99407Behav chng smoking >10 min.
G0249Provide INR test mater/equip.
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Start Printed Page 60332

Start Printed Page 60333

Start Printed Page 60334

Start Printed Page 60335

Start Printed Page 60336

Start Printed Page 60337

Start Printed Page 60338

Start Printed Page 60339

Start Printed Page 60340

Start Printed Page 60341

Start Printed Page 60342

c. Calculation of CCRs

(1) Development of the CCRs

We calculated hospital-specific overall ancillary CCRs and hospital-specific departmental CCRs for each hospital for which we had CY 2008 claims data from the most recent available hospital cost reports, in most cases, cost reports beginning in CY 2007. For the CY 2010 OPPS ratesetting, we used the set of claims processed during CY 2008. We applied the hospital-specific CCR to the hospital's charges at the most detailed level possible, based on a revenue code-to-cost center crosswalk that contains a hierarchy of CCRs used to estimate costs from charges for each revenue code. That crosswalk is available for review and continuous comment on the CMS Web site at: http://www.cms.hhs.gov/​HospitalOutpatientPPS/​03_​crosswalk.asp#TopOfPage. We calculated CCRs for the standard and nonstandard cost centers accepted by the electronic cost report database. In general, the most detailed level at which we calculated CCRs was the hospital-specific departmental level. For a discussion of the hospital-specific overall ancillary CCR calculation, we refer readers to the CY 2007 OPPS/ASC final rule with comment period (71 FR 67983 through 67985).

In the CY 2010 OPPS/ASC proposed rule (74 FR 35253), we proposed to continue using the hospital-specific overall ancillary and departmental CCRs to convert charges on the claims reported under specific revenue codes to estimated costs through application of a revenue code-to-cost center crosswalk for CY 2010.

We did not receive any public comments on this proposal. Therefore, we are finalizing our proposal for CY 2010, without modification, to calculate hospital-specific overall and departmental CCRs as described above in this section.

(2) Charge Compression

Since the implementation of the OPPS, some commenters have raised concerns about potential bias in the OPPS cost-based weights due to “charge compression,” which is the practice of applying a lower charge markup to higher-cost services and a higher charge markup to lower-cost services. (We discuss our CCR calculation in section Start Printed Page 60343II.A.1.c. of this final rule with comment period and how we use these CCRs to estimate cost on hospital outpatient claims in detail in section II.A.2.a. of this final rule with comment period). As a result, the cost-based weights incorporate aggregation bias, undervaluing high cost items and overvaluing low cost items when an estimate of average markup, embodied in a single CCR, is applied to items of widely varying costs in the same cost center. Commenters on previous rules have expressed increased concern about the impact of charge compression when CMS began setting the relative weights for payment under the IPPS based on the costs of inpatient hospital services, rather than the charges for the services.

To explore this issue, in August 2006 we awarded a contract to RTI International (RTI) to study the effects of charge compression in calculating the IPPS relative weights, particularly with regard to the impact on inpatient diagnosis-related group (DRG) payments, and to consider methods to capture better the variation in cost and charges for individual services when calculating costs for the IPPS relative weights across services in the same cost center. Of specific note was RTI's analysis of a regression-based methodology estimating an average adjustment for CCR by type of revenue code from an observed relationship between provider cost center CCRs and proportional billing of high and low cost services in the revenue codes associated with the cost center in the claims data. RTI issued a report in March 2007 with its findings on charge compression. The report is available on the CMS Web site at: http://www.cms.hhs.gov/​reports/​downloads/​Dalton.pdf. Although this report was focused largely on charge compression in the context of the IPPS cost-based relative weights, several of the findings were relevant to the OPPS. Therefore, we discussed the findings and our responses to that report in the CY 2008 OPPS/ASC proposed rule (72 FR 42641 through 42643) and reiterated them in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66599 through 66602).

RTI noted in its 2007 report that its research was limited to IPPS DRG cost-based weights and that it did not examine potential areas of charge compression specific to hospital outpatient services. We were concerned that the analysis was too limited in scope because typically hospital cost report CCRs encompass both inpatient and outpatient services for each cost center. Further, because both the IPPS and OPPS rely on cost-based weights, we preferred to introduce any methodological adjustments to both payment systems at the same time. We believe that because charge compression affects the cost estimates for services paid under both IPPS and OPPS in the same way, it is appropriate that we would use the same or, at least, similar approaches to address the issue. Finally, we noted that we wished to assess the educational activities being undertaken by the hospital community to improve cost reporting accuracy in response to RTI's findings, either as an adjunct to or in lieu of regression-based adjustments to CCRs.

We expanded RTI's analysis of charge compression to incorporate outpatient services. In August 2007, we again contracted with RTI. Under this contract, we asked RTI to evaluate the cost estimation process for the OPPS relative weights. This research included a reassessment of the regression-based CCR models using hospital outpatient and inpatient charge data, as well as a detailed review of the OPPS revenue code-to-cost center crosswalk and the OPPS' hospital-specific CCR methodology. In evaluating cost-based estimation, in general, the results of RTI's analyses impact both the OPPS APC relative weights and the IPPS MS-DRG (Medicare severity) relative weights. The RTI final report can be found on RTI's Web site at: http://www.rti.org/​reports/​cms/​HHSM-500-2005-0029I/​PDF/​Refining_​Cost_​to_​Charge_​Ratios_​200807_​Final.pdf. For a complete discussion of the RTI recommendations, public comments, and our responses, we refer readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR 68519 through 68527).

In the FY 2009 IPPS final rule, we finalized our proposal for both the OPPS and IPPS to add one cost center to the cost report so that, in general, the costs and charges for relatively inexpensive medical supplies would be reported separately from the costs and charges for more expensive implantable devices (such as pacemakers and other implantable devices). Specifically, we created one cost center for “Medical Supplies Charged to Patients” and one cost center for “Implantable Devices Charged to Patients.” This change split the CCR for “Medical Supplies and Equipment” into one CCR for medical supplies and another CCR for implantable devices. In response to the majority of commenters on the proposal set forth in the FY 2009 IPPS proposed rule, we finalized a definition of the “Implantable Devices Charged to Patients” cost center as capturing the costs and charges billed with the following UB-04 revenue codes: 0275 (Pacemaker), 0276 (Intraocular lens), 0278 (Other implants), and 0624 (FDA investigational devices). We made this change to the cost report form for cost reporting periods beginning in the spring of 2009. Because there is generally a 3-year lag between the availability of cost report data for IPPS and OPPS ratesetting purposes in a given calendar year, we believe we will be able to use data from the revised cost report form to estimate costs from charges associated with UB-04 revenue codes 0275, 0276, 0278, and 0624 for implantable devices in order to more accurately estimate the costs of device-related procedures for the CY 2013 OPPS relative weights. For a complete discussion of the proposal, public comments, and our responses, we refer readers to the FY 2009 IPPS final rule (73 FR 48458 through 45467).

For the CY 2009 OPPS/ASC proposed rule, we made a similar proposal for drugs, proposing to split the “Drugs Charged to Patients” cost center into two cost centers: one for drugs with high pharmacy overhead costs and one for drugs with low pharmacy overhead costs (73 FR 41492). We noted that we expected that CCRs from the proposed new cost centers would be available in 2 to 3 years to refine OPPS drug cost estimates by accounting for differential hospital markup practices for drugs with high and low pharmacy overhead costs. However, after consideration of the public comments received and the APC Panel recommendations, we did not finalize our proposal to split the single standard “Drugs Charged to Patients” cost center into two cost centers, and instead indicated in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68659) that we would continue to explore other potential approaches to improve our drug cost estimation methodology. Unlike implantable devices, we do not currently have a policy to address charge compression in our cost estimation for expensive drugs and biologicals. In section V.B.3. of the CY 2010 OPPS/ASC proposed rule (74 FR 35326 through 35333), we proposed an adjustment to our cost estimation methodology for drugs and biologicals to address charge compression by proposing to shift a portion of the pharmacy overhead cost associated with packaged drugs and biologicals from those packaged drugs and biologicals to separately payable drugs and biologicals; proposing payment for separately payable drugs and biologicals at ASP+4 percent; and proposing a proportional reduction in the total amount of pharmacy overhead cost Start Printed Page 60344associated with packaged drugs and biologicals prior to our estimating the total resource costs of individual OPPS services.

Finally, in the CY 2009 OPPS/ASC final rule with comment period, we indicated that we would be making some OPPS-specific changes in response to the RTI report recommendations. With regard to modifying the cost reporting preparation software in order to impose fixed descriptions for nonstandard cost centers, we indicated that the change would be made for the next release of the cost report software. We anticipate that these changes will be made to the cost reporting software in CY 2010 and will act as a quality check for hospitals to review their choice of nonstandard cost center code to ensure that the reporting of nonstandard cost centers is accurate, while not significantly increasing provider burden. In addition to improving the reporting mechanism for the nonstandard cost centers, we indicated in the CY 2009 OPPS/ASC final rule with comment period that we also planned to add the new nonstandard cost centers for Cardiac Rehabilitation, Hyperbaric Oxygen Therapy, and Lithotripsy. We expect that changes to add these nonstandard cost centers also will be made for cost reports beginning in CY 2010. Furthermore, we noted in the FY 2010 IPPS final rule (74 FR 43781 through 43782) that we are updating the cost report form to eliminate outdated requirements, in conjunction with the Paperwork Reduction Act (PRA), and that we had proposed actual changes to the cost reporting form, the attending cost reporting software, and the cost report instructions in Chapters 36 and 40 of the PRM-II. The comment period for this proposal (74 FR 31738) ended on August 31, 2009. We believe that improved cost report software, the incorporation of new nonstandard cost centers, and elimination of outdated requirements will improve the accuracy of the cost data contained in the electronic cost report data files and, therefore, the accuracy of our cost estimation processes for the OPPS relative weights. As has been described above, CMS has taken steps to address charge compression in the IPPS and OPPS, and continues to examine ways in which it can improve the accuracy of its cost estimation process.

Comment: Several commenters expressed support for the policy adopted in the FY 2009 IPPS final rule, with application to both the OPPS and IPPS, to create one cost center for “Medical Supplies Charged to Patients” and one cost center for “Implantable Devices Charged to Patients.” Some commenters recommended that CMS verify the accuracy of the CCRs derived from the new cost centers by comparing CCRs calculated from the new cost center against regression-based CCRs or by undertaking other activities to ensure that data reported in these revised cost centers are consistent and accurate.

One commenter stated that hospitals are reluctant to bill for devices that do not remain in the patient upon discharge, specifically cryoablation probes, under revenue code 0278 (Medical/Surgical Supplies: Other Implants). The commenter requested that CMS work with hospitals to revise the common hospital practice of billing for cryoablation probes under revenue code 0272 (Medical/Surgical Supplies: Sterile Supplies) rather than revenue code 0278. The commenter asserted that billing cryoablation probes under revenue code 0272 would result in estimating costs from charges using a CCR derived from the revised cost center for “Medical Supplies Charged to Patients,” rather than one derived from the “Implantable Devices Charged to Patients,” even though cryoablation probes are high cost implantable devices. The commenter believed that, without a change in the revenue code under which many hospitals report cryoablation probes, the recent cost center changes for medical supplies would negatively bias the estimated cost of cryoablation probes and the accuracy of the APC payment rates for cryoablation procedures.

Some commenters suggested that CMS engage in outreach and educational activities to hospitals on the changes to the cost report and the reporting of charges with respect to the medical device and medical supply cost centers so that hospitals can appropriately report data. The commenters recommended that the outreach activities go beyond the “distribution of bulletins that are used to inform providers about changes to the Medicare program.”

Response: We appreciate the commenters' support for our CY 2009 policy to split the “Medical Supplies Charged to Patients” into one cost center for “Medical Supplies Charged to Patients” and one cost center for “Implantable Devices Charged to Patients”. In the FY 2009 IPPS final rule (73 FR 48458 through 48467), we explained in detail the reasoning behind the development of the cost center split and our decision to ultimately have hospitals use the American Hospital Association's National Uniform Billing Committee (NUBC) revenue codes to determine what would be reported in the “Medical Supplies Charged to Patients” and the “Implantable Devices Charged to Patients” cost centers. In that discussion, we noted that while we require that the device broadly be considered implantable to have its costs and charges included in the new “Implantable Devices Charged to Patients” cost center, our final policy did not require the device to remain in the patient at discharge (73 FR 48462 through 48463). We typically do not specify a revenue code-to-cost center crosswalk that hospitals must adopt to prepare their cost report, recognizing hospitals' need to interpret the NUBC definitions and cost reporting requirements within the context of their own financial systems. In response to comments on our proposal to create the new cost center in the FY 2009 IPPS final rule, we did define the new “Implantable Devices Charged to Patients” cost center by the revenue codes that we believe would map to this cost center to facilitate ease of reporting by hospitals. We note that revenue code definitions are established by the NUBC, and we fully expect hospitals to follow existing guidelines regarding revenue code use. Specifically with regard to reporting cryoablation probes, we do not believe that the current NUBC definition of revenue code 0278 (Medical/Surgical Supplies and Devices (also see 062x, an extension of 027x); Other implants (a)) precludes reporting hospital charges for cryoablation probes under this revenue code. Therefore, we believe hospitals can report charges for cryoablation probes under the revenue code 0278 using the definitions in the official UB 04 Data Specifications Manual.

As discussed in the FY 2010 IPPS final rule (74 FR 43780), we reiterated that we had not proposed any policy changes with respect to the use of revenue codes or alternative ways of identifying high-cost devices. We refer readers to the discussion in the FY 2009 IPPS final rule concerning our current policy on these matters (73 FR 48462). Hospitals were able to report costs and charges for the new “Implantable Devices Charged to Patients” cost center for cost reporting periods beginning on or after May 1, 2009 as line 55.30 on Form 2552-96 and, at the time of development of this final rule with comment period, we anticipate that hospitals will be able to report costs and charges for the new cost center as line 69 on the revised draft Medicare hospital cost report form CMS-2552-10 beginning February 1, 2010.

In the FY 2009 IPPS final rule (73 FR 48463), we agreed that once the data reflecting the cost center changes become available for ratesetting, we Start Printed Page 60345would evaluate the CCRs that we derive from the new “Medical Supplies Charged to Patients” and “Implantable Devices Charged to Patients” cost centers and that we would continue to analyze cost report data. In the FY 2010 IPPS final rule (74 FR 43782), we indicated that we might consider the results of regression analyses as one way to evaluate costs and charges reported in the new cost center. However, we point out that we do not believe it is appropriate to “pick and choose” between CCRs; rather, the determining factor should be payment accuracy, regardless of whether one method increases or decreases payment for devices (73 FR 48463). That is, the validity of the CCRs resulting from the newly implemented cost center cannot be determined to be accurate simply because they will result in higher overall cost estimates for procedures that rely on implantable devices and, therefore, higher APC payment rates.

As discussed in the FY 2010 IPPS rule, we believe it is early to plan specific outreach activities on the revised cost report form CMS-2552-10 and the new “Implantable Devices Charged to Patients” cost center, given that the comment period for the revised cost reporting forms closed on August 31, 2009. We agree that such educational activities are important, and we have been considering various options for educating the provider community that would involve fiscal intermediaries, Medicare administrative contractors, and cost report vendors. We look forward to working with the provider community on these initiatives.

Comment: A few commenters noted that two revenue codes became effective for reporting radiopharmaceuticals, specifically 0343 (Nuclear Medicine; Diagnostic Radiopharmaceuticals) for diagnostic preparations and 0344 (Nuclear Medicine; Therapeutic Radiopharmaceuticals) for therapeutic preparations in October 2004; and that this more specific revenue code reporting should help capture the unique costs and charges of radiopharmaceuticals. The commenters also pointed out that the costs and charges associated with these revenue codes likely would be reported by hospitals under the broader radiology cost center on the Medicare hospital cost report. They expressed concern that, because the CCR used to estimate charges for these revenue codes encompasses a large volume of many different services, the specificity of charge information in the claims data gained through use of the new revenue codes would not translate into better cost estimation for diagnostic and therapeutic radiopharmaceuticals under the OPPS. The commenters suggested that CMS require hospitals to report costs and charges for these two revenue codes as unique cost centers on the cost report.

Response: We agree with the commenters that the broader the range and volume of services included in a given cost center, the more the resulting CCR calculated from the costs and charges for that cost center represents a weighted average of included services. To the extent that the revenue codes implemented in October 2004, specifically 0343 (Nuclear Medicine; Diagnostic Radiopharmaceuticals) for diagnostic preparations and 0344 (Nuclear Medicine; Therapeutic Radiopharmaceuticals) for therapeutic preparations, have no specific associated cost center in which to capture their unique costs and charges and to the extent hospitals report these costs and charges in cost center 4100 “Radiology—Diagnostic” or 4200 “Radiology—Therapeutic,” the CCRs for cost centers 4100 and 4200 that CMS uses to estimate costs from charges on claims for specific radiopharmaceuticals will reflect the average cost and markup associated with all diagnostic and therapeutic radiology procedures. However, our policy for establishing new cost centers requires a public review process that allows commenters the opportunity to provide input on any changes, and many commenters historically have not been interested in adding cost centers to the cost report because of the associated hospital administrative burden.

As we have noted above, we have recently undertaken regulatory comment and response on our effort to update the cost report. The proposed draft hospital cost report Form CMS-2552-10 went on Federal Register public display at the Office of the Federal Register on July 2, 2009, for a 60-day review and comment period, which ended on August 31, 2009. As we stated in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68525 through 68526), that notice and comment procedure is the process by which we are considering public comments requesting additional cost centers. We will consider all comments for new cost centers submitted through that process as we work to improve and modify the hospital cost report. We also note that we make the revenue code-to-cost center crosswalk that we use to match Medicare hospital cost report information with claims data continually available for inspection and comment on the CMS Web site: http://www.cms.hhs.gov/​HospitalOutpatientPPS.

Comment: One commenter believed that the proposed drug cost center split discussed in the CY 2009 OPPS/ASC proposed rule would represent an unnecessary burden for hospitals.

Response: While we welcome comments regarding OPPS policy, we note that the drug cost center proposal was a CY 2009 proposal which was not finalized (73 FR 68654 through 68657). We have not proposed a policy to split the drug cost center for CY 2010.

Comment: One commenter requested that CMS issue clarifying instructions for reporting computed tomography (CT) and magnetic resonance imaging (MRI) equipment and supported the creation of new cost centers to capture the unique costs and charges of CT scanning, MRI, and other radiology procedures.

Response: We did not propose to implement separate standard radiology cost centers for CT Scanning, MRI, and other radiology procedures due to the significant number of comments we received in response to our general request in the CY 2009 OPPS/ASC proposed rule for comments and reactions to RTI's recommendations. The commenters on the CY 2009 OPPS/ASC proposed rule were generally in favor of these cost centers in theory, but suggested that the allocation of capital cost across these cost centers was not consistent or consistently accurate across hospitals and that smaller hospitals might not have sufficiently sophisticated accounting systems to accurately allocate costs (73 FR 68526). In that discussion, we expressed our preference for establishing these cost centers as standard cost centers because standard cost centers constitute the minimum set of cost centers that a hospital is required to report, assuming that the hospital maintains separate departments for those services and reports the costs and charges for these departments in separate accounts within its own internal accounting systems. We believe this step would improve the accuracy of radiology payment by encouraging greater and more consistent reporting of the costs and charges specifically associated with advanced imaging services. However, we also noted that nonstandard cost centers already are available for CT Scanning and MRI and that hospitals that provide these services and maintain a separate account for each of these services in their internal accounting records to capture the costs and charges are currently required, in accordance with § 413.53(a)(1), to report these cost centers on the cost report, even if CMS Start Printed Page 60346does not identify a nonstandard cost center code for the department(s).

As we stated in the CY 2009 OPPS/ASC final rule with comment (73 FR 68525 through 68526) and in response to an earlier comment in this section, we will consider public comments requesting additional cost centers in response to the PRA Federal Register notice for the proposed draft cost report form CMS-2552-10. The comment period for this proposal ended August 31, 2009.

Comment: A few commenters expressed concern about the timing for implementing the nonstandard cost center for cardiac rehabilitation, suggesting that a delay could limit beneficiary access to cardiac rehabilitation services because the proposed CY 2010 payment was too low. The commenters noted that the new CCRs would not be available for setting OPPS payment rates until CY 2013.

Response: While we understand the commenters' concern regarding the timing of implementing the cardiac rehabilitation nonstandard cost center, in our CY 2009 OPPS/ASC final rule with comment period discussion (73 FR 68524), we explained our preference for improving the accuracy of the APC relative weights through long-term changes to the cost report rather than implementing short-term statistical adjustments, in order to ensure that actual hospital data are used to set payment rates. As discussed above, we currently anticipate we will implement new nonstandard cost centers for Cardiac Rehabilitation, Hyperbaric Oxygen Therapy, and Lithotripsy with the revised Medicare hospital cost report form in CY 2010.

We have approximately 2.5 million CY 2008 claims from almost 2,000 hospitals for cardiac rehabilitation sessions available for setting the CY 2010 payment rates for these services. Given that the OPPS payment for the services has been highly stable for the past several years, we have no reason to believe that Medicare beneficiaries' access to cardiac rehabilitation will be limited in CY 2010 based on the final OPPS payment rates for the services. Further discussion of CY 2010 payment for traditional and intensive cardiac rehabilitation services is included in section XII.B. of this final rule with comment period.

Comment: One commenter believed that CMS continues to expand and complicate the antiquated Medicare cost report rather than to design a helpful tool. The commenter believes that the current “piecemeal” approach to revising the cost report is costly and burdensome. Based on that impression, the commenter recommended that CMS partner with the hospital industry to consider more comprehensive changes to the cost report.

Response: In the FY 2009 IPPS proposed and final rules (73 FR 23546 and 73 FR 48461) and CY 2009 OPPS/ASC proposed rule and final rule with comment period (73 FR 41431 and 73 FR 68526), we stated that we began a comprehensive review of the Medicare hospital cost report, and splitting the current cost center for “Medical Supplies Charged to Patients” into one line for “Medical Supplies Charged to Patients” and another line for “Implantable Devices Charged to Patients” is part of that initiative to update and revise the cost report. We also explained that in the context of the effort to update the cost report and eliminate outdated requirements, we would make changes to the cost report form and cost report instructions that would be available to the public for comment. Thus, the public would have an opportunity to suggest the more comprehensive reforms that one commenter on the CY 2010 OPPS/ASC proposed rule advocates. Similarly, the public would be able to offer suggestions for ensuring that these reforms are made in a manner that is not disruptive to hospitals' billing and accounting systems, and within the guidelines of General Accepted Accounting Principles (GAAP), which are consistent with the Medicare principles of reimbursement and sound accounting practices. The proposed draft hospital cost report Form CMS-2552-10 went on Federal Register public display at the Office of the Federal Register on July 2, 2009, for a 60-day review and comment period, which ended on August 31, 2009. We will consider comments from the public as we work to improve and modify the hospital cost report. The cost center for “Implantable Devices Charged to Patients” is available for use for cost reporting periods beginning on or after May 1, 2009. The revised hospital cost report Form CMS-2552-10 will be effective for cost reporting periods beginning on or after February 1, 2010 (74 FR 43781 through 43782).

2. Data Development Process and Calculation of Median Costs

In this section of this final rule with comment period, we discuss the use of claims to calculate final OPPS payment rates for CY 2010. The hospital OPPS page on the CMS Web site on which this final rule with comment period is posted provides an accounting of claims used in the development of the final payment rates at: http://www.cms.hhs.gov/​HospitalOutpatientPPS. The accounting of claims used in the development of this final rule with comment period is included on the CMS Web site under supplemental materials for the CY 2010 OPPS/ASC final rule with comment period. That accounting provides additional detail regarding the number of claims derived at each stage of the process. In addition, below in this section we discuss the file of claims that comprise the data set that is available for purchase under a CMS data use agreement. Our CMS Web site, http://www.cms.hhs.gov/​HospitalOutpatientPPS, includes information about purchasing the “OPPS Limited Data Set,” which now includes the additional variables previously available only in the OPPS Identifiable Data Set, including ICD-9-CM diagnosis codes and revenue code payment amounts. This file is derived from the CY 2008 claims that were used to calculate the final payment rates for the CY 2010 OPPS.

As proposed, we used the methodology described in sections II.A.2.b. through e. of this final rule with comment period to establish the relative weights used in calculating the final OPPS payment rates for CY 2010 shown in Addenda A and B to this final rule with comment period.

a. Claims Preparation

For the CY 2010 OPPS/ASC proposed rule, we used the CY 2008 hospital outpatient claims processed before January 1, 2009 to calculate the median costs of APCs, which in turn are used to set the proposed relative weights for CY 2010. To begin the calculation of the relative weights for CY 2010, we pulled all claims for outpatient services furnished in CY 2008 from the national claims history file. This is not the population of claims paid under the OPPS, but all outpatient claims (including, for example, critical access hospital (CAH) claims and hospital claims for clinical laboratory services for persons who are neither inpatients nor outpatients of the hospital). In the discussion that follows, we have updated the information to reflect the claims available for this final rule with comment period, specifically CY 2008 claims processed through June 30, 2009.

We then excluded claims with condition codes 04, 20, 21, and 77. These are claims that providers submitted to Medicare knowing that no payment would be made. For example, providers submit claims with a condition code 21 to elicit an official denial notice from Medicare and Start Printed Page 60347document that a service is not covered. We then excluded claims for services furnished in Maryland, Guam, the U.S. Virgin Islands, American Samoa, and the Northern Mariana Islands because hospitals in those geographic areas are not paid under the OPPS.

We divided the remaining claims into the three groups shown below. Groups 2 and 3 comprise the 107 million claims that contain hospital bill types paid under the OPPS.

1. Claims that were not bill types 12X, 13X (hospital bill types), 14X (laboratory specimen bill types), or 76X (CMHC bill types). Other bill types are not paid under the OPPS and, therefore, these claims were not used to set OPPS payment.

2. Claims that were bill types 12X, 13X or 14X. Claims with bill types 12X and 13X are hospital outpatient claims. Claims with bill type 14X are laboratory specimen claims, of which we use a subset for the limited number of services in these claims that are paid under the OPPS.

3. Claims that were bill type 76X (CMHC). (These claims are later combined with any claims in item 2 above with a condition code 41 to set the per diem partial hospitalization rates determined through a separate process.)

To convert charges on the claims to estimated cost, we needed to multiply those charges by the CCR associated with each revenue code as discussed in section II.A.1.c.(1) of this final rule with comment period. For the CCR calculation process, we used the same general approach that we used in developing the final APC rates for CY 2007, using the revised CCR calculation that excluded the costs of paramedical education programs and weighted the outpatient charges by the volume of outpatient services furnished by the hospital. We refer readers to the CY 2007 OPPS/ASC final rule with comment period for more information (71 FR 67983 through 67985). We first limited the population of cost reports to only those for hospitals that filed outpatient claims in CY 2008 before determining whether the CCRs for such hospitals were valid.

We then calculated the CCRs for each cost center and the overall ancillary CCR for each hospital for which we had claims data. We did this using hospital-specific data from the Hospital Cost Report Information System. We used the most recent available cost report data, in most cases, cost reports with cost reporting periods beginning in CY 2007. As proposed, for this final rule with comment period, we used the most recently submitted cost reports to calculate the CCRs to be used to calculate median costs for the final CY 2010 OPPS payment rates. If the most recent available cost report was submitted but not settled, we looked at the last settled cost report to determine the ratio of submitted to settled cost using the overall ancillary CCR, and we then adjusted the most recent available submitted but not settled cost report using that ratio. We then calculated both an overall ancillary CCR and cost center-specific CCRs for each hospital. We used the overall ancillary CCR referenced in section II.A.1.c.(1) of this final rule with comment period for all purposes that require use of an overall ancillary CCR.

We then flagged CAH claims, which are not paid under the OPPS, and claims from hospitals with invalid CCRs. The latter included claims from hospitals without a CCR; those from hospitals paid an all-inclusive rate; those from hospitals with obviously erroneous CCRs (greater than 90 or less than .0001); and those from hospitals with overall ancillary CCRs that were identified as outliers (3 standard deviations from the geometric mean after removing error CCRs). In addition, we trimmed the CCRs at the cost center (that is, departmental) level by removing the CCRs for each cost center as outliers if they exceeded ±3 standard deviations from the geometric mean. We used a four-tiered hierarchy of cost center CCRs, which is the revenue code-to-cost center crosswalk, to match a cost center to every possible revenue code appearing in the outpatient claims that is relevant to OPPS services, with the top tier being the most common cost center and the last tier being the default CCR. If a hospital's cost center CCR was deleted by trimming, we set the CCR for that cost center to “missing” so that another cost center CCR in the revenue center hierarchy could apply. If no other cost center CCR could apply to the revenue code on the claim, we used the hospital's overall ancillary CCR for the revenue code in question. For example, if a visit was reported under the clinic revenue code but the hospital did not have a clinic cost center, we mapped the hospital-specific overall ancillary CCR to the clinic revenue code. The revenue code-to-cost center crosswalk is available for inspection and comment on the CMS Web site: http://www.cms.hhs.gov/​HospitalOutpatientPPS. Revenue codes not used to set medians or to model impacts are identified with an “N” in the revenue code-to-cost center crosswalk.

As we proposed, we updated the revenue code-to-cost center crosswalk to more accurately reflect the current use of revenue codes. We indicated in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68531) that we intended to assess the NUBC revenue codes to determine whether any changes to the list of packaged revenue codes should be proposed for the CY 2010 OPPS. We expanded this evaluation to review all revenue codes in the revenue code-to-cost center crosswalk that we have used for OPPS ratesetting purposes in recent years against the CY 2008 NUBC definitions of revenue codes in place for CY 2008. As a result of that review, we proposed to revise the revenue code-to-cost center crosswalk as described in Table 2 of the CY 2010 OPPS/ASC proposed rule (74 FR 35256 through 35261).

Comment: Two commenters specifically addressed the proposed OPPS treatment of a number of revenue codes for CY 2010 and submitted identical, detailed recommendations. In general, the commenters agreed with the proposed treatment of revenue codes 0253 (Pharmacy; Take Home Drugs); 0290 (Durable Medical Equipment (other than renal); General Classification); 0291 (Durable Medical Equipment; Rental); 0292 (Durable Medical Equipment; Purchase of New DME); 0293 (Durable Medical Equipment; Purchase of Used DME); 0294 (Durable Medical Equipment; Supplies/Drugs for DME); 052x (Free-Standing Clinic; All Classifications); 066X (Respite Care; All Classifications); 0749, 0759, 0779, 0799, and 0910 (All Reserved); and 0948 (Other Therapeutic Services—Pulmonary Rehabilitation). The commenters disagreed with the proposed treatment of the revenue codes as displayed in Table 3 below, which provides the commenters' perspective on each revenue code.

Response: Specifically, our revenue proposal addressed: (1) Acknowledging that costs estimated from charges are associated with specific revenue codes when calculating OPPS payment rates; (2) identifying the appropriate cost center CCR that should be used to estimate costs for certain revenue codes; and (3) packaging of revenue center costs into the costs of separately paid procedures when revenue charges are reported without a HCPCS code. The commenters addressed some revenue codes that were explicitly identified and discussed in the CY 2010 OPPS/ASC proposed rule (74 FR 35256 through 35266), as well as some additional revenue codes. Table 3 below displays our response to each area where the commenters disagreed with our proposed treatment of the revenue code.Start Printed Page 60348

We note that we continually make our revenue code-to-cost center crosswalk available on the CMS Web site for review and comment, and we welcome further comments on the crosswalk from the public at any time.

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Comment: One commenter suggested that CMS include dates in the revenue code-to-cost center crosswalk document to allow hospitals and CMS to easily track the effective dates for each change.

Response: We appreciate the desire to track changes to the revenue code-to-cost center crosswalk. However, rather than document changes to individual revenue codes in the crosswalk, we will provide the public with the current and past copies of the same revenue code-to-cost center crosswalk that we directly incorporate into our modeling of the OPPS payment rates each year.

Table 4 below shows the update to the revenue codes for which estimated costs on each claim for this final rule with comment period are based and incorporates the costs for those revenue codes into APC median cost estimates. Column A of Table 4 provides the 2008 revenue code and description. Column B indicates whether the charges reported with the revenue code will be converted to cost and incorporated into median cost estimates for CY 2010. Column C indicates whether the charges reported with the revenue code were converted to cost and incorporated into median cost estimates for the CY 2009 OPPS. In both columns, a “Y” indicates that the charges will be converted to cost in CY 2010 (or were converted for CY 2009), and an “N” indicates that charges reported under the revenue code will not be converted to cost and incorporated into median cost estimates. Finally, Column D provides our rationale for the CY 2010 final change.

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Also, as a result of our comprehensive review of the revenue codes included in the revenue code-to-cost center crosswalk, as we proposed, we are adding revenue codes to the hierarchy of primary, secondary, and tertiary hospital cost report cost centers that result in the departmental CCRs that we use to estimate cost from charges for some revenue codes or to revise the applicable cost centers associated with a given revenue code. Table 5 below lists the revenue codes for which we made changes to the revenue code-to-cost center crosswalk for CY 2010 ratesetting and our rationale for each change. With the exception of revenue code 0942 (Other Therapeutic Services; Education/Training), the revenue codes for which we made changes to the designated departmental CCRs are those identified in our comprehensive review that are also listed above in Table 4. Start Printed Page 60358

Table 5—Changes to CY 2010 OPPS Hierarchy of Cost Centers in the Revenue Code-to-Cost Center Crosswalk

2008 Revenue code and descriptionRationale for CY 2010 change
0392—Administration, Processing and Storage for Blood and Blood Components; Processing and StorageWe crosswalked charges under revenue code 0392 to cost center 4700 (Blood Storing, Processing, & Transfusing) because we believe that cost center 4700 is the most likely departmental cost center to which hospitals would assign the costs of blood processing and storage. We made no secondary or tertiary cost centers because we believe that no other departmental cost centers are appropriate.
0623—Medical Surgical Supplies—Extension of 027X; Surgical DressingsWe crosswalked the charges reported under revenue code 0623 to cost center 5500 (Medical Supplies Charged to Patients) as the primary cost center because we believe that the costs associated with the charges for surgical dressings are most likely to be assigned by hospitals to cost center 5500. We made no secondary or tertiary cost centers because we believe that no other departmental cost centers are appropriate.
0942—Other Therapeutic Services (also see 095x, an extension of 094x); Educ/TrainingWe crosswalked the charges under revenue code 0942 to cost center 6000 (Clinic) as the primary cost center. Previously, the charges under revenue code 0942 were crosswalked to the overall ancillary CCR. As discussed above, we believe that cost center 6000 is a more appropriate primary cost center. We made no secondary or tertiary cost centers because we believe that no other departmental cost centers are appropriate.
0948—Other Therapeutic Services (also see 095x, an extension of 094x); Pulmonary RehabilitationWe crosswalked the charges under revenue code 0948 to cost center 4900 (Respiratory Therapy) as primary and to cost center 6000 (Clinic) as secondary because we believe that hospitals are most likely to assign the costs of these services to these cost centers. We are not establishing a tertiary cost center.

Having revised the revenue code-to-cost center crosswalk, we then converted the charges to costs on each claim by applying the CCR that we believed was best suited to the revenue code indicated on the line with the charge. One exception to this general methodology for converting charges to costs on each claim is the calculation of median blood costs, as discussed in section II.A.2.d.(2) of the proposed rule and this final rule with comment period.

Thus, we applied CCRs as described above to claims with bill type 12X, 13X, or 14X, excluding all claims from CAHs and hospitals in Maryland, Guam, the U.S. Virgin Islands, American Samoa, and the Northern Mariana Islands and claims from all hospitals for which CCRs were flagged as invalid.

We identified claims with condition code 41 as partial hospitalization services of hospitals and moved them to another file. These claims were combined with the 76X claims identified previously to calculate the partial hospitalization per diem rates. We note that the separate file containing partial hospitalization claims is included in the files that are available for purchase as discussed above.

We then excluded claims without an HCPCS code. We moved to another file claims that contained nothing but influenza and pneumococcal pneumonia (PPV) vaccines. Influenza and PPV vaccines are paid at reasonable cost and, therefore, these claims are not used to set OPPS rates.

We next copied line-item costs for drugs, blood, and brachytherapy sources (the lines stay on the claim, but are copied onto another file) to a separate file. No claims were deleted when we copied these lines onto another file. These line-items are used to calculate a per unit mean and median cost and a per day mean and median cost for drugs, therapeutic radiopharmaceutical agents, and brachytherapy sources, as well as other information used to set payment rates, such as a unit-to-day ratio for drugs.

To implement our policy to redistribute some portion of total cost for packaged drugs and biologicals to the separately payable drugs and biologicals as acquisition and pharmacy overhead and handling costs discussed in section V.B.3. of this final rule with comment period, we used the line-item cost data for drugs and biologicals for which we had an HCPCS code with ASP pricing information to calculate the ASP+X values first for all drugs and biologicals, and then for separately payable drugs and biologicals and for packaged drugs and biologicals, respectively, by taking the ratio of total claim cost for each group relative to total ASP dollars (per unit of each drug or biological HCPCS code's July 2009 ASP amount multiplied by total units for each drug or biological in the CY 2008 claims data). These values are ASP+11 percent, ASP-3 percent, and ASP+259 percent, respectively. As we discuss in greater detail in section V.B.3. of this final rule with comment period, we are finalizing a policy to redistribute $150 million of the total cost in our claims data for packaged drugs and biologicals that have an associated ASP from packaged drugs with an ASP to separately payable drugs and biologicals. The $150 million is, roughly, one-third of the difference of $445 million between the total cost of packaged drugs and biologicals with an associated ASP in our CY 2008 claims data ($616 million) and ASP for the same drugs and biologicals ($171 million). In response to comments that CMS excluded valid overhead and handling costs associated with drugs lacking ASP information, largely costs estimated from uncoded charges reported under pharmacy revenue codes, we also are finalizing a policy to redistribute an additional $50 million of the total cost in our claims data for drugs and biologicals lacking an ASP, largely for estimated costs associated with uncoded charges billed under pharmacy revenue code series 025X (Pharmacy (also see 063X, an extension of 025X)), 026X (IV Therapy), and 063X (Pharmacy—Extension of 025X). As we state in section V.B.3. of this final rule with comment period, because we do not know ASP for this subset of drug costs, we do not know the amount of associated pharmacy overhead. We observe about $656 million for drugs lacking an ASP in our CY 2008 claims data. This total excludes the cost of diagnostic and therapeutic radiopharmaceuticals because they are not reported under pharmacy revenue codes or under the pharmacy cost center on the cost report.

Removing a total of $150 million in pharmacy overhead cost from packaged drugs and biologicals reduces the $616 million to $466 million, a 24 percent reduction. Removing $50 million from the cost of drugs lacking an ASP reduces the $656 million to $606 million, an 8 percent reduction. To implement our final CY 2010 policy to redistribute $150 million in claim cost from Start Printed Page 60359packaged drugs and biologicals with an ASP to separately payable drugs and biologicals and $50 million in claim cost from packaged drugs and biologicals lacking an ASP, including uncoded pharmacy revenue code charges, we multiplied the cost of each packaged drug or biological with an HCPCS code and ASP pricing information in our CY 2008 claims data by 0.76, and we multiplied all other packaged drug costs in our CY 2008 claims data, excluding those for diagnostic radiopharmaceuticals, by 0.92. We also added the redistributed $200 million to the total cost of separately payable drugs and biologicals in our CY 2008 claims data, which increased the relationship between the total cost for separately payable drugs and biologicals and ASP dollars for the same drugs and biologicals to ASP+4 percent.

For CY 2010, we added an additional trim in our claims preparation to remove line-items that were not paid during claim processing, presumably for a line-item rejection or denial. The number of edits for valid OPPS payment in the Integrated Outpatient Code Editor (I/OCE) and elsewhere has grown significantly in the past few years, especially with the implementation of the full spectrum of National Correct Coding Initiative (NCCI) edits. To ensure that we are using valid claims that represent the cost of payable services to set payment rates, we removed line-items with an OPPS status indicator for the claim year (CY 2008) and a status indicator of “S,” “T,” “V,” or “X” when separately paid under the final CY 2010 payment system. This logic preserves charges for services that would not have been paid in the claim year but for which some estimate of cost is needed for the prospective year, such as services newly proposed to come off the inpatient list for CY 2010 which were assigned status indicator “C” in the claim year.

Using February 2009 APC Panel data, we estimate that the impact of removing line-items with valid status indicators that received no CY 2008 payment was limited to approximately 1.4 percent of all line-items for separately paid services. This additional trim reduced the number of single bills available for ratesetting by 1.5 percent. For approximately 92 percent of procedural APCs, we observed a change in the APC median cost of less than 1 percent. A handful of APCs experienced greater changes in median cost. For example, APC 0618 (Trauma Response with Critical Care) experienced declines in both the number of single bills used to set the median cost and the estimated median cost itself. This occurred because the I/OCE has an edit to ensure that HCPCS code G0390 (Trauma response team activation associated with hospital critical care service), which is assigned to APC 0618, receives payment only when one unit of G0390 appears with both a revenue code in the 68x series and CPT code 99291 (Critical care, evaluation and management of the critically ill or critically injured patient; first 30-74 minutes) on the claim for the same date of service, as described in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68134). If the I/OCE criteria are not met, HCPCS code G0390 is not separately paid, and we found that a number of CY 2008 claims including HCPCS code G0390 did not meet the criteria for payment. On the other hand, a few APCs had greater estimated median costs and greater numbers of single bills as a result of this additional trim, presumably because removing lines from the claim allowed us to identify more single bills. We believe that removing lines with valid status indicators that were edited and not paid during claims processing increases the accuracy of the single bills used to determine the APC median costs for ratesetting.

Comment: One commenter claimed that the removal of charges and costs from denied lines was in contrast to longstanding policy for hospital inpatient services. A few commenters expressed concern about APC 0312 (Radioelement Applications), noting that there has been significant fluctuation in the payment rates for this APC in the past. They believe that implementing the proposed line-item trim, which removed a significant number of single claims, may have contributed to that instability. The commenters suggested that historical data would not indicate any reason for significant line-items to be trimmed. One commenter believed that the payment rates for low dose rate prostate brachytherapy were arbitrary and unfair. Based on the commenters' impression that the purpose of the line-item trim was to act as a quality check, the commenters requested that the line-item trim be suppressed for APC 0312.

Response: While payment systems such as the IPPS do not remove charge and cost data, this is largely due to the differences in the fundamental structures of the two payment systems. The IPPS is a system based on DRGs that relies on significant bundling of services under common clinical scenarios, while the OPPS is largely based on payment for a specific individual service. These differences in payment approach under each system are reflected in the way that data are used to establish the payment weights, from the CCRs used to reduce charges to cost to the structure of how charge and cost information is classified. One byproduct of the differences between the IPPS and the OPPS is the level of editing in each system to ensure that a correct payment is made. Similarly, there are many NCCI edits to ensure that payment is made to hospitals for outpatient services only when there is correct coding because there are hundreds of APCs that may contribute to inappropriate unbundling of services when those services are reported for a hospital outpatient encounter. In the CY 2010 OPPS/ASC proposed rule (74 FR 35262), we indicated that removing lines with valid status indicators that were edited and not paid during claims processing increases the accuracy of the single bills used for ratesetting. Doing so allows the single bills used for ratesetting purposes to be representative of those services as they would be paid in the prospective year.

In studying the billing patterns for HCPCS codes that are assigned to APC 0312, we noted that the line-item trim removes a number of unpaid single bills for this APC, as the commenters had suggested. However, we also observed a general decline in the reporting of services assigned to this APC that was unrelated to the line-item trim, suggesting that a portion of the observed decline in the number of single bills available for ratesetting is due to an actual reduction in the frequency that the services assigned to APC 0312 are furnished. While we understand the commenters' concern regarding the reduction of single bills used in ratesetting for APC 0312, the data suggest that the reduction is due in part to a decline in the billing of individual services assigned to the APC. Further, we believe that removing these line-items which have likely been rejected or denied is appropriate in light of the goal of using accurate single procedure claims for ratesetting under the OPPS.

After consideration of the public comments received relating to our CY 2010 proposal for claims preparation, we are adopting it as final, with modification to the treatment of certain revenue codes as described in Table 4 in this section.

b. Splitting Claims and Creation of “Pseudo” Single Claims

(1) Splitting Claims

We then split the remaining claims into five groups: single majors, multiple majors, single minors, multiple minors, and other claims. (Specific definitions Start Printed Page 60360of these groups follow below.) In the CY 2010 OPPS/ASC proposed rule (74 FR 35262), we proposed to continue our current policy of defining major procedures as any HCPCS code having a status indicator of “S,” “T,” “V,” or “X;” defining minor procedures as any code having a status indicator of “F,” “G,” “H,” “K,” “L,” “R,” “U,” or “N,” and classifying “other” procedures as any code having a status indicator other than one that we have classified as major or minor. For CY 2010, we proposed to continue assigning status indicator “R” to blood and blood products; status indicator “U” to brachytherapy sources; status indicator “Q1” to all “STVX-packaged codes;” status indicator “Q2” to all “T-packaged codes;” and status indicator “Q3” to all codes that may be paid through a composite APC based on composite-specific criteria or paid separately through single code APCs when the criteria are not met. As discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68709), we established status indicators “Q1,” “Q2,” and “Q3” to facilitate identification of the different categories of codes. We proposed to treat these codes in the same manner for data purposes for CY 2010 as we have treated them since CY 2008. Specifically, we proposed to continue to evaluate whether the criteria for separate payment of codes with status indicator “Q1” or “Q2” are met in determining whether they are treated as major or minor codes. As discussed earlier in this section, because we proposed to treat CPT code 76098 as conditionally packaged, this logic now includes the addition of CPT code 76098 as a “Q2” code. Codes with status indicator “Q1” or “Q2” are carried through the data either with status indicator “N” as packaged or, if they meet the criteria for separate payment, they are given the status indicator of the APC to which they are assigned and are considered as “pseudo” single major codes. Codes assigned status indicator “Q3” are paid under individual APCs unless they occur in the combinations that qualify for payment as composite APCs and, therefore, they carry the status indicator of the individual APC to which they are assigned through the data process and are treated as major codes during both the split and “pseudo” single creation process. The calculation of the median costs for composite APCs from multiple major claims is discussed in section II.A.2.e. of this final rule with comment period.

Specifically, we divided the remaining claims into the following five groups:

1. Single Major Claims: Claims with a single separately payable procedure (that is, status indicator “S,” “T,” “V,” or “X,” which includes codes with status indicator “Q3”); claims with one unit of a status indicator “Q1” code (“STVX-packaged”) where there was no code with status indicator “S,” “T,” “V,” or “X” on the same claim on the same date; or claims with one unit of a status indicator “Q2” code (“T-packaged”) where there was no code with a status indicator “T” on the same claim on the same date.

2. Multiple Major Claims: Claims with more than one separately payable procedure (that is, status indicator “S,” “T,” “V,” or “X,” which includes codes with status indicator “Q3”), or multiple units of one payable procedure. These claims include those codes with a status indicator “Q2” code (“T-packaged”) where there was no procedure with a status indicator “T” on the same claim on the same date of service but where there was another separately paid procedure on the same claim with the same date of service (that is, another code with status indicator “S,” “V,” or “X”). We also include in this set, claims that contained one unit of one code when the bilateral modifier was appended to the code and the code was conditionally or independently bilateral. In these cases, the claims represented more than one unit of the service described by the code, notwithstanding that only one unit was billed.

3. Single Minor Claims: Claims with a single HCPCS code that was assigned status indicator “F,” “G,” “H,” “K,” “L,” “R,” “U,” or “N” and not status indicator “Q1” (“STVX-packaged”) or status indicator “Q2” (“T-packaged”) code.

4. Multiple Minor Claims: Claims with multiple HCPCS codes that are assigned status indicator “F,” “G,” “H,” “K,” “L,” “R,” “U,” or “N;” claims that contain more than one code with status indicator “Q1” (“STVX-packaged”) or more than one unit of a code with status indicator “Q1” but no codes with status indicator “S,” “T,” “V,” or “X” on the same date of service; or claims that contain more than one code with status indicator “Q2” (T-packaged), or “Q2” and “Q1,” or more than one unit of a code with status indicator “Q2” but no code with status indicator “T” on the same date of service.

5. Non-OPPS Claims: Claims that contain no services payable under the OPPS (that is, all status indicators other than those listed for major or minor status). These claims were excluded from the files used for the OPPS. Non-OPPS claims have codes paid under other fee schedules, for example, durable medical equipment or clinical laboratory tests, and do not contain a code for a separately payable or packaged OPPS service. Non-OPPS claims include claims for therapy services paid sometimes under the OPPS but billed, in these non-OPPS cases, with revenue codes indicating that the therapy services would be paid under the Medicare Physician Fee Schedule (MPFS).

The claims listed in numbers 1, 2, 3, and 4 above are included in the data file that can be purchased as described above. Claims that contain codes to which we have assigned status indicators “Q1” (“STVX-packaged”) and “Q2” (“T-packaged”) appear in the data for the single major file, the multiple major file, and the multiple minor file used in this final rule with comment period. Claims that contain codes to which we have assigned status indicator “Q3” (composite APC members) appear in both the data of the single and multiple major files used in this final rule with comment period, depending on the specific composite calculation.

Because we did not receive any public comments on our proposed process of organizing claims by type, we are finalizing our CY 2010 proposal without modification.

(2) Creation of “Pseudo” Single Claims

As we proposed, to develop “pseudo” single claims for this final rule with comment period, we examined both the multiple major claims and the multiple minor claims. We first examined the multiple major claims for dates of service to determine if we could break them into “pseudo” single procedure claims using the dates of service for all lines on the claim. If we could create claims with single major procedures by using dates of service, we created a single procedure claim record for each separately payable procedure on a different date of service (that is, a “pseudo” single).

We also used the bypass codes listed earlier in Table 1 and discussed in section II.A.1.b. of this final rule with comment period to remove separately payable procedures that we determined contained limited or no packaged costs or that were otherwise suitable for inclusion on the bypass list from a multiple procedure bill. As discussed above, we ignore the “overlap bypass codes,” that is, those HCPCS codes that are both on the bypass list and are members of the multiple imaging Start Printed Page 60361composite APCs, in this initial assessment for “pseudo” single claims. The CY 2010 “overlap bypass codes” are listed in Table 1 in section II.A.1.b. of this final rule with comment period. When one of the two separately payable procedures on a multiple procedure claim was on the bypass list, we split the claim into two “pseudo” single procedure claim records. The single procedure claim record that contained the bypass code did not retain packaged services. The single procedure claim record that contained the other separately payable procedure (but no bypass code) retained the packaged revenue code charges and the packaged HCPCS code charges. We also removed lines that contained multiple units of codes on the bypass list and treated them as “pseudo” single claims by dividing the cost for the multiple units by the number of units on the line. Where one unit of a single, separately payable procedure code remained on the claim after removal of the multiple units of the bypass code, we created a “pseudo” single claim from that residual claim record, which retained the costs of packaged revenue codes and packaged HCPCS codes. This enabled us to use claims that would otherwise be multiple procedure claims and could not be used.

We then assessed the claims to determine if the criteria for the multiple imaging composite APCs, discussed in section II.A.2.e.(5) of this final rule with comment period, were met. Where the criteria for the imaging composite APCs were met, we created a “single session” claim for the applicable imaging composite service and determined whether we could use the claim in ratesetting. For HCPCS codes that are both conditionally packaged and are members of a multiple imaging composite APC, we first assessed whether the code would be packaged and if so, the code ceased to be available for further assessment as part of the composite APC. Because the packaged code would not be a separately payable procedure, we considered it to be unavailable for use in setting the composite APC median cost. Having identified “single session” claims for the imaging composite APCs, we reassessed the claim to determine if, after removal of all lines for bypass codes, including the “overlap bypass codes,” a single unit of a single separately payable code remained on the claim. If so, we attributed the packaged costs on the claim to the single unit of the single remaining separately payable code other than the bypass code to create a “pseudo” single claim. We also identified line-items of overlap bypass codes as a “pseudo” single claim. This allowed us to use more claims data for ratesetting purposes.

We also examined the multiple minor claims to determine whether we could create “pseudo” single procedure claims. Specifically, where the claim contained multiple codes with status indicator “Q1” (“STVX-packaged”) on the same date of service or contained multiple units of a single code with status indicator “Q1,” we selected the status indicator “Q1” HCPCS code that had the highest CY 2008 relative weight, set the units to one on that HCPCS code to reflect our policy of paying only one unit of a code with a status indicator of “Q1.” We then packaged all costs for the following into a single cost for the “Q1” HCPCS code that had the highest CY 2008 relative weight to create a “pseudo” single claim for that code: additional units of the status indicator “Q1” HCPCS code with the highest CY 2008 relative weight; other codes with status indicator “Q1;” and all other packaged HCPCS codes and packaged revenue code costs. We changed the status indicator for selected codes from the data status indicator of “N” to the status indicator of the APC to which the selected procedure was assigned for further data processing and considered this claim as a major procedure claim. We used this claim in the calculation of the APC median cost for the status indicator “Q1” HCPCS code.

Similarly, where a multiple minor claim contained multiple codes with status indicator “Q2” (“T-packaged”) or multiple units of a single code with status indicator “Q2,” we selected the status indicator “Q2” HCPCS code that had the highest CY 2008 relative weight, set the units to one on that HCPCS code to reflect our policy of paying only one unit of a code with a status indicator of “Q2.” We then packaged all costs for the following into a single cost for the “Q2” HCPCS code that had the highest CY 2008 relative weight to create a “pseudo” single claim for that code: additional units of the status indicator “Q2” HCPCS code with the highest CY 2008 relative weight; other codes with status indicator “Q2;” and other packaged HCPCS codes and packaged revenue code costs. We changed the status indicator for the selected code from a data status indicator of “N” to the status indicator of the APC to which the selected code was assigned, and we considered this claim as a major procedure claim.

Lastly, where a multiple minor claim contained multiple codes with status indicator “Q2” (“T-packaged”) and status indicator “Q1” (“STVX-packaged”), we selected the status indicator “Q2” HCPCS code (“T-packaged”) that had the highest relative weight for CY 2008 and set the units to one on that HCPCS code to reflect our policy of paying only one unit of a code with a status indicator of “Q2.” We then packaged all costs for the following into a single cost for the selected (“T packaged”) HCPCS code to create a “pseudo” single claim for that code: additional units of the status indicator “Q2” HCPCS code with the highest CY 2008 relative weight; other codes with status indicator “Q2;” codes with status indicator “Q1” (“STVX-packaged”); and other packaged HCPCS codes and packaged revenue code costs. We favor status indicator “Q2” over “Q1” HCPCS codes because “Q2” HCPCS codes have higher CY 2008 relative weights. If a status indicator “Q1” HCPCS code had a higher CY 2008 relative weight, it would become the primary code for the simulated single bill process. We changed the status indicator for the selected status indicator “Q2” (“T-packaged”) code from a data status indicator of “N” to the status indicator of the APC to which the selected code was assigned and we considered this claim as a major procedure claim.

We excluded those claims that we were not able to convert to single claims even after applying all of the techniques for creation of “pseudo” singles to multiple major and to multiple minor claims. As has been our practice in recent years, we also excluded claims that contained codes that were viewed as independently or conditionally bilateral and that contained the bilateral modifier (Modifier 50 (Bilateral procedure)) because the line-item cost for the code represented the cost of two units of the procedure, notwithstanding that the code appeared with a unit of one.

Comment: One commenter noted that the bilateral procedure logic did not appear to appropriately exclude claims with bilateral codes from the single major claims, having observed bilateral procedure codes in that claims subset. Also, the commenter suggested that the conditional packaging of the status indicator “Q2” (“T-packaged”) codes did not appear to be treated consistently with the policy we proposed, which was that a “Q2” procedure with the highest scaled weight would be paid separately when there is no status indicator “T” procedure on the claim and that the costs of any other “Q2” codes on the claim would be packaged.

Response: In seeking to address the commenter's observations, we discovered that the bilateral logic was Start Printed Page 60362not processed correctly as we proposed. Similarly, inaccurate program logic in the weight comparison for status indicator “Q2” (“T-packaged”) codes caused the packaging to be assigned based on order of precedence rather than by weight.

For this final rule with comment period, we accurately applied the bilateral and status indicator “Q2” (“T-packaged”) weight comparison packaging logic, consistent with the proposed and final policy. The national unadjusted payments for CY 2010 accurately reflect the policy that we proposed to continue for CY 2010 OPPS and that we are finalizing in this final rule with comment period.

After consideration of the public comment received, we are finalizing our CY 2010 proposal, without modification, for the process by which we develop “pseudo” single procedure claims.

c. Completion of Claim Records and Median Cost Calculations

We then packaged the costs of packaged HCPCS codes (codes with status indicator “N” listed in Addendum B to this final rule with comment period and the costs of those lines for codes with status indicator “Q1” or “Q2” when they are not separately paid), and the costs of packaged revenue codes into the cost of the single major procedure remaining on the claim. For CY 2010, this packaging also included the redistributed packaged pharmacy overhead cost relative to the units of separately payable drugs on each single procedure claim.

As noted in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66606), for the CY 2008 OPPS, we adopted an APC Panel recommendation that requires CMS to review the final list of packaged revenue codes for consistency with OPPS policy and ensure that future versions of the I/OCE edit accordingly. We compared the packaged revenue codes in the I/OCE to the final list of packaged revenue codes for the CY 2009 OPPS (73 FR 68531 through 68532) that we used for packaging costs in median calculation. As a result of that analysis, we proposed to use the packaged revenue codes for CY 2010 that were displayed in Table 4 of the CY 2010 OPPS/ASC proposed rule (74 FR 35265 through 35266).

As noted in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68531), we replaced the NUBC standard abbreviations for the revenue codes listed in Table 2 of the CY 2009 OPPS/ASC proposed rule with the most current NUBC descriptions of the revenue code categories and subcategories to better articulate the meanings of the revenue codes without actually changing the proposed list of revenue codes. In the course of making the changes in labeling for the revenue codes in Table 2 of the CY 2009 OPPS/ASC final rule with comment period, we noticed some changes to revenue categories and subcategories that we believed warranted further review for future OPPS updates. Although we finalized the list of packaged revenue codes in Table 2 for CY 2009, we indicated in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68531) that we intended to assess the NUBC revenue codes to determine whether any changes to the list of packaged revenue codes should be proposed for the CY 2010 OPPS. We specifically requested public input and discussion on this issue during the comment period of the CY 2009 OPPS/ASC final rule with comment period. We did not receive any public comments on this issue. As we discuss in section II.A.2.a. of this final rule with comment period, we have completed that analysis for all revenue codes in the revenue code-to-cost center crosswalk. As discussed in the CY 2010 OPPS/ASC proposed rule (74 FR 35264 through 35265), as a result, we proposed to add several revenue codes to the list of packaged revenue codes for the CY 2010 OPPS. Specifically, we believe that the costs derived from charges reported under revenue codes 0261 (IV Therapy; Infusion Pump); 0392 (Administration, Processing and Storage for Blood and Blood Components; Processing and Storage); 0623 (Medical Supplies—Extension of 027X, Surgical Dressings); 0943 (Other Therapeutic Services (also see 095X, an extension of 094X), Cardiac Rehabilitation); and 0948 (Other Therapeutic Services (also see 095X, an extension of 094X), Pulmonary Rehabilitation) are appropriately packaged into payment for other OPPS services when charges appear on lines with these revenue codes but no HCPCS code appears on the line. Revenue codes that we proposed to add to the CY 2010 packaged revenue code list were identified by asterisks (*) in Table 4 of the CY 2010 OPPS/ASC proposed rule.

The public comments that we received that resulted in our changing the list of packaged revenue codes for CY 2010 are discussed in section II.A.2.a. of this final rule with comment period. Thus, we are finalizing the proposed packaged revenue codes for CY 2010, with modification. The final CY 2010 packaged revenue codes are listed in Table 6 below. Revenue codes that we are adding to the CY 2010 packaged revenue code list are identified by asterisks (*) in Table 6.

Table 6—Final CY 2010 Packaged Revenue Codes

Revenue codeDescription
0250Pharmacy; General Classification.
0251Pharmacy; Generic Drugs.
0252Pharmacy; Non-Generic Drugs.
0254Pharmacy; Drugs Incident to Other Diagnostic Services.
0255Pharmacy; Drugs Incident to Radiology.
0257Pharmacy; Non-Prescription.
0258Pharmacy; IV Solutions.
0259Pharmacy; Other Pharmacy.
0260IV Therapy; General Classification.
*0261IV Therapy; Infusion Pump.
0262IV Therapy; IV Therapy/Pharmacy Svcs.
0263IV Therapy; IV Therapy/Drug/Supply Delivery.
0264IV Therapy; IV Therapy/Supplies.
0269IV Therapy; Other IV Therapy.
0270Medical/Surgical Supplies and Devices; General Classification.
0271Medical/Surgical Supplies and Devices; Non-sterile Supply.
0272Medical/Surgical Supplies and Devices; Sterile Supply.
0275Medical/Surgical Supplies and Devices; Pacemaker.
0276Medical/Surgical Supplies and Devices; Intraocular Lens.
0278Medical/Surgical Supplies and Devices; Other Implants.
0279Medical/Surgical Supplies and Devices; Other Supplies/Devices.
0280Oncology; General Classification.
0289Oncology; Other Oncology.
0343Nuclear Medicine; Diagnostic Radiopharmaceuticals.
0344Nuclear Medicine; Therapeutic Radiopharmaceuticals.
0370Anesthesia; General Classification.
0371Anesthesia; Anesthesia Incident to Radiology.
0372Anesthesia; Anesthesia Incident to Other DX Services.
0379Anesthesia; Other Anesthesia.
0390Administration, Processing and Storage for Blood and Blood Components; General Classification.
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*0392Administration, Processing and Storage for Blood and Blood Components; Processing and Storage.
0399Administration, Processing and Storage for Blood and Blood Components; Other Blood Handling.
0621Medical Surgical Supplies—Extension of 027X; Supplies Incident to Radiology.
0622Medical Surgical Supplies—Extension of 027X; Supplies Incident to Other DX Services.
*0623Medical Supplies—Extension of 027X, Surgical Dressings.
0624Medical Surgical Supplies—Extension of 027X; FDA Investigational Devices.
0630Pharmacy—Extension of 025X; Reserved.
0631Pharmacy—Extension of 025X; Single Source Drug.
0632Pharmacy—Extension of 025X; Multiple Source Drug.
0633Pharmacy—Extension of 025X; Restrictive Prescription.
0681Trauma Response; Level I Trauma.
0682Trauma Response; Level II Trauma.
0683Trauma Response; Level III Trauma.
0684Trauma Response; Level IV Trauma.
0689Trauma Response; Other.
0700Cast Room; General Classification.
0710Recovery Room; General Classification.
0720Labor Room/Delivery; General Classification.
0721Labor Room/Delivery; Labor.
0732EKG/ECG (Electrocardiogram); Telemetry.
0762Specialty Room—Treatment/Observation Room; Observation Room.
0801Inpatient Renal Dialysis; Inpatient Hemodialysis.
0802Inpatient Renal Dialysis; Inpatient Peritoneal Dialysis (Non-CAPD).
0803Inpatient Renal Dialysis; Inpatient Continuous Ambulatory Peritoneal Dialysis (CAPD).
0804Inpatient Renal Dialysis; Inpatient Continuous Cycling Peritoneal Dialysis (CCPD).
0809Inpatient Renal Dialysis; Other Inpatient Dialysis.
0810Acquisition of Body Components; General Classification.
0819Inpatient Renal Dialysis; Other Donor.
0821Hemodialysis-Outpatient or Home; Hemodialysis Composite or Other Rate.
0824Hemodialysis-Outpatient or Home; Maintenance—100%.
0825Hemodialysis-Outpatient or Home; Support Services.
0829Hemodialysis-Outpatient or Home; Other OP Hemodialysis.
0942Other Therapeutic Services (also see 095X, an extension of 094x); Education/Training.
*0943Other Therapeutic Services (also see 095X, an extension of 094X), Cardiac Rehabilitation.
*0948Other Therapeutic Services (also see 095X, an extension of 094X), Pulmonary Rehabilitation.

In addition, we excluded: (1) claims that had zero costs after summing all costs on the claim, and (2) claims containing packaging flag number 3. Effective for services furnished on or after July 1, 2004, the I/OCE assigned packaging flag number 3 to claims on which hospitals submitted token charges for a service with status indicator “S” or “T” (a major separately payable service under the OPPS) for which the fiscal intermediary or MAC was required to allocate the sum of charges for services with a status indicator equaling “S” or “T” based on the relative weight of the APC to which each code was assigned. We do not believe that these charges, which were token charges as submitted by the hospital, are valid reflections of hospital resources. Therefore, we deleted these claims. We also deleted claims for which the charges equaled the revenue center payment (that is, the Medicare payment) on the assumption that where the charge equaled the payment, to apply a CCR to the charge would not yield a valid estimate of relative provider cost.

For the remaining claims, we then standardized 60 percent of the costs of the claim (which we have previously determined to be the labor-related portion) for geographic differences in labor input costs. We made this adjustment by determining the wage index that applied to the hospital that furnished the service and dividing the cost for the separately paid HCPCS code furnished by the hospital by that wage index. As has been our policy since the inception of the OPPS, we proposed to use the pre-reclassified wage indices for standardization because we believe that they better reflect the true costs of items and services in the area in which the hospital is located than the post-reclassification wage indices and, therefore, would result in the most accurate unadjusted median costs.

We also excluded claims that were outside 3 standard deviations from the geometric mean of units for each HCPCS code on the bypass list (because, as discussed above, we used claims that contain multiple units of the bypass codes).

After removing claims for hospitals with error CCRs, claims without HCPCS codes, claims for immunizations not covered under the OPPS, and claims for services not paid under the OPPS, approximately 58 million claims were left. Using these 58 million claims, we created approximately 99 million single and “pseudo” single claims, of which we used 99 million single bills (after trimming out approximately 657,000 claims as discussed above in this section) in the CY 2010 median development and ratesetting.

We used these claims to calculate the CY 2010 median costs for each separately payable HCPCS code and each APC. The comparison of HCPCS code-specific and APC medians determines the applicability of the 2 times rule. Section 1833(t)(2) of the Act provides that, subject to certain exceptions, the items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest median (or mean cost, if elected by the Secretary) for an item or service in the group is more than 2 times greater than the lowest median cost for an item or service within the same group (the 2 times rule). Finally, we reviewed the median costs for this final rule with comment period and reassigned HCPCS codes to different APCs where we believed that it was appropriate. Section III. of this final rule with comment period includes a discussion of certain HCPCS code assignment changes that resulted from examination of the median costs, review of the public comments, and for other reasons. The APC medians were recalculated after we reassigned the affected HCPCS codes. Both the HCPCS code-specific medians and the APC medians were weighted to account for the inclusion of multiple units of the bypass codes in the creation of “pseudo” single bills.Start Printed Page 60364

Comment: Several commenters objected to the volatility of the OPPS rates from year to year. The commenters asserted that the absence of stability in the OPPS rates creates budgeting, planning, and operating problems for hospitals, and that as more care is provided on an outpatient, rather than inpatient basis, the need for stable payment rates from one year to the next becomes more important to hospitals. Some commenters suggested that CMS limit reductions in APC payments to a set percentage, with one commenter noting that CMS dampened payment decreases for blood and blood products to mitigate large payment fluctuations in order to limit provider losses. One commenter suggested that the median costs from claims be adjusted to limit changes from year to year. Another commenter suggested that CMS perform a thorough examination of the payment rates and examine billed charges, costs, median and mean costs, and CCRs to isolate the source of the fluctuations as well as mandate a review of all APCs that fluctuate above a certain percentage, similar to the 2 times rule.

Response: There are a number of factors pertinent to the OPPS that may cause median costs to change from one year to the next. Some of these are a reflection of hospital behavior, and some of them are a reflection of fundamental characteristics of the OPPS as defined in statute. For example, the OPPS payment rates are based on hospital cost report and claims data. However, hospital costs and charges change each year and this results in both changes to the CCRs taken from the most currently available cost reports and also differences in the charges on the claims that are the basis of the calculation of the median costs on which OPPS rates are based. Similarly, hospitals adjust their mix of services from year to year by offering new services and ceasing to furnish services and changing the proportion of the various services they furnish, which have an impact on the CCRs that we derive from their cost reports. CMS cannot stabilize these hospital-driven fundamental inputs to the calculation of OPPS payment rates.

Moreover, there are other essential elements of the OPPS which contribute to the changes in relative weights each year. These include, but are not limited to, reassignments of HCPCS codes to APCs to rectify 2 times violations as required by the law, to address the costs of new services, to address differences in hospitals' costs that may result from changes in medical practice, and to respond to public comments. Our efforts to improve payment accuracy may also contribute to payment volatility in the short run, as may be the case when we are eventually able to use more specific CCRs to estimate the costs of implantable devices, based on the final policy that we adopted to disaggregate the single cost center for medical supplies into two more specific cost centers, as described in the FY 2009 IPPS final rule (73 FR 48458 through 48467). Moreover, for some services, we cannot avoid using small numbers of claims, either because the volume of services is naturally low or because the claims data do not facilitate the calculation of a median cost for a single service. Where there are small numbers of claims that are used in median calculation, there is more volatility in the median cost from one year to the next. Lastly, changes to OPPS payment policy (for example, changes to packaging) also contribute to some extent to the fluctuations in the OPPS payment rates for the same services from year to year.

We cannot avoid the naturally occurring volatility in the cost report and claims data that hospitals submit and on which the payment rates are based. Moreover (with limited exceptions), we reassign HCPCS codes to APCs where it is necessary to avoid 2 times violations. However, we have made other changes to resolve some of the other potential reasons for instability from year to year. Specifically, we continue to seek ways to use more claims data so that we have fewer APCs for which there are small numbers of single bills used to set the APC median costs. Moreover, we have tried to eliminate APCs with very small numbers of single bills where we could do so. We recognize that changes to payment policies, such as the packaging of payment for ancillary and supportive services and the implementation of composite APCs, may contribute to volatility in payment rates in the short term, but we believe that larger payment packages and bundles should help to stabilize payments in future years by enabling us to use more claims data and by establishing payments for larger groups of services.

While we recognize the reasoning behind a policy that would dampen both increases and decreases in the weights or payment rates of the OPPS, this would not be as simple or beneficial as commenters have implied. Implementing such a dampening policy would require the assumption that payment policy is static from year to year. Based on the commenters' own acknowledgement, and the data used to develop the OPPS, we know that this is not true. Further, in seeking to mitigate fluctuations in the OPPS, implementing such a system would make payments less reflective of the true service costs. Dampening payments across all APCs in this way could unfairly harm those hospitals whose true cost for a service increases significantly, while inappropriately benefiting those hospitals whose true cost for a service decreases significantly. While one commenter requested that CMS adopt a policy to investigate any APCs that fluctuate above a certain threshold, this mandate would be unnecessary since we already examine all APCs that experience significant median cost fluctuations, as described in the CY 2010 OPPS/ASC proposed rule (74 FR 35626 through 35627).

Comment: Some commenters asked that CMS provide an adjustment for medical education costs under the OPPS because many of the costs of teaching services are now incurred in the HOPD as services previously furnished only in the inpatient setting are now being furnished in the HOPD. They also noted that the OPPS did not have a teaching adjustment while many of the other Medicare payment systems, such as inpatient, psychiatric, and rehabilitation facilities, already include one. These commenters stated that CMS indicated that it would study the costs and payment differential among different classes of providers in the April 7, 2000 OPPS final rule but has not done so. They recommended that CMS study whether the hospital outpatient costs of teaching hospitals are higher than the costs of other hospitals for purposes of determining whether there should be a teaching hospital adjustment. The commenters explained that analysis of 2007 Medicare cost reports showed that the average outpatient margins were −30.4 for major teaching hospitals, −13.8 for other teaching hospitals, and −14.4 for nonteaching hospitals. They believed that these findings demonstrated that the hospital outpatient costs of major teaching hospitals are significantly greater than the costs of other hospitals. The commenters requested that CMS conduct its own analysis and that if that analysis showed a difference due to the unique missions of teaching hospitals, CMS should add a teaching adjustment to the OPPS.

Response: Unlike payment under the IPPS, the law does not provide for payment for indirect medical education costs to be made under the OPPS. Section 1833(t)(2)(E) of the Act states that the Secretary shall establish, in a budget neutral manner “* * * other adjustments as determined to be necessary to ensure equitable payments, Start Printed Page 60365such as adjustments for certain classes of hospitals.” We have not found such an adjustment to be necessary to ensure equitable payments to teaching hospitals and, therefore, have not developed such an adjustment. Furthermore, in this final rule with comment period, we have developed payment weights that we believe provide appropriate and adequate payment for the complex medical services, such as new technology services and device-dependent procedures, which we understand are furnished largely by teaching hospitals. We note that teaching hospitals benefit from the recalibration of the APCs in this final rule with comment period. The final CY 2010 impacts by class of hospital are displayed in Table 73 in section XXI.B. of this final rule with comment period.

After consideration of the public comments we received, we are finalizing our proposed CY 2010 methodology for calculating the median costs upon which the CY 2010 OPPS payment rates are based, with modifications as discussed throughout this section.

In some cases, APC median costs are calculated using variations of the process outlined above. Section II.A.2.d. of this final rule with comment period that follows addresses the calculation of single APC criteria-based median costs. Section II.A.2.e. of this final rule with comment period discusses the calculation of composite APC criteria-based median costs. Section X.B. of this final rule with comment period addresses the methodology for calculating the median cost for partial hospitalization services.

At the February 2009 APC Panel Meeting, the APC Panel recommended that CMS study the claims data for any APC in which the calculated payment reduction would be greater than 10 percent. The APC Panel also recommended that CMS provide a list of APCs to the APC Panel at the next meeting with a proposed payment rate change of greater than 10 percent. While we recognize the concerns the APC Panel expressed with regards to cost variability in the system, we already engage in a standard review process for all APCs that experience significant changes in median costs. We study all significant changes in estimated cost to determine the effect that proposed and final payment policies have on the APC payment rates and ensure that these policies are appropriate and that the intended cost estimation methodologies have been correctly applied. We note that there are a number of factors that cause APC median costs to change from one year to the next. Some of these are a reflection of hospital behavior, and some of them are a reflection of fundamental characteristics of the OPPS as defined in the statute. With limited exceptions, we are required by law to reassign HCPCS codes to APCs where it is necessary to avoid 2 times violations. Thus, there are various mechanisms already in place to ensure that we assess changes in cost and adjust APC weights accordingly or justify why we have not made adjustments. We plan to continue our examination of all APCs that experience changes of greater than 10 percent. In the CY 2010 OPPS/ASC proposed rule (74 FR 35267), we indicated that we would provide the APC Panel with a list of the APCs with proposed changes in costs of more than 10 percent for CY 2010 at the next CY 2009 APC Panel meeting. Accordingly, we accepted this recommendation of the APC Panel in full.

At the August 2009 meeting of the APC Panel, we provided the APC Panel a list of all APCs fluctuating by more than 10 percent when comparing the CY 2010 proposed rule APC median costs to those based on CY 2009 final rule data. We found that the median costs for 7 APCs decreased by 10 percent or more and the median costs for 63 APCs increased by 10 percent or more. These changes occurred due to some of the reasons described earlier, including reassignment of HCPCS codes from one APC to another to resolve 2 times violations, modeling changes such as the removal of lines for codes that were not payable in CY 2008 under the OPPS payment rules, low volumes of services influencing the claims used to determine APC median costs, and updated cost and charge information from hospital claims and cost reports. We noted that the median costs for 63 APCs increased by 10 percent or more and that the reasons for the increases were similar to the reasons for the decreases of more than 10 percent but, in general, we found nothing that raised concern regarding the data process we used to calculate the proposed median costs. The APC Panel discussed the different APCs on the list but did not express any significant concern with the fluctuations. As a result, they did not make any further recommendations related to the list of APCs with median costs fluctuating by greater than 10 percent.

At the February 2009 APC Panel meeting, we reviewed and examined the data process in preparation for the CY 2010 rulemaking cycle. At this meeting, the APC Panel recommended that the Data Subcommittee continue its work and we accepted that recommendation. The APC Panel further recommended at the August 2009 meeting that the Data Subcommittee continue its work. We are accepting this most recent recommendation, and we will continue to work closely with the APC Panel's Data Subcommittee to prepare and review data and analyses relevant to the APC configurations and OPPS payment policies for hospital outpatient items and services.

d. Calculation of Single Procedure APC Criteria-Based Median Costs

(1) Device-Dependent APCs

Device-dependent APCs are populated by HCPCS codes that usually, but not always, require that a device be implanted or used to perform the procedure. For a full history of how we have calculated payment rates for device-dependent APCs in previous years and a detailed discussion of how we developed the standard device-dependent APC ratesetting methodology, we refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66739 through 66742). Overviews of the procedure-to-device edits and device-to-procedure edits used in ratesetting for device-dependent APCs are available in the CY 2005 OPPS final rule with comment period (69 FR 65761 through 65763) and the CY 2007 OPPS/ASC final rule with comment period (71 FR 68070 through 68071).

In the CY 2010 OPPS/ASC proposed rule (74 FR 35267), we proposed to revise our standard methodology for calculating median costs for device-dependent APCs, which utilizes claims data that generally represent the full cost of the required device, to exclude claims that contain the “FC” modifier. Specifically, we proposed to calculate the median costs for device-dependent APCs for CY 2010 using only the subset of single procedure claims from CY 2008 claims data that pass the procedure-to-device and device-to-procedure edits; do not contain token charges (less than $1.01) for devices; do not contain the “FB” modifier signifying that the device was furnished without cost to the provider, supplier, or practitioner, or where a full credit was received; and do not contain the “FC” modifier signifying that the hospital received partial credit for the device. The “FC” modifier became effective January 1, 2008, and is present for the first time on claims that would be used in OPPS ratesetting for CY 2010. We stated in the CY 2010 OPPS/ASC proposed rule (74 FR 35267) that we believe the standard methodology for calculating median costs for device-Start Printed Page 60366dependent APCs, further refined to exclude claims with the “FC” modifier, gives us the most appropriate median costs for device-dependent APCs in which the hospital incurs the full cost of the device.

The median costs for the majority of device-dependent APCs that were calculated using the CY 2010 proposed rule claims data were generally stable, with most median costs increasing moderately compared to the median costs upon which the CY 2009 OPPS payment rates were based. However, the median costs for APC 0225 (Implantation of Neurostimulator Electrodes, Cranial Nerve) and APC 0418 (Insertion of Left Ventricular Pacing Electrode) demonstrated significant fluctuation. Specifically, the proposed CY 2010 median cost for APC 0225 increased approximately 49 percent compared to the final CY 2009 median cost, although this APC median cost had declined by approximately the same proportion from CY 2008 to CY 2009. The proposed CY 2010 median cost for APC 0418, which had decreased approximately 45 percent from CY 2008 to CY 2009, showed an increase of approximately 56 percent based on the claims data available for the CY 2010 proposed rule. As indicated in the CY 2010 OPPS/ASC proposed rule (74 FR 35267), we believe the fluctuations in median costs for these two APCs are a consequence of the small number of single bills upon which the median costs are based and the small number of providers of these services. As we have stated in the past, some fluctuation in relative costs from year to year is to be expected in a prospective payment system for low volume device-dependent APCs, particularly where there are small numbers of single bills from a small number of providers.

At the February 2009 meeting of the APC Panel, one presenter stated that the assignment of the single-array cranial neurostimulator pulse generator implantation procedure described by CPT code 61885 (Insertion or replacement of cranial neurostimulator pulse generator or receiver, direct or inductive coupling; with connection to a single electrode array) to APC 0039 (Level I Implantation of Neurostimulator Generator), along with the peripheral/gastric neurostimulator pulse generator implantation procedure described by CPT code 64590 (Insertion or replacement of peripheral or gastric neurostimulator pulse generator or receiver, direct or inductive coupling) is not appropriate, given the clinical and cost differences between the two procedures. According to the presenter, the cranial procedure described by CPT code 61885 is more similar clinically and in terms of resource utilization to the spinal neurostimulator pulse generator implantation procedure described by CPT code 63685 (Insertion or replacement of spinal neurostimulator pulse generator or receiver, direct or inductive coupling), which is the only CPT code assigned to APC 0222 (Level II Implantation of Neurostimulator) for CY 2009. The presenter requested that the APC Panel recommend that CMS restructure the existing configuration of neurostimulator pulse generator implantation APCs for CY 2010 by splitting APC 0039, so that procedures involving peripheral/gastric neurostimulators and cranial neurostimulators would be in distinct APCs, or by reassigning the cranial neurostimulator pulse generator implantation procedure described by CPT code 61885 from APC 0039 to APC 0222. In response to this request, the APC Panel recommended that CMS combine APC 0039 and APC 0222 for CY 2010, given the overall similarity in median costs among the cranial, peripheral/gastric, and spinal neurostimulator pulse generator implantation procedures assigned to these two APCs. The APC Panel also recommended that CMS maintain the configuration of APC 0315 (Level III Implantation of Neurostimulator Generator) as it currently exists in CY 2009 for CY 2010. The dual-array cranial neurostimulator pulse generator implantation procedure described by CPT code 61886 (Insertion or replacement of cranial neurostimulator pulse generator or receiver, direct or inductive coupling; with connection to two or more electrode arrays) is currently the only procedure assigned to APC 0315.

In the CY 2010 OPPS/ASC proposed rule (74 FR 35267 through 35268), we stated that we agree with the APC Panel that the median costs of the procedures described by CPT codes 61885, 63685, and 64590 are sufficiently similar to warrant placement of the CPT codes into a single APC, rather than two APCs. We accepted the APC Panel's recommendation and, therefore, proposed to reassign CPT code 63685 to APC 0039, to delete APC 0222, and to maintain the current configuration of APC 0315 for CY 2010. We also proposed to change the title of APC 0315 to “Level II Implantation of Neurostimulator Generator” to reflect the proposed two-level, rather than three-level, structure of the neurostimulator pulse generator implantation APCs.

In reviewing the APC Panel recommendation for consolidating APC 0039 and APC 0222, we observed that the median costs of the procedures assigned to APC 0425 (Level II Arthroplasty or Implantation with Prosthesis) and APC 0681 (Knee Arthroplasty) also are sufficiently similar to warrant combining these two APCs into one APC. The proposed median cost for the only procedure currently assigned to APC 0681, described by CPT code 27446 (Arthroplasty, knee, condyle and plateau; medial OR lateral compartment), was approximately $7,464 based on the claims data available for the CY 2010 OPPS/ASC proposed rule. This proposed median cost was very similar to the proposed median cost of approximately $7,852 calculated for APC 0425, which included other procedures involving the implantation of prosthetic devices into bone, similar to the procedure described by CPT code 27446. Given the shared resource and clinical characteristics of the procedures included in APC 0425 and the only procedure assigned to APC 0681 for CY 2009, in the CY 2010 OPPS/ASC proposed rule, we proposed to consolidate these two APCs by reassigning CPT code 27446 to APC 0425, and deleting APC 0681. We also noted that, over the past several years, the median cost for CPT code 27446 has fluctuated due to a low volume of services being performed by a small number of providers, and to a single provider performing the majority of services (73 FR 68535). We indicated in the CY 2010 OPPS/ASC proposed rule (74 FR 35268) that we believe by reassigning CPT code 27446 to APC 0425 and deleting APC 0681, we can maintain greater stability from year to year in the payment rate for this knee arthroplasty service, while also paying appropriately for the service.

At its August 2009 meeting, the APC Panel heard a joint presentation from neurostimulator manufacturers who asserted that CMS' proposal to consolidate spinal, peripheral/gastric, and single-array cranial neurostimulator pulse generator implantation procedures into a single APC does not adequately capture facility resources associated with the different types of neurostimulator pulse generators involved in these procedures and would undermine access to rechargeable neurostimulators. The neurostimulator manufacturers asked the APC Panel to recommend to CMS a revised, three-level APC configuration for neurostimulator pulse generator implantation procedures that would Start Printed Page 60367differentiate payment for procedures involving rechargeable and nonrechargeable neurostimulators. Following discussion of this request, the APC Panel recommended that CMS adopt the two-level neurostimulator pulse generator implantation APC configuration proposed by CMS for CY 2010.

Comment: Many commenters supported CMS' proposal to continue using the standard methodology for calculating median costs for device-dependent APCs, revised to exclude claims that contain the “FC” modifier. The commenters stated that the exclusion of partial credit claims would result in APC median costs that more appropriately reflect true hospital costs. Some commenters also supported the mandatory reporting of all HCPCS device C-codes to encourage hospitals to remain vigilant in reporting the costs of performing services involving devices. The commenters urged CMS to continue educating hospitals on the importance of accurate coding for devices, supplies, and other technologies to help ensure these items are more appropriately reflected in future years' payment rates for outpatient services.

Some commenters recommended CMS continue examining and refining the ratesetting methodology for procedures involving devices in order to encourage the continued development and proliferation of new technology. The commenters also encouraged CMS to develop mechanisms for capturing the costs of devices included on multiple procedure claims.

Response: We appreciate the commenters' support of the standard device-dependent APC ratesetting methodology, including our proposal to refine the methodology to exclude claims that contain the “FC” modifier. As we have stated in the past (73 FR 68535 through 68536), we agree that accurate reporting of device, supply, and technology charges will help to ensure that these items are appropriately accounted for in future years' OPPS payment rates. We encourage stakeholders to carefully review HCPCS code descriptors, as well as any guidance CMS may have provided for specific HCPCS codes. In addition, we have provided further instructions on the billing of medical and surgical supplies in the October 2008 OPPS update (Transmittal 1599, Change Request 6196, dated September 19, 2008) and the April 2009 OPPS update (Transmittal 1702, Change Request 6416, dated March 13, 2009). For HCPCS codes that are paid under the OPPS, providers may also submit inquiries to the AHA Central Office on HCPCS, which serves as a clearinghouse on the proper use of Level I HCPCS codes for hospitals and certain Level II HCPCS codes for hospitals, physicians, and other health professionals. Inquiries must be submitted using the approved form, which may be downloaded from the AHA Web site (http://www.ahacentraloffice.org) and either faxed to 312-422-4583 or mailed directly to the AHA Central Office: Central Office on HCPCS, American Hospital Association, One North Franklin, Floor 29, Chicago, IL 60606.

We agree with the commenters that we should continue to encourage the development and proliferation of new technology under the OPPS. We have special mechanisms to provide payment for new technologies and services under the OPPS, including new technology APCs and transitional pass-through payments for certain devices. We refer readers to sections III.C. and IV.A., respectively, of this final rule with comment period for more information on these payment methodologies. For all OPPS services, we continue our efforts to use the data from as many multiple procedure claims as possible, through approaches such as use of the bypass list and date splitting of claims as described further in section II.A. of this final rule with comment period, and through methodologies such as increased packaging and composite APCs. We refer readers to section II.A.2.e. of this final rule with comment period for a detailed summary of the public comments related to the establishment of a composite payment methodology for procedures involving cardiac resynchronization therapy defibrillators and pacemakers and our responses.

Comment: Many commenters responded to CMS' proposal to revise the APC configuration for neurostimulator pulse generator implantation procedures from a three-level structure to a two-level structure. While one commenter supported the proposal to combine the single-array cranial neurostimulator pulse generator implantation procedure, described by CPT code 61885 and used for vagus nerve stimulation, with the spinal neurostimulator pulse generator implantation procedure, described by CPT code 63685, many commenters argued that the proposed two-level configuration for neurostimulator pulse generator implantation procedures would threaten patient access to rechargeable spinal neurostimulators. These commenters asserted that hospitals may be unable to offer rechargeable spinal neurostimulator pulse generators at the proposed CY 2010 payment rate for APC 0039, which, according to the commenters, is substantially less than the cost of the device and the CY 2009 payment rate for the procedure. Some commenters presented an analysis of CY 2008 OPPS claims data available for the CY 2010 OPPS/ASC proposed rule that demonstrated a $4,132 difference in costs for spinal neurostimulator pulse generator implantation procedures involving rechargeable devices compared to the same procedures involving nonrechargeable devices. According to these commenters, this difference in cost warrants a separate APC for rechargeable spinal neurostimulator pulse generator procedures. They argued that while the cost difference does not violate the 2 times rule, it is large enough to influence hospitals to choose the lower cost nonrechargeable spinal neurostimulator pulse generators instead of the rechargeable devices if hospitals receive the same payment for the implantation procedure, regardless of the type of technology that is used. Several commenters noted that the threat to patient access to rechargeable spinal neurostimulators should be of particular concern to CMS, given the Agency's past recognition of the technology's ability to reduce the need for device replacements and the associated surgical risks, thereby reducing costs while providing optimal therapy.

Some commenters also stated that the consolidation of APC 0039 and APC 0222 would result in a disproportionately small number of single claims for procedures involving spinal neurostimulator pulse generators being used in ratesetting compared to the number of single claims for other types of neurostimulator pulse generator implantation procedures (specifically, peripheral/gastric and single-array cranial), further reducing the payment for these procedures relative to their costs. The commenters pointed out that, because spinal neurostimulator pulse generator implantation procedures are almost always performed with permanent lead placement procedures, rather than being staged as is common with other neurostimulator implantation procedures, they are typically not captured in the single claims used to calculate the median cost for consolidated APC 0039, upon which payment for that APC would be based. Many commenters argued that the proposed policy would be inconsistent with CMS' rationale in the CY 2008 OPPS/ASC final rule with comment period for implementing the current Start Printed Page 60368APC configuration for neurostimulator pulse generator implantation procedures, which places the spinal neurostimulator pulse generator implantation procedure in its own APC. According to the commenters, CMS implemented a separate APC for this procedure because, unlike other neurostimulator pulse generator implantation procedures that involve only the less costly nonrechargeable devices, spinal neurostimulator pulse generator implantation procedures utilize either the more costly rechargeable device or the less costly nonrechargeable device. The commenters summarized CMS' assessment in the CY 2008 OPPS/ASC final rule with comment period that the placement of the procedure described by CPT code 63685 as the only procedure in APC 0222 would enable CMS to calculate payment rates for spinal neurostimulator implantation procedures that reflect changes in surgical practice based on clinical, rather than financial, considerations.

Many commenters asserted that CMS' proposed APC configuration for neurostimulator pulse generator implantation procedures would result in APC 0039 being overly broad and clinically heterogeneous. The commenters stated that the spinal, peripheral/gastric, and single-array cranial neurostimulator pulse generator implantation procedures proposed for assignment to APC 0039 are clinically disparate and involve widely diverse neurostimulator technologies (including vagus nerve stimulators for epilepsy, sacral nerve stimulators for urinary incontinence, gastric pacemakers for chronic nausea and vomiting, and spinal neurostimulators for chronic neuropathic pain). One commenter requested that the CY 2010 proposal for neurostimulator pulse generator implantation procedures be reviewed by a pain management physician and a certified coder working in pain management.

According to the commenters, in order to address these concerns, CMS should differentiate payment for procedures involving rechargeable and nonrechargeable neurostimulators by revising the current (CY 2009) three-level APC payment structure for neurostimulator pulse generator implantation procedures. The commenters stated that their recommended configuration would group peripheral/gastric and spinal neurostimulator pulse generator implantation procedures (described by CPT codes 64590 and 63685, respectively) involving nonrechargeable devices in Level 1; single-array cranial neurostimulator pulse generator implantation procedures (described by CPT code 61885) involving nonrechargeable devices in Level 2; and dual-array cranial neurostimulator pulse generator implantation procedures (described by CPT code 61886) and any neurostimulator pulse generator implantation procedure involving rechargeable devices in Level 3. According to the commenters, this APC configuration for neurostimulator pulse generator implantation procedures could be implemented by assigning APCs based on the presence of HCPCS device C-codes present on claims or through the creation of new Level II HCPCS G-codes that would distinguish procedures performed to implant nonrechargeable neurostimulator pulse generators from those performed to implant rechargeable neurostimulator pulse generators. The commenters asserted that CMS has shown a willingness to use alternative mapping schemes in the past to differentiate resource costs for procedures involving technologies such as drug-eluting coronary stents, implantable cardioverter defibrillators (ICDs), and linear accelerator-based stereotactic radiosurgery (LINAC-SRS), when there are important technology and facility resource cost differences that cannot be identified through the use of existing CPT codes.

The commenters urged CMS to maintain the current neurostimulator pulse generator implantation APC configuration as adopted in CY 2008 if the Agency decides not to implement their recommended three-level technology-specific APC configuration, or to create a four-level APC configuration in which the existing APC 0039 is split, with one APC for single-array cranial neurostimulator pulse generator implantation procedures and a separate APC for peripheral/gastric neurostimulator pulse generator implantation procedures. According to the commenters, either approach would yield more accurate payment rates than CMS' proposal for CY 2010.

Response: We do not agree with the commenters who argued that we should not implement our CY 2010 proposal to revise the APC configuration of neurostimulator pulse generator implantation procedures from a three-level structure to a two-level structure. We are finalizing our CY 2010 proposal to reassign CPT code 63685 to APC 0039, to delete APC 0222, and to maintain the current configuration of APC 0315. We believe that the final CY 2010 median costs for the neurostimulator pulse generator implantation procedures, described by CPT codes 61885, 63685, and 64590, are sufficiently similar to warrant their placement in a single APC, as demonstrated in Table 7 below. The difference between the procedure with the highest median cost in APC 0039, described by CPT code 63685, and the procedure with the lowest median cost in APC 0039, described by CPT code 64590, is approximately $3,000. Even if we were to consider the difference in costs between spinal neurostimulator pulse generator implantation procedures described by CPT code 63685 when they are performed with a rechargeable device compared to when they are performed with a nonrechargeable device, estimated by the commenters to be approximately $4,000, the grouping of these procedures in the same APC would not violate the 2 times rule. We also point out that, as demonstrated in Table 7, we use a similar number of single claims with each of the CPT codes assigned to APC 0039 to calculate the median cost upon which the final CY 2010 payment rate for APC 0039 is based.

We do not agree with the commenters that these modest differences in costs, either among the various types of neurostimulator pulse generator implantation procedures assigned to APC 0039 or among the same types of procedures involving rechargeable versus nonrechargeable devices, are sufficiently substantial to result in hospitals denying access to the limited subset of patients for whom the more expensive rechargeable technology is clinically indicated. We note that payment based on a measure of central tendency is a principle of any prospective payment system. As we have stated in the past (73 FR 68562), in some individual cases, payment exceeds the average cost, and in other cases, payment is less than the average cost. On balance, however, payment should approximate the relative cost of the average case, recognizing that, as a prospective payment system, the OPPS is a system of averages.

In addition to being similar in terms of resource utilization, we believe the procedures described by CPT codes 61885, 63685, and 64590 are comparable from a clinical perspective because they all involve the subcutaneous placement of a neurostimulator pulse generator. We do not agree with the commenters who argued that these procedures should be considered clinically disparate because they use widely diverse technologies for very different clinical indications. It is not uncommon under the OPPS to group procedures described by relatively general HCPCS codes that Start Printed Page 60369may utilize a wide variety of technologies and may be performed to treat different patient populations in the same APC. Furthermore, as stated in the CY 2009 OPPS/ASC final rule with comment period (73 FR 66537), the standard device-dependent APC ratesetting methodology does not take into consideration patient diagnoses. In response to the commenter who requested that the CY 2010 proposal for neurostimulator pulse generator implantation procedures be reviewed by a pain management physician and a certified coder working in pain management, we note that the CMS staff involved in reviewing the clinical characteristics of the APC groups include medical advisors from a variety of specialties as well as certified coders.

We also do not agree that we should not implement the two-level APC configuration for neurostimulator pulse generator implantation procedures as proposed for CY 2010 because, as argued by some commenters, it would be inconsistent with our rationale in the CY 2008 OPPS/ASC final rule with comment period to maintain a separate APC solely for spinal neurostimulator pulse generator implantation procedures. It is our standard process under the OPPS to reassess the composition of APCs, including reviewing the median costs of individual HCPCS codes, annually when we have the most current claims and Medicare cost report data, and to propose through our annual rulemaking cycle changes that we believe are necessary to maintain and improve the clinical and resource homogeneity of APCs based on the updated data. In CY 2008, the median costs for the single-array cranial and peripheral/gastric neurostimulator pulse generator implantation procedures described by CPT codes 61885 and 64590 of $12,799 and $10,954, respectively, were more divergent from the median cost calculated for the spinal neurostimulator pulse generator implantation procedure of $15,150 using the CY 2006 claims and cost report data available at that time, compared to the median costs for these procedures calculated from the CY 2008 claims and cost report data available for this CY 2010 OPPS/ASC final rule with comment period, as demonstrated in Table 7 below.

Finally, we do not agree with the commenters that we should differentiate payment for neurostimulator pulse generator implantation procedures based on the type of technology that is implanted (that is, rechargeable or nonrechargeable), nor do we agree with the commenters that past CMS policy to use alternative mapping schemes to differentiate resource costs for certain procedures, such as those involving drug-eluting stents, ICDs, and LINAC-SRS, serves as a precedent to do so. As we have stated in the past (72 FR 66715 through 66716 and 73 FR 68538), a policy to provide different payments for the same procedures according to the types of devices implanted would not be consistent with our overall strategy under the OPPS to encourage hospitals to use resources more efficiently by increasing the size of the payment bundles. The circumstances surrounding the payment policies and coding configurations for drug-eluting stents (67 FR 66732 through 66734), ICDs (72 FR 66702 through 66703), and LINAC-SRS (72 FR 66734 through 66737) are markedly different from the circumstances surrounding neurostimulator pulse generator implantation procedures. We developed HCPCS G-codes to distinguish payment for procedures involving drug-eluting stents from procedures involving non-drug-eluting stents because drug-eluting stents did not meet the criteria for transitional pass-through payment or for payment under a New Technology APC. Unlike drug-eluting stents, rechargeable spinal neurostimulators were granted pass-through status under the OPPS in CY 2006, which lasted until December 31, 2007. In the case of ICDs, we created HCPCS G-codes to gather cost data on single and dual chamber ICDs, but we did not differentiate payment for ICD insertion based on the type of technology that was used (72 FR 66703). Finally, our policy to utilize HCPCS G-codes rather than CPT codes for payment under the OPPS for LINAC-SRS treatment delivery services recognizes the vastly different capital equipment costs required for various LINAC-SRS services, rather than differences in the costs of single-use devices implanted in patients during the same procedure.

Comment: Some commenters disagreed with CMS” presentation at the August 2009 APC Panel meeting of the proposed CY 2010 line-item median costs for the two device HCPCS C-codes that describe neurostimulator pulse generators, specifically HCPCS code C1767 (Generator, neurostimulator (implantable), nonrechargeable) and HCPCS code C1820 (Generator, neurostimulator (implantable), with rechargeable battery and charging system). The commenters disputed the accuracy of the data presented by CMS, specifically that the line-item median costs for HCPCS codes C1767 and C1820 are $9,606 and $9,636, respectively, based on CY 2008 claims available for the CY 2010 OPPS/ASC proposed rule. According to the commenters, these line-item median costs are inconsistent with the commenters” analyses of CY 2010 OPPS/ASC proposed rule data, which indicated that the line-item median costs for HCPCS codes C1767 and C1820 are $10,580 and $13,587, respectively. One commenter urged CMS to reanalyze the data and to disregard the APC Panel's support of the proposed CY 2010 APC configuration for neurostimulator pulse generator implantation procedures if the data were found to be erroneous. Another commenter characterized CMS” presentation of the line-item median costs for HCPCS codes C1767 and C1820 as incomplete because OPPS payment rates are based upon median costs that include all packaged items and services associated with providing a procedure as they appear on single claims, and not the line-item median costs for individual devices. The commenter asked CMS to ensure that all data presented to the APC Panel in the future is full and appropriate information for decisionmaking.

Response: In response to the commenters” concerns, we reassessed our methodology for calculating the proposed CY 2010 line-item median costs for HCPCS codes C1767 and C1820 and verified that the information presented to the APC Panel is accurate based on the CY 2008 claims data available for the CY 2010 OPPS/ASC proposed rule. The line-item statistics for these HCPCS codes, along with all other HCPCS codes recognized under the OPPS, are released to the public as part of the OPPS limited data set. We do not agree with the commenters that the presentation of these data was incomplete or inappropriate. We frequently consider line-item median costs for devices and other packaged items and services as one data element among several when we evaluate the clinical and resource homogeneity of APCs, particularly when stakeholders voice concerns that the costs of different items are driving procedure costs or influencing hospitals” decisions to provide certain services. An advantage of the line-item median costs is that they represent data from all OPPS claims, and not just the single claims that we are able to use in ratesetting for procedures. Therefore, we believe that a comparison of line-item costs is particularly appropriate for different types of neurostimulator pulse generators because one of the commenters” concerns was that there are relatively few single claims available Start Printed Page 60370for ratesetting for the implantation of spinal neurostimulator pulse generators. We would expect the device costs on multiple procedure claims to be reflective of the hospital costs of these neurostimulator pulse generators, because commenters stated that multiple procedure claims resulted from the most typical spinal neurostimulator implantation procedures. Furthermore, we would not expect there to be significant packaged costs associated with the neurostimulator pulse generators described by these device HCPCS codes. Therefore, we would expect the line-item median costs to accurately reflect the differential costs of non-rechargeable and rechargeable neurostimulator technology. We note that the APC Panel members are well-acquainted with the OPPS ratesetting methodology, including the use of single procedure claims and not line-item median costs for individual items, to calculate the median costs upon which OPPS payment rates are based.

Table 7—CY 2010 APC Configuration for Payment of Neurostimulator Pulse Generator Implantation Procedures

CY 2010 APCRevised APC Title for CY 2010CY 2010 CPT CodeCY 2010 CPT Code DescriptorCY 2010 CPT Code Median CostCY 2010 CPT Code Single ClaimsCY 2010 APC Median Cost
0039Level I Implantation of Neuro­stimulator Generator61885Insertion or replacement of cranial neurostimulator pulse generator or receiver, direct or inductive coupling; with connection to a single electrode array$14,1411,260$13,766
63685Insertion or replacement of spinal neurostimulator pulse generator or receiver, direct or inductive coupling15,8021,26213,766
64590Insertion or replacement of peripheral or gastric neurostimulator pulse generator or receiver, direct or inductive coupling12,7261,97813,766
0315Level II Implantation of Neuro­stimulator Generator61886Insertion or replacement of cranial neurostimulator pulse generator or receiver, direct or inductive coupling; with connection to two or more electrode arrays18,3501,00418,350

Comment: Several commenters expressed support for the proposed CY 2010 payment rate for the implantation of auditory osseointegrated devices, described by CPT codes 69714 (Implantation, osseointegrated implant, temporal bone, with percutaneous attachment to external speech processor/cochlear stimulator; without mastoidectomy); 69715 (Implantation, osseointegrated implant, temporal bone, with percutaneous attachment to external speech processor/cochlear stimulator; with mastoidectomy); 69717 (Replacement (including removal of existing device), osseointegrated implant, temporal bone, with percutaneous attachment to external speech processor/cochlear stimulator; without mastoidectomy); and 69718 (Replacement (including removal of existing device), osseointegrated implant, temporal bone, with percutaneous attachment to external speech processor/cochlear stimulator; with mastoidectomy) and assigned to APC 0425. Other commenters, however, stated that the proposed payment rate for APC 0425 is less than hospitals' device and service-related costs associated with the procedures described by these CPT codes and urged CMS to consider a slight increase in the payment for APC 0425.

Response: We agree with the commenters that the payment rate for APC 0425, calculated from the standard device-dependent APC ratesetting methodology, appropriately reflects hospitals' relative costs for providing the procedures assigned to APC 0425 as reported to us in the claims and cost report data. We used 1,410 single claims from CY 2008 to calculate the median cost upon which the final CY 2010 payment rate for APC 0425 is based. The final CY 2010 median cost for APC 0425 is approximately $7,932, slightly higher than the final CY 2009 median cost for APC 0425 of $7,863. We note that we were able to use significantly more single claims in ratesetting for APC 0425 for CY 2010 compared to CY 2009 (1,410 single claims from CY 2008 compared to 668 single claims from CY 2007). We disagree with the commenters who requested an additional increase in the payment rate for APC 0425, because this would artificially and inaccurately inflate payment rates. A fundamental principle of the OPPS is that it is based on relative weights, and as we have stated in the past (73 FR 68541), it is the relativity of the costs to one another, rather than absolute cost, that is important in setting payment rates. To deviate from our standard OPPS ratesetting methodology and increase the payment rates for certain procedures beyond their relatives costs as derived from claims and cost report data would skew this relativity.

Comment: Some commenters supported CMS' proposal to reassign CPT code 27446 to APC 0425 and to delete APC 0681. Other commenters, however, opposed the consolidation of these two APCs, arguing that the procedure described by CPT code 27446 is clinically dissimilar from the arthroplasty procedures currently assigned to APC 0425. The commenters recommended that CMS continue to maintain APC 0681 for CY 2010 and to add other total knee arthroplasty procedures to this APC, along with the procedure described by CPT code 27446.

Response: We disagree with the commenters who argued that it is necessary to maintain APC 0681 specifically for knee arthroplasty procedures because we do not believe it is appropriate to maintain an APC that is not necessary to classify services into groups that are similar clinically and in terms of resource utilization. We continue to believe that CPT code 27446 is most appropriately assigned to APC 0425 for CY 2010, as we proposed, based on consideration of the procedure's clinical and resource characteristics. As described in section XI.B. of this final rule with comment Start Printed Page 60371period, we are not removing any total knee arthroplasty procedures from the inpatient list.

Comment: Several commenters supported the proposed payment rate for the implantation of cochlear implants, described by CPT code 69930 (Cochlear device implantation, with or without mastoidectomy) and assigned to APC 0259 (Level VII ENT Procedures). These commenters stated that while hospitals' device and service-related costs for these procedures likely still exceed the proposed payment rate for APC 0259, they represent an improvement in payment relative to CY 2009 that may lead to better access to care for Medicare beneficiaries.

Response: We appreciate the commenters' support of the proposed payment rate for APC 0259. We believe that the standard device-dependent APC ratesetting methodology results in a payment rate that reflects hospitals' relative costs for providing the procedure assigned to this APC as reported to us in the claims and cost report data.

Comment: One commenter concurred with CMS' proposal that APC 0385 (Level I Prosthetic Urological Procedures) and APC 0386 (Level II Prosthetic Urological Procedures) continue to be recognized as device-dependent APCs. The commenter supported CMS' continued application of procedure-to-device edits for procedures assigned to these APCs.

Response: We appreciate the commenter's support of the continued recognition of APC 0385 and 0386 as device-dependent APCs. We agree that claims processing edits for devices that are integral to the performance of procedures assigned to device-dependent APCs are an important element of the standard device-dependent APC ratesetting methodology.

Comment: One commenter urged CMS not to reduce the payment for the procedure described by CPT code 62361 (Implantation or replacement of device for intrathecal or epidural drug infusion; nonprogrammable pump), which is assigned to APC 0227 (Implantation of Drug Infusion Device). The commenter stated that patient access to this procedure is limited due to recent payment cuts.

Response: The final CY 2010 median cost for APC 0227 of approximately $13,268 is approximately 10 percent higher than the median cost of $12,006, upon which the final CY 2009 payment rate was based, and approximately 13 percent higher than the median cost of $11,569, upon which the final CY 2008 payment rate was based. We believe that the final CY 2010 median cost for APC 0227 of $13,268, which is calculated using the standard device-dependent APC methodology, results in a final CY 2010 payment rate that accurately and appropriately reflects hospitals” costs for providing the service described by CPT code 62361 and will not result in any barriers to patient care.

In summary, after consideration of the public comments we received, we are finalizing our proposed CY 2010 payment policies for device-dependent APCs, without modification. The CY 2010 OPPS payment rates for device-dependent APCs are based on their median costs calculated from CY 2008 claims and the most recent cost report data, using only claims that pass the device edits, do not contain token charges for devices, and do not have a modifier signifying that the device was furnished without cost or with full or partial credit. We continue to believe that the median costs calculated from the single claims that meet these criteria represent the most valid estimated relative costs of these services to hospitals when they incur the full cost of the devices required to perform the procedures. The CY 2010 device-dependent APCs are listed in Table 8 below.

Table 8—CY 2010 Device-Dependent APCs

CY 2010 APCCY 2010 Status indicatorCY 2010 APC Title
0039SLevel I Implantation of Neurostimulator Generator
0040SPercutaneous Implantation of Neurostimulator Electrodes
0061SLaminectomy, Laparoscopy, or Incision for Implantation of Neurostimulator Electrodes
0082TCoronary or Non-Coronary Atherectomy
0083TCoronary or Non-Coronary Angioplasty and Percutaneous Valvuloplasty
0084SLevel I Electrophysiologic Procedures
0085TLevel II Electrophysiologic Procedures
0086TLevel III Electrophysiologic Procedures
0089TInsertion/Replacement of Permanent Pacemaker and Electrodes
0090TInsertion/Replacement of Pacemaker Pulse Generator
0104TTranscatheter Placement of Intracoronary Stents
0106TInsertion/Replacement of Pacemaker Leads and/or Electrodes
0107TInsertion of Cardioverter-Defibrillator
0108TInsertion/Replacement/Repair of Cardioverter-Defibrillator Leads
0115TCannula/Access Device Procedures
0202TLevel VII Female Reproductive Procedures
0225SImplantation of Neurostimulator Electrodes, Cranial Nerve
0227TImplantation of Drug Infusion Device
0229TTranscatheter Placement of Intravascular Shunts
0259TLevel VII ENT Procedures
0293TLevel V Anterior Segment Eye Procedures
0315SLevel II Implantation of Neurostimulator Generator
0384TGI Procedures with Stents
0385SLevel I Prosthetic Urological Procedures
0386SLevel II Prosthetic Urological Procedures
0418TInsertion of Left Ventricular Pacing Electrode
0425TLevel II Arthroplasty or Implantation with Prosthesis
0427TLevel II Tube or Catheter Changes or Repositioning
0622TLevel II Vascular Access Procedures
0623TLevel III Vascular Access Procedures
0648TLevel IV Breast Surgery
Start Printed Page 60372
0652TInsertion of Intraperitoneal and Pleural Catheters
0653TVascular Reconstruction/Fistula Repair with Device
0654TInsertion/Replacement of a Permanent Dual Chamber Pacemaker
0655TInsertion/Replacement/Conversion of a Permanent Dual Chamber Pacemaker
0656TTranscatheter Placement of Intracoronary Drug-Eluting Stents
0674TProstate Cryoablation
0680SInsertion of Patient Activated Event Recorders

(2) Blood and Blood Products

Since the implementation of the OPPS in August 2000, we have made separate payments for blood and blood products through APCs rather than packaging payment for them into payments for the procedures with which they are administered. Hospital payments for the costs of blood and blood products, as well as for the costs of collecting, processing, and storing blood and blood products, are made through the OPPS payments for specific blood product APCs.

In the CY 2010 OPPS/ASC proposed rule (74 FR 35269), we proposed to continue to establish payment rates for blood and blood products using our blood-specific CCR methodology, which utilizes actual or simulated CCRs from the most recently available hospital cost reports to convert hospital charges for blood and blood products to costs. This methodology has been our standard ratesetting methodology for blood and blood products since CY 2005. It was developed in response to data analysis indicating that there was a significant difference in CCRs for those hospitals with and without blood-specific cost centers, and past comments indicating that the former OPPS policy of defaulting to the overall hospital CCR for hospitals not reporting a blood-specific cost center often resulted in an underestimation of the true hospital costs for blood and blood products. Specifically, in order to address the differences in CCRs and to better reflect hospitals' costs, we proposed to continue to simulate blood CCRs for each hospital that does not report a blood cost center by calculating the ratio of the blood-specific CCRs to hospitals' overall CCRs for those hospitals that do report costs and charges for blood cost centers. We would then apply this mean ratio to the overall CCRs of hospitals not reporting costs and charges for blood cost centers on their cost reports in order to simulate blood-specific CCRs for those hospitals. We calculated the median costs upon which the proposed CY 2010 payment rates for blood and blood products were based using the actual blood-specific CCR for hospitals that reported costs and charges for a blood cost center and a hospital-specific simulated blood-specific CCR for hospitals that did not report costs and charges for a blood cost center.

We stated in the CY 2010 OPPS/ASC proposed rule (74 FR 35269) that we continue to believe the hospital-specific, blood-specific CCR methodology better responds to the absence of a blood-specific CCR for a hospital than alternative methodologies, such as defaulting to the overall hospital CCR or applying an average blood-specific CCR across hospitals. Because this methodology takes into account the unique charging and cost accounting structure of each provider, we believe that it yields more accurate estimated costs for these products. We indicated that we believe continuing with this methodology in CY 2010 would result in median costs for blood and blood products that appropriately reflect the relative estimated costs of these products for hospitals without blood cost centers and, therefore, for these blood products in general.

Comment: One commenter expressed appreciation for CMS' recognition of the complexities of calculating payment rates for blood and blood products and the accommodations CMS has made through the blood and blood product ratesetting methodology to ensure the calculated rates are as fair as possible. However, several commenters stated that the proposed payment rates for many blood and blood products are less than the costs hospitals incur acquiring, managing, and processing them, and that the claims-based cost data for blood and blood products are error-prone and subject to significant and unexplained fluctuations. They noted that the payment decreases for several blood and blood products seem inexplicable because prices for blood have been increasing due to new technologies and tests required to ensure the continued safety of the blood supply and increasingly expensive donor recruitment and retention efforts. According to the commenters, a comparison of the proposed APC payment changes for blood and blood products to the producer price index (PPI) for blood and organ banks, which increased 3.1 percent from July 2008 to July 2009, indicates that the blood product payment rates in the CY 2010 OPPS/ASC proposed rule do not reflect overall pricing trends in the blood banking industry. The commenters asked CMS to adjust the CY 2010 payment rates for blood and blood products by increasing all of the CY 2009 payment rates by 3.1 percent, or by implementing a 3.1 percent payment floor for CY 2010 payment rates compared to CY 2009 payment rates for blood and blood products. One commenter particularly urged CMS to apply a 3 percent minimum increase in payment for the highest volume blood product, described by HCPCS code P9016 (Red blood cells, leukocytes reduced, each unit). The commenters asserted that the use of the PPI for blood and organ banks in calculating hospital payment is not unprecedented. They stated that in the CY 2005 OPPS final rule, CMS used the PPI for blood and derivatives for human use in calculating the payment rates for low-volume blood products. They also pointed out that CMS recognized the value of the PPI for blood and organ banks by using it to update blood and blood product prices in the market basket under the IPPS for CY 2010.

Response: We continue to believe that using blood-specific CCRs applied to hospital claims data results in payments that appropriately reflect hospitals' relative costs of providing blood and blood products as reported to us by hospitals. We do not believe it is necessary or appropriate to use the PPI for blood and organ banks as a benchmark for updating the payment rates for blood and blood products from year to year, because it is not our standard process under the OPPS for any item or service to update payment rates by implementing across-the-board, product-specific inflation updates to the payment rates that were in place the year before. Rather, we annually update Start Printed Page 60373payment groups and payment weights using the most recently available hospital claims and cost report data. This process allows us to recalibrate the payment groups and payment weights in response to changes in hospitals' costs from year to year. A fundamental principle of the OPPS is that it is based on relative weights, and as we have stated in the past (73 FR 68541), it is the relativity of the costs to one another, rather than absolute cost, that is important in setting payment rates. To deviate from our standard OPPS ratesetting methodology and update the payment rates for blood and blood products by the PPI would skew this relativity.

We also note that, as discussed in section II.B. of this final rule with comment period, we are required by law to update the conversion factor used to determine payment rates under the OPPS. For CY 2010, the update is equal to the hospital inpatient market basket increase. The PPI for blood and organ banks is one of several price proxies used to calculate the hospital inpatient market basket (74 FR 43847), which represents the change in price over time of the same mix (quantity and intensity) of goods and services purchased to provide hospital services. In this way, the PPI for blood and blood products is already incorporated in the CY 2010 payment rates for blood and blood products.

Comment: One commenter noted that the proposed CY 2010 median costs for several blood and blood products fluctuated significantly relative to CY 2009. The commenter expressed concern about potentially large payment decreases and noted that, in the past, CMS dampened payment decreases for blood and blood products to limit product losses. The commenter requested that CMS disclose the source of the fluctuations in CY 2010 median costs for blood and blood products and implement a dampening policy to mitigate significant payment fluctuations, not only for blood and blood products but for all other services.

Response: As stated previously, we continue to believe that using blood-specific CCRs applied to hospital claims data results in payments that appropriately reflect hospitals' relative costs of providing blood and blood products as reported to us by hospitals. We do not believe it is necessary or appropriate to implement a dampening policy to mitigate significant payment fluctuations, for blood and blood products or for any other items and services payable under the OPPS, as described in section II.A.2.c. of this final rule with comment period. As we have stated in the past (73 FR 68541), it is our common practice to review significant changes in median costs from year to year and from the proposed rule to the final rule for a given calendar year. The final CY 2010 median costs for more than two-thirds of all blood and blood products changed by a margin of less than 10 percent compared to the CY 2009 median costs. Of the remaining blood and blood products, 8 demonstrated decreases in median costs of greater than 10 percent, and 5 demonstrated increases in median costs of greater than 10 percent. We determined that the fluctuations in median costs for these 13 blood and blood products were due to contributions of additional claims, the addition or removal of individual hospitals furnishing particular blood and blood products, and revised cost report data. For all APCs whose payment rates are based upon relative payment weights, we note that the quality and accuracy of reported units and charges significantly influence the median costs that are the basis for our payment rates, especially for low volume items and services. Beyond our standard OPPS trimming methodology (described in section II.A.2. of this final rule with comment period) that we apply to those claims that have passed various types of claims processing edits, it is not our general policy to judge the accuracy of hospital coding and charging for purposes of ratesetting.

Comment: One commenter recommended that CMS recognize plasma protein fraction (PPF) products as drugs under the OPPS and assign status indicator “K” (Nonpass-Through Drugs and Nonimplantable Biologicals, Including Therapeutic Radiopharmaceuticals) to HCPCS codes P9043 (Infusion, plasma protein fraction (human), 5%, 50 ml) and P9048 (Infusion, plasma protein fraction (human), 5%, 250 ml), rather than assigning them status indicator “R” (Blood and Blood Products). The commenter also requested that CMS instruct providers to use the appropriate infusion CPT codes for administration of PPF, rather than blood transfusion codes. According to the commenter, PPF is similar clinically to albumin in terms of how it is derived and the patients for whom it is indicated. The commenter also stated that, according to the AABB, both albumin and PPF are blood derivatives that should be billed with pharmacy revenue codes. According to the commenter, the AABB also indicates that the administration of blood derivatives, including PPF, should be billed with injection or infusion CPT codes rather than blood transfusion CPT codes.

Response: We did not propose to change the status indicators for the PPF products described by HCPCS codes P9043 and P9048 from “R” to “K” for CY 2010. Because changing the status indicators for these products as the commenter recommended could have significant payment implications, we believe we should not consider such a potential change in policy without seeking input from all interested stakeholders through our annual rulemaking cycle. Specifically, changing the status indicator from “R” to “K” would require us to calculate the payment rates for PPF using mean unit cost from hospital claims, as we currently do for albumin products, rather than using our standard blood-specific CCR methodology for blood and blood products.

We last addressed the issue of whether plasma-derived therapies and their recombinant analogs should be considered blood and blood products for purposes of payment under the OPPS in the CY 2003 OPPS final rule with comment period (67 FR 66774) and the CY 2004 OPPS final rule with comment period (68 FR 63455). We stated that, because these products are highly processed and not manufactured by local blood banks, they do not have the same access and safety concerns as other blood and blood products. Therefore, we did not consider any plasma-derived products and their recombinant analogs, including albumin and immune globulins, to fall under the category of blood and blood products (67 FR 66774).

We are requesting comments on this final rule with comment period that address whether PPF should be recognized as a blood and blood product, designated with status indicator “R,” or as a nonpass-through drug and biological, designated with status indicator “K.” Specifically, we are interested in how PPF is derived and manufactured, and whether the same access and safety concerns that apply to the blood and blood products recognized under the OPPS for payment purposes also apply to PPF. Finally, we are interested in the relationship between albumin and PPF, from clinical, manufacturing, and safety perspectives, and whether there would be a rationale for treating these products similarly for payment purposes under the OPPS. We will consider these comments as we prepare for the CY 2011 annual rulemaking cycle.

Comment: One commenter asked if the product “prepooled cryoprecipitate” Start Printed Page 60374would be added to the list of blood and blood products.

Response: The existing HCPCS code that describes cryoprecipitate products, P9012 (Cryoprecipitate, each unit), is recognized under the OPPS for payment purposes as a blood and blood product. We note there is an established process in place for requesting a revision to the Level II HCPCS codes if stakeholders believe the current codes cannot adequately address all clinical circumstances. The Level II HCPCS coding system is a comprehensive and standardized system that classifies similar products that are medical in nature into categories for the purpose of efficient claims processing. The process and criteria for revising Level II HCPCS codes is available on the CMS Web site at: http://www.cms.hhs.gov/​MedHCPCSGenInfo/​02_​HCPCSCODINGPROCESS.asp#TopOfPage.

After consideration of the public comments we received, we are finalizing, without modification, our proposal to calculate the median costs upon which the CY 2010 payment rates for blood and blood products are based using the blood-specific CCR methodology that we have utilized since CY 2005. We believe that continuing this methodology in CY 2010 results in median costs for blood and blood products that appropriately reflect the relative estimated costs of these products for hospitals without blood cost centers and, therefore, for these products in general.

We refer readers to Addendum B to this final rule with comment period for the final CY 2010 payment rates for blood and blood products, which are identified with status indicator “R.” For more detailed discussion of the blood-specific CCR methodology, we refer readers to the CY 2005 OPPS proposed rule (69 FR 50524 through 50525). For a full history of OPPS payment for blood and blood products, we refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66807 through 66810).

(3) Single Allergy Tests

In the CY 2010 OPPS/ASC proposed rule (74 FR 35269), we proposed to continue with our methodology of differentiating single allergy tests (“per test”) from multiple allergy tests (“per visit”) by assigning these services to two different APCs to provide accurate payments for these tests in CY 2010. Multiple allergy tests are currently assigned to APC 0370 (Allergy Tests), with a median cost calculated based on the standard OPPS methodology. We provided billing guidance in CY 2006 in Transmittal 804 (issued on January 3, 2006) specifically clarifying that hospitals should report charges for the CPT codes that describe single allergy tests to reflect charges “per test” rather than “per visit” and should bill the appropriate number of units of these CPT codes to describe all of the tests provided. However, as noted in the CY 2010 OPPS/ASC proposed rule (74 FR 35269), our CY 2008 claims data available for that proposed rule for APC 0381 did not reflect improved and more consistent hospital billing practices of “per test” for single allergy tests. The median cost of APC 0381, calculated for the proposed rule according to the standard single claims OPPS methodology, was approximately $55, significantly higher than the CY 2009 median cost of APC 0381 of approximately $23 calculated according to the “per unit” methodology, and greater than we would expect for these procedures that are to be reported “per test” with the appropriate number of units. Some claims for single allergy tests still appear to provide charges that represent a “per visit” charge, rather than a “per test” charge. Therefore, consistent with our payment policy for single allergy tests since CY 2006, we proposed to calculate a “per unit” median cost for APC 0381, based upon 530 claims containing multiple units or multiple occurrences of a single CPT code. The proposed CY 2010 median cost for APC 0381 using the “per unit” methodology was approximately $29. For a full discussion of this methodology, we refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66737).

We did not receive any public comments on our CY 2010 proposal for payment of single allergy tests. Therefore, we are finalizing our CY 2010 proposal, without modification, to calculate a “per unit” median cost for APC 0381 as described above in this section. The final CY 2010 median cost of APC 0381 is approximately $29.

(4) Echocardiography Services

In CY 2008, we implemented a policy whereby payment for all contrast agents is packaged into the payment for the associated imaging procedure, regardless of whether the contrast agent met the OPPS drug packaging threshold. Section 1833(t)(2)(G) of the Act requires us to create additional APC groups of services for procedures that use contrast agents to classify them separately from those procedures that do not utilize contrast agents. To reconcile this statutory provision with our final policy of packaging all contrast agents, for CY 2008, we calculated HCPCS code-specific median costs for all separately payable echocardiography procedures that may be performed with contrast agents by isolating single and “pseudo” single echocardiography claims with the following CPT codes where a contrast agent was also billed on the claim:

  • 93303 (Transthoracic echocardiography for congenital cardiac anomalies; complete);
  • 93304 (Transthoracic echocardiography for congenital cardiac anomalies; follow-up or limited study);
  • 93307 (Echocardiography, transthoracic, real-time with image documentation (2D) with or without M-mode recording; complete);
  • 93308 (Echocardiography, transthoracic, real-time with image documentation (2D) with or without M-mode recording; follow-up or limited study);
  • 93312 (Echocardiography, transesophageal, real time with image documentation (2D) (with or without M-mode recording); including probe placement, image acquisition, interpretation and report);
  • 93315 (Transesophageal echocardiography for congenital cardiac anomalies; including probe placement, image acquisition, interpretation and report);
  • 93318 (Echocardiography, transesophageal (TEE) for monitoring purposes, including probe placement, real time 2-dimensional image acquisition and interpretation leading to ongoing (continuous) assessment of (dynamically changing) cardiac pumping function and to therapeutic measures on an immediate time basis); and
  • 93350 (Echocardiography, transthoracic, real-time with image documentation (2D), with or without M-mode recording, during rest and cardiovascular stress test using treadmill, bicycle exercise and/or pharmacologically induced stress, with interpretation and report).

After reviewing HCPCS code-specific median costs, we determined that all echocardiography procedures that may be performed with contrast agents are reasonably similar both clinically and in terms of resource use. In CY 2008, we created APC 0128 (Echocardiogram with Contrast) to provide payment for echocardiography procedures that are performed with a contrast agent. We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66643 through 66646) for more information on this methodology.

In order for hospitals to identify and receive appropriate payment for echocardiography procedures performed with contrast beginning in CY 2008, we created eight new HCPCS codes (C8921 Start Printed Page 60375through C8928) that corresponded to the related CPT echocardiography codes and assigned them to the newly created APC 0128. We instructed hospitals to report the CPT codes when performing echocardiography procedures without contrast and to report the new HCPCS C-codes when performing echocardiography procedures with contrast, or without contrast followed by with contrast. As is our standard policy with regard to new codes, the APC assignment of these codes was then open to comment in that final rule.

We used the same process to calculate median costs for these codes for CY 2009 as we used for CY 2008 to separately identify echocardiography services provided with contrast and those provided without contrast because the data reported under these new codes were not yet available for CY 2009 ratesetting.

In addition, for CY 2009, the American Medical Association (AMA) revised several CPT codes in the 93000 series to more specifically describe particular services provided during echocardiography procedures. The CY 2009 descriptor for new CPT code 93306 (Echocardiography, transthoracic real-time with image documentation (2D), includes M-mode recording, when performed, complete, with spectral Doppler echocardiography, and with color flow Doppler echocardiography) includes the services described in CY 2008 by three CPT codes: 93307; 93320 (Doppler echocardiography, pulsed wave and/or continuous wave with spectral display; complete); and 93325 (Doppler echocardiography color flow velocity mapping). Therefore, the service described in CY 2009 by new CPT code 93306 was reported in the CY 2008 data with three CPT codes, specifically CPT codes 93307, 93320, and 93325. In CY 2008, the hospital received separate payment for CPT code 93307 through APC 0269 (Level II Echocardiogram without Contrast Except Transesophageal), into which payment for the other two services was packaged. The revised CY 2009 descriptor of CPT code 93307 explicitly excludes services described by CPT codes 93320 and 93325.

To estimate the hospital costs of CPT codes 93306 and 93307 based on their CY 2009 descriptors and the corresponding HCPCS codes C8929 and C8923 for CY 2009, we used claims data from CY 2007. As described in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68542 through 68544), we manipulated our CY 2007 single and “pseudo” single claims data to simulate the new CY 2009 definitions of these services. Specifically, we selected claims for CPT code 93307 on which CPT codes 93320 and 93325 were also present and we treated the summed costs on these claims as if they were a single procedure claim for CPT code 93306. Similarly, we selected single claims for CPT code 93307 to reflect the newly revised descriptor for CY 2009; that is, we included those claims where CPT code 93307 was not billed with packaged CPT code 93320 or CPT code 93325 on the same claim. We then applied our CY 2009 methodology for calculating HCPCS code-specific median costs for these echocardiography procedures with and without contrast by dividing the new set of claims for CPT codes 93306 and 93307 into those billed with and without contrast agents. We assigned the costs for simulated CPT codes 93306 and 93307 reported without contrast to those CPT codes. We then assigned the costs for simulated CPT codes 93306 and 93307 reported with contrast to new HCPCS code C8929 (Transthoracic echocardiography with contrast, or without contrast followed by with contrast, real-time with image documentation (2D), includes M-mode recording, when performed, complete, with spectral Doppler echocardiography, and with color flow Doppler echocardiography) and revised HCPCS code C8923 (Transthoracic echocardiography with contrast, or without contrast followed by with contrast, real-time with image documentation (2D), includes M-mode recording, when performed, complete, without spectral or color Doppler echocardiography), respectively. In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68542 through 68544), we assigned these CPT and HCPCS codes to APCs for CY 2009 based on their simulated median costs and clinical characteristics. New CY 2009 CPT code 93306 and HCPCS code C8929 were assigned comment indicator “NI” in that final rule with comment period, to signify that they were new codes whose interim final OPPS treatment was open to comment on that final rule with comment period.

The CY 2010 OPPS/ASC proposed rule was the first opportunity to have claims data available from hospitals for echocardiography services performed with contrast (or without contrast followed by with contrast) and reported with HCPCS codes C8921 through C8928. With the exception of HCPCS code C8923, which had a significant change in its code descriptor for CY 2009, in the CY 2010 OPPS/ASC proposed rule (74 FR 35271), we proposed to use our standard methodology to set the CY 2010 OPPS payment rates for these echocardiography services performed with contrast, taking into consideration their HCPCS code-specific median costs from CY 2008 claims.

For CY 2010 ratesetting, we proposed to employ an alternative ratesetting methodology for CPT codes 93306 and 93307 and HCPCS codes C8929 and C8923 that is similar to the approach we used for CY 2009 in order to account for the new codes and revised code descriptors for which CY 2008 data are unavailable. However, in the case of the proposed CY 2010 cost estimation, our CY 2008 claims for CPT code 93307 were only for services performed without contrast, and we have CY 2008 claims for HCPCS C8923 for the comparable services performed with contrast. Specifically, we selected claims for CPT code 93307 on which CPT codes 93320 and 93325 were also present and we treated the summed costs on these claims as if they were a single procedure claim for CPT code 93306 in order to simulate the median cost for CPT code 93306, for which CY 2008 claims data are not available. We then selected single claims for CPT code 93307 to reflect the newly revised descriptor for CY 2009; that is, we included those claims where CPT code 93307 was not billed with either packaged CPT code 93320 or CPT code 93325 on the same claim in order to simulate an appropriate CY 2010 proposed median cost for CPT code 93307. We assigned the costs of HCPCS code C8923 when reported with CPT codes 93320 and 93325 to HCPCS code C8929 and the costs of HCPCS code C8923 when reported without CPT code 93320 or 93325 to HCPCS code C8923.

Following publication of the CY 2009 OPPS/ASC final rule with comment period, several stakeholders brought a number of concerns to our attention, including the interim APC assignment of new CPT code 93351 (Echocardiography, transthoracic, real-time with image documentation (2D), includes M-mode recording, when performed, during rest and cardiovascular stress test using treadmill, bicycle exercise and/or pharmacologically induced stress, with interpretation and report; including performance of continuous electrocardiographic monitoring, with physician supervision) and the corresponding new HCPCS code C8930 (Transthoracic echocardiography, with contrast, or without contrast followed by with contrast, real-time with image documentation (2D), includes M-mode recording, when performed, during rest and cardiovascular stress test using Start Printed Page 60376treadmill, bicycle exercise and/or pharmacologically induced stress, with interpretation and report; including performance of continuous electrocardiographic monitoring, with physician supervision). These stakeholders noted that new CY 2009 CPT code 93351 was created to include the services reported previously by CPT codes 93015 (Cardiovascular stress test using maximal or submaximal treadmill or bicycle exercise, continuous electrocardiographic monitoring, and/or pharmacological stress; with physician supervision, with interpretation and report) and 93350 (Echocardiography, transthoracic, real-time with image documentation (2D), includes M-mode recording, when performed, during rest and cardiovascular stress test using treadmill, bicycle exercise and/or pharmacologically induced stress, with interpretation and report). Because new CY 2009 CPT code 93351 was meant to include the services previously reported with both the CPT codes for a transthoracic echocardiogram during rest and stress (CPT code 93350 is recognized under the OPPS) and a cardiovascular stress test (CPT code 93017 is recognized under the OPPS, rather than CPT code 93015), these stakeholders disagreed with our assignments of both CPT codes 93350 and 93351 to APC 0269 for CY 2009.

Upon review of these concerns and our CY 2008 data, in the CY 2010 OPPS/ASC proposed rule (74 FR 35271), we proposed for CY 2010 to use an alternative methodology to simulate median costs for CPT code 93351 and corresponding HCPCS code C8930, for which CY 2008 claims data are unavailable, and for CPT code 93350 and corresponding HCPCS code C8928 (Transthoracic echocardiography with contrast, or without contrast followed by with contrast, real-time with image documentation (2D), includes M-mode recording, when performed, during rest and cardiovascular stress test using treadmill, bicycle exercise and/or pharmacologically induced stress, with interpretation and report). That is, we proposed to use claims that contain both CPT codes 93350 and 93017 (Cardiovascular stress test using maximal or submaximal treadmill or bicycle exercise, continuous electrocardiographic monitoring, and/or pharmacological stress; tracing only, without interpretation and report) to simulate the median cost for CPT code 93351. We also proposed to use the remaining claims that contain CPT code 93350 but that do not contain CPT code 93017 to develop the proposed CY 2010 median cost for CPT code 93350. For our proposed rule analysis, we identified over 74,000 CY 2008 claims with both CPT code 93350 and CPT code 93017 on the same date of service and no other separately paid services appearing on the same date after applying our bypass processing logic, discussed in section II.A.1.b. of the proposed rule (74 FR 35240 through 35241). We treated these modified claims containing both CPT codes 93350 and 93017 as a single service and we calculated a proposed median cost of approximately $604. Therefore, for CY 2010, we proposed to reassign CPT code 93351 to revised APC 0270 (Level III Echocardiogram without Contrast), which had a proposed APC median cost of approximately $596. We proposed to continue to assign CPT code 93350 to APC 0269, which had a proposed APC median cost of approximately $456, based on its proposed HCPCS code-specific median cost of approximately $406 based on approximately 11,000 single claims. Furthermore, we proposed to use claims for HCPCS code C8928 that are reported with CPT code 93017 on the same claim to simulate the CY 2010 median cost for HCPCS code C8930. We identified over 4,000 claims in the proposed rule data with both HCPCS code C8930 and CPT code 93017 on the same date of service and no other separately paid services appearing on the same date after applying our bypass processing logic, discussed in section II.A.1.b. of the proposed rule (74 FR 35240 through 35241), that we modified to treat HCPCS code C8930 and CPT code 93017 as a single service. We calculated a HCPCS code-specific proposed median cost of approximately $706. Therefore, we proposed to continue to assign HCPCS code C8930 to APC 0128 with a proposed APC median cost of approximately $660. We also proposed to continue to assign HCPCS code C8928 to APC 0128, based on its HCPCS code-specific proposed median cost of approximately $595 based on approximately 1,000 single claims.

Comment: One commenter on the CY 2009 OPPS/ASC final rule with comment period addressed the interim final treatment of new CPT code 93306 for CY 2009. The commenter requested that CMS not recognize CPT code 93306 under the OPPS because this code represents the combination of three services already described by existing CPT codes 93307, 93320, and 93325. Alternatively, the commenter recommended that CMS could instruct hospitals to continue billing CPT codes 93320 and 93325 in association with CPT code 93306 in order to encourage consistent reporting of services described by CPT codes 93320 and 93325 when they are furnished with any echocardiography service. The commenter believed that requiring the use of CPT code 93306 may confuse hospitals, as other echocardiography services require the separate reporting of CPT codes 93320 and 93325 when these additional procedures are performed. Because there are already existing codes for the services described by CPT code 93306 and hospitals could inappropriately stop reporting CPT codes 93320 and 93325 in association with other echocardiography services, the commenter requested that CMS not recognize CPT code 93306 for payment under the OPPS. According to the commenter, under all circumstances, hospitals would continue to report CPT code 93320 or CPT code 93325 when they are performed with any echocardiography procedure, a practice preferred by the commenter. Similarly, the commenter recommended that CMS not recognize the corresponding HCPCS code C8929 that describes CPT code 93306 when furnished with contrast because the contrast echocardiography procedure could also be reported using existing HCPCS code C8921 and CPT codes 93320 and 93325.

Response: As is our standard methodology, we review new CPT codes annually and assign status indicators to all new codes and provide APC assignments, if applicable, for codes that describe services that may be performed in the hospital outpatient department (which includes provider-based clinics located on and off campus). We consider CPT code 93306 to be part of the standard CPT code set hospitals use for reporting services under the OPPS, and the service described by the code is one that we believe could be furnished to a hospital outpatient and potentially covered and, therefore, paid by Medicare under the OPPS. We incorporated CPT code 93306 in the CY 2009 OPPS/ASC final rule with comment period, assigning it a separately payable status indicator and APC, consistent with our belief that the service described by this code could be appropriately reported by hospitals when they furnish the service in the HOPD. Furthermore, as described in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68543), we used a special cost estimation methodology to estimate the expected cost of CPT code 93306 based on hospital claims data for the individual predecessor codes in order to inform our interim final assignment of CPT code 93306 to a clinical APC for CY 2009.Start Printed Page 60377

Regarding the commenter's alternative suggestion that we instruct hospitals to continue to report CPT codes 93320 and 93325 when performed in association with the procedure described by CPT code 93306, we will not instruct hospitals to continue to report CPT codes 93320 and 93325 when billing for CPT code 93306 because CPT code 93306 incorporates the services described by CPT codes 93320 and 93325 in its code descriptor. Billing separately for these services when reporting CPT 93306 would not be consistent with correct coding principles and could create greater confusion and unnecessary burden for hospitals. Whenever possible, hospitals have repeatedly encouraged us to follow standard coding guidelines in order to reduce their administrative burden in reporting services differently for Medicare, and our recognition of CPT code 93306 for payment under the OPPS is consistent with hospitals' general request to us.

Finally, as we are continuing to instruct hospitals to use CPT code 93306 for CY 2010, it continues to be appropriate for hospitals to bill using HCPCS code C8929 when furnishing the service described by CPT code 93306 with contrast. In the case of CPT code 93306 and other CPT codes for echocardiography services, we have developed parallel HCPCS C-codes to report each procedure when furnished with contrast in order to provide payment through separate APCs for those echocardiography services furnished with and without contrast.

Comment: Several commenters on the CY 2010 OPPS/ASC proposed rule expressed support for the revisions to the echocardiography APCs included in the CY 2010 OPPS/ASC proposed rule. One commenter noted appreciation for the proposed reassignment of CPT code 93351 from APC 0269 to APC 0270. However, one commenter on the CY 2009 OPPS/ASC final rule with comment period suggested that the new CY 2009 CPT code 93351 should not be recognized for payment under the OPPS. The commenter reasoned that the comprehensive service described by CPT code 93351 is comprised of two services previously reported with CPT codes 93350 and 93015: CPT code 93015 includes physician supervision and interpretation, which are not hospital outpatient services; and CPT code 93015 is reported by nonhospital practitioners and is not recognized for payment under the OPPS.

In addition, a commenter on the CY 2010 OPPS/ASC proposed rule stated that a more appropriate treatment of CPT code 93351 under the OPPS would be to not recognize this code for payment under the OPPS but, rather, to continue to recognize for payment several existing CPT codes which, when reported in combination, would describe the service that would otherwise be reported with CPT code 93351 alone. The commenter believed that CPT code 93351 was created specifically for services performed in nonfacility settings and that the intent of the CPT Editorial Committee was to limit the use of the code to nonfacility settings only. The commenter stated that correspondence from CMS indicated that CPT code 93351 would be billable only when provided in a physician's office or independent laboratory settings.

Response: As is our standard methodology, we review new CPT codes annually and assign status indicators to all new codes and provide APC assignments, if applicable, for codes that describe services that may be performed in the HOPD (which includes provider-based clinics located on and off campus). The CPT code descriptor for CPT code 93351 makes no mention that the code is restricted from use in the HOPD, or that its use is limited to nonfacility settings. Further, there are no additional CPT instructions that would limit the reporting of CPT code 93351 to nonfacility or nonhospital settings. We consider this CPT code to be part of the standard CPT code set hospitals use for reporting services under the OPPS, and the service described by the code is one that we believe could be furnished to a hospital outpatient and potentially covered and, therefore, paid by Medicare under the OPPS. CPT code 93351 describes a service that would previously have been reported with CPT codes 93350 and 93017 under the OPPS. While the commenter was correct that we do not recognize CPT code 93015 for payment under the OPPS, a code that describes a cardiovascular stress test with interpretation and report, we do recognize CPT code 93017, which describes the tracing only for the cardiovascular stress test. We incorporated CPT code 93351 in the CY 2009 OPPS/ASC final rule with comment period, assigning it a separately payable status indicator and APC, consistent with our belief that the service described by this code could be appropriately reported by hospitals when they furnish the service in the HOPD. Furthermore, we established professional component (PC) and technical component (TC) payments under the MPFS for CPT code 93351, also consistent with our belief that the CPT code may be reported for services in facility settings, such as independent laboratory settings. We have communicated no information to the public that states that Medicare hospital outpatient payment would not be made if this CPT code were reported by a hospital for services furnished to hospital outpatients.

We proposed a methodology for identifying the hospital outpatient claims and isolating the hospital charges that would be associated with this procedure for CY 2010 in order to develop an appropriate hospital outpatient payment for the associated facility resources for the existing services that would be reported and paid under the new CPT code. Specifically, we proposed to use claims that contain both CPT codes 93350 and 93017 to simulate the median cost for CPT code 93351 and proposed to reassign CPT code 93351 from APC 0269 to revised APC 0270 for CY 2010 based on its simulated median cost. We continue to believe that this CPT code may be reported for OPPS services described by the code, and that our proposed CY 2010 cost estimation methodology accurately simulates a median cost for this new code that reflects the associated hospital resources for the component services that are newly described by this single CPT code.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal, without modification, to reassign CPT code 93351 to APC 0270 based on a simulated CPT-specific median cost identified from over 80,000 CY 2008 claims with both CPT code 93350 and CPT code 93017 on the same date of service and no other separately paid services appearing on the same date after applying our bypass processing logic, as discussed above. We calculated a final CPT-specific median cost of approximately $605 for CPT code 93351 and a final CY 2010 APC median cost for APC 0270 of approximately $591.

Comment: One commenter on the CY 2009 OPPS/ASC final rule with comment period requested that CMS delete HCPCS code C8930 (Transthoracic echocardiography, with contrast, or without contrast followed by with contrast, real-time with image documentation (2D), includes M-mode recording, when performed, during rest and cardiovascular stress test using treadmill, bicycle exercise and/or pharmacologically induced stress, with interpretation and report; including performance of continuous electrocardiographic monitoring, with physician supervision) as the services Start Printed Page 60378described by this code could be reported using CPT code 93017 (Cardiovascular stress test using maximal or submaximal treadmill or bicycle exercise, continuous electrocardiographic monitoring, and/or pharmacological stress; tracing only, without interpretation and report) and HCPCS code C8928 (Transthoracic echocardiography with contrast, or without contrast followed by with contrast, real-time with image documentation (2D), includes M-mode recording, when performed, during rest and cardiovascular stress test using treadmill, bicycle exercise and/or pharmacologically induced stress, with interpretation and report).

Response: As described above, we are continuing to recognize the service described by CPT code 99351, which is the noncontrast echocardiography procedure that is parallel to HCPCS code C8930 for the same procedures provided with contrast. As previously noted, we have developed parallel HCPCS C-codes to report each echocardiography procedure when furnished with contrast in order to provide payment through separate APCs for those echocardiography services furnished with and without contrast. While we understand that the service reported under HCPCS code C8930 may be reported using a combination of a CPT code and a HCPCS C-code, we do not believe that this would be appropriate because the noncontrast echocardiography service is reported with a single CPT code. Hospitals are generally instructed to use the HCPCS code that most appropriately and specifically describes the service that was provided, including not unbundling component services that could otherwise be separately reported. In this instance, HCPCS code C8930 would be the most specific code that describes the full service provided when the component services that would otherwise be reported by CPT code 93017 and HCPCS code C8928 are provided together. Our CY 2010 ratesetting methodology for HCPCS code C8928 is based on claims data and specifically excludes those cases when the service was furnished along with the procedure described by CPT code 93017. On the other hand, our CY 2010 ratesetting methodology for HCPCS code C8930 specifically includes cases where the services described by HCPCS code C8928 and CPT code 93017 were provided together. In that way, we are able to base CY 2010 payment for all of these services on their actual or simulated hospital costs in the context of the CPT and HCPCS C-codes that will be reported in CY 2010.

After consideration of the public comment we received, we are finalizing our CY 2010 proposal, without modification, to continue to recognize HCPCS code C8930 for OPPS payment. For CY 2010, HCPCS code C8930 continues to be assigned to APC 0128, with a final CY 2010 APC median cost of approximately $645.

Comment: One commenter on the CY 2009 OPPS/ASC final rule with comment period requested that CMS not recognize CPT code 93352 (Use of echocardiographic contrast agent during stress echocardiography), as the OPPS has already developed Level II HCPCS C-codes to identify echocardiography procedures performed with contrast.

Response: During our review of CPT code 93352 for the CY 2009 OPPS/ASC final rule with comment period, we assigned an interim final status indicator “M” (Not paid under the OPPS) to CPT code 93352 for CY 2009. In our CY 2010 OPPS/ASC proposed rule, we proposed to continue this status indicator assignment for CY 2010.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal, without modification, to assign status indicator “M” to CPT code 93352.

Comment: A few commenters requested that CPT code 93318 (Echocardiography, transesophageal (TEE) for monitoring purposes, including probe placement, real time 2-dimensional image acquisition and interpretation leading to ongoing (continuous) assessment of (dynamically changing) cardiac pumping function and to therapeutic measures on an immediate time basis) not be reassigned to APC 0269 as proposed for CY 2010. Instead, these commenters requested that CPT code 93318 continue to be assigned to APC 0270 for CY 2010. Commenters stated that CPT code 93318 is clinically similar to CPT code 93312 (Echocardiography, transesophageal, real time with image documentation (2D) (with or without M-mode recording); including probe placement, image acquisition, interpretation and report), and because CPT code 93312 is assigned to APC 0270, CPT code 93318 should be assigned to APC 0270 as well. While these commenters noted that the reassignment of CPT code 93318 to APC 0269 would be most consistent with its CPT-specific median cost presented in the proposed rule, they stated that the unexplained volatility in the cost of CPT code 93318 suggests that clinical homogeneity should be the deciding factor when assigning this service to an APC.

Response: As is our standard process, for the CY 2010 proposed rule, we reviewed each APC for clinical cohesiveness and resource homogeneity. As the commenters noted, we proposed to reassign CPT code 93318 to APC 0269 as we believed that the proposed CPT-specific median cost more closely matched the median cost of APC 0269. While we continue to believe that the CPT-specific median cost of CPT 93318 (approximately $472) closely resembles the median cost of APC 0269 (approximately $447), upon further review, we agree with the commenter that the clinical characteristics of the procedure described by CPT code 93318 are similar to the procedure described by CPT code 93312. We also note that we have only 344 single and 593 total claims for CPT code 93318 from only 188 providers in comparison to 29,987 single and 52,342 total claims for CPT code 93312 from 2,093 providers. We believe the limited claims data from relatively few providers contribute to the variability in cost observed for CPT code 93318 and agree with the commenters that this procedure should remain assigned to APC 0270 for CY 2010.

After consideration of the public comments we received, we are not finalizing our proposal to reassign CPT code 93318 to APC 0269. Instead, for CY 2010, we are continuing to assign CPT code 93318 to APC 0270, with a final CY 2010 APC median cost of approximately $591.

Comment: Several commenters supported the continuation of separate APCs for payment of echocardiography procedures with contrast and without contrast. While these commenters were generally supportive of the proposed ratesetting methodology, they were concerned that the proposed payment rate for APC 0128 of approximately $683 was insufficient to cover the costs associated with providing the echocardiogram and the related contrast materials and services for HCPCS codes C8921 (Transthoracic echocardiography with contrast, or without contrast followed by with contrast, for congenital cardiac anomalies; complete); C8925 (Transesophageal echocardiography (TEE) with contrast, or without contrast followed by with contrast, real time with image documentation (2D) (with or without M-mode recording); including probe placement, image acquisition, interpretation and report); C8926 (Transesophageal echocardiography (TEE) with contrast, or without contrast followed by with contrast, for congenital cardiac anomalies; including probe Start Printed Page 60379placement, image acquisition, interpretation and report); and C8930 (Transthoracic echocardiography, with contrast, or without contrast followed by with contrast, real-time with image documentation (2D), includes M-mode recording, when performed, during rest and cardiovascular stress test using treadmill, bicycle exercise and/or pharmacologically induced stress, with interpretation and report; including performance of continuous electrocardiographic monitoring, with physician supervision). Specifically, the commenters noted that the noncontrast equivalent procedures (described by CPT codes 93303, 93312, 93315, and 93351) were all proposed for assignment to APC 0270, with a proposed payment rate of approximately $600. The commenters believed that the difference between the proposed payment rate for these procedures with contrast and without contrast is too small to cover the cost of the contrast material used in these procedures. The commenters suggested that CMS reassign HCPCS codes C8921, C8925, C8926, and C8930 to a new APC for echocardiography procedures performed with contrast or that CMS provide separate payment for the contrast material used in these procedures.

Response: The final payment differential between APC 0270, where CPT codes 99303, 99312, 99315, and 99351 are assigned, and APC 0128, where the corresponding HCPCS codes for the same procedures with contrast (HCPCS codes C8921, C8925, C8926, and C8930) are assigned, is the difference between approximately $645 and approximately $591 of $54. We believe this differential provides an appropriate higher payment to those hospitals that furnish these procedures with contrast and appropriately accounts for the cost of the contrast material, which is required for all of the services assigned to APC 0128. HCPCS codes C8921, C8925, C8926, and C8930 have median costs that range from a low of approximately $178 to a high of approximately $712. Each of these HCPCS codes was reported by fewer than 170 providers in CY 2008. The median costs of these services span most of the range of median costs of HCPCS codes assigned to APC 0128, and they do not form a cluster of high cost procedures in the APC such that they would warrant assignment to a new clinical APC. In contrast, the median costs of CPT codes 99303, 99312, 99315, and 99351 span a much narrower range, from a low of approximately $505 to a high of approximately $605. Two of these CPT codes were reported by more than 1,500 providers in CY 2008. Clearly, fewer providers are reporting the echocardiogram procedures with contrast, and we expect that the hospital cost distribution for that subset of hospitals could be different than the cost distribution of the large number of providers reporting the procedures without contrast. Therefore, no conclusions can be drawn about the aggregate OPPS payment to that subset of hospitals for all of their echocardiogram services in comparison to the aggregate echocardiogram costs of the subset of hospitals specifically based on the payment rates for APCs 0128 and 0270. The OPPS is a prospective payment system that relies on hospital charge and cost report data from the hospitals that furnish the services in order to determine relative costs. Therefore, we believe that our prospective payment rates calculated based on the costs of those providers furnishing the procedures in CY 2008 provide appropriate payment to the providers that will furnish the services in CY 2010.

In summary, after consideration of the public comments we received, we are finalizing our CY 2010 proposals for payment of echocardiography procedures with and without contrast, with modifications. We are finalizing our proposed methodologies for simulating the median costs of CPT codes 93306, 93307, 93351, and 93350 for which there are no CY 2008 hospital claims data for these specific CPT codes, as discussed above. In addition, we are finalizing our proposed methodologies for simulating the median costs of HCPCS codes C8929, C8923, C8930, and C8928 for which there are no CY 2008 hospital claims data for these specific HCPCS codes, as discussed above. We are not finalizing our proposal to reassign CPT code 93318 to APC 0269; instead, we are maintaining the assignment of CPT code 93318 to APC 0270 for CY 2010. Finally, we are finalizing our proposal to assign HCPCS codes C8921, C8925, C8926, and C8930 to APC 0128 for CY 2010.

Table 9 below shows CY 2010 CPT codes for billing echocardiography services without contrast, their final APC assignments for CY 2010, and the corresponding HCPCS codes for use when echocardiography services are performed with contrast (or without contrast followed by with contrast), along with their final APC assignments for CY 2010.

Start Printed Page 60380

Start Printed Page 60381

Start Printed Page 60382

Start Printed Page 60383

Finally, in the CY 2010 OPPS/ASC proposed rule (74 FR 35275), for CY 2010, based upon our proposed APC configurations, we also proposed to revise the titles of our existing series of echocardiography APCs to more accurately describe the groups of services identified by CPT codes 93303 through 93352 and HCPCS codes C8921 through C8930 that are assigned to these APCs. We proposed to rename APCs 0269, 0270, and 0697 as described in Table 7 of the proposed rule.

Comment: One commenter supported the proposed revisions to the echocardiography APC titles and configurations.

Response: We appreciate the support for our proposal.

We are finalizing our proposal to rename APCs 0269, 0270, and 0697 without modification. Therefore, we are adopting as final the titles of these APCs as reflected in Table 10 below:

Table 10—CY 2010 Echocardiography APCs

Final CY 2010 APCCY 2010 APC titleFinal CY 2010 approximate APC median cost
0128Echocardiogram With Contrast$645
0269Level II Echocardiogram Without Contrast447
Start Printed Page 60384
0270Level III Echocardiogram Without Contrast591
0697Level I Echocardiogram Without Contrast262

(5) Nuclear Medicine Services

In CY 2008, we began packaging payment for diagnostic radiopharmaceuticals into the payment for the associated nuclear medicine procedure. (For a discussion regarding the distinction between diagnostic and therapeutic radiopharmaceuticals, we refer readers to the CY 2008 OPPS/ASC final rule with comment period at 72 FR 66636.) Prior to the implementation of this policy, diagnostic radiopharmaceuticals were subject to the standard OPPS drug packaging methodology whereby payments are packaged when the estimated mean per day product costs fall at or below the annual packaging threshold for drugs, biologicals (other than implantable biologicals), and radiopharmaceuticals.

Packaging costs into a single aggregate payment for a service, encounter, or episode-of-care is a fundamental principle that distinguishes a prospective payment system from a fee schedule. In general, packaging the costs of supportive items and services into the payment for the independent procedure or service with which they are associated encourages hospital efficiencies and also enables hospitals to manage their resources with maximum flexibility. All nuclear medicine procedures require the use of at least one radiopharmaceutical or other radiolabeled product, and there are only a small number of radiopharmaceuticals that may be appropriately billed with each diagnostic nuclear medicine procedure. For the OPPS, we distinguish diagnostic radiopharmaceuticals from therapeutic radiopharmaceuticals for payment purposes, and this distinction is recognized in the Level II HCPCS codes for diagnostic radiopharmaceuticals that include the term “diagnostic” along with a radiopharmaceutical in their HCPCS code descriptors. As we stated in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66635), we believe that our policy to package payment for diagnostic radiopharmaceuticals (other than those already packaged when their per day costs are below the packaging threshold for OPPS drugs, biologicals, and radiopharmaceuticals) is consistent with OPPS packaging principles, provides greater administrative simplicity for hospitals, and encourages hospitals to use the most clinically appropriate and cost efficient diagnostic radiopharmaceutical for each study. For more background on this policy, we refer readers to discussions in the CY 2008 OPPS/ASC proposed rule (72 FR 42667 through 42672) and the CY 2008 OPPS/ASC final rule with comment period (72 FR 66635 through 66641).

For CY 2008 ratesetting, we used only claims for nuclear medicine procedures that contained a diagnostic radiopharmaceutical in calculating the median costs for APCs that include nuclear medicine procedures (72 FR 66639). This is similar to the established methodology used for device-dependent APCs before claims reflecting the procedure-to-device edits were included in our claims data. For CY 2008, we also implemented claims processing edits (called procedure-to-radiolabeled product edits) requiring the presence of a radiopharmaceutical (or other radiolabeled product) HCPCS code when a separately payable nuclear medicine procedure is present on a claim. Similar to our practice regarding the procedure-to-device edits that have been in place for some time, we continually review comments and requests for changes related to these edits and, based on our review, may update the edit list during our quarterly update process if necessary. The radiolabeled product and procedure HCPCS codes that are included in these edits can be viewed on the CMS Web site at: http://www.cms.hhs.gov/​HospitalOutpatientPPS/​01_​overview.asp.

The CY 2008 OPPS claims that are subject to the procedure-to-radiolabeled product edits were not available for setting payment rates in CY 2009. Therefore, as described in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68545), we continued to use our established CY 2008 methodology for setting the payment rates for APCs that included nuclear medicine procedures for CY 2009. We used an updated list of radiolabeled products, including but not limited to diagnostic radiopharmaceuticals, from the procedure-to-radiolabeled product edit file to identify single and “pseudo” single claims for nuclear medicine procedures that also included at least one eligible radiolabeled product. Using this subset of claims, we followed our standard OPPS ratesetting methodology to calculate median costs for nuclear medicine procedures and their associated APCs. As in CY 2008, when we set APC median costs based on single and “pseudo” single claims that also included at least one radiolabeled product on our edit file, we observed an equivalent or higher median cost than that calculated from all single and “pseudo” single bills. We believe that this methodology appropriately ensured that the costs of diagnostic radiopharmaceuticals were included in the CY 2009 ratesetting process for these APCs.

As discussed in section II.A.4.b.(1) of the proposed rule (74 FR 35287) and this final rule with comment period, during the September 2007 APC Panel meeting, the APC Panel requested that CMS evaluate the impact of expanded packaging on beneficiaries. Also, during the March 2008 APC Panel meeting, the APC Panel requested that CMS report to the APC Panel at the first meeting in CY 2009 the impact of packaging on net payments for patient care. In response to these requests, we shared data with the APC Panel at the February 2009 APC Panel meeting that compared the frequency of the billing of diagnostic radiopharmaceuticals billed under the OPPS in CY 2007, before the packaging of all diagnostic radiopharmaceuticals went into effect, to the frequency of the billing of those same products in CY 2008, their first year of packaged payment. We also reviewed information about the aggregate payment for diagnostic radiopharmaceuticals and nuclear medicine procedures during those same 2 years. A summary of these data analyses is provided in section II.A.4.b.(1) of this final rule with comment period.

In addition to these aggregate analyses of total frequency and payment, we also presented our analyses of the number of hospitals performing nuclear medicine scans and the specific diagnostic radiopharmaceuticals appearing with Start Printed Page 60385cardiac and tumor imaging nuclear medicine procedures, excluding positron emission tomography (PET) scans, by classes of hospitals between the CY 2007 claims processed through September 30, 2007 and the CY 2008 claims processed through September 30, 2008. At the March 2008 APC Panel meeting, the APC Panel also recommended that we evaluate the usage and frequency, geographic distribution, and size and type of hospitals performing nuclear medicine studies using radioisotopes to assess beneficiaries' access and that we present these analyses at the first APC Panel meeting in CY 2009. The number of all hospitals reporting any nuclear medicine procedure declined by 2 percent between the CY 2007 claims data and the CY 2008 claims data. Across several classes of hospitals (urban and rural, teaching and nonteaching, and small and large OPPS service volume), the number of hospitals billing any nuclear medicine procedure declined by up to 4 percent over that same time period. With regard to the specific diagnostic radiopharmaceuticals reported with cardiac and tumor imaging nuclear medicine procedure, we generally observed comparable distributions of radiopharmaceuticals between the CY 2007 claims data and the CY 2008 claims data. However, the utility of this analysis was limited due to the introduction of the procedure-to-radiolabeled product claims processing edits discussed above. There are nuclear medicine procedures reported with a diagnostic radiopharmaceutical HCPCS code on the CY 2008 claims that would have not necessarily been billed with a diagnostic radiopharmaceutical HCPCS code on the CY 2007 claims. Specifically, we observed an increase in billing for many radiopharmaceuticals, some new and costly, between the CY 2007 claims data and the CY 2008 claims data. We do not know how much of this was attributable to changes in hospitals' use of radiopharmaceuticals or to the CY 2008 introduction of the procedure-to-radiolabeled product edits that require a radiolabeled product on the claim for payment of the nuclear medicine procedure. With the exception of the notable increases in the frequencies of certain radiopharmaceutical HCPCS codes that potentially resulted from the introduction of these edits, in general, hospital billing patterns for diagnostic radiopharmaceuticals associated with cardiac and tumor imaging nuclear medicine scans did not change dramatically between CY 2007 and CY 2008 for all hospitals and classes of hospitals. We concluded that very few hospitals stopped providing nuclear medicine procedures as a result of our CY 2008 policy to package payment for diagnostic radiopharmaceuticals and that, in general, hospitals did not decrease their use of expensive radiopharmaceuticals.

As a result of the discussions of the APC Panel following our presentation of the analyses of the impact of packaging payment for all diagnostic radiopharmaceuticals in the OPPS, the APC Panel further recommended that CMS continue to analyze the impact on beneficiaries of increased packaging of diagnostic radiopharmaceuticals and provide more detailed analyses at the next APC Panel meeting. Further, the APC Panel requested that, in the more detailed analyses of packaging of diagnostic radiopharmaceuticals by type of nuclear medicine scan, CMS analyze the data according to the specific CPT codes billed with the diagnostic radiopharmaceuticals. We stated in the CY 2010 OPPS/ASC proposed rule (74 FR 35277) that we are accepting the APC Panel's recommendation and would provide additional data to the APC Panel at an upcoming meeting. We did not share additional data related to diagnostic radiopharmaceuticals with the APC Panel at the most recent August 2009 meeting because we believe the APC Panel's discussions would benefit from analyses of an additional year of claims data after CY 2008. Therefore, we plan to incorporate analysis of CY 2009 claims into the information we will present to the APC Panel for its review at the winter 2010 meeting.

At the February 2009 meeting of the APC Panel, the Panel commended CMS for its effort to date to tailor the resource-based APC system to facilitate appropriate payment for diagnostic and therapeutic radiopharmaceuticals. The APC Panel recommended that CMS continue its dialogue with professional societies, vendors, and other stakeholders to improve the accuracy of APC payments for these complex items and services, including consideration of developing composite APCs. We appreciate the support of the APC Panel, and we are accepting the APC Panel's recommendation to continue to communicate with interested stakeholders regarding payment for radiopharmaceuticals and the associated procedures. We regularly accept meetings from interested parties throughout the year, and we encourage stakeholders to continue a dialogue with us during the rulemaking cycle and throughout the year. Our response to the APC Panel's recommendation regarding composite APCs is included in our response to the public comments summarized below.

For CY 2010 ratesetting, we are able to use CY 2008 OPPS claims that were subject to the procedure-to-radiolabeled product claims processing edits incorporated into the I/OCE prior to payment of claims in order to develop single and “pseudo” single claims for nuclear medicine procedures according to our standard methodology. We believe that using the CY 2008 claims data for these services without further editing for the presence of a radiolabeled product is now appropriate for CY 2010 because these claims reflect all possible relationships between the nuclear medicine procedures and their associated radiolabeled products that we have accommodated for payment of nuclear medicine procedures. Moreover, as we indicated in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68548 through 68549), in the rare circumstance where a diagnostic radiopharmaceutical is not provided in association with a nuclear medicine procedure, for example, because a beneficiary receives a therapeutic radiopharmaceutical as part of a hospital inpatient stay and then returns to the HOPD for a nuclear medicine scan without needing a diagnostic radiopharmaceutical to be administered again for the study, we believe it is appropriate to use these claims for ratesetting purposes. We believe that just as these situations are representative of the performance of a nuclear medicine scan, it is also appropriate to include them for ratesetting purposes.

Comment: A number of commenters opposed CMS' proposed policy to package payment for all diagnostic radiopharmaceuticals into payment for their associated nuclear medicine procedures. They noted that the majority of diagnostic radiopharmaceuticals are not interchangeable and, for that reason, CMS' policy of packaging payment for all diagnostic radiopharmaceuticals into their associated nuclear medicine procedures does not foster hospital efficiencies. Some commenters expressed concern that packaging diagnostic radiopharmaceuticals into payment for associated nuclear medicine procedures results in overpayment of many procedures, especially those using existing low-cost radiopharmaceuticals, while the bundled payment would be insufficient for newer, and likely more expensive, radiopharmaceuticals.

In addition, the commenters requested that, if CMS continues to Start Printed Page 60386package payment for diagnostic radiopharmaceuticals into payment for their associated nuclear medicine procedures, CMS revise the nuclear medicine APCs to provide differential payments for nuclear medicine procedures when used with different radiopharmaceuticals. Several commenters identified the series of tumor/infection imaging APCs, including APCs 0406 (Level I Tumor/Infection Imaging), 0408 (Level III Tumor/Infection Imaging), and 0414 (Level II Tumor/Infection Imaging), for CMS' attention to ensure appropriate payment for low volume, high cost radiopharmaceuticals. One commenter specifically suggested a composite APC for certain combinations of a tumor imaging scan and specific diagnostic radiopharmaceuticals.

Several commenters noted that there is wide variation in the costs of diagnostic radiopharmaceuticals, and that composite APCs for specific combinations of procedures and diagnostic radiopharmaceuticals would be necessary to ensure adequate payment to hospitals using expensive diagnostic radiopharmaceuticals. Other commenters suggested that the significant clinical and resource diversity of radiopharmaceuticals packaged into nuclear imaging procedures amounted to a violation of the 2 times rule. The commenters explained that, just as diagnostic radiopharmaceuticals are not interchangeable, certain radiopharmaceuticals are indicated for particular types of diseases, such as cancer, and are not clinically similar to other radiopharmaceuticals used for other purposes, such as tumor imaging.

Response: As we discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68547), we understand that the selection of a diagnostic radiopharmaceutical for a particular nuclear medicine procedure is a complex decision based on many factors, including patient-specific factors, and that not every diagnostic radiopharmaceutical is fully interchangeable with others. However, as stated in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66617) and in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68546), we believe that nonspecific packaging (as opposed to selected code packaging) based on combinations of items and services observed on hospital claims is fully appropriate because of the myriad combinations of items and services that can be appropriately provided together. Under the OPPS, we package payment for ancillary, supportive, and interrelated items and services into payment for the independent services they accompany. As we discuss in section II.A.4. of this final rule with comment period, packaging promotes hospital efficiencies through numerous means, not only just through the choice of which radiopharmaceutical to use for a specific nuclear medicine scan. While all diagnostic radiopharmaceuticals may not be interchangeable, we believe that packaging the costs of diagnostic radiopharmaceuticals, however differential those costs may be, into the payment for nuclear medicine services that use these products is appropriate, whether there is one product or multiple products that could be used to furnish the particular service provided to an individual patient. The OPPS has a history of packaging items that are not necessarily interchangeable. It is our longstanding practice to package payment for nonpass-through implantable medical devices into payment for the procedure in which they are used, notwithstanding that there may be different devices or combinations of devices that could be used to furnish a service. (For a more complete discussion of the history of packaging items, we refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66639).) Therefore, in accordance with our understanding that a diagnostic radiopharmaceutical is never provided without an accompanying nuclear medicine scan, we believe that it is appropriate to package the payment for all diagnostic radiopharmaceuticals into the payment for the associated nuclear medicine procedure.

With regard to suggested composites or other revisions designed to isolate specific nuclear medicine scans with a subset of diagnostic radiopharmaceuticals, as we discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68546), we do not believe that the inability to substitute one diagnostic radiopharmaceutical for another is a compelling reason for creating composite APCs, as explained below. We developed composite APCs to provide a single payment for two or more services that are typically performed together during a single clinical encounter and that result in the provision of a complete service. Composite APCs differ from packaging. Composite APCs provide a single payment for specific combinations of independent services that would otherwise be separately payable if they were not provided together, while packaging entails associating the cost of ancillary, supportive, and interrelated services and supplies with a distinct service or composite service. Composite APCs are intended to expand the OPPS payment bundles to encourage hospital efficiencies. Providing a single payment for a specific combination of a diagnostic radiopharmaceutical with a particular nuclear medicine procedure would not constitute a composite APC and would provide no incentives for hospital efficiency. Specifically, a diagnostic radiopharmaceutical would never be separately payable under the OPPS when furnished alone, so the combination of a diagnostic radiopharmaceutical and a nuclear medicine procedure would not meet the definition of a composite APC as described above. From the perspective of value-based purchasing, we see no benefit to paying for many individual diagnostic radiopharmaceutical and nuclear medicine procedure combinations over paying separately for both the item and service, beyond an appearance of bundling. Such an approach would add complexity to ratesetting and would create challenges and cost instability because payments would be based on data from small numbers of claims for certain HCPCS code pairs. As noted above, there are many items and services that we package under the OPPS that are similarly not interchangeable with other related items and services. Therefore, we are not accepting the APC Panel's recommendation to explore developing composite APCs for diagnostic radiopharmaceuticals and nuclear medicine procedures.

We understand that, by packaging payment for a range of products such as diagnostic radiopharmaceuticals, payment for the associated nuclear medicine procedure may be more or less than the hospital's cost for these services in a given case. As stated in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66639) and the CY 2009 OPPS/ASC final rule with comment period (73 FR 68546), we note that a fundamental characteristic of a prospective payment system is that payment is to be set at an average for the service which, by definition, means that some services are paid more or less than the average.

We discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66640) and the CY 2009 OPPS/ASC final rule with comment period (73 FR 68546) the issue of variability in radiopharmaceutical costs or other packaged costs creating potential 2 times violations. We note that 2 times violations are specific to the total cost of the primary service, nuclear medicine Start Printed Page 60387scans in this case, including packaged costs. We have performed our standard review of the APCs using updated CY 2008 claims data for this final rule with comment period and, as a result, have not identified any 2 times violations in the APCs containing nuclear medicine procedures, when calculated as described above. (For more information on the 2 times rule, we refer readers to sections III.B.2. and III.B.3. of this final rule with comment period.)

Comment: Several commenters expressed concern that CMS was relying on edits in the claims processing system in order to identify those claims that would be used for CY 2010 ratesetting purposes. These commenters suggested that CMS continue to require a diagnostic radiopharmaceutical in order to use a nuclear medicine claim for ratesetting purposes for at least another 2 years in order to ensure that the claims editing process is working properly and that all hospital costs are reflected in the median costs of nuclear medicine procedures.

One commenter noted that CMS' methodology for setting payment rates for nuclear medicine services may be flawed. This commenter contended that CMS should not solely rely on the claims processing edits in order to determine which claims are to be used for ratesetting purposes. The commenter suggested that, even though CMS is using claims that have passed the nuclear medicine-to-radiolabeled product edits, CMS' ratesetting methodology may exclude the cost of diagnostic radiopharmaceuticals when calculating median costs for associated nuclear medicine procedures. Specifically, the commenter stated that the program logic that creates “pseudo” single procedure claims may separate a nuclear medicine scan and the associated diagnostic radiopharmaceutical when the diagnostic radiopharmaceutical appears on a different day and, therefore, CMS would not package the cost of the diagnostic radiopharmaceutical when setting the median cost for the nuclear medicine procedure. The commenter added that CMS' ratesetting methodology for “pseudo” single procedure claims relies on the date of service to identify associated packaged costs. Therefore, the commenter requested that CMS use only single and “pseudo” single nuclear medicine procedure claims that also contain a diagnostic radiopharmaceutical in order to set payment rates for nuclear medicine procedures. More specifically, several commenters requested that CMS not reassign CPT code 78803 (Radiopharmaceutical localization of tumor or distribution of radiopharmaceutical agent(s); tomographic (SPECT)) to APC 0414 (Level II Tumor/Infection Imaging) as proposed, but instead assign CPT code 78803 to APC 0408 (Level III Tumor/Infection Imaging). One commenter believed that the use of “pseudo” single procedure claims to calculate payment rates may have neglected to include the cost of the radiopharmaceutical or other scans that may have been performed on other dates of service and reported on other claims.

Response: As we indicated in the CY 2008 OPPS/ASC final rule with comment period (72 FR 42669), we are aware that several diagnostic radiopharmaceuticals may be used for multiple day studies; that is, a particular diagnostic radiopharmaceutical may be administered on one day and a related diagnostic nuclear medicine procedure may be performed on a subsequent day. While we understand that multiple-day episodes for diagnostic radiopharmaceuticals and the related diagnostic nuclear medicine procedures occur, we found the occurrence of nuclear medicine scans on a different date of service to be a small proportion of all diagnostic nuclear medicine imaging procedures appearing with the radiopharmaceutical. Specifically, our analysis at that time indicated that, roughly, 15 diagnostic radiopharmaceuticals have a half-life longer than one day such that they could support diagnostic nuclear medicine scans on different days. Excluding the 5 percent of diagnostic radiopharmaceutical claims that had no matching diagnostic nuclear medicine scan for the same beneficiary, we found that a diagnostic nuclear medicine scan was reported on the same day as a coded diagnostic radiopharmaceutical 90 percent or more of the time for 10 of these 15 diagnostic radiopharmaceuticals. Further, we found that between 80 and 90 percent of single bills for each of the remaining 5 diagnostic radiopharmaceuticals had a diagnostic nuclear medicine scan on the same day.

Moreover, as the commenter noted, the potential separation of a diagnostic radiopharmaceutical and the associated nuclear medicine procedure would only be relevant to the “pseudo” single procedure claims. In the “natural” single bills we use for ratesetting, we package costs across dates of service. Overall, in examining the CY 2008 claims data available for this final rule with comment period, we observed that “natural” single claims constituted a majority of all single procedure claims used to calculate median costs for APCs with nuclear medicine procedures. Further, we acknowledge that we expect to lose packaged costs on a small proportion of claims when we create “pseudo” single procedure claims by splitting claims based on dates of service. This is an inevitable consequence of the “pseudo” single procedure claim creation process. We believe that the tradeoff is a minor one given the significant benefit of additional claims data, and the vast majority of commenters generally supported our “pseudo” single procedure claim methodology. Finally, we note that the nuclear medicine procedure-to-radiolabeled product I/OCE claims processing edits (http://www.cms.hhs.gov/​HospitalOutpatientPPS/​02_​device_​procedure.asp) to which the commenters referred include therapeutic radiopharmaceuticals and brachytherapy sources. Claims that pass these claims processing edits and enter into the ratesetting methodology without a diagnostic radiopharmaceutical reported on the claim are factored into ratesetting for nuclear medicine procedures as we do not expect that every nuclear medicine procedure would be billed with a diagnostic radiopharmaceutical, although we do expect each to be billed with a radiolabeled product. We note that the only time that we would not expect a nuclear medicine procedure to be billed with a radiolabeled product on an outpatient claim would be in the rare circumstance where a therapeutic radiopharmaceutical is provided in an inpatient setting and a nuclear medicine procedure associated with this radiopharmaceutical is subsequently furnished in the HOPD. In this specific circumstance, we would expect that hospitals would bill HCPCS code C9898 (Radiolabeled product provided during a hospital inpatient stay) in place of the radiolabeled product. Nuclear medicine scans are sometimes performed after the application of brachytherapy sources or the provision of a therapeutic radiopharmaceutical and in these cases the administration of an additional source of radioactivity (a diagnostic radiopharmaceutical) may not be required. While brachytherapy sources and therapeutic radiopharmaceuticals would be paid separately under the OPPS, we believe it is appropriate for us to include the costs of the scans that include a brachytherapy source or therapeutic radiopharmaceutical (or where a therapeutic radiopharmaceutical used for the scan was furnished to an inpatient) but lack a diagnostic radiopharmaceutical in Start Printed Page 60388calculating the median cost of the nuclear medicine procedure because these claims represent the hospital costs for the scans furnished under these circumstances. We previously discussed this issue in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68647 through 68648).

We believe that the single and “pseudo” single procedure claims resulting from our standard ratesetting methodology accurately capture the cost of providing nuclear medicine scans under a variety of clinical scenarios for several reasons discussed above and summarized again here. First, previous analyses demonstrated that a significant percentage of nuclear medicine procedures are reported on the same day as diagnostic radiopharmaceuticals with an extended half-life and, in these cases, our ratesetting methodology would capture these diagnostic radiopharmaceutical costs. We acknowledge that diagnostic radiopharmaceuticals with an extended half-life may be administered on a different day than the performance of the accompanying nuclear medicine scan. However, administration of the diagnostic radiopharmaceutical on a different day does not mean that these costs are not captured in our APC median costs for nuclear medicine procedures. The majority of the single procedure claims that we use to estimate APC median cost for APCs with nuclear medicine scans are “natural” single procedure claims that package all identified packaged costs (including diagnostic radiopharmaceuticals) into the nuclear medicine procedures, irrespective of the dates of service. While our standard ratesetting methodology also relies on “pseudo” single procedure claims that, by definition, represent only a single service date and potentially eliminate the cost of a packaged diagnostic radiopharmaceutical with an extended half-life billed on a different date of service than the nuclear medicine scan, the potential to ignore packaged costs on other dates of service is true for all procedures for which we use “pseudo” single procedure claims in ratesetting. This small loss of packaging is a tradeoff in adopting our methodology for breaking down multiple procedure claims through the bypass process, as discussed in section II.A.1.b. of this final rule with comment period. Finally, not all claims for nuclear medicine procedures should include a diagnostic radiopharmaceutical because they may include another type of radiolabeled product (such as a brachytherapy source or therapeutic radiopharmaceutical), and these additional radiolabeled products are not packaged. In short, we believe that, overall, the single procedure claims for nuclear medicine scans, both “natural” and “pseudo” single procedure claims, together appropriately represent the full cost of providing various nuclear medicine procedures and result in accurate APC median costs. Therefore, our standard OPPS ratesetting methodology of using median costs calculated from claims data according to our standard methodology from those claims that passed the I/OCE claims processing edits adequately captures the costs of diagnostic radiopharmaceuticals associated with diagnostic nuclear medicine procedures that are not provided on the same date of service.

Specifically with regard to our proposed reassignment of CPT code 78803, with a CPT code-specific median cost of approximately $561, to APC 0414, with an APC median cost of approximately $506, we note that we have almost 3,000 single claims upon with the median cost of CPT code 78803 is based. This CPT code-specific median cost is significantly lower than the median cost of APC 0408 of approximately $954, the APC assignment requested by the commenters and the highest level APC in the tumor/infection imaging series. Therefore, we believe the most appropriate CY 2010 APC assignment for CPT code 78803 is APC 0414, as we proposed for CY 2010. As stated above, we believe that our standard ratesetting methodology adequately incorporates the packaged diagnostic radiopharmaceutical costs associated with nuclear medicine procedures, including the procedure described by CPT code 78803.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal, without modification, to package the costs of all diagnostic radiopharmaceuticals into payment for the associated nuclear medicine procedures utilizing our standard OPPS ratesetting methodology that is applied to claims that passed the nuclear medicine procedure-to-radiolabeled product I/OCE claims processing edits in CY 2008. We also are finalizing our CY 2010 proposal, without modification, to reassign CPT code 78003 to APC 0414, with an APC median cost of approximately $506.

Comment: A number of commenters cited concerns regarding the proposed APC assignments and proposed payment rates for a number of nuclear medicine procedures. These commenters believed that the proposed APC assignments of certain nuclear medicine procedures led to clinically diverse procedures being grouped together for payment purposes.

Specifically, one commenter requested that: (1) CPT code 78645 (Cerebrospinal fluid flow, imaging (not including introduction of material); shunt evaluation) be reassigned from APC 0403 (Level I Nervous System Imaging) to APC 0402 (Level II Nervous System Imaging); (2) CPT code 78608 (Brain imaging, positron emission tomography (PET); metabolic evaluation) be reassigned from APC 0308 (Non-Myocardial Positron Emission Tomography (PET) Imaging) to a more appropriate APC; and (3) CPT codes 78000 (Thyroid uptake; single determination) and 78001 (Thyroid uptake; multiple determinations) be reassigned from APC 0389 (Level I Non-imaging Nuclear Medicine) to APC 0392 (Level II Non-Imaging Nuclear Medicine).

Response: We have performed our annual review of all the procedures and APC groupings for this final rule with comment period based on updated CY 2008 claims data. The CPT code-specific median cost of CPT code 78645 is approximately $246 based on 434 single claims, which is reasonably close to the median cost of APC 0403 of approximately $195, where we proposed to assign the service. The commenter recommended assignment of CPT code 78645 to APC 0402, in the same nervous system imaging series, with a significantly higher APC median cost of approximately $573. Based on this review of the costs and clinical characteristics of other services assigned to these nervous system imaging APCs, we continue to believe CPT code 78645 is most appropriately assigned to APC 0403 as we proposed.

There is a single APC for nonmyocardial PET scans, APC 0308, with an APC median cost of approximately $1,028. The median costs of all CPT codes assigned to that APC, including CPT codes for positron emission tomography (PET) scans and PET/computed tomography (CT) scans and CPT code 78608 for a metabolic evaluation of the brain using PET range from approximately $849 to $1,093, demonstrating very significant resource similarity across all of these procedures. Therefore, we do not agree with the commenter that the proposed configuration of APC 0308 should be modified because all of these nonmyocardial services that use PET technology demonstrate very similar costs and share clinical similarity as well.Start Printed Page 60389

With regard to the thyroid scans described by CPT codes 78000 and 78001, these procedures have CPT code-specific median costs of approximately $91 and $121 based on 1,167 and 982 single claims, respectively. The CPT code-specific median costs of these two procedures are very close to the median cost of APC 0389 of approximately $112, where we proposed to assign them for CY 2010. CPT codes 78000 and 78001 are the only services assigned to this APC with significant volume, and the APC median cost is mostly a reflection of the costs of procedures reported with two codes. In contrast, the median cost of APC 0392, their recommended placement according to the commenter, is approximately $179, substantially greater than the median costs of the two thyroid studies. Furthermore, if we were to reassign CPT codes 78000 and 78001 to APC 0392 as the commenter suggested, the median cost of APC 0392 would decrease to reflect the costs of these two procedures because, based on number of single claims for CPT codes 78000 and 78001, their costs would significantly affect the median cost of the APC. Therefore, we do not believe any changes to the proposed APC assignments of CPT codes 78000 or 78001 are justified.

After consideration of the public comments we received, we are finalizing our CY 2010 proposals, without modification, to assign CPT code 78645 to APC 0403, CPT code 79608 to APC 0308, CPT code 78000 to APC 0389, and CPT code 78001 to APC 0389. The approximate APC median costs of these APCs are as follows: APC 0403 at $195; APC 0308 at $1,028; and APC 0389 at $112.

Comment: A few commenters requested that CMS not reassign CPT code 78807 (Radiopharmaceutical localization of inflammatory process; tomographic (SPECT)) to APC 0406 (Level I Tumor/Infection Imaging) as proposed. These commenters noted that CPT code 78807 is more clinically similar to CPT codes 78805 (Radiopharmaceutical localization of inflammatory process; limited area) and 78806 (Radiopharmaceutical localization of inflammatory process; whole body) that are assigned to APC 0414. Therefore, the commenters requested that CMS continue to assign CPT code 78807 to APC 0414 for CY 2010.

Response: We proposed to assign CPT code 78807, with a CPT code-specific median cost of approximately $371 based on 251 single claims, to APC 0406, with an APC median cost of approximately $287. The significant individual services included in APC 0406 have a range of median costs, from approximately $232 to approximately $371. APC 0406 includes a number of tumor or infection imaging nuclear medicine procedures. Comparatively, APC 0414, where the commenters requested that we assign CPT code 78807, has an APC median cost of approximately $506 and includes significant services with CPT code-specific median costs from approximately $382 to approximately $561. CPT codes 78805 and 78806 are both assigned to APC 0414 and have CPT code-specific median costs of approximately $477 and $538, respectively, significantly higher than the median cost of CPT code 78807. Therefore, we do not believe that there is a reason to assign CPT code 78807 to APC 0414, which principally includes services with significantly higher median costs than CPT code 78807. We note that CPT code 78807 is a SPECT scan to localize an inflammatory process, while the other two codes do not describe services that use SPECT technology. Therefore, we do not believe that CPT code 78807 is sufficiently similar to CPT codes 78805 and 78806 from clinical or resource perspectives to warrant assignment to the mid-level tumor/infection imaging APC along with the other two services.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal, without modification, to assign CPT code 78807 to APC 0406, with an APC median cost of approximately $287.

Comment: Several commenters requested that CMS: (1) Not reassign CPT code 78610 (Brain imaging, vascular flow only) to APC 0403 as proposed but instead assign CPT code 78610 to APC 0402; (2) not reassign CPT code 78601 (Brain imaging, less than 4 static views; with vascular flow) to APC 0402 as proposed but instead assign CPT code 78601 to APC 0403; and (3) not reassign CPT code 78003 (Radiopharmaceutical localization of tumor or distribution of radiopharmaceutical agent(s); tomographic (SPECT)) to APC 0389 as proposed but instead assign CPT code 78003 to APC 0392.

Response: We proposed to assign CPT code 78610, with a CPT-specific median cost of approximately $211, to APC 0403, with an APC median cost of approximately $195. The significant services included in APC 0403 have a range of median costs, from approximately $156 to approximately $246. Comparatively, APC 0402, where the commenters requested that we assign CPT code 78610, has an APC median cost of approximately $573 and includes significant services with CPT code-specific median costs from approximately $540 to approximately $587. We do not believe that reassignment of CPT code 78610 to APC 0402 would be appropriate, given the procedure's relatively low median cost, although we recognize that we have few claims for the procedures. We continue to believe that payment for the resources required to provide CPT code 78610 is appropriately reflected through the procedure's assignment to APC 0403.

We proposed to assign CPT code 78601, with a CPT code-specific median cost of approximately $436, to APC 0402 with an APC median cost of approximately $573. The significant services included in APC 0402 have a range of median costs from approximately $540 to approximately $587. Comparatively, APC 0403, where the commenters requested that we assign CPT code 78601, has an APC median cost of approximately $195 and includes significant services with CPT code-specific median costs ranging from approximately $156 to approximately $246. Although we have few claims for CPT code 78601, we continue to believe it is most appropriately assigned to APC 0402 for CY 2010.

We proposed to assign CPT code 78003, with a CPT code-specific median cost of approximately $82, to APC 0389 with an APC median cost of approximately $112. There are two services included in APC 0389 that have a significant volume, CPT codes 78000 and 78001. These two CPT codes both have higher CPT code-specific median costs than CPT code 78003, approximately $91 and $121, respectively. Comparatively, APC 0392, where the commenters requested that we assign CPT code 78003, has an APC median cost of approximately $179. Based on its median cost, we continue to believe that the resources required for CPT code 78003 are appropriately reflected through its assignment to APC 0389.

Comment: A few commenters expressed their appreciation that the CY 2010 OPPS/ASC proposed rule included a proposed increase in payment for PET services compared to CY 2009 payment rates. These commenters also noted their concerns that hospital claims data for PET services are not predictable and that volatile data over the last several years may limit access to PET services. Some commenters urged CMS to use external data when setting payment rates for these services, while others suggested that CMS continue to monitor data to ensure that payment for these services is sufficient to cover the hospital costs for these resources. Start Printed Page 60390

Response: As we stated in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68547), while we utilized external data in the early years of the OPPS for ratesetting for a few services, we now rely on the cost data from claims as the system has matured and we have gained additional experience in ratesetting for HOPD services. The foundation of a system of relative weights like the OPPS is the relativity of the costs of all services to one another, as derived from a standardized system that uses standardized inputs and a consistent methodology. Further, the OPPS is a prospective payment system that relies on hospital charges and cost report data from the hospitals that furnish the services in order to determine relative costs. Therefore, we believe that our prospective payment rates, calculated based on the costs of those providers furnishing the procedures in CY 2008, provide appropriate payment to the providers who will furnish the services in CY 2010. We continue to believe that this standard ratesetting methodology accurately provides payment for PET services provided to hospital outpatients.

In summary, after consideration of the public comments we received, we are finalizing our CY 2010 proposals, without modification, for the configuration of nuclear medicine APCs. The final CY 2010 median costs for these APCs, as proposed, are calculated according to the standard OPPS ratesetting methodology as applied to claims for nuclear medicine procedures that passed the CY 2008 nuclear medicine procedure-to-radiolabeled product I/OCE claims processing edits. These edits ensure that the claims that are taken through our standard ratesetting process, as described in section II.A.2.b. of this final rule with comment period, that incorporates the creation of “natural” single and “pseudo” single claims, include the radiolabeled product necessary for the performance of the associated nuclear medicine procedure.

(6) Hyperbaric Oxygen Therapy

Since the implementation of the OPPS in August 2000, the OPPS has recognized HCPCS code C1300 (Hyperbaric oxygen under pressure, full body chamber, per 30 minute interval) for hyperbaric oxygen therapy (HBOT) provided in the hospital outpatient setting. In the CY 2005 OPPS final rule with comment period (69 FR 65758 through 65759), we finalized a “per unit” median cost calculation for APC 0659 (Hyperbaric Oxygen) using only claims with multiple units or multiple occurrences of HCPCS code C1300 because delivery of a typical HBOT service requires more than 30 minutes. We observed that claims with only a single occurrence of the code were anomalies, either because they reflected terminated sessions or because they were incorrectly coded with a single unit. In the same rule, we also established that HBOT would not generally be furnished with additional services that might be packaged under the standard OPPS APC median cost methodology. This enabled us to use claims with multiple units or multiple occurrences. Finally, we also used each hospital's overall CCR to estimate costs for HCPCS code C1300 from billed charges rather than the CCR for the respiratory therapy or other departmental cost centers. The public comments on the CY 2005 OPPS proposed rule effectively demonstrated that hospitals report the costs and charges for HBOT in a wide variety of cost centers. Since CY 2005, we have used this methodology to estimate the median cost for HBOT. The median costs of HBOT using this methodology have been relatively stable for the last 4 years. In the CY 2010 OPPS/ASC proposed rule (74 FR 35277), we proposed to continue using the same methodology to estimate a “per unit” median cost for HCPCS code C1300 for CY 2010 of approximately $108, using 279,139 claims with multiple units or multiple occurrences.

We did not receive any public comments on our proposal to continue to use our established ratesetting methodology for calculating the median cost of APC 0659 for payment of HBOT. Therefore, we are finalizing, without modification, our CY 2010 proposal to continue to use our established ratesetting methodology for calculating the median cost of APC 0659 for payment of HBOT, with a final CY 2010 median cost of approximately $106.

(7) Payment for Ancillary Outpatient Services When Patient Expires (-CA Modifier)

In the November 1, 2002 final rule with comment period (67 FR 66798), we discussed the creation of the new HCPCS CA modifier to address situations where a procedure on the OPPS inpatient list must be performed to resuscitate or stabilize a patient (whose status is that of an outpatient) with an emergent, life-threatening condition, and the patient dies before being admitted as an inpatient. In Transmittal A-02-129, issued on January 3, 2003, we instructed hospitals on the use of this modifier. For a complete description of the history of the policy and the development of the payment methodology for these services, we refer readers to the CY 2007 OPPS/ASC final rule with comment period (71 FR 68157 through 68158).

In the CY 2010 OPPS/ASC proposed rule (74 FR 35277 through 35278), we proposed to continue to use our established ratesetting methodology for calculating the median cost of APC 0375 (Ancillary Outpatient Services When Patient Expires) and to continue to make one payment under APC 0375 for the services that meet the specific conditions for using modifier -CA. We proposed to calculate the relative payment weight for APC 0375 by using all claims reporting a status indicator “C” procedure appended with the -CA modifier, using estimated costs from claims data for line-items with a HCPCS code assigned status indicator “G,” “H,” “K,” “N,” “Q1,” “Q2,” “Q3,” “R,” “S,” “T,” “U,” “V,” and “X” and charges for packaged revenue codes without a HCPCS code. We continue to believe that this methodology results in the most appropriate aggregate median cost for the ancillary services provided in these unusual clinical situations.

We believe that hospitals are reporting the -CA modifier according to the policy initially established in CY 2003. We note that the claims frequency for APC 0375 has been relatively stable over the past few years. Although the median cost for APC 0375 has increased, the median in the CY 2008 data used for development of rates for CY 2010 was only slightly higher than that for CY 2009. Variation in the median cost for APC 0375 is expected because of the small number of claims and because the specific cases are grouped by the presence of the -CA modifier appended to an inpatient procedure and not according to the standard APC criteria of clinical and resource homogeneity. Cost variation for APC 0375 from year to year is anticipated and acceptable as long as hospitals continue judicious reporting of the -CA modifier. Table 8 of the proposed rule (74 FR 35278) showed the number of claims and the proposed median costs for APC 0375 for CYs 2007, 2008, and 2009. For CY 2010, we proposed a median cost for APC 0375 of approximately $5,784.

We did not receive any public comments regarding this proposal. Therefore, we are finalizing our CY 2010 proposal, without modification, to continue to use our established ratesetting methodology for calculating the median cost of APC 0375, which has a final CY 2010 APC median cost of approximately $5,911. Start Printed Page 60391

Table 11 below shows the number of claims and the final median cost for APC 0375 from CY 2007 to CY 2010.

Table 11—Claims for Ancillary Outpatient Services When Patient Expires (-CA Modifier) for CYs 2007 to 2010

Prospective payment yearNumber of claimsAPC median cost
CY 2007260$3,549
CY 20081834,945
CY 20091685,545
CY 20101825,911

e. Calculation of Composite APC Criteria-Based Median Costs

As discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66613), we believe it is important that the OPPS enhance incentives for hospitals to provide only necessary, high quality care and to provide that care as efficiently as possible. For CY 2008, we developed composite APCs to provide a single payment for groups of services that are typically performed together during a single clinical encounter and that result in the provision of a complete service. Combining payment for multiple independent services into a single OPPS payment in this way enables hospitals to manage their resources with maximum flexibility by monitoring and adjusting the volume and efficiency of services themselves. An additional advantage to the composite APC model is that we can use data from correctly coded multiple procedure claims to calculate payment rates for the specified combinations of services, rather than relying upon single procedure claims which may be low in volume and/or incorrectly coded. Under the OPPS, we currently have composite APC policies for extended assessment and management services, low dose rate (LDR) prostate brachytherapy, cardiac electrophysiologic evaluation and ablation services, mental health services, and multiple imaging services. We refer readers to the CY 2008 OPPS/ASC final rule with comment period for a full discussion of the development of the composite APC methodology (72 FR 66611 through 66614 and 66650 through 66652).

While we continue to consider the development and implementation of larger payment bundles, such as composite APCs (a long-term policy objective for the OPPS), and continue to explore other areas where this payment model may be utilized, in the CY 2010 OPPS/ASC proposed rule, we did not propose any new composite APCs for CY 2010 so that we may monitor the effects of the existing composite APCs on utilization and payment. In response to our CY 2009 proposal to apply a composite payment methodology to multiple imaging procedures provided on the same date of service, several public commenters stated that we should proceed cautiously as we expand service bundling. They commented that we should not implement additional composite methodologies until adequate data are available to evaluate the composite policies' effectiveness and impact on beneficiary access to care (73 FR 68561 through 68562).

In response to the concerns of the public commenters and the APC Panel, in the CY 2010 OPPS proposed rule (74 FR 35278 through 35279) we reviewed the CY 2008 claims data for claims processed through September 30, 2008, for the services in the following composite APCs: APC 8000 (Cardiac Electrophysiologic Evaluation and Ablation Composite); APC 8001 (Low Dose Rate Prostate Brachytherapy Composite); APC 8002 (Level I Extended Assessment and Evaluation Composite); and APC 8003 (Level II Extended Assessment and Evaluation Composite). Our analyses did not consider inflation, changes in beneficiary population, or other comparable variables that can affect changes in aggregate payment from year to year. We found that the average payment for the package of services in both APC 8000 and APC 8001 increased from CY 2007, when payments were made for all individual services, to CY 2008 under the composite payment methodology. We also noted that the proposed median costs for these composite APCs for CY 2010 were higher than the median costs upon which the CY 2009 payments were based. We believe that, in part, this is because we used more claims data for common clinical scenarios to calculate the median costs of these APCs than we were able to use prior to the implementation of the composite payment methodology.

With regard to APCs 8002 and 8003, we compared payment for all visits appearing with observation services in CY 2007 with payments for all visits appearing with observation services in CY 2008 and found that total payment for visits and observation services increased from approximately $197 million to $270 million for claims processed through September 30 in each year. We attribute this increase in payments, in part, to the introduction of a composite payment for visits and observation through the extended assessment and management composite methodology that occurred for CY 2008 and that did not incorporate the International Classification of Diseases, Ninth Edition, Clinical Modification (ICD-9-CM) diagnosis criteria previously necessary for separate payment of observation.

At its February 2009 meeting, the APC Panel recommended that CMS evaluate the implications of creating composite APCs for cardiac resynchronization therapy (CRT) services with a defibrillator or pacemaker and report its findings to the APC Panel. The APC Panel also recommended at its August 2009 meeting that CMS reconsider creating a new composite APC or group of composite APCs for CRT procedures. While we did not propose any new composite APCs for CY 2010, we are accepting both of these APC Panel recommendations. We will reconsider creating composite APCs for CRT services and evaluate the implications of such a potential policy change, and report our findings to the APC Panel at a future meeting. We also will consider bringing other potential composite APCs to the APC Panel for further discussion.

In the CY 2010 OPPS/ASC proposed rule (74 FR 35279), we proposed to continue for CY 2010 our established composite APC policies for extended assessment and management, LDR prostate brachytherapy, cardiac electrophysiologic evaluation and ablation, mental health services, and multiple imaging services, as discussed Start Printed Page 60392in sections II.A.2.e.(1), II.A.2.e.(2), II.A.2.e.(3), II.A.2.e.(4), and II.A.2.e.(5), respectively, of this final rule with comment period.

Comment: Several commenters supported the development and implementation of the composite APC methodology, remarking that it is consistent with the principles of a prospective payment system and provides more appropriate payment rates through the use of multiple procedure claims for certain services. Many of these commenters also supported CMS' decision to monitor the existing composite APCs' effects on beneficiary access, utilization, and payment for at least another year before implementing additional composite APCs.

Other commenters, however, expressed disappointment that CMS did not propose additional composite APCs for CY 2010 in order to improve OPPS payment accuracy and include more correctly coded, multiple procedure claims in ratesetting. Some commenters recommended the development of composite APCs for nuclear medicine tumor or infection imaging services that encompass multiple days and multiple procedures, with separate payment for the associated diagnostic radiopharmaceuticals.

In addition, many commenters supported the development of composite APCs for CRT with defibrillator (CRT-D) or pacemaker (CRT-P) implantation. They indicated that the procedures involved in the implantation of CRT-D and CRT-P are separately payable services that, if coded correctly, are always represented by the submission of two CPT codes. According to the commenters, the number of single procedure CRT claims available for CY 2010 ratesetting is very low compared to the total number of claims submitted for CRT-D and CRT-P procedures. They argued that the establishment of a composite APC methodology for CRT-D and CRT-P would greatly increase the number of claims used in ratesetting, thereby lessening the year-to-year fluctuations in payment rates for CRT. The commenters also stated that the APC Panel advised CMS to use its discretion in forming one or a group of composite APCs for CRT without the need to report back to the APC Panel. They urged CMS to take this advice and move forward with the composite APC methodology for CRT-D and CRT-P for CY 2010.

Response: We appreciate the commenters' support of the composite APC methodology. As stated in the CY 2010 OPPS/ASC proposed rule (74 FR 35279), we will continue to review the claims data for the impact of all of the composite APCs on payments to hospitals and on services to beneficiaries and will take such data into consideration before proposing or implementing new composite APCs. We recognize the concerns expressed with respect to our CY 2009 proposal by the public commenters that moving ahead too quickly with any nonstandard OPPS payment methodology (even one such as composite APCs that may improve the accuracy of the OPPS payment rates by utilizing more complete claims for common clinical scenarios in ratesetting) could have unintended consequences and requires close monitoring. Because the multiple imaging composite APCs were implemented for the first time in CY 2009, we will not have data available for such monitoring until early CY 2010. Therefore, we continue to believe that it is in the best interest of hospitals and the continuing refinement of the OPPS that we not implement any new composite APC policies for at least one year.

As previously stated, we are accepting the recommendation made by the APC Panel at its August 2009 meeting that we reconsider creating a new composite APC or group of composite APCs for CRT-D and CRT-P procedures. We will evaluate the implications of such a potential policy change and report our findings to the APC Panel at a future meeting. We note that, while the APC Panel did recommend we reconsider creating a new composite APC or group of composite APCs for CRT-D and CRT-P, the Panel did not specify that we should move forward with the composite APC methodology for CRT-D and CRT-P for CY 2010 without first reporting back to the APC Panel, as some commenters indicated. We do not believe it would be appropriate to implement new composite APCs for CRT-D and CRT-P procedures for CY 2010 because neither we nor the public have had the opportunity to evaluate fully all of the implications of such a potential policy change, which may require complex claims processing logic or new claims processing edits and may have significant, unanticipated effects on the payment rates of other services. We also note that the total volume of claims that would qualify for a CRT-P composite APC in particular would be very low; in the past, we have explored composite APCs only for combinations of services that are commonly performed together (73 FR 68551). Because of the complex issues for these procedures with significant device costs, we believe that it is particularly important that the APC Panel and the public, through the annual rulemaking cycle, have the opportunity to comment on the development of composite APCs for CRT-D and CRT-P procedures.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal, without modification, to continue our established composite APC policies for extended assessment and management, LDR prostate brachytherapy, cardiac electrophysiologic evaluation and ablation, mental health services, and multiple imaging services, as discussed in sections II.A.2.e.(1), II.A.2.e.(2), II.A.2.e.(3), II.A.2.e.(4), and II.A.2.e.(5), respectively, of this final rule with comment period.

(1) Extended Assessment and Management Composite APCs (APCs 8002 and 8003)

In the CY 2010 OPPS/SC proposed rule (74 FR 35279 through 35280), we proposed to continue to include composite APC 8002 (Level I Extended Assessment and Management Composite) and composite APC 8003 (Level II Extended Assessment and Management Composite) in the OPPS. For CY 2008, we created these two composite APCs to provide payment to hospitals in certain circumstances when extended assessment and management of a patient occur (an extended visit). In most circumstances, observation services are supportive and ancillary to the other services provided to a patient. In the circumstances when observation care is provided in conjunction with a high level visit or direct referral and is an integral part of a patient's extended encounter of care, payment is made for the entire care encounter through one of two composite APCs as appropriate.

As defined for the CY 2008 OPPS, composite APC 8002 describes an encounter for care provided to a patient that includes a high level (Level 5) clinic visit or direct referral for observation services in conjunction with observation services of substantial duration (72 FR 66648 through 66649). Composite APC 8003 describes an encounter for care provided to a patient that includes a high level (Level 4 or 5) Type A emergency department visit, a high level (Level 5) Type B emergency department visit, or critical care services in conjunction with observation services of substantial duration. HCPCS code G0378 (Observation services, per hour) is assigned status indicator “N,” signifying that its payment is always packaged. As noted in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66648 through 66649), the Integrated Outpatient Code Editor Start Printed Page 60393(I/OCE) evaluates every claim received to determine if payment through a composite APC is appropriate. If payment through a composite APC is inappropriate, the I/OCE, in conjunction with the OPPS Pricer, determines the appropriate status indicator, APC, and payment for every code on a claim. The specific criteria that must be met for the two extended assessment and management composite APCs to be paid are provided below in the description of the claims that were selected for the calculation of the proposed CY 2010 median costs for these composite APCs. We did not propose to change these criteria for the CY 2010 OPPS.

When we created composite APCs 8002 and 8003 for CY 2008, we retained as general reporting requirements for all observation services those criteria related to physician order and evaluation, documentation, and observation beginning and ending time as listed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66812). These are more general requirements that encourage hospitals to provide medically reasonable and necessary care and help to ensure the proper reporting of observation services on correctly coded hospital claims that reflect the full charges associated with all hospital resources utilized to provide the reported services. We did not propose to change these reporting requirements for the CY 2010 OPPS. However, as discussed below, the APC Panel at its February 2009 meeting requested that CMS issue guidance clarifying the correct method for reporting the starting time for observation services. The APC Panel noted that the descriptions of the start time for observation services located in the Medicare Claims Processing Manual (Pub. 100-4), Chapter 4, sections 290.2.2 through 290.5, cause confusion for hospitals. We accepted this recommendation and issued clarifying guidance in the Claims Processing Manual through Transmittal 1745, Change Request 6492, issued May 22, 2009 and implemented July 6, 2009.

As noted in detail in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66802 through 66805 and 66814), we saw a normal and stable distribution of clinic and emergency department visit levels in the OPPS claims data through CY 2006 available at that time. We stated that we did not expect to see an increase in the proportion of visit claims for high level visits as a result of the new composite APCs adopted for CY 2008. Similarly, we stated that we expected that hospitals would not purposely change their visit guidelines or otherwise upcode clinic and emergency department visits reported with observation care solely for the purpose of composite payment. As stated in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66648), we expect to carefully monitor any changes in billing practices on a service-specific and hospital-specific level to determine whether there is reason to request that Quality Improvement Organizations (QIOs) review the quality of care furnished, or to request that Benefit Integrity contractors or other contractors review the claims against the medical record.

When we compared total payments for all visits appearing with observation services in CY 2007 to payments in CY 2008, using claims processed through September 30 in CY 2007 and CY 2008, we observed a 37 percent increase in total payments. We believe this increase is, in part, attributable to the expansion of payment under the extended assessment and management composites to all ICD-9-CM diagnoses. To confirm this, we calculated the percentage of visit HCPCS codes billed with HCPCS code G0378 (Observation services, per hour) between CY 2007 and CY 2008 and compared the percentage associated with visit codes included in the extended assessment and management composites in each year. If hospitals had inappropriately changed their visit reporting behavior to maximize payment through the new composite APCs, we would expect to see significant changes in the percentage of visit HCPCS codes included in the composite APCs billed with observation services relative to all other visit HCPCS codes billed with observation services between CY 2007 and CY 2008. We did not observe a sizable increase in the proportion of visit HCPCS codes included in the composite APCs relative to the proportion of all other visit HCPCS codes billed with observation services. For example, the percentage of claims billed with CPT code 99285 (Emergency department visit for the evaluation and management of a patient (Level 5)) and HCPCS code G0378 was 51 percent in the CY 2007 data and 54 percent in the CY 2008 data. Similarly, the percentage of claims billed with CPT code 99284 (Emergency department visit for the evaluation and management of a patient (Level 4)) and HCPCS code G0378 decreased only slightly from 28 percent in the CY 2007 data to 27 percent in the CY 2008 data. We concluded that, although the volume of visits billed with HCPCS code G0378 increased between CY 2007 and CY 2008, the overall pattern of billing visit levels did not change significantly. We stated that we will continue to carefully monitor any changes in billing practices on a service-specific and hospital-specific level.

In the CY 2010 OPPS/ASC proposed rule (74 FR 35280), we proposed to continue for CY 2010 the extended assessment and management composite APC payment methodology for APCs 8002 and 8003. As stated earlier, we also proposed to continue the general reporting requirements for observation services reported with HCPCS code G0378. We continue to believe that the composite APCs 8002 and 8003 and related policies provide the most appropriate means of paying for these services. We proposed to calculate the median costs for APCs 8002 and 8003 using all single and “pseudo” single procedure claims for CY 2008 that meet the criteria for payment of each composite APC.

Specifically, to calculate the proposed median costs for composite APCs 8002 and 8003, we selected single and “pseudo” single claims that met each of the following criteria:

1. Did not contain a HCPCS code to which we have assigned status indicator “T” that is reported with a date of service 1 day earlier than the date of service associated with HCPCS code G0378. (By selecting these claims from single and “pseudo” single claims, we had already assured that they would not contain a code for a service with status indicator “T” on the same date of service.);

2. Contained 8 or more units of HCPCS code G0378; and

3. Contained one of the following codes:

  • In the case of composite APC 8002, HCPCS code G0379 (Direct referral of patient for hospital observation care) on the same date of service as G0378; or CPT code 99205 (Office or other outpatient visit for the evaluation and management of a new patient (Level 5)); or CPT code 99215 (Office or other outpatient visit for the evaluation and management of an established patient (Level 5)) provided on the same date of service or one day before the date of service for HCPCS code G0378. We refer readers to section XII.E. of the CY 2010 OPPS/ASC proposed rule (74 FR 35370 through 35371) and section XII.E. of this final rule with comment period for a full discussion of our proposed revision of the code descriptor for HCPCS code G0379 and the final policy for CY 2010.
  • In the case of composite APC 8003, CPT code 99284 (Emergency department visit for the evaluation and management of a patient (Level 4)); CPT code 99285 (Emergency department visit for the Start Printed Page 60394evaluation and management of a patient (Level 5)); CPT code 99291 (Critical care, evaluation and management of the critically ill or critically injured patient; first 30-74 minutes); or HCPCS code G0384 (Level 5 Hospital Emergency Department Visit Provided in a Type B Emergency Department) provided on the same date of service or one day before the date of service for HCPCS code G0378. (As discussed in detail in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68684), we finalized our proposal to add HCPCS code G0384 to the eligibility criteria for composite APC 8003 for CY 2009.)

We applied the standard packaging and trimming rules to the claims before calculating the proposed CY 2010 median costs. The proposed CY 2010 median cost resulting from this process for composite APC 8002 was approximately $384, which was calculated from 14,981 single and “pseudo” single bills that met the required criteria. The proposed CY 2010 median cost for composite APC 8003 was approximately $709, which was calculated from 154,843 single and “pseudo” single bills that met the required criteria. This is the same methodology we used to calculate the medians for composite APCs 8002 and 8003 for the CY 2008 OPPS (72 FR 66649).

As discussed further in section IX. of the CY 2010 OPPS/ASC proposed rule (74 FR 35350) and this final rule with comment period, and consistent with our CY 2008 and CY 2009 final policies, when calculating the median costs for the clinic, Type A emergency department visit, Type B emergency department visit, and critical care APCs (0604 through 0617 and 0626 through 0630), we utilize our methodology that excludes those claims for visits that are eligible for payment through the two extended assessment and management composite APCs, that is APC 8002 or APC 8003. We believe that this approach results in the most accurate cost estimates for APCs 0604 through 0617 and 0626 through 0630 for CY 2010.

At the August 2009 meeting of the APC Panel, the APC Panel recommended that CMS provide the Visits and Observation Subcommittee with an analysis of calendar year 2009 claims data for clinic, ED (Type A and B), and extended assessment and management composite APCs at the next meeting of the APC Panel. The APC Panel also recommended that CMS provide the Visits and Observation Subcommittee with continued analyses of observation services, as previously provided to the APC Panel, including data on frequency, length of stay, and common diagnoses, as well as recovery audit contractor (RAC) data on these subjects if available. Furthermore, the APC Panel recommended that CMS provide the Visits and Observation Subcommittee with analyses of the most common diagnoses and services associated with Type A and Type B ED visits at the next meeting of the APC Panel, including analysis by hospital-specific characteristics. Finally, the APC Panel recommended that the work of the Visits and Observation Subcommittee continue. We accept all of these recommendations and will present the available requested data at the winter 2010 meeting of the APC Panel.

In summary, in the CY 2010 OPPS/ASC proposed rule (74 FR 35279 through 35280), we proposed to continue to include for CY 2010 composite APC 8002 (Level I Extended Assessment and Management Composite) and composite APC 8003 (Level II Extended Assessment and Management Composite) in the OPPS. We proposed to continue the extended assessment and management composite APC payment methodology and criteria that we finalized for CY 2009. We also proposed to calculate the median costs for APCs 8002 and 8003 using all single and “pseudo” single procedure claims from CY 2008 that meet the criteria for payment of each composite APC. We did not propose to change the reporting requirements for observation services for the CY 2010 OPPS. However, in CY 2009 we did issue further clarifying guidance in the Medicare Claims Processing Manual related to observation start time.

Comment: Several commenters expressed appreciation for CMS' issuance of clarifying guidance for reporting the beginning and ending times of observation services.

Response: We appreciate these comments and note again that the guidance was issued in the Claims Processing Manual through Transmittal 1745, Change Request 6492, issued May 22, 2009, and implemented July 6, 2009.

Comment: Several commenters requested clarification of the reporting of observation services in relation to maternity care paid under another payer's policies and in relation to changes in patient status from inpatient to outpatient using Condition Code 44. One commenter pointed out that references to “observation status” versus “inpatient admission” are potentially confusing for beneficiaries and physicians.

Response: Each of these comments/questions is outside of the scope of the proposals in the CY 2010 OPPS/ASC proposed rule. However, we will consider the possibility of addressing these concerns through other available mechanisms, as appropriate. We note that we have continued to emphasize that observation care is a hospital outpatient service, ordered by a physician and reported with a HCPCS code, like any other outpatient service. It is not a patient status for Medicare purposes.

After consideration of the public comments we received, we are finalizing, without modification, our CY 2010 proposal to continue to include composite APC 8002 and composite APC 8003 in the OPPS and to continue the extended assessment and management composite APC payment methodology and criteria that we finalized for CY 2009. We also are calculating the median costs for APCs 8002 and 8003 using all single and “pseudo” single procedure claims from CY 2008 that meet the criteria for payment of each composite APC. The final CY 2010 median cost resulting from this methodology for composite APC 8002 is approximately $378, which was calculated from 17,074 single and “pseudo” single bills that met the required criteria. The final CY 2010 median cost for composite APC 8003 is approximately $699, which was calculated from 176,226 single and “pseudo” single bills that met the required criteria.

(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC 8001)

LDR prostate brachytherapy is a treatment for prostate cancer in which hollow needles or catheters are inserted into the prostate, followed by permanent implantation of radioactive sources into the prostate through the needles/catheters. At least two CPT codes are used to report the composite treatment service because there are separate codes that describe placement of the needles/catheters and the application of the brachytherapy sources: CPT code 55875 (Transperineal placement of needles or catheters into prostate for interstitial radioelement application, with or without cystoscopy) and CPT code 77778 (Interstitial radiation source application; complex). Generally, the component services represented by both codes are provided in the same operative session in the same hospital on the same date of service to the Medicare beneficiary being treated with LDR brachytherapy for prostate cancer. As discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66653), OPPS payment rates for CPT code 77778, in Start Printed Page 60395particular, had fluctuated over the years. We were frequently informed by the public that reliance on single procedure claims to set the median costs for these services resulted in use of only incorrectly coded claims for LDR prostate brachytherapy because a correctly coded claim should include, for the same date of service, CPT codes for both needle/catheter placement and application of radiation sources, as well as separately coded imaging and radiation therapy planning services (that is, a multiple procedure claim).

In order to base payment on claims for the most common clinical scenario, and to further our goal of providing payment under the OPPS for a larger bundle of component services provided in a single hospital encounter, beginning in CY 2008, we provide a single payment for LDR prostate brachytherapy when the composite service, reported as CPT codes 55875 and 77778, is furnished in a single hospital encounter. We base the payment for composite APC 8001 (LDR Prostate Brachytherapy Composite) on the median cost derived from claims for the same date of service that contain both CPT codes 55875 and 77778 and that do not contain other separately paid codes that are not on the bypass list. In uncommon occurrences in which the services are billed individually, hospitals continue to receive separate payments for the individual services. We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66652 through 66655) for a full history of OPPS payment for LDR prostate brachytherapy and a detailed description of how we developed the LDR prostate brachytherapy composite APC.

In the CY 2010 OPPS/ASC proposed rule (74 FR 35281), we proposed for CY 2010 to continue paying for LDR prostate brachytherapy services using the composite APC methodology proposed and implemented for CY 2008 and CY 2009. That is, we proposed to use CY 2008 claims on which both CPT codes 55875 and 77778 were billed on the same date of service with no other separately paid procedure codes (other than those on the bypass list) to calculate the payment rate for composite APC 8001. Consistent with our CY 2008 and CY 2009 practice, we proposed not to use the claims that meet these criteria in the calculation of the median costs for APCs 0163 (Level IV Cystourethroscopy and Other Genitourinary Procedures) and 0651 (Complex Interstitial Radiation Source Application), the APCs to which CPT codes 55875 and 77778 are assigned, respectively. The median costs for APCs 0163 and 0651 would continue to be calculated using single and “pseudo” single procedure claims. We continue to believe that this composite APC contributes to our goal of creating hospital incentives for efficiency and cost containment, while providing hospitals with the most flexibility to manage their resources. We also continue to believe that data from claims reporting both services required for LDR prostate brachytherapy provide the most accurate median cost upon which to base the composite APC payment rate.

Using partial year CY 2008 claims data available for the CY 2010 OPPS/ASC proposed rule, we were able to use 669 claims that contained both CPT codes 77778 and 55875 to calculate the median cost upon which the proposed CY 2010 payment for composite APC 8001 was based. The proposed median cost for composite APC 8001 for CY 2010 was approximately $3,106. This was an increase compared to the CY 2009 OPPS/ASC final rule with comment period in which we calculated a final median cost for this composite APC of approximately $2,967 based on a full year of CY 2007 claims data. The CY 2010 proposed median cost for this composite APC was slightly less than $3,268, the sum of the proposed median costs for APCs 0163 and 0651 ($2,453+$815), the APCs to which CPT codes 55875 and 77778 map if one service is billed on a claim without the other. We stated in the CY 2010 OPPS/ASC proposed rule (74 FR 35281) that we believe the proposed CY 2010 median cost for composite APC 8001 of approximately $3,106, calculated from claims we believe to be correctly coded, would result in a reasonable and appropriate payment rate for this service in CY 2010.

Comment: Several commenters requested changes to the bypass list that could potentially affect the number of claims used to calculate the median costs upon which payments for several APCs involving radiation oncology services, including APC 8001, are based. In particular, some commenters requested CMS add CPT code 77470 (Special treatment procedure (eg, total body irradiation, hemibody radiation, per oral, endocavitary or intraoperative cone irradiation)), CPT code 77328 (Brachytherapy isodose plan; complex (multiplane isodose plan, volume implant calculations, over 10 sources/ribbons used, special spatial reconstruction, remote afterloading brachytherapy, over 12 sources), and CPT code 77295 (Therapeutic radiology simulation-aided field setting; 3-dimensional) to the bypass list in order to utilize more single claims in calculating the median costs of APC 8001 and other APCs for radiation oncology services. According to one commenter's analysis, the addition of these CPT codes to the bypass list would result in a 17 percent increase in the median cost for APC 8001.

Response: As discussed in detail in section II.A.1.b. of this final rule with comment period, we are not adding CPT codes 77470, 77328, and 77295 to the list of bypass codes for CY 2010 ratesetting, but we are adding several other CPT codes for radiation oncology services. The addition of these codes to the bypass list results in a modest increase in the number of single claims used to calculate the median cost upon which the final payment rate for CY 2010 for APC 8001 is based, but does not result in a significant increase or decrease in the median cost itself.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal, without modification, to continue paying for LDR prostate brachytherapy services using the composite APC methodology implemented in CY 2008. We were able to use 906 claims that contained both CPT codes 77778 and 55875 to calculate the median cost upon which the CY 2010 final payment for composite APC 8001 is based. The final median cost for composite APC 8001 for CY 2010 is approximately $3,084. We note that this is slightly less than $3,303, the approximate sum of the median costs for APC 0163 and APC 0651 ($2,418 + $885), the APCs to which CPT codes 55875 and 77778 map if one service is billed on a claim without the other. These CPT codes are assigned status indicator “Q3” in Addendum B to this final rule with comment period to identify their status as potentially payable through a composite APC. Their composite APC assignment is identified in Addendum M to this final rule with comment period.

(3) Cardiac Electrophysiologic Evaluation and Ablation Composite APC (APC 8000)

Cardiac electrophysiologic evaluation and ablation services frequently are performed in varying combinations with one another during a single episode-of-care in the hospital outpatient setting. Therefore, correctly coded claims for these services often include multiple codes for component services that are reported with different CPT codes and that, prior to CY 2008, were always paid separately through different APCs (specifically, APC 0085 (Level II Electrophysiologic Evaluation), APC 0086 (Ablate Heart Dysrhythm Focus), Start Printed Page 60396and APC 0087 (Cardiac Electrophysiologic Recording/Mapping). As a result, there would never be many single bills for cardiac electrophysiologic evaluation and ablation services, and those that are reported as single bills would often represent atypical cases or incorrectly coded claims. As described in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66655 through 66659), the APC Panel and the public expressed persistent concerns regarding the limited and reportedly unrepresentative single bills available for use in calculating the median costs for these services according to our standard OPPS methodology.

Effective January 1, 2008, we established APC 8000 (Cardiac Electrophysiologic Evaluation and Ablation Composite) to pay for a composite service made up of at least one specified electrophysiologic evaluation service and one specified electrophysiologic ablation service. Calculating a composite APC for these services allowed us to utilize many more claims than were available to establish the individual APC median costs for these services, and we also saw this composite APC as an opportunity to advance our stated goal of promoting hospital efficiency through larger payment bundles. In order to calculate the median cost upon which the payment rate for composite APC 8000 is based, we used multiple procedure claims that contained at least one CPT code from group A for evaluation services and at least one CPT code from group B for ablation services reported on the same date of service on an individual claim. Table 9 in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66656) identified the CPT codes that are assigned to groups A and B. For a full discussion of how we identified the group A and group B procedures and established the payment rate for the cardiac electrophysiologic evaluation and ablation composite APC, we refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66655 through 66659). Where a service in group A is furnished on a date of service that is different from the date of service for a code in group B for the same beneficiary, payments are made under the appropriate single procedure APCs and the composite APC does not apply.

In the CY 2010 OPPS/ASC proposed rule (74 FR 35282), we proposed to continue for CY 2010 to pay for cardiac electrophysiologic evaluation and ablation services using the composite APC methodology proposed and implemented for CY 2008 and CY 2009. Consistent with our CY 2008 and CY 2009 practice, we proposed not to use the claims that meet the composite payment criteria in the calculation of the median costs for APC 0085 and APC 0086, to which the CPT codes in both groups A and B for composite APC 8000 are otherwise assigned. Median costs for APCs 0085 and 0086 would continue to be calculated using single procedure claims. We continue to believe that the composite APC methodology for cardiac electrophysiologic evaluation and ablation services is the most efficient and effective way to use the claims data for the majority of these services and best represents the hospital resources associated with performing the common combinations of these services that are clinically typical. Furthermore, this approach creates incentives for efficiency by providing a single payment for a larger bundle of major procedures when they are performed together, in contrast to continued separate payment for each of the individual procedures.

Using partial year CY 2008 claims data available for the proposed rule, we were able to use 6,975 claims containing a combination of group A and group B codes and calculated a proposed median cost of approximately $10,105 for composite APC 8000. This was an increase compared to the CY 2009 OPPS/ASC final rule with comment period in which we calculated a final median cost for this composite APC of approximately $9,206 based on a full year of CY 2007 claims data. We stated in the CY 2010 OPPS/ASC proposed rule (74 FR 35282) that we believe the proposed median cost of $10,105 calculated from a high volume of correctly coded multiple procedure claims would result in an accurate and appropriate proposed payment for cardiac electrophysiologic evaluation and ablation services when at least one evaluation service is furnished during the same clinical encounter as at least one ablation service. Table 9 of the CY 2010 OPPS/ASC proposed rule (74 FR 35282) listed the groups of procedures upon which we proposed to base composite APC 8000 for CY 2010.

Comment: Several commenters supported CMS' proposal to continue using the composite APCs created in CY 2008, in particular the composite APC for cardiac electrophysiologic evaluation and ablation services. One commenter also supported the modest increase in payment for this APC, stating that it is reflective of the increased costs of providing these important services to patients.

Response: We appreciate commenters' support for the composite payment methodology in general and the composite APC for cardiac electrophysiologic evaluation and ablation in particular.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal, without modification, to continue paying for cardiac electrophysiologic evaluation and ablation services using the composite APC methodology implemented for CY 2008. For this final rule with comment period, we were able to use 7,599 claims from CY 2008 containing a combination of group A and group B codes and calculated a final median cost of approximately $10,026 for composite APC 8000. This is an increase compared to the CY 2009 OPPS/ASC final rule with comment period in which we calculated a final median cost of approximately $9,206 based a full year of CY 2007 claims data. We believe that the final median cost of $10,026 calculated from a high volume of correctly coded multiple procedure claims results in an accurate and appropriate final payment for cardiac electrophysiologic evaluation and ablation services when at least one evaluation service is furnished during the same clinical encounter as at least one ablation service. Table 12 below lists the groups of procedures upon which we are basing composite APC 8000 for CY 2010. These CPT codes are assigned status indicated “Q3” in Addendum B to this final rule with comment period to identify their status as potentially payable through a composite APC. Their composite APC assignment is identified in Addendum M to this final rule with comment period.Start Printed Page 60397

Table 12—Groups of Cardiac Electrophysiologic Evaluation and Ablation Procedures Upon Which Composite APC 8000 is Based

Codes used in combinations: At least one in Group A and one in Group BCY 2010 CPT codeFinal single code CY 2010 APCFinal CY 2010 SI (composite)
Group A:
Comprehensive electrophysiologic evaluation with right atrial pacing and recording, right ventricular pacing and recording, His bundle recording, including insertion and repositioning of multiple electrode catheters, without induction or attempted induction of arrhythmia936190085Q3
Comprehensive electrophysiologic evaluation including insertion and repositioning of multiple electrode catheters with induction or attempted induction of arrhythmia; with right atrial pacing and recording, right ventricular pacing and recording, His bundle recording936200085Q3
Group B:
Intracardiac catheter ablation of atrioventricular node function, atrioventricular conduction for creation of complete heart block, with or without temporary pacemaker placement936500085Q3
Intracardiac catheter ablation of arrhythmogenic focus; for treatment of supraventricular tachycardia by ablation of fast or slow atrioventricular pathways, accessory atrioventricular connections or other atrial foci, singly or in combination936510086Q3
Intracardiac catheter ablation of arrhythmogenic focus; for treatment of ventricular tachycardia936520086Q3

(4) Mental Health Services Composite APC (APC 0034)

In the CY 2010 OPPS/ASC proposed rule (74 FR 35282 through 35283), we proposed to continue our longstanding policy of limiting the aggregate payment for specified less resource-intensive mental health services furnished on the same date to the payment for a day of partial hospitalization, which we consider to be the most resource-intensive of all outpatient mental health treatment for CY 2010. We refer readers to the April 7, 2000 OPPS final rule with comment period (65 FR 18455) for the initial discussion of this longstanding policy. We stated in the CY 2010 OPPS/ASC proposed rule that we continue to believe that the costs associated with administering a partial hospitalization program represent the most resource-intensive of all outpatient mental health treatment. Therefore, we do not believe that we should pay more for a day of individual mental health services under the OPPS than the partial hospitalization per diem payment.

As discussed in the CY 2010 OPPS/ASC proposed rule (74 FR 35356 through 35357), for CY 2010 we proposed to continue using the two tiered payment approach for partial hospitalization services that we implemented in CY 2009: one APC for days with three services (APC 0172) (Level I Partial Hospitalization (3 services)) and one APC for days with four or more services (APC 0173) (Level II Partial Hospitalization (4 or more services)) (74 FR 35282 through 35283). When a CMHC or hospital provides three units of partial hospitalization services and meets all other partial hospitalization payment criteria, we proposed that the CMHC or hospital be paid through APC 0172. When the CMHC or hospital provides 4 or more units of partial hospitalization services and meets all other partial hospitalization payment criteria, we proposed that the CMHC or hospital be paid through APC 0173. We proposed to set the CY 2010 payment rate for mental health services composite APC 0034 (Mental Health Services Composite) at the same rate as we proposed for APC 0173, which is the maximum partial hospitalization per diem payment. We stated in the CY 2010 OPPS/ASC proposed rule that we believe this APC payment rate would provide the most appropriate payment for composite APC 0034, taking into consideration the intensity of the mental health services and the differences in the HCPCS codes for mental health services that could be paid through this composite APC compared with the HCPCS codes that could be paid through partial hospitalization APC 0173. When the aggregate payment for specified mental health services provided by one hospital to a single beneficiary on one date of service based on the payment rates associated with the APCs for the individual services exceeds the maximum per diem partial hospitalization payment, we proposed that those specified mental health services would be assigned to APC 0034. We proposed that APC 0034 would continue to have the same payment rate as APC 0173 and that the hospital would continue to be paid one unit of APC 0034. The I/OCE currently determines, and we proposed for CY 2010 that it would continue to determine, whether to pay these specified mental health services individually or to make a single payment at the same rate as the APC 0173 per diem rate for partial hospitalization for all of the specified mental health services furnished by the hospital on that single date of service.

We also proposed to continue assigning status indicator “Q3” (Codes that May be Paid Through a Composite APC) to the HCPCS codes that are assigned to composite APC 0034 in Addendum M, and to continue assigning status indicator “S” (Significant Procedure, Not Discounted when Multiple), as adopted for CY 2009, to APC 0034 for CY 2010 (74 FR 35283).

Comment: One commenter expressed concern that using claims data from CMHCs and hospitals to calculate the payment rate for APC 0173 would result in reduced access not only for hospital-based partial hospitalization services but also for other less intensive mental health services provided in hospital outpatient departments. The commenter stated that CMS should use hospital data to calculate the payment rates for hospital services.

Response: As discussed in section X. of this final rule with comment period, the final CY 2010 payment rates for APCs 0172 and 0173 are calculated using hospital-only cost data for CY 2010, rather than using both hospital and CMHC cost data. This final policy results in an increase in the median cost for APC 0173 from approximately $200 in CY 2009 to approximately $209. As noted in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66739), we continue to believe that the costs associated with administering a partial hospitalization program Start Printed Page 60398represent the most resource intensive of all outpatient mental health treatment, and we do not believe that we should pay more for a day of individual mental health services under the OPPS. The mental health payment limitation will rise and fall in the same manner as payment for partial hospitalization services.

After consideration of the public comment we received, we are finalizing our CY 2010 proposal, without modification, to limit the aggregate payment for specified less intensive outpatient mental health services furnished on the same date by a hospital to the payment for a day of partial hospitalization, specifically APC 0173. For CY 2010, we also are finalizing our proposal, without modification, to assign status indicator “Q3” to those HCPCS codes that describe the specified mental health services to which APC 0034 applies in Addendum B to this final rule with comment period. Lastly, we are finalizing our proposal to continue assigning status indicator “S” (Significant Procedure, Not Discounted When Multiple) to APC 0034.

(5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 8008)

Prior to CY 2009, hospitals received a full APC payment for each imaging service on a claim, regardless of how many procedures were performed during a single session using the same imaging modality. Based on extensive data analysis, we determined that this practice neither reflected nor promoted the efficiencies hospitals can achieve when performing multiple imaging procedures during a single session (73 FR 41448 through 41450). As a result of our data analysis, and in response to ongoing recommendations from MedPAC to improve payment accuracy for imaging services under the OPPS, we expanded the composite APC model developed in CY 2008 to multiple imaging services. Effective January 1, 2009, we provide a single payment each time a hospital bills more than one imaging procedure within an imaging family on the same date of service. We utilize three imaging families based on imaging modality for purposes of this methodology: ultrasound, computed tomography (CT) and computed tomographic angiography (CTA), and magnetic resonance imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes subject to the multiple imaging composite policy, and their respective families, are listed in Table 8 of the CY 2009 OPPS/ASC final rule with comment period (73 FR 68567 through 68569).

While there are three imaging families, there are five multiple imaging composite APCs due to the statutory requirement at section 1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging services provided with and without contrast. While the ultrasound procedures included in the policy do not involve contrast, both CT/CTA and MRI/MRA scans can be provided either with or without contrast. The five multiple imaging composite APCs established in CY 2009 are: APC 8004 (Ultrasound Composite); APC 8005 (CT and CTA without Contrast Composite); APC 8006 (CT and CTA with Contrast Composite); APC 8007 (MRI and MRA without Contrast Composite); and APC 8008 (MRI and MRA with Contrast Composite). We define the single imaging session for the “with contrast” composite APCs as having at least one or more imaging procedures from the same family performed with contrast on the same date of service. For example, if the hospital performs an MRI without contrast during the same session as at least one other MRI with contrast, the hospital will receive payment for APC 8008, the “with contrast” composite APC.

Hospitals continue to use the same HCPCS codes to report imaging procedures, and the I/OCE determines when combinations of imaging procedures qualify for composite APC payment or map to standard (sole service) APCs for payment. We make a single payment for those imaging procedures that qualify for composite APC payment, as well as any packaged services furnished on the same date of service. The standard (noncomposite) APC assignments continue to apply for single imaging procedures and multiple imaging procedures performed across families. For a full discussion of the development of the multiple imaging composite APC methodology, we refer readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR 68559 through 68569).

As we discussed in the CY 2010 OPPS/ASC proposed rule (74 FR 35283), during the February 2009 meeting of the APC Panel, the APC Panel heard from stakeholders who claimed that a composite payment is not appropriate when multiple imaging procedures are provided on the same date of service but at different times. Some APC Panel members expressed concern that the same efficiencies that may be gained when multiple imaging procedures are performed during the same sitting may not be gained if a significant amount of time passes between the second and subsequent imaging procedures, when the patient may leave not only the scanner, but also the radiology department or hospital. The APC Panel recommended that CMS continue to work with stakeholders to examine different options for APCs for multiple imaging sessions and multiple imaging procedures.

We accepted the APC Panel recommendation that CMS continue to work with stakeholders to examine different options for APCs for multiple imaging sessions and multiple imaging procedures. However, as we stated in the CY 2010 OPPS/ASC proposed rule (74 FR 35283 through 35284), we do not believe it is appropriate to make modifications to the multiple imaging composite policy for CY 2010. We indicated that we continue to believe that composite payment is appropriate even when procedures are provided on the same date of service but at different times, because hospitals do not expend the same facility resources each and every time a patient is seen for a distinct imaging service in a separate imaging session. In most cases, we expect that patients in those circumstances would receive imaging procedures at different times during a single prolonged hospital outpatient encounter, and that the efficiencies that may be gained from providing multiple imaging procedures during a single session are achieved in such ways as not having to register the patient again, or not having to re-establish new intravenous access for an additional study when contrast is required. Furthermore, we stated that even if the same level of efficiencies could not be gained for multiple imaging procedures performed on the same date of service but at different times, we expect that any higher costs associated with these cases would be reflected in the claims data and cost reports we use to calculate the median costs for the multiple imaging composite APCs and, therefore, in their payment rates.

In summary, in the CY 2010 OPPS/ASC proposed rule (74 FR 35284), for CY 2010 we proposed to continue paying for all multiple imaging procedures within an imaging family performed on the same date of service using the multiple imaging composite payment methodology, and we proposed no changes from the final CY 2009 policy. The proposed CY 2010 payment rates for the five multiple imaging composite APCs (APC 8004, APC 8005, APC 8006, APC 8007, and APC 8008) were based on median costs calculated from the partial year CY 2008 claims available for the proposed rule that would have qualified for composite payment under the current policy (that Start Printed Page 60399is, those claims with more than one procedure within the same family on a single date of service). To calculate the proposed median costs, we used the same methodology that we used to calculate the final CY 2009 median costs for these composite APCs. That is, we removed any HCPCS codes in the OPPS imaging families that overlapped with codes on our bypass list (“overlap bypass codes”) to avoid splitting claims with multiple units or multiple occurrences of codes in an OPPS imaging family into new “pseudo” single claims. The imaging HCPCS codes that we removed from the bypass list for purposes of calculating the proposed multiple imaging composite APC median costs appeared in Table 11 of the CY 2010 OPPS/ASC proposed rule (74 FR 35286). We integrated the identification of imaging composite “single session” claims, that is, claims with multiple imaging procedures within the same family on the same date of service, into the creation of “pseudo” single claims to ensure that claims were split in the “pseudo” single process into accurate reflections of either a composite “single session” imaging service or a standard sole imaging service resource cost. Like all single bills, the new composite “single session” claims were for the same date of service and contained no other separately paid services in order to isolate the session imaging costs. Our last step after processing all claims through the “pseudo” single process was to reassess the remaining multiple procedure claims using the full bypass list and bypass process in order to determine if we could make other “pseudo” single bills. That is, we assessed whether a single separately paid service remained on the claim after removing line-items for the “overlap bypass codes.”

We were able to identify 1.7 million “single session” claims out of an estimated 2.5 million potential composite cases from our ratesetting claims data, or well over half of all eligible claims, to calculate the proposed CY 2010 median costs for the multiple imaging composite APCs. The HCPCS codes subject to the proposed multiple imaging composite policy and their respective families were listed in Table 10 of the proposed rule (74 FR 35284 through 35285).

Comment: Many commenters asserted that a single composite APC payment is not appropriate when multiple imaging services of the same modality are provided on the same date of service but at different times. They argued that the same efficiencies that may be gained when multiple imaging procedures are performed during the same sitting may not be realized if a significant amount of time passes between the first and subsequent imaging procedures, when the patient may have to be repositioned or may have to leave not only the scanner, but also the radiology department or hospital. The commenters stated that, in such cases, facilities must expend equivalent facility resources in each sitting as if the sittings occurred on different dates of service. They noted that not all of these costs are reflected in claims data and, therefore, would not be reflected in the multiple imaging composite APC payment rates. The commenters requested that CMS allow hospitals to report modifier -59 when multiple imaging services of the same modality are provided at different times on the same date of service, and that such cases be excluded from the multiple imaging composite payment methodology. They stated that such an approach is necessary to recognize the provider costs when imaging services must be provided at different sittings due to clinical need or safety requirements. One commenter also asked CMS to work with the AMA to create new CPT codes that describe combined procedures so that providers could use those codes when they provide multiple imaging services in a single session. The commenter argued that utilization of such codes would be easier for providers and would facilitate the capturing of charge data that could be used to create new APCs or payment policies that reflect economies of scale for combined procedures reported through claims data.

Response: We do not agree with the commenters that multiple imaging procedures of the same modality provided on the same date of service but at different times should be exempt from the multiple imaging composite payment methodology. As we indicated in the CY 2010 OPPS/ASC proposed rule (74 FR 35283 through 35284) and the CY 2009 OPPS/ASC final rule with comment period (73 FR 68565), we believe that composite payment is appropriate even when procedures are provided on the same date of service but at different times because hospitals do not expend the same facility resources each and every time a patient is seen for a distinct imaging service in a separate imaging session. In most cases, we expect that patients in these circumstances would receive imaging procedures at different times during a single prolonged hospital outpatient encounter. The efficiencies that may be gained from providing multiple imaging procedures during a single session are achieved in ways other than merely not having to reposition the patient. For example, a patient who has two MRI procedures 3 hours apart during a single hospital outpatient encounter would not have to be registered again, and hospital staff might not have to explain the procedure in detail prior to the second scan. In the case of multiple procedures involving contrast that are provided at different times during a single hospital outpatient encounter, establishment of new intravenous access for the second study would not be necessary. Even if the same level of efficiencies could not be gained for multiple imaging procedures performed on the same date of service but at different times, we expect that any higher costs associated with these cases would be reflected in the claims data and cost reports we use to calculate the median costs for the multiple imaging composite APCs and, therefore, in the payment rates for the multiple imaging composite APCs. We do not believe it is necessary or appropriate for hospitals to report imaging procedures provided on the same date of service but during different sittings any differently than they would report imaging procedures performed consecutively in one sitting with no time in between the imaging services.

We also do not agree with the commenter that it is necessary to create new CPT codes that describe combined services to ease the burden of hospital billing and improve claims data for ratesetting. As we stated in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68565), certain combination CPT codes, specifically those single codes that describe imaging procedures without contrast and then followed by contrast, already allow for hospitals to report commonly performed combinations of imaging procedures in one anatomic area using a single CPT code. Hospitals can continue to use existing codes to report multiple imaging services by reporting multiple HCPCS codes, and for ratesetting, we use the charges reported to us by hospitals on claims for those multiple imaging services to calculate composite APC payment rates. The I/OCE determines whether composite APC payment applies to a claim, so the composite payment policy creates no additional administrative burden for hospitals.

Comment: Several commenters asserted that the multiple imaging composite payment methodology could have a disproportionately negative effect on cancer centers and trauma units, where patients frequently require more than two imaging services during a Start Printed Page 60400hospital encounter. They argued that the use of a single composite APC payment for an imaging modality regardless of the number of services provided is only appropriate if the underlying claims data used to set the “average” payment rate reflect an average number of services furnished by all providers. According to the commenters, certain providers, such as cancer centers and trauma hospitals, face systematic underpayment of multiple imaging services due to their unique patient population because they routinely provide a greater than average number of imaging services in one sitting or multiple sittings on the same date of service. The commenters stated that, at the same time, all other hospitals experience systematic overpayment.

Response: We do not agree with the commenters that the underlying claims data used to calculate the median costs upon which the payment rates for the multiple imaging composite APCs are inappropriate for payment of all hospitals, or that the multiple imaging composite payment methodology is likely to have a disproportionately negative effect on cancer centers and trauma units. In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68562 through 68563), we explored data from CY 2007 claims in response to similar concerns from commenters and a recommendation by the APC Panel at its August 2008 meeting. An analysis of diagnosis codes present on the CY 2007 multiple imaging “single session” claims did show more variability in the number of scans for cancer patients compared to patients with noncancer diagnoses, consistent with commenters' concerns. We observed that, for several of the more commonly reported cancer diagnoses, more than half of the patients received more than two imaging procedures on the same day, while generally lower proportions of patients with noncancer diagnoses received more than two imaging procedures on a single date of service. We did not observe the same pattern for trauma diagnoses. As we stated in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68562), we do not believe that the higher rate of variability that we observed in the number of scans cancer patients receive was so extreme, however, that the mix of services hospitals provide to patients with diagnoses other than cancer would not balance out higher numbers of scans for cancer patients.

We continue to believe that OPPS hospitals demonstrate sufficient variability in the number of imaging procedures they provide to a single patient on the same day that it is unlikely any particular class of hospital would experience disproportionate financial effects from the multiple imaging composite payment methodology. For CY 2009, the first year of implementation of the multiple imaging composite APC methodology, the modeled impacts of payment changes by class of hospital due to APC recalibration (where the effects of the multiple imaging composite payment methodology and other APC recalibration would be observed), were very modest across classes of hospital, ranging from −2.5 percent to +1.9 percent (73 FR 68799 through 68800).

The goal of the multiple imaging composite payment methodology is to establish incentives for efficiency through larger payment bundles based on the practice patterns of OPPS hospitals as a whole. We acknowledge that there may be a small number of dedicated cancer centers that, relative to other hospitals paid under the OPPS, may provide a higher proportion of imaging services to cancer patients that involve three or more scans. However, as discussed above, our prior analyses do not lead us to believe that any class of hospitals would experience significantly negative effects from the multiple imaging composite payment methodology. We note that we establish national payment policies for the OPPS and, while certain policies may have greater or lesser impact on individual hospitals, on average we believe that the total OPPS payment to a hospital for all of its services is appropriate. Our modeled estimates of changes in total payment for classes of hospitals between CY 2008 and CY 2009 support this conclusion. We do not believe it would be appropriate to establish national policy based on considerations of the service mix of individual hospitals, or to exclude individual hospitals from national policy because of the impact a specific policy may have on one component of a hospital's operations as a result of a particular hospital's service mix. Furthermore, we note that several cancer centers are held permanently harmless under section 1833(t)(7)(D)(ii) of the Act in order to account for the fact that they may be more costly and have different practice patterns than other hospitals paid under the OPPS.

Comment: Some commenters questioned the adequacy of the proposed multiple imaging composite APC payment rates for sessions involving three or more imaging procedures, and expressed general concern that multiple imaging composite payment methodology would limit beneficiary access to imaging services. For example, these commenters asserted that the multiple imaging composite payment methodology could create incentives for hospitals to require patients who need more than two imaging procedures to return for additional sittings on other days if the costs for sessions in which more than two procedures are performed far exceed the multiple imaging composite APC payment rates.

Response: As we stated in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68562), we do not believe that, in aggregate, OPPS payment for multiple imaging services will be inadequate under the multiple imaging composite payment methodology so as to limit beneficiary access, even considering the minority of cases in which hospitals provide more than two imaging procedures on a single date of service. The median costs upon which the payment rates for the multiple imaging composite APCs are based are calculated using CY 2008 claims that would have qualified for composite payment, including those with only two imaging procedures and those with substantially higher numbers of imaging procedures. Payment based on a measure of central tendency is a principle of any prospective payment system. In some individual cases payment exceeds the average cost and in other cases payment is less than the average cost. On balance, however, payment should approximate the relative cost of the average case, recognizing that, as a prospective payment system, the OPPS is a system of averages.

We also do not agree with the commenters that the multiple imaging composite payment methodology will result in hospitals requiring patients who need more than two imaging procedures to return for additional sittings on other days. As we stated in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68562), we do not believe that, in general, hospitals would routinely and for purposes of financial gain put patients at unnecessary risk of harm from radiation or contrast exposure, or inconvenience them or risk lack of timely followup to the point of making them return to the hospital on separate days to receive medically necessary diagnostic studies. However, we again note that we do have the capacity to examine our claims data for patterns of fragmented care. If we were to find a pattern in which a hospital appears to be fragmenting imaging services across multiple days for individual beneficiaries, we could refer it for review by the Quality Improvement Organizations (QIOs) with Start Printed Page 60401respect to the quality of care furnished, or for review by the Program Safeguard Contractors of claims against the medical record, as appropriate to the circumstances we found.

Comment: Several commenters urged CMS to standardize cost reporting for both advanced imaging procedures and other problematic cost centers before it makes any methodological changes to OPPS payment methodologies, including a composite policy for multiple imaging procedures. One commenter was concerned that observed efficiencies in the multiple imaging composite APC median costs are the result of inaccurate cost report data only and do not reflect true efficiencies from multiple imaging services provided during a single session. According to the commenter, CMS should implement separate cost centers for CT and MRI procedures and the revised revenue code-to-cost center crosswalk, as recommended in the July 2008 report by RTI International (RTI) entitled, “Refining Cost to Charge Ratios for Calculating APC and DRG Relative Payment Weights.” The commenter stated that the creation of the new standard cost centers and the adoption of the revised revenue code-to-cost center crosswalk would provide much more accurate charge and cost data for these imaging modalities, and that the true efficiencies associated with providing multiple imaging procedures in a single session may only be discernable once these data are available. The commenter also remarked that the adoption of these changes would result in significant shifts in the underlying CCRs for all APCs, thereby impacting all relative weights and payment rates across all services over time.

Response: We published information regarding the proposed draft hospital cost report CMS-2552-10 in the Federal Register on July 2, 2009 and the proposed agency information collection activities were open for a 60-day review and comment period (74 FR 31738). The comment period ended August 31, 2009. The proposed cost report can be viewed at: http://www.cms.hhs.gov/​PaperworkReductionActof1995/​PRAL/​itemdetail.asp?​filterType=​none&​filterByDID=​-99&​sortByDID=​2&​sortOrder=​descending&​itemID=​CMS1224069&​intNumPerPage=​10. We will consider all comments received during the comment period in our determination of whether to create new modality-specific standard diagnostic radiology cost centers.

As noted in our response to a comment regarding the recommendations included in RTI's July 2008 report entitled, “Refining Cost to Charge Ratios for Calculating APC and DRG Relative Payment Weights” (73 FR 68526), the current cost report form already includes nonstandard cost centers for CT Scanning and MRI. We also explained that under the principle of departmental apportionment of costs at § 413.53 hospitals are required to report separately the costs and charges for each ancillary department for which charges are customarily billed if the corresponding cost and charge information is accumulated separately in the provider's accounting system. We believe the nonstandard cost center information for CT Scanning and MRI that we currently collect reflects costs and charges for CT Scanning and MRI and we use these data to estimate median costs for ratesetting.

In the meantime, we believe it is fully appropriate to continue the multiple imaging composite payment methodology, which we believe improves the accuracy of OPPS payment rates and promotes efficiency among hospitals. As we stated in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68563), the most recent hospital cost report data are the best and most consistent estimate of relative costs that we have available to us for all hospitals for all hospital services. We will continue to use these data to estimate APC median costs. Should revised cost report data become available for CT and MRI procedures, our composite methodology would automatically incorporate that additional precision into the multiple imaging composite APC median cost estimates.

Comment: One commenter stated that the differential in the CY 2010 proposed payment rates for APC 8007 and APC 8008 appears adequate to account for the substantial differences in costs between magnetic resonance procedures when performed with and without contrast. The commenter asked CMS to evaluate the claims available for the CY 2010 OPPS/ASC final rule with comment period to ensure that payment rates for the two APCs reflect the incremental costs for the contrast agent and contrast administration included in APC 8008.

Response: We agree with the commenter regarding the appropriateness of the proposed differential in payment rates for APC 8007 and APC 8008 for CY 2010. The median costs upon which the CY 2010 final payment rates for APC 8007 and APC 8008 are based ($706 and $986, respectively) also appropriately reflect differences in costs for MRI and MRA imaging sessions with and without the administration of contrast.

Comment: One commenter stated that there was a discrepancy in CMS' estimated volume of APC 8005 single claims for the CY 2010 OPPS/ASC proposed rule. The commenter indicated that CMS' estimated volume of APC 8005 single claims increased by approximately one-third from the CY 2007 claims used in CY 2009 ratesetting to the CY 2008 claims available for the CY 2010 OPPS/ASC proposed rule. The commenter noted that this increase was inconsistent with the commenter's data analysis, which indicated that the total volume of single claims for APC 8005 did not increase significantly over this same time period.

Response: We reviewed the CY 2007 “single session” claims data used in ratesetting for APC 8005 for the CY 2009 OPPS/ASC final rule with comment period, and the CY 2008 “single session” claims data used in ratesetting for APC 8005 for the CY 2010 OPPS/ASC proposed rule. For the CY 2009 final rule, we identified 429,525 “single session” claims out of 809,483 potential composite cases to calculate the median cost for APC 8005. For the CY 2010 OPPS/ASC proposed rule, we identified 423,890 “single session” claims out of 810,469 potential composite cases to calculate the median cost for APC 8005. These published data do not demonstrate an increase of approximately one-third in the volume of “single session” claims from the CY 2007 claims used to calculate the median costs upon which the CY 2009 final payment rates are based compared to the CY 2008 claims used to calculate the median costs upon which the CY 2010 proposed payment rates are based, as the commenter indicated. For this final rule with comment period, we identified 455,191 “single session” claims (an increase of approximately 6 percent compared to CY 2009) out of 882,581 potential composite cases (an increase of approximately 9 percent compared to CY 2009) to calculate the median cost of APC 8005.

Comment: Many commenters requested that CMS thoroughly evaluate the impact of the multiple imaging composite payment methodology and commended CMS for not proposing to expand the multiple imaging composite payment methodology for CY 2010. Commenters asked CMS to review claims data to ensure that hospitals are being adequately paid for providing multiple imaging services, that patients are not being required by hospitals to return to the hospital on multiple days for imaging services, and that certain types or classes of hospitals are not being negatively affected before moving forward with any additional imaging Start Printed Page 60402composite policies. One commenter noted that while CMS will have data available from CY 2009 to analyze for the winter 2010 APC Panel meeting, the commenter believed that such analyses would be more meaningful if claims data through CY 2012 are use to show impacts and a change in hospital behavior under the composite payment policy. Commenters also stated that any expansion of the multiple imaging composite payment methodology should be subject to full public comment.

Response: We appreciate the commenters' support of our proposal not to implement any significant changes to the composite APC methodology for CY 2010 so that we may monitor the effects of the existing composite APCs on utilization and payment. We also appreciate the commenters' thoughtful suggestions for data analysis that can be performed toward that end once CY 2009 claims data become available and in the longer term. We will take commenters' suggestions into consideration as we review the CY 2009 claims data for the impact of the multiple imaging composite APCs on payments to hospitals and on services to beneficiaries.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal, without modification, to continue paying for all multiple imaging procedures within an imaging family performed on the same date of service using the multiple imaging composite payment methodology. The CY 2010 payment rates for the five multiple imaging composite APCs (APC 8004, APC 8005, APC 8006, APC 8007, and APC 8008) are based on median costs calculated from the CY 2008 claims that would have qualified for composite payment under the current policy (that is, those claims with more than one procedure within the same family on a single date of service). Using the same ratesetting methodology described in the CY 2010 OPPS/ASC proposed rule (74 FR 35284), we were able to identify 1.8 million “single session” claims out of an estimated 2.7 million potential composite cases from our ratesetting claims data, or well over half of all eligible claims, to calculate the final CY 2010 median costs for the multiple imaging composite APCs.

Table 13 below lists the HCPCS codes subject to the final multiple imaging composite policy and their respective families for CY 2010. We note that we have updated Table 13 to reflect HCPCS coding changes for CY 2010. Specifically, we added CPT code 74261 (Computed tomographic (CT) colonography, diagnostic, including image postprocessing; without contrast material) and CPT code 74262 (Computed tomographic (CT) colonography, diagnostic, including image postprocessing, with contrast materials(s) including non-contrast images, if performed) to the CT and CTA family, and removed CPT code 0067T (Computed tomographic (CT) colonography (ie, virtual colonoscopy); diagnostic), which was replaced by these CPT codes. The HCPCS codes listed in Table 13 are assigned status indicated “Q3” in Addendum B to this final rule with comment period to identify their status as potentially payable through a composite APC. Their composite APC assignment is identified in Addendum M to this final rule with comment period. Table 14 below lists the imaging services subject to the composite methodology that overlap with HCPCS codes on the CY 2010 bypass list.

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3. Calculation of OPPS Scaled Payment Weights

Using the APC median costs discussed in sections II.A.1. and II.A.2. of this final rule with comment period, we calculated the final relative payment weights for each APC for CY 2010 shown in Addenda A and B to this final rule with comment period. In years prior to CY 2007, we standardized all the relative payment weights to APC 0601 (Mid Level Clinic Visit) because mid-level clinic visits were among the most frequently performed services in the hospital outpatient setting. We assigned APC 0601 a relative payment weight of 1.00 and divided the median cost for each APC by the median cost for APC 0601 to derive the relative payment weight for each APC.

Beginning with the CY 2007 OPPS (71 FR 67990), we standardized all of the relative payment weights to APC 0606 (Level 3 Clinic Visits) because we deleted APC 0601 as part of the reconfiguration of the clinic visit APCs. We selected APC 0606 as the base because APC 0606 was the mid-level clinic visit APC (that is, Level 3 of five levels). Therefore, for CY 2010, to maintain consistency in using a median Start Printed Page 60408for calculating unscaled weights representing the median cost of some of the most frequently provided services, we proposed to continue to use the median cost of the mid-level clinic visit APC, APC 0606, to calculate unscaled weights. Following our standard methodology, but using the proposed CY 2010 median cost for APC 0606, for CY 2010 we assigned APC 0606 a relative payment weight of 1.00 and divided the median cost of each APC by the proposed median cost for APC 0606 to derive the proposed unscaled relative payment weight for each APC. The choice of the APC on which to base the proposed relative weights for all other APCs did not affect the payments made under the OPPS because we scale the weights for budget neutrality.

Section 1833(t)(9)(B) of the Act requires that APC reclassification and recalibration changes, wage index changes, and other adjustments be made in a budget neutral manner. Budget neutrality ensures that the estimated aggregate weight under the OPPS for CY 2010 is neither greater than nor less than the estimated aggregate weight that would have been made without the changes. To comply with this requirement concerning the APC changes, we proposed to compare the estimated aggregate weight using the CY 2009 scaled relative weights to the estimated aggregate weight using the CY 2010 unscaled relative weights. For CY 2009, we multiply the CY 2009 scaled APC relative weight applicable to a service paid under the OPPS by the volume of that service from CY 2008 claims to calculate the total weight for each service. We then add together the total weight for each of these services in order to calculate an estimated aggregate weight for the year. For CY 2010, we perform the same process using the CY 2010 unscaled weights rather than scaled weights. We then calculate the weight scaler by dividing the CY 2009 estimated aggregate weight by the CY 2010 estimated aggregate weight. The service mix is the same in the current and prospective years because we use the same set of claims for service volume in calculating the aggregate weight for each year. For a detailed discussion of the weight scaler calculation, we refer readers to the OPPS claims accounting document available on the CMS Web site at: http://www.cms.hhs.gov/​HospitalOutpatientPPS/​. We included payments to CMHCs in our comparison of estimated unscaled weight in CY 2010 to estimated total weight in CY 2009 using CY 2008 claims data and holding all other things constant. Based on this comparison, we adjusted the unscaled relative weights for purposes of budget neutrality. In our proposal for CY 2010, the proposed CY 2010 unscaled relative payment weights were adjusted by multiplying them by a proposed weight scaler of 1.2863 to ensure budget neutrality of the proposed CY 2010 relative weights.

Section 1833(t)(14)(H) of the Act, as added by section 621(a)(1) of Public Law 108-173, states that, “Additional expenditures resulting from this paragraph shall not be taken into account in establishing the conversion factor, weighting and other adjustment factors for 2004 and 2005 under paragraph (9) but shall be taken into account for subsequent years.” Section 1833(t)(14) of the Act provides the payment rates for certain “specified covered outpatient drugs.” Therefore, the cost of those specified covered outpatient drugs (as discussed in section V.B.3. of the proposed rule (74 FR 35324 through 35333) and this final rule with comment period) was included in the proposed budget neutrality calculations for the CY 2010 OPPS.

We did not receive any public comments on the proposed methodology for calculating scaled weights from the median costs for the CY 2010 OPPS. Therefore, we are finalizing our proposed methodology, without modification, including updating of the budget neutrality scaler for this final rule with comment period. Under this methodology, the final unscaled payment weights were adjusted by a weight scaler of 1.3222 for this final rule with comment period. The final scaled relative payment weights listed in Addenda A and B to this final rule with comment period incorporate the recalibration adjustments discussed in sections II.A.1. and II.A.2. of this final rule with comment period.

4. Changes to Packaged Services

a. Background

The OPPS, like other prospective payment systems, relies on the concept of averaging, where the payment may be more or less than the estimated cost of providing a service or bundle of services for a particular patient, but with the exception of outlier cases, the payment is adequate to ensure access to appropriate care. Packaging and bundling payment for multiple interrelated services into a single payment create incentives for providers to furnish services in the most efficient way by enabling hospitals to manage their resources with maximum flexibility, thereby encouraging long-term cost containment. For example, where there are a variety of supplies that could be used to furnish a service, some of which are more expensive than others, packaging encourages hospitals to use the least expensive item that meets the patient's needs, rather than to routinely use a more expensive item. Packaging also encourages hospitals to negotiate carefully with manufacturers and suppliers to reduce the purchase price of items and services or to explore alternative group purchasing arrangements, thereby encouraging the most economical health care. Similarly, packaging encourages hospitals to establish protocols that ensure that necessary services are furnished, while carefully scrutinizing the services ordered by practitioners to maximize the efficient use of hospital resources. Finally, packaging payments into larger payment bundles promotes the stability of payment for services over time. Packaging and bundling also may reduce the importance of refining service-specific payment because there is more opportunity for hospitals to average payment across higher cost cases requiring many ancillary services and lower cost cases requiring fewer ancillary services.

Decisions about packaging and bundling payment involve a balance between ensuring that payment is adequate to enable the hospital to provide quality care and establishing incentives for efficiency through larger units of payment. In the CY 2008 OPPS/ASC final rule with comment period (72 FR 66610 through 66659), we adopted the packaging of payment for items and services in the seven categories listed below into the payment for the primary diagnostic or therapeutic modality to which we believe these items and services are typically ancillary and supportive. The seven categories are guidance services, image processing services, intraoperative services, imaging supervision and interpretation services, diagnostic radiopharmaceuticals, contrast media, and observation services. We specifically chose these categories of HCPCS codes for packaging because we believe that the items and services described by the codes in these categories are the HCPCS codes that are typically ancillary and supportive to a primary diagnostic or therapeutic modality and, in those cases, are an integral part of the primary service they support.

We assign status indicator “N” to those HCPCS codes that we believe are always integral to the performance of the primary modality; therefore, we always package their costs into the costs Start Printed Page 60409of the separately paid primary services with which they are billed. Services assigned status indicator “N” are unconditionally packaged.

We assign status indicator “Q1” (“STVX-Packaged Codes”), “Q2” (“T-Packaged Codes”), or “Q3” (Codes that may be paid through a composite APC) to each conditionally packaged HCPCS code. An “STVX-packaged code” describes a HCPCS code whose payment is packaged when one or more separately paid primary services with the status indicator of “S,” “T,” “V,” or “X” are furnished in the hospital outpatient encounter. A “T-packaged code” describes a code whose payment is packaged when one or more separately paid surgical procedures with the status indicator of “T” are provided during the hospital encounter. “STVX-packaged codes” and “T-packaged codes” are paid separately in those uncommon cases when they do not meet their respective criteria for packaged payment. “STVX-packaged codes” and “T-packaged HCPCS codes” are conditionally packaged. We refer readers to section XIII.A.1. of this final rule with comment period for a complete listing of status indicators.

We use the term “dependent service” to refer to the HCPCS codes that represent services that are typically ancillary and supportive to a primary diagnostic or therapeutic modality. We use the term “independent service” to refer to the HCPCS codes that represent the primary therapeutic or diagnostic modality into which we package payment for the dependent service. We note that, in future years as we consider the development of larger payment groups that more broadly reflect services provided in an encounter or episode-of-care, it is possible that we might propose to bundle payment for a service that we now refer to as “independent.”

In addition, in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66650 through 66659), we finalized additional packaging for the CY 2008 OPPS, which included the establishment of new composite APCs for CY 2008, specifically APC 8000 (Cardiac Electrophysiologic Evaluation and Ablation Composite), APC 8001 (LDR Prostate Brachytherapy Composite), APC 8002 (Level I Extended Assessment & Management Composite), and APC 8003 (Level II Extended Assessment & Management Composite). In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68559 through 68569), we expanded the composite APC model to one new clinical area, multiple imaging services. We created five multiple imaging composite APCs for payment in CY 2009 that incorporate statutory requirements to differentiate between imaging services provided with contrast and without contrast as required by section 1833(t)(2)(G) of the Act. The multiple imaging composite APCs are: APC 8004 (Ultrasound Composite); APC 8005 (CT and CTA without Contrast Composite); APC 8006 (CT and CTA with Contrast Composite); APC 8007 (MRI and MRA without Contrast Composite); and APC 8008 (MRI and MRA with Contrast Composite). We discuss composite APCs in more detail in section II.A.2.e. of this final rule with comment period.

Hospitals include charges for packaged services on their claims, and the estimated costs associated with those packaged services are then added to the costs of separately payable procedures on the same claims in establishing payment rates for the separately payable services. We encourage hospitals to report all HCPCS codes that describe packaged services that were provided, unless the CPT Editorial Panel or CMS provide other guidance. If a HCPCS code is not reported when a packaged service is provided, it can be challenging to track utilization patterns and resource costs.

b. Packaging Issues

(1) Packaged Services Addressed by the February 2009 APC Panel Recommendations

The Packaging Subcommittee of the APC Panel was established to review packaged HCPCS codes. In deciding whether to package a service or pay for a code separately, we have historically considered a variety of factors, including whether the service is normally provided separately or in conjunction with other services; how likely it is for the costs of the packaged code to be appropriately mapped to the separately payable codes with which it was performed; and whether the expected cost of the service is relatively low. As discussed in section II.A.4.a. of this final rule with comment period regarding our packaging approach for CY 2008, we established packaging criteria that apply to seven categories of codes whose payments are packaged.

During the September 2007 APC Panel meeting, the APC Panel requested that CMS evaluate the impact of expanded packaging on beneficiaries. During the March 2008 APC Panel meeting, the APC Panel requested that CMS report to the Panel at the first Panel meeting in CY 2009 regarding the impact of packaging on net payments for patient care. In response to these requests, we shared data with the APC Panel at the February 2009 APC Panel meeting that compared the frequency of specific categories of services billed under the OPPS in CY 2007, before the expanded packaging went into effect, to the frequency of those same categories of services in CY 2008, their first year of packaged payment. In each category, the HCPCS codes that we compared are the ones that we identified in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66659 through 66664) as fitting into one of the seven packaging categories listed in section II.A.4.a. of this final rule with comment period. The data shared with the APC Panel at the February 2009 APC Panel meeting compared CY 2007 claims processed through September 30, 2007 to CY 2008 claims processed through September 30, 2008. We did not make any adjustments for inflation, changes in Medicare population, or other variables that potentially influenced billing between CY 2007 and CY 2008. These data represent about 60 percent of the full year data. A summary of these data analyses is provided below.

Analysis of the diagnostic radiopharmaceuticals category showed that the frequency of the reporting of diagnostic radiopharmaceuticals increased by 1 percent between the first 9 months of CY 2007 and the first 9 months of CY 2008. In CY 2007, some diagnostic radiopharmaceuticals were packaged and others were separately payable, depending on whether their per day mean costs fell above or below the $55 drug packaging threshold for CY 2007. All diagnostic radiopharmaceuticals were uniformly packaged in CY 2008. Two percent more hospitals reported one or more diagnostic radiopharmaceuticals during CY 2008 as compared to CY 2007. Effective for CY 2008, we first required reporting of a radiolabeled product (including diagnostic radiopharmaceuticals) when billing a nuclear medicine procedure, and we believe that the increases in frequency and the number of reporting hospitals reflect hospitals meeting this reporting requirement.

We also found that nuclear medicine procedures (into which diagnostic radiopharmaceuticals were packaged) and associated diagnostic radiopharmaceuticals were billed approximately 3 million times during the first 9 months of both CY 2007 and CY 2008. Further analysis revealed that we paid hospitals over $637 million for nuclear medicine procedures and diagnostic radiopharmaceuticals during the first 9 months of CY 2007, when diagnostic radiopharmaceuticals were separately payable, and over $619 Start Printed Page 60410million for nuclear medicine procedures and diagnostic radiopharmaceuticals during the first 9 months of CY 2008, when payment for diagnostic radiopharmaceuticals was packaged. This represented a 3 percent decrease in aggregate payment between the first 9 months of CY 2007 and the first 9 months of CY 2008.

Using the same data, we calculated an average payment per service or item billed (including nuclear medicine procedures and packaged or separately payable diagnostic radiopharmaceuticals) of $203 in CY 2007 and $198 in CY 2008 for nuclear medicine procedures. This represented a decrease of 2 percent in average payment per item or service billed between CY 2007 and CY 2008. It is unclear how much of the decrease in estimated aggregate or average per service or item billed payment may be due to packaging payment for diagnostic radiopharmaceuticals (and other services that were newly packaged for CY 2008) and how much may be due to the usual annual APC recalibration and typical fluctuations in service frequency. However, we believe that all of these factors likely contributed to the slight decrease in aggregate payment in CY 2008, as compared to CY 2007. Overall, the observed changes between CY 2007 and CY 2008 were very small and indicated that there has been very little change in frequency or aggregate payment in this clinical area between CY 2007 and CY 2008.

We similarly analyzed 9 months of CY 2007 and CY 2008 data related to all services that were packaged during CY 2008 because they were categorized as guidance services. Analysis of the guidance category (which includes image-guided radiation therapy services) showed that the frequency of guidance services increased by 2 percent between the first 9 months of CY 2007 and the first 9 months of CY 2008. One percent fewer hospitals reported one or more guidance services during CY 2007 as compared to CY 2008.

We further analyzed 9 months of CY 2007 and CY 2008 claims data for radiation oncology services that would be accompanied by radiation oncology guidance. We found that radiation oncology services (including radiation oncology guidance services) were billed approximately 4 million times in CY 2007 and 3.9 million times in CY 2008, representing a decrease in frequency of approximately 5 percent between CY 2007 and CY 2008. These numbers represented each instance where a radiation oncology service or a radiation oncology guidance service was billed. Our analysis indicated that hospitals were paid over $818 million for radiation oncology services and radiation oncology guidance services under the OPPS during the first 9 months of CY 2007, when radiation oncology guidance services were separately payable. During the first 9 months of CY 2008, when payments for radiation oncology guidance were packaged, hospitals were paid over $740 million for radiation oncology services under the OPPS. This $740 million included packaged payment for radiation oncology guidance services and represented a 10 percent decrease in aggregate payment from CY 2007 to CY 2008. Using the first 9 months of data for both CY 2007 and CY 2008, we calculated an average payment per radiation oncology service or item billed of $201 in CY 2007 and $190 in CY 2008, representing a decrease of 5 percent from CY 2007 to CY 2008. It is unclear how much of the decrease in aggregate payment and the decrease in average payment per service provided may be due to packaging payment for radiation oncology guidance services (and other services that were newly packaged for CY 2008) and how much may be due to the usual annual APC recalibration and typical fluctuations in service frequency. This analysis is discussed in further detail below, under “Recommendation 1” in this section of this final rule with comment period. In that analysis, we demonstrated that the volume of some packaged radiation oncology guidance services increased during the period, leading us to conclude that, irrespective of the decline in the frequency of radiation oncology services in general, hospitals did not appear to be changing their practice patterns specifically in response to packaged payment for radiation oncology guidance services.

We similarly analyzed 9 months of CY 2007 and CY 2008 data related to all services that were packaged during CY 2008 because they were categorized as intraoperative services. Analysis of the intraoperative category (which includes intravascular ultrasound (IVUS), intracardiac echocardiography (ICE), and coronary fractional flow reserve (FFR)) showed minimal changes in the frequency and the number of reporting hospitals between CY 2007 and CY 2008.

We found that cardiac catheterization and other percutaneous vascular procedures that would typically be accompanied by IVUS, ICE and FFR (including IVUS, ICE, and FFR) were billed approximately 375,000 times in CY 2007 and approximately 400,000 times in CY 2008, representing an increase of 8 percent in the number of services and items billed between CY 2007 and CY 2008. Further analysis revealed that the OPPS paid hospitals over $912 million for cardiac catheterizations, other related services, and IVUS, ICE, and FFR in CY 2007, when IVUS, ICE, and FFR were separately payable. In the first 9 months of CY 2008, the OPPS paid hospitals approximately $1.1 billion for cardiac catheterization and other percutaneous vascular procedures and IVUS, ICE, and FFR, when payments for IVUS, ICE, and FFR were packaged. This represented a 25 percent increase in payment from CY 2007 to CY 2008. Using the 9 months of data for both CY 2007 and CY 2008, we calculated an average payment per service or item provided of $2,430 in CY 2007 and $2,800 in CY 2008 for cardiac catheterization and other related services. This represented an increase of 15 percent in average payment per item or service from CY 2007 to CY 2008.

We could not determine how much of the 25 percent increase in aggregate payment for these services may be due to the packaging of payment for IVUS, ICE, and FFR (and other services that were newly packaged for CY 2008) and how much may be due to the usual annual APC recalibration and typical fluctuations in service frequency. However, we believe that all of these factors contributed to the increase in payment between these 2 years.

The three remaining packaging categories (excluding observation services, which are further discussed in section II.A.2.e.(1) of this final rule with comment period), contrast agents, image processing services, and imaging supervision and interpretation services, showed minimal changes in frequency between CY 2007 and CY 2008, ranging from a 2 percent increase to a 1 percent decrease in frequency. Similarly, when examining the number of hospitals reporting these services, the data showed similar numbers of hospitals reporting these services in CY 2007, when these services were separately payable, and CY 2008, when they were packaged. Specifically, the percentage change in the number of reporting hospitals for these categories between CY 2007 and CY 2008 ranged from 0 percent to a decrease of 1 percent.

In summary, these preliminary data indicated that hospitals in aggregate did not appear to have significantly changed their service reporting patterns as a result of the expanded packaging adopted for the OPPS beginning in CY 2008.

The APC Panel's Packaging Subcommittee reviewed the packaging status of several CPT codes and reported Start Printed Page 60411its findings to the APC Panel at its February 2009 meeting. The full report of the February 18 and 19, 2009 APC Panel meeting can be found on the CMS Web site at: http://www.cms.hhs.gov/​FACA/​05_​AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp. The APC Panel accepted the report of the Packaging Subcommittee, heard several presentations related to packaged services, discussed the deliberations of the Packaging Subcommittee, and recommended that—

1. CMS pay separately for radiation therapy guidance services performed in the treatment room for 2 years and then reevaluate packaging on the basis of claims data. (Recommendation 1)

2. CMS continue to analyze the impact of increased packaging on beneficiaries and provide more detailed versions of the analyses presented at the February 2009 meeting of services initially packaged in CY 2008 at the next Panel meeting. In addition, the Panel requested that, in the more detailed analyses of radiation oncology services that would be accompanied by radiation oncology guidance, CMS stratify the data according to the type of radiation oncology service, specifically, intensity modulated radiation therapy, stereotactic radiosurgery, brachytherapy, and conventional radiation therapy. (Recommendation 2)

3. CMS continue to analyze the impact on beneficiaries of increased packaging of diagnostic radiopharmaceuticals and provide more detailed analyses at the next Panel meeting. In addition, the Panel requested that, in the more detailed analyses of packaging of diagnostic radiopharmaceuticals by type of nuclear medicine scan, CMS break down the data according to the specific CPT codes billed with the diagnostic radiopharmaceuticals. (Recommendation 3)

4. CPT code 36592 (Collection of blood specimen using established central or peripheral catheter, venous, not otherwise specified) remain assigned to APC 0624 (Phlebotomy and Minor Vascular Access Device Procedures) for CY 2010. (Recommendation 4)

5. The Packaging Subcommittee continue its work until the next APC Panel meeting. (Recommendation 5)

In the proposed rule, we addressed each of these recommendations in turn in the discussion that follows.

Recommendation 1

In the CY 2010 OPPS/ASC proposed rule (74 FR 35289), we did not propose to pay separately for radiation therapy guidance services provided in the treatment room for CY 2010, which would have been consistent with the APC Panel's recommendation. Instead, we proposed to maintain the packaged status of radiation therapy guidance services performed in the treatment room for CY 2010.

As discussed below in this section, during the February 2009 APC Panel meeting, we presented data that estimated that aggregate payment for radiation oncology services, including the payment for radiation oncology guidance services, decreased by approximately 10 percent between the first 9 months of CY 2007 (before the expanded packaging went into effect) and the first 9 months of CY 2008 (after the expanded packaging went into effect). This decline may be attributable to many factors, including lower payment rates for common radiation oncology services in CY 2008 specifically and generally reduced volume for separately paid radiation oncology services. The APC Panel expressed concern that this aggregate payment decrease could inhibit patient access to technologically advanced and clinically valuable radiation oncology guidance services whose payment became packaged effective January 1, 2008.

While we presented data to the APC Panel comparing payment between CY 2007 and CY 2008 in response to past APC Panel recommendations, we note that we made changes to the bypass list for CY 2009 to ensure that we more fully captured all packaged costs on each claim, which resulted in significantly increased payment rates for many of these radiation oncology services for CY 2009, as compared to the CY 2008 payment rates for these services.

Specifically, as discussed in detail in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68575), in response to public comments received, several radiation oncology CPT codes had been included on the bypass list for the CY 2008 OPPS, although they failed to meet the empirical criteria for inclusion on the bypass list. For CY 2009, we removed from the bypass list those radiation oncology codes that did not meet the empirical criteria. As a result of these changes to the bypass list, the CY 2009 median costs for several common radiation oncology APCs increased by more than 9 percent as compared to the CY 2008 median costs, while the median costs for some of the other lower volume radiation oncology APCs, most notably the brachytherapy source application APCs, declined. For example, as noted in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68575), these changes to the bypass list resulted in payment for the common combination of intensity modulated radiation therapy (IMRT) and image-guided radiation therapy (IGRT) increasing from $348 in CY 2008 to $411 in CY 2009. Notably, the CY 2007 total payment rate for this combination of services, before the expanded packaging went into effect, was $403.

We do not yet have CY 2009 claims data reflecting utilization based on the payment rates in effect for CY 2009. However, we do not expect that an overall per-service payment comparison between CY 2007 and CY 2009 would likely demonstrate a significant decrease in payment for radiation oncology services because we have adopted a significant increase in the CY 2009 payment rates for the most common radiation oncology services. In addition, we note that CY 2010 proposed rule data indicated that the CY 2010 APC median costs applicable to most radiation oncology services experienced increases of approximately 2 to 15 percent when compared to their CY 2009 final rule median costs. Although a small number of other lower volume radiation oncology APCs, most notably the brachytherapy and stereotactic radiosurgery APCs, experienced declines in median costs, we do not expect that an overall per-service payment comparison between CY 2007 and CY 2010 would likely demonstrate a significant decrease in payment for radiation oncology services over this time period.

While we understand that the CY 2007 to CY 2008 aggregate payment comparison provided to the APC Panel during the February 2009 meeting may have contributed to the APC Panel's particular concern about payment for radiation oncology services for CY 2010, we do not believe that packaging payment for radiation oncology guidance services has primarily caused this decline. In addition, we do not believe that beneficiaries' access to these services has been limited as a result of packaging payment for radiation oncology guidance services. In the data presented to the APC Panel at the February 2009 meeting, the number of all packaged guidance services provided during the first 9 months of CY 2008 represented a 2 percent increase from the number of guidance services provided during the first 9 months of CY 2007. Further, although the CY 2008 volume of the radiation oncology guidance codes that we newly packaged for CY 2008 varied, with some of the services experiencing increases in volume and others experiencing decreases in volume, in aggregate, the reporting of radiation oncology Start Printed Page 60412guidance services increased by 4 percent in the first 9 months of claims for CY 2008, as compared to the first 9 months of CY 2007, and the number of hospitals reporting these services also increased. This further supports our belief that, irrespective of the decline in the frequency of radiation oncology services in general, hospitals do not appear to be changing their practice patterns specifically in response to packaged payment for radiation oncology guidance services.

Therefore, in the CY 2010 OPPS/ASC proposed rule (74 FR 35289), we did not propose to pay separately for radiation therapy guidance services performed in the treatment room for 2 years as the APC Panel recommended. Instead, for CY 2010, we proposed to maintain the packaged status of all radiation therapy guidance services, including those radiation therapy guidance services performed in the treatment room.

A summary of the public comments and our response on the CY 2010 proposal to package payment for radiation therapy guidance services are included in section II.A.4.b.(2) of this final rule with comment period.

Recommendation 2

In the CY 2010 OPPS/ASC proposed rule (74 FR 35290), we stated that we are accepting the APC Panel recommendation to continue to analyze the impact of increased packaging on beneficiaries and to share more data with the APC Panel. We noted that we would carefully consider which additional data would be most informative for the APC Panel and would discuss these data with the APC Panel at the next CY 2009 APC Panel meeting and/or the first CY 2010 APC Panel meeting. We did not share additional packaging data with the APC Panel at the most recent August 2009 meeting because we believe the APC Panel's discussions would benefit from analyses of an additional year of claims data after CY 2008. Therefore, we plan to incorporate analysis of CY 2009 claims into the information we will bring to the APC Panel for its review at the winter 2010 meeting. Similarly, in the proposed rule, we noted that we would determine what additional detailed data related to radiation oncology services would be helpful to the APC Panel and would share these data at the next CY 2009 APC Panel meeting and/or the first CY 2010 APC Panel meeting. We did not share additional data related to radiation oncology services with the APC Panel at the most recent August 2009 meeting because we believe the APC Panel's discussions would benefit from analyses of an additional year of claims data after CY 2008. Therefore, we plan to incorporate analysis of CY 2009 claims into the information we will bring to the APC Panel for its review at the winter 2010 meeting.

A summary of the public comments and our response regarding the impact of the CY 2010 packaging proposal are included in section II.A.4.b.(2) of this final rule with comment period.

Recommendation 3

In the CY 2010 OPPS/ASC proposed rule (74 FR 35290), we stated that we are accepting the APC Panel's recommendation that CMS continue to analyze the impact on beneficiaries of increased packaging of diagnostic radiopharmaceuticals and provide more detailed analyses at the next APC Panel meeting. In these analyses of diagnostic radiopharmaceuticals by type of nuclear medicine scan, the APC Panel further recommended that CMS analyze the data according to the specific CPT codes billed with the diagnostic radiopharmaceuticals. This APC Panel recommendation is discussed in detail in section II.A.2.d.(5) of this final rule with comment period. In the proposed rule, we noted that we are accepting the APC Panel's recommendation and would provide additional data to the APC Panel at an upcoming meeting. We did not share additional data related to diagnostic radiopharmaceuticals and nuclear medicine scans with the APC Panel at the most recent August 2009 meeting because we believe the APC Panel's discussions would benefit from analyses of an additional year of claims data after CY 2008. Therefore, we plan to incorporate analysis of CY 2009 claims into the information we will bring to the APC Panel for its review at the winter 2010 meeting.

A summary of the public comments and our response on the CY 2010 proposal to package payment for diagnostic radiopharmaceuticals into payment for the associated nuclear medicine procedures are included in sections II.A.2.d.(5) and V.B.2.d. of this final rule with comment period.

Recommendation 4

In the CY 2010 OPPS/ASC proposed rule (74 FR 35290), we proposed to continue for CY 2010 to treat CPT code 36592 (Collection of blood specimen using established central or peripheral catheter, venous, not otherwise specified) as an “STVX packaged code” and to assign it to APC 0624 (Phlebotomy and Minor Vascular Access Device Procedures), the same APC to which CPT code 36591 (Collection of blood specimen from a completely implantable venous access device) is currently assigned as the APC Panel recommended. CPT code 36592 became effective January 1, 2008 and was assigned interim status indicator “N” in the CY 2008 OPPS/ASC final rule with comment period. For CY 2009, in response to public comments, we proposed to treat CPT code 36592 as a conditionally packaged code, with assignment to APC 0624. In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68576), we discussed the public comments we received regarding our proposed treatment of CPT code 36592. Several of these commenters supported our proposal to treat CPT code 36592 as a conditionally packaged code with assignment to APC 0624. We stated in the CY 2009 OPPS/ASC final rule with comment period that when cost data for CPT code 36592 became available for the CY 2010 OPPS annual update, we would reevaluate whether assignment to APC 0624 continued to be appropriate.

Based on our analysis of claims data, our clinical understanding of the service, and our discussion with the APC Panel Packaging Subcommittee, in the CY 2010 OPPS/ASC proposed rule (74 FR 35290), we proposed to maintain the assignment of CPT code 36592 to APC 0624 for CY 2010, consistent with the APC Panel recommendation, and we proposed to continue to treat CPT code 36592 as an “STVX packaged code” and assign it to APC 0624. We noted that we expect hospitals to follow the CPT guidance related to CPT codes 36591 and 36592 regarding when these services should be appropriately reported.

We received no public comments on the CY 2010 proposal to maintain the assignment of CPT code 36592 to APC 0624 and treat it as an “STVX packaged code,” so we are finalizing our proposal, without modification.

Recommendation 5

In response to the APC Panel's recommendation for the Packaging Subcommittee to remain active until the next APC Panel meeting, in the CY 2010 OPPS/ASC proposed rule (74 FR 35290) we noted that we have accepted this recommendation and the APC Panel Packaging Subcommittee remains active. We stated that additional issues and new data concerning the packaging status of codes would be shared for its consideration as information becomes available. We continue to encourage submission of common clinical scenarios involving currently packaged HCPCS codes to the Packaging Subcommittee for its ongoing review. We also encourage recommendations of Start Printed Page 60413specific services or procedures whose payment would be most appropriately packaged under the OPPS. Additional detailed suggestions for the Packaging Subcommittee should be submitted by e-mail to APCPanel@cms.hhs.gov with Packaging Subcommittee in the subject line.

The Packaging Subcommitee has remained active; the Subcommittee's last meeting to discuss packaging issues was the August 2009 meeting.

(2) Packaged Services Addressed by the August 2009 APC Panel Recommendations

The APC Panel met again on August 5 and 6, 2009 to hear public presentations on the proposals set forth in the CY 2010 OPPS/ASC proposed rule. The APC Panel's Packaging Subcommittee reviewed the packaging status of several CPT codes and reported its findings to the APC Panel. The full report of the August 5 and 6, 2009 APC Panel meeting can be found on the CMS Web site at: http://www.cms.hhs.gov/​FACA/​05_​AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp. The APC Panel accepted the report of the Packaging Subcommittee, heard several presentations related to packaged services, discussed the deliberations of the Packaging Subcommittee, and recommended that—

1. CMS submit to the Packaging Subcommittee, for its ongoing review, common clinical scenarios involving currently packaged HCPCS codes and recommendations of specific services or procedures for which payment would be most appropriately packaged under the OPPS. (Recommendation 6)

2. When CMS changes the dollar amount of the drug packaging threshold and determines that some drugs within a single therapeutic class fall on either side of the packaging threshold, CMS consider packaging all of the drugs within that class on the basis of feedback from providers, the APC Panel, and stakeholders. (Recommendation 7)

3. CMS continue to study the impact of increased packaging on beneficiaries. (Recommendation 8)

4. The work of the APC Packaging Subcommittee continue. (Recommendation 9)

With respect to these August 2009 APC Panel recommendations, we are accepting recommendations 6, 8, and 9. We are continuing the work of the APC Panel Packaging Subcommitee, and we appreciate the Packaging Subcommitee's expertise and experience regarding packaging under the OPPS and the valuable advice the Subcommittee continues to provide to us. We will continue to bring to the Subcommittee's attention clinical scenarios identified by us or the public regarding services that are currently packaged or are candidates for future packaging under the OPPS. As discussed above, we also will continue to study the impact of increased packaging on Medicare beneficiaries, as the APC Panel has previously recommended to us. We did not share additional packaging data with the APC Panel at the most recent August 2009 meeting because we believe the APC Panel's discussions would benefit from analyses of an additional year of claims data after CY 2008. Therefore, we plan to incorporate analysis of CY 2009 claims into the information we will bring to the APC Panel for its review at the winter 2010 meeting. Finally, our response to recommendation 7 regarding the packaging of payment for all drugs in the same therapeutic class is discussed in section V.B.2.c. of this final rule with public comment.

Comment: Many commenters expressed a wide range of views on the existing policies for packaging payment for categories of services that CMS proposed to continue for CY 2010. One commenter claimed that while packaging provides an incentive for providers to deliver services in the most efficient, cost-effective manner possible, payment bundles that are too small do not enhance efficiencies, while payment bundles that are too large may carry excessive copayments for patients who need only a small proportion of services in the bundle. Another commenter suggested that CMS' packaging policy is likely to lead to less efficient use of resources, limited access to innovative treatment options, and greater instability in payments because, unlike the incentives from packaging under the IPPS, under the OPPS, the hospital would receive greater payment by bringing the outpatient back for a second visit or admitting the patient for inpatient care than by utilizing a more costly approach to providing an outpatient service that would be paid the same, regardless of the approach. The commenter also stated that when an APC's payment rate is significantly less than the cost of a technology, hospitals have a strong disincentive to use that technology, even if it could reduce the costs of care at a later date and provide better care to the patient.

Several commenters asserted that the implications of OPPS packaging policies are unknown due to a lack of transparency in the OPPS ratesetting process and methodology used to determine payment for packaged services, potentially leading to inappropriate payment and underutilization of image-guidance services. The commenters believed that packaging payment for image-guidance leads to hospitals discouraging physicians from using guidance services and that, therefore, CMS should not package payment for image-guidance services. Several commenters urged CMS to consider establishing a 2 to 3 year data collection period during which separate payment would be made for new technology or new applications of existing technology. The commenters further suggested that the data could then be used to evaluate the impact of packaging on clinical utilization and payment and could also be used to determine whether to package or maintain separate payment for the services in the future. Another commenter recommended that CMS adopt a threshold policy that would be similar to the existing policy used to identify packaged drugs, under which separate payment would be made for all services with a median cost in excess of a nominal threshold amount.

Response: We continue to believe that packaging creates incentives for hospitals and their physician partners to work together to establish appropriate protocols that eliminate unnecessary services where they exist and institutionalize approaches to providing necessary services more efficiently. With respect to new services or new applications of existing technology, we believe that packaging payment for ancillary and dependent services creates appropriate incentives for hospitals to seriously consider whether a new service or a new technology offers a benefit that is sufficient to justify the cost of the new service or technology. Where this review results in reductions in services that are only marginally beneficial or hospitals' choices not to utilize certain technologies, we believe that this could improve, rather than harm, the quality of care for Medicare beneficiaries because every service furnished in a hospital carries some level of risk to the patient. Moreover, we believe that hospitals strive to provide the best care they can to the patients they serve so that when new technologies are proven to improve the quality of care, their utilization will increase appropriately, whether the payment for them is packaged or not.

However, we are aware that there are financial pressures on hospitals that might motivate some providers to split services among different hospital encounters in such a way as to maximize payments. While we do not expect that hospitals would routinely change the way they furnish services or the way they bill for services in order Start Printed Page 60414to maximize payment, we recognize that it would be possible and we consider that possibility as we annually review hospital claims data. We will to continue examine claims data for patterns of fragmented care, and if we find a pattern in which a hospital appears to be dividing care across multiple days, we will refer it for investigation to the QIO or to the program safeguard contractor, as appropriate to the circumstances we find.

In section II.A.1. of this final rule with comment period, we discuss the established methodology we use to incorporate the costs of packaged services into payment for the associated independent procedures. In response to those commenters with concerns about transparency of the ratesetting process that incorporates packaged costs, in general, we package the costs of services into the payment for the major separately paid procedure on the same claim on which the packaged service appears. Hence, it is the practice of hospitals with regard to reporting and charging for packaged services that determines the separately paid service into which the cost of a packaged service is incorporated and the amount of packaged cost included the payment for that separately paid procedure.

Regarding the recommendation that we establish a cost threshold that would guide the packaging of services, we do not agree that this approach would result in appropriate packaging of costs for dependent ancillary services. A threshold policy could create incentives for hospitals to increase charges to ensure that payment for certain services was made separately, and the result would be contrary to the creation of incentives for prudent assessment of the costs and benefits of these services. Furthermore, as we stated in the CY 2009 OPPS/ASC final with comment period (73 FR 68572), it is not clear whether one set of packaging principles or one threshold could apply to the wide variety of services under the OPPS. Finally, to adopt a policy that would only package services that are low cost ancillary and supportive services would essentially negate the concept of averaging that is an underlying premise of a prospective payment system because hospitals would not have a particular incentive to provide care more efficiently.

We believe it is important to continue to advance value-based purchasing by Medicare in the hospital outpatient setting by furthering the focus on value of care rather than volume. While we acknowledge the concerns of the commenters and, as discussed below, are committed to considering the impact of packaging payment on Medicare beneficiaries further in the future, we must balance the concerns of the commenters with our goal of continuing to encourage efficient use of hospital resources. As we noted in the CY 2009 OPPS/ASC final rule with comment period in our response to comments on the CY 2009 OPPS/ASC proposed rule (73 FR 68572) and as we note in our responses to public comments on the CY 2010 OPPS/ASC proposed rule, the suggestions and packaging criteria recommended by most commenters are focused almost exclusively on preventing packaging, rather than on determining when packaging would be appropriate. We also welcome suggestions from the public on approaches to packaging that would encourage efficient use of hospital resources.

Comment: Several commenters commended CMS for reviewing and accepting the APC Panel's February 2009 recommendation that CMS continue to analyze the impact of increased packaging on Medicare beneficiaries. The commenters expressed concern about CMS' current packaging policy and urged CMS to conduct a more detailed review of the hospital claims data in order to verify that current OPPS packaging policies and methodologies are accomplishing CMS' goals. A few commenters offered recommendations for additional data analyses for CMS to consider in the ongoing efforts to study the impact of increased packaging under the OPPS. The commenters recommended that CMS compare utilization of currently packaged services billed and paid separately under the OPPS in CY 2007, before the packaging of additional categories of services went into effect, to the frequency of those same services that were packaged in CY 2008 and later, after the packaging of additional categories of services went into effect. The commenters requested that CMS conduct these studies at the CPT code level. The commenters also recommended that CMS conduct a hospital-level review of the data, in addition to an overall review, and compare overall utilization by packaged HCPCS code for CYs 2005 and 2006 to CYs 2007, 2008, and 2009. Another commenter, in support of a provider-level review of the data, asserted that reviewing the data for packaged services at a national aggregate level can easily mask the behavioral changes of classes of hospitals and, therefore, concluded that more detailed analysis is needed to determine the impact of the policy. Several commenters requested that CMS present its analyses in the final rule with comment period and at upcoming APC Panel meetings and consult with relevant stakeholders before proposing any additional packaging changes. The commenters also recommended that CMS make the data underlying payments for packaged services, including utilization rates and median costs, publicly available to enhance the transparency of its decision making so that stakeholders could assess whether the payment rates truly reflect the costs of providing the bundle of services.

Response: We agree that it is important to examine our claims data to assess the impact of packaging to the extent we can do so. During the September 2007 APC Panel meeting, the APC Panel requested that CMS evaluate the impact of expanded packaging on Medicare beneficiaries. At the March 2008 APC Panel meeting, the APC Panel requested that CMS report to the APC Panel at the first meeting in CY 2009 regarding the impact of packaging on net payments for patient care. In response to these requests, we shared the first available CY 2008 claims data with the APC Panel at the February 2009 APC Panel meeting. In that analysis, we compared the frequency of specific categories of services we newly packaged for CY 2008 as they were billed under the OPPS in CY 2007, before expanded packaging went into effect, to the frequency of those same categories of services in CY 2008, their first year of packaged payment. In each category, the HCPCS codes that we compared are the ones that we identified in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66659 through 66664) as fitting into one of the seven packaging categories listed in section II.A.4.a. of this final rule with comment period. The data shared with the APC Panel at the February 2009 APC Panel meeting compared CY 2007 claims processed through September 30, 2007, to CY 2008 claims processed through September 30, 2008, and represented about 60 percent of the full year data. We did not make any adjustments for inflation, changes in Medicare population, or other variables that potentially influenced billing between CY 2007 and CY 2008. A summary of these data analyses was included in the CY 2010 OPPS/ASC proposed rule (74 FR 35287 through 35289) and is reiterated above.

We note that we plan to present subsequent analyses that compare CY 2007 claims processed through September 30, 2007, to CY 2008 claims processed through September 30, 2008, and to CY 2009 claims processed Start Printed Page 60415through September 30, 2009, to the APC panel at the APC Panel's winter 2010 meeting. We do not anticipate providing analyses using claims for services furnished during CY 2005 or CY 2006 because the packaging of the seven categories of services was effective for services furnished on and after January 1, 2008, and, therefore, we view CY 2007, the year immediately preceding the year that the packaging expansion went into effect, to be the base year for our comparisons. In addition, we do not anticipate providing the analyses at a provider-specific level or at a HCPCS code level. It is not clear to us how we would be able to use an analysis at the provider-specific level or the HCPCS code level or what value such an analysis would have in the context of national packaging policies for the OPPS.

We note that we make available a considerable amount of data for public analysis each year through the supporting data files that are posted on the CMS Web site in association with the display of the proposed and final rules. In addition, we make available the public use files of claims and a detailed narrative description of our data process for the annual OPPS/ASC proposed and final rules that the public can use to perform any desired analyses. Therefore, commenters are able to examine and analyze these data to develop specific information to support their requests for changes to payments under the OPPS, whether with regard to separate payment for a packaged service or other issues. We understand that the OPPS is a complex payment system and that it may be difficult to determine the quantitative amount of packaged cost included in the median cost for every independent service. However, based on the complex and detailed public comments on prior proposed rules that we have received, some commenters have performed meaningful analyses at a detailed and service-specific level based on the public claims data available.

With regard to the commenters' request that we not expand OPPS packaging until after we have produced data on the impact of packaging policy changes and consulted with stakeholders, we note that we establish all significant OPPS payment policies, including the packaging status of each HCPCS code, through the annual rulemaking process. Integral to this process is a detailed explanation of the claims data on which we base our proposals and the availability of the claims from which we develop those data for the use of the public to perform any level of analysis they choose. Moreover, the OPPS/ASC annual rulemaking process provides a 60-day public comment period, as well as public presentations and discussion of the proposals at the summer APC Panel meeting. We also reply to all public comments that are within the scope of the OPPS/ASC proposed rule when we issue the OPPS/ASC final rule with comment period. In addition, we regularly meet with parties throughout the year who want to share their views on topics of interest to them. All of these activities and discussions provide significant information and opportunities for the public to influence and inform policy changes that we may be considering.

Comment: Some commenters expressed concern about the impact that packaging payment for services described by separate HCPCS codes could have on the submission of claims data by hospitals for those packaged codes and, therefore, with the validity of conclusions that could be drawn from impact analyses performed by CMS. One commenter questioned CMS' assumption that the OPPS packaging policies would allow continued collection of the data necessary to set appropriate, stable payment rates in the future. The commenter believed that greater packaging may eliminate hospitals' incentive to code for items and services for which separate payment is not made. The commenter further argued that CMS' past experiences with packaging payment for ancillary items and services indicate that hospitals do not report HCPCS codes for items and services that do not directly affect hospital payment. Similarly, the commenter explained that, under the IPPS, hospitals report only the data required to assign a case to the highest paying appropriate diagnosis-related group (DRG), even though other data might affect payment in the long term. The commenter saw no reason to believe that the current OPPS packaging approach would have a different outcome unless CMS gives clear instructions that hospitals should continue coding for all items and services used in the care of patients and provides an incentive to report packaged items and services.

Several commenters argued that the costs of new services are not reflected in the historical claims data CMS uses to set payment rates. The commenters believed that if CMS were to package payment for a new imaging service under the same criteria proposed for many existing imaging services, not only would CMS have no basis for determining how much the new service costs in its first 2 years of availability, but also CMS would provide no incentive to hospitals to report codes and charges for the new service for use in future OPPS ratesetting. The commenters further asserted that the resulting incomplete data would lead to inappropriate payments for independent services that, in turn, would limit access to care and would discourage continued innovation to improve patient care.

Response: We do not believe that there will be a significant change in what hospitals report and charge for the outpatient services they furnish to Medicare beneficiaries and other patients as a result of our current packaging methodology. Medicare cost reporting standards specify that hospitals must impose the same charges for Medicare patients as for other patients. We are often told by hospitals that many private payers pay based on a percentage of charges and that, in accordance with Medicare cost reporting rules and generally accepted accounting principles, hospital chargemasters do not differentiate between the charges to Medicare patients and other patients. Therefore, we have no reason to believe that hospitals will stop reporting HCPCS codes and charges for packaged services they provide to Medicare beneficiaries. As we stated in the CY 2009 OPPS/ASC final rule with comment period (74 FR 68575), we strongly encourage hospitals to report a charge for each packaged service they furnish, either by billing the packaged HCPCS code and a charge for that service if separate reporting is consistent with CPT and CMS instructions, by increasing the charge for the separately paid associated service to include the charge for the packaged service, or by reporting the charge for the packaged service with an appropriate revenue code but without a HCPCS code. Any of these means of charging for the packaged service will result in the cost of the packaged service being incorporated into the cost we estimate for the separately paid service. If a HCPCS code is not reported when a packaged service is provided, we acknowledge that it can be challenging to specifically track the utilization patterns and resource cost of the packaged service itself. However, we have no reason to believe that hospitals have not considered the cost of the packaged service in reporting charges for the independent, separately paid service.

We expect that hospitals, as other prudent businesses, have a quality review process that ensures that they accurately and completely report the services they furnish, with appropriate charges for those services to Medicare Start Printed Page 60416and all other payers. We encourage hospitals to report all HCPCS codes that describe packaged services that were furnished, unless the CPT Editorial Panel or CMS provides other guidance. To the extent that hospitals include separate charges for packaged services on their claims, the estimated costs of those packaged services are then added to the costs of separately paid procedures on the same claims and used in establishing payment rates for the separately paid services.

Comment: One commenter argued that CMS' packaging methodology for guidance services used in radiation oncology procedures is not transparent. Specifically, the commenter claimed that CMS packaged payment for the radiation oncology image-guidance services (shown in Table 15) into the payment for independent radiation therapy services (shown in Table 16) without publishing its packaging methodology. The commenter further stated that the lack of transparency regarding CMS' packaging methodology is of concern to the radiation oncology community, and that it would be helpful if CMS published the information used in the APC Panel's determination of packaging and payment rates.

Table 15—Packaged Radiation Oncology Guidance Services

CY 2010 CPT codeCY 2010 Long descriptor
77421Stereoscopic X ray guidance for localization of target volume for the delivery of radiation therapy.
77014Computed tomography guidance for placement of radiation fields.
77417Therapeutic radiology port film(s).
76950Ultrasonic guidance for aspiration of ova, imaging supervision and interpretation.

Table 16—Separately Paid Radiation Therapy Services

CY 2010 CPT codeCY 2010 Long descriptor
77402Radiation treatment delivery, single treatment area, single port or parallel opposed ports, simple blocks or no blocks; up to 5MeV.
77403Radiation treatment delivery, single treatment area, single port or parallel opposed ports, simple blocks or no blocks; 6-10MeV.
77404Radiation treatment delivery, single treatment area, single port or parallel opposed ports, simple blocks or no blocks; 11-19 MeV.
77406Radiation treatment delivery, single treatment area, single port or parallel opposed ports, simple blocks or no blocks; 20 MeV or greater.
77407Radiation treatment delivery, 2 separate treatment areas, 3 or more ports on a single treatment area, use of multiple blocks; up to 5 MeV.
77408Radiation treatment delivery, 2 separate treatment areas, 3 or more ports on a single treatment area, use of multiple blocks; 6-10 MeV.
77409Radiation treatment delivery, 2 separate treatment areas, 3 or more ports on a single treatment area, use of multiple blocks; 11-19 MeV.
77411Radiation treatment delivery, 2 separate treatment areas, 3 or more ports on a single treatment area, use of multiple blocks; 20 MeV or greater.
77412Radiation treatment delivery, 3 or more separate treatment areas, custom blocking, tangential ports, wedges, rotational beam, compensators, electron beam; up to 5 MeV.
77413Radiation treatment delivery, 3 or more separate treatment areas, custom blocking, tangential ports, wedges, rotational beam, compensators, electron beam; 6-10 MeV.
77414Radiation treatment delivery, 3 or more separate treatment areas, custom blocking, tangential ports, wedges, rotational beam, compensators, electron beam; 11-19 MeV.
77416Radiation treatment delivery, 3 or more separate treatment areas, custom blocking, tangential ports, wedges, rotational beam, compensators, electron beam; 20 MeV or greater.
77417Therapeutic radiology port film(s).
77418Intensity modulated treatment delivery, single or multiple fields/arcs, via narrow spatially and temporally modulated beams, binary, dynamic MLC, per treatment session.

Response: Although the APC Panel provides valuable advice with regard to the establishment of OPPS payment policies and payment rates, the APC Panel does not, as the commenter suggested, determine what services are packaged under the OPPS or establish OPPS payment rates. We adopt the OPPS payment policies regarding packaging and other issues and establish payment rates through the annual rulemaking cycle.

In general, payment for a packaged HCPCS code is included in the payment for the independent service with which it is associated, to the extent that the cost of the packaged service is reflected on the single procedure claims that are used to calculate the median cost for the independent, separately paid service. We intend to further examine the packaging of image-guidance for radiation therapy in the analyses of the impact of packaging that we plan to discuss with the APC Panel at the winter 2010 meeting. However, as we describe earlier in this section, we make available a considerable amount of data for public analysis each year, provide the claims we use to calculate median costs, and provide a detailed narrative description of our data process that the public can use to analyze any topic of interest to them.

Comment: One commenter supported CMS' goal of increased efficiency in hospital outpatient care. However, the commenter was concerned that packaging payment for services too soon could create access problems for technologies that would otherwise improve patient outcomes and reduce costs. The commenter urged CMS to reinstate separate payment in CY 2010 for ICE, FFR, and IVUS until a thorough analysis has been performed on the impact of packaging payment for these services, including the rate of change in their utilization over time and market penetration.Start Printed Page 60417

Response: As discussed earlier in this section, in response to the request from the APC Panel that CMS evaluate the impact of expanded packaging on Medicare beneficiaries, we analyzed 9 months of CY 2007 and CY 2008 data related to all services that were packaged during CY 2008. Analysis of the intraoperative category (which includes IVUS, ICE, and FFR) showed minimal changes in the frequency and the number of hospitals reporting these packaged services between CY 2007 and CY 2008. The IVUS, ICE, and FFR services studied specifically included CPT codes 37250 (Intravascular ultrasound (non-coronary vessel) during diagnostic evaluation and/or therapeutic intervention; initial vessel); 37251 (Intravascular ultrasound (non-coronary vessel) during diagnostic evaluation and/or therapeutic intervention; each additional vessel); 92978 (Intravascular ultrasound (coronary vessel or graft) during diagnostic evaluation and/or therapeutic intervention including imaging supervision, interpretation and report; initial vessel); 92979 (Intravascular ultrasound (coronary vessel or graft) during diagnostic evaluation and/or therapeutic intervention including imaging supervision, interpretation and report; each additional vessel); 93662 (Intracardiac echocardiography during therapeutic/diagnostic intervention, including imaging supervision and interpretation); 93571 (Intravascular Doppler velocity and/or pressure derived coronary flow reserve measurement (coronary vessel or graft) during coronary angiography including pharmacologically induced stress, initial vessel); and 93572 (Intravascular Doppler velocity and/or pressure derived coronary flow reserve measurement (coronary vessel or graft) during coronary angiography including pharmacologically induced stress, each additional vessel).

As discussed previously, in February 2009 we presented an analysis to the APC Panel that showed an increase of 8 percent in the number of services billed and an increase in aggregate payment of 25 percent in CY 2008, when IVUS, ICE and FFR were packaged, in comparison to CY 2007 when IVUS, ICE and FFR were paid separately. Additionally, we intend to continue our analysis of the impact of greater packaging on Medicare beneficiaries and to present additional data to the APC Panel at the winter 2010 meeting.

We note that IVUS, ICE, and FFR services are existing, established technologies and that hospitals have provided some of these services in the HOPD since the implementation of the OPPS in CY 2000. IVUS, FFR, and ICE are all dependent services that are always provided in association with independent services. Given the increase in the number of services furnished and the associated payment between CY 2007 and CY 2008, we have seen no evidence from our claims data that beneficiary access to care is being harmed by packaging payment for IVUS, ICE, and FFR services. We believe that packaging creates appropriate incentives for hospitals and their physician partners to carefully consider the technologies that are used in the care of patients, in order to ensure that technologies are selected for use in each case based on their expected benefit to a particular Medicare beneficiary.

After consideration of the public comments we received, we are finalizing our CY 2010 proposals, without modification, to packaged payment for the seven categories of services, including guidance services, image processing services, intraoperative services, imaging supervision and interpretation services, diagnostic radiopharmaceuticals, contrast media, and observation services. We refer readers to section V.B.2.d. of this final rule with comment period for further discussion of our final policy to package payment for contrast agents and diagnostic radiopharmaceuticals. We refer readers to section II.A.2.e.(1) for further discussion of our final policy to pay for observation services through extended assessment and management composite APCs under certain circumstances. We plan to discuss with the APC Panel additional analyses of the impact of packaging these categories of services at the winter 2010 APC Panel meeting.

(3) Other Service-Specific Packaging Issues

The APC Panel also recommended that CMS reassign CPT code 76098 (Radiological examination, surgical specimen) from APC 0317 (Level II Miscellaneous Radiology Procedures) to APC 0260 (Level I Plain Film), and to place CPT code 76098 on the bypass list. Based on our analysis of the CY 2010 claims containing CPT 76098 and clinical review of the services being furnished, in the CY 2010 OPPS/ASC proposed rule (74 FR 35241), we proposed to treat CPT code 76098 as a “T- packaged” code for CY 2010 with continued assignment to APC 0317. As discussed above, a “T-packaged code,” identified with status indicator “Q2,” describes a code whose payment is packaged when one or more separately paid surgical procedures with a status indicator of “T” are provided during the hospital encounter. The assignment of status indicator “Q2” to CPT code 76098 would result in more claims data being available to set the median costs for the surgical procedures with which CPT code 76098 is most commonly billed (for example, CPT code 19101 (Biopsy of breast, percutaneous, needle core, not using image guidance; open incisional)), while continuing to provide appropriate separate payment that reflects the costs of the service, including its packaged costs, when it is not billed with a surgical procedure. Further discussion related to the proposal is included in section II.A.1.b. of this final rule with comment period.

Comment: One commenter requested that CPT code 76098 remain separately payable instead of conditionally packaged. The commenter acknowledged that radiological examination of a surgical specimen is performed in conjunction with a surgical procedure most of the time but asserted that when the service is conditionally packaged, surgical procedure payment would not cover the cost of the radiological examination of a surgical specimen.

Response: We continue to believe that when CPT code 76098 is furnished on the same date of service as a major separately payable procedure, CPT code 76098 is a dependent service that is ancillary and supportive to the independent service with which it is performed and that, therefore, it is most appropriate to package the cost of CPT code 76098 into the payment for the independent, separately paid procedure. The full cost of CPT code 76098 is packaged into the cost of the independent, separately paid procedure to the extent that the hospital's charge for the packaged service, when reduced to cost by the hospital's applicable CCR, results in an accurate reflection of the cost of the packaged service. As we stated in the CY 2009 OPPS/ASC final rule with comment period (74 FR 68575), we strongly encourage hospitals to report a charge for each packaged service they furnish, either by billing the packaged HCPCS code and a charge for that service if separate reporting is consistent with CPT and CMS instructions, by increasing the charge for the separately paid associated service to include the charge for the packaged service, or by reporting the charge for the packaged service with an appropriate revenue code but without a HCPCS code. Any of these means of charging for the packaged service will result in the costs of the packaged service being incorporated into the cost we estimate for the separately paid Start Printed Page 60418service. We note that further discussion of CPT code 76098 as it relates to the commenters' requests to add this code to the bypass list is included in section II.A.1.b. of this final rule with comment period.

After consideration of the public comment we received, we are finalizing our CY 2010 proposal, without modification, to assign CPT code 76098 status indicator “Q2” to signify that the service is packaged when it is reported with a separately paid procedure that has a status indicator of “T” on the same date of service and separately paid under APC 0317 when it is not reported on the same date of service with a separately paid surgical procedure that has a status indicator of “T.” The final CY 2010 APC median cost of APC 0317 is approximately $374.

Comment: A number of commenters disagreed with CMS' proposal to package electrodiagnostic guidance for chemodenervation procedures. The commenters asserted that paying chemodenervation procedures at the same rate, regardless of the use of electrodiagnostic guidance, may discourage providers from using guidance to place a needle filled with a potentially fatal substance like botulinum toxin. They urged CMS to consider providing a separate payment for electrodiagnostic needle guidance to ensure that quality of care is not compromised.

Response: While the commenters did not identify specific chemodenervation guidance CPT codes, we note that the costs of chemodenervation guidance services, specifically CPT codes 95873 (Electrical stimulation for guidance in conjunction with chemodenervation (List separately in addition to code for primary procedure)) and 95874 (Needle electromyography for guidance in conjunction with chemodenervation (list separately in addition to code for primary procedure)) are reflected in the median costs of the independent, separately paid chemodenervation procedures as a function of the frequency that chemodenervation services are reported with a particular guidance CPT code. We recognize that, in some cases, supportive and ancillary dependent services are furnished at a high frequency with independent services, and in other cases, they are furnished with independent services at a low frequency. Nonetheless, we believe that packaging should reflect the reality of how these services are furnished. Moreover, we believe that hospitals make prudent and appropriate patient care decisions with regard to when they furnish packaged services.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal, without modification, to unconditionally package payment for chemodenervation guidance services described by CPT codes 95873 and 95874. These CPT codes are, therefore, assigned status indicator “N” in Addendum B to this final rule with comment period.

Comment: One commenter objected to the assignment of status indicator “N” to a number of guidance procedures and requested that CMS conditionally packaged these services so that they could be paid separately if they are the only services furnished in a hospital encounter. The commenter believed that it is not appropriate that the hospital receives no payment when these services are furnished in preparation for a surgical procedure that is canceled after the services have been furnished but before the patient is taken to the operating room. The procedures of concern to the commenter include CPT codes 19290 (Preoperative placement of needle localization wire, breast;); 19291 (Preoperative placement of needle localization wire, breast; each additional lesion (List separately in addition to code for primary procedure)); 19295 (Image guided placement, metallic localization clip, percutaneous, during breast biopsy (List separately in addition to code for primary procedure)); 77031 (Stereotactic localization guidance for breast biopsy or needle placement (e.g., for wire localization or for injection), each lesion, radiological supervision and interpretation)); 77032 (Mammographic guidance for needle placement, breast (e.g., for wire localization or for injection), each lesion, radiological supervision and interpretation); and 76942 (Ultrasonic guidance for needle placement (e.g., biopsy, aspiration, injection, localization device), imaging supervision and interpretation).

Response: We appreciate the commenter's submission of this clinical scenario for our review. The APC Panel Packaging Subcommittee provides substantive advice to us on the packaging of services, either conditionally or unconditionally under the OPPS, and the Subcommittee members bring broad and deep expertise and experience to their review of clinical scenarios. Therefore, we will review these services and the scenario described by the commenter with the APC Panel's Packaging Subcommittee at the winter 2010 APC Panel meeting.

After review of the public comment we received, we are finalizing our CY 2010 proposal, without modification, to unconditionally package payment for CPT codes 19290, 19291, 19295, 77031, 77032, and 76942. These CPT codes are assigned status indicator “N” in Addendum B to this final rule with comment period. We will review the OPPS treatment of these CPT codes with the APC Panel Packaging Subcommittee at the winter 2010 APC Panel meeting.

Comment: One commenter suggested that it is very challenging for hospitals to determine they were paid correctly for services furnished because of CMS' “Q” status indicators and the complexity of determining which HCPCS codes should be separately paid. The commenter asked that CMS make the claims processing system more transparent.

Response: We acknowledge that the OPPS is a complex payment system and that it is difficult to determine the correct payment for a service that is subject to conditional packaging. Addendum D1 to this final rule with comment period describes how services that appear in Addendum B with status indicators “Q1,” “Q2,” and “Q3” are treated in claims processing. In the case of conditionally packaged codes with status indicators “Q1” or “Q2,” where the criteria for separate payment are not met, these codes are treated as packaged services. We assign status indicators “Q1” and “Q2” to conditionally packaged services to indicate that they are usually packaged, except for special circumstances when they are separately payable. Through the I/OCE claims processing logic, the status indicator of a conditionally packaged service reported on a claim is changed either to “N” or the status indicator of the APC to which the code is assigned for separate payment, depending upon the presence or absence of other OPPS services also reported on the claim with the same date of service. Status indicator “Q3” indicates that the code is a member of a composite APC. Addendum M includes the HCPCS codes for all services that are paid either through single code APCs or composite APCs when the criteria for composite APC payment are met. A full discussion of the composite criteria for each composite APC (to which status indicator “Q3” applies) is included in section II.A.2.e. of this final rule with comment period.

In addition to the availability of these resources that describe whether a service is separately payable or packaged (in the case of services with status indicators “Q1” or “Q2”) or a member of a composite APC (in the case of services with status indicator “Q3”), the quarterly I/OCE and the OPPS Pricer that are used by the Fiscal Intermediary Start Printed Page 60419Standard System (FISS) to process claims paid under the OPPS are both available to the public each calendar quarter. The I/OCE instructions and specifications that are utilized for OPPS and non-OPPS payment for hospital outpatient services are available quarterly for download on the CMS Web site at: http://www.cms.hhs.gov/​OutpatientCodeEdit/​02_​OCEQtrReleaseSpecs.asp#TopOfPage. Providers interested in purchasing the I/OCE software should visit the authorized distributor's Web site at http://www.ntis.gov/​products/​oceapc.aspx for more information on how to obtain the software. There is no OPPS Pricer application for personal computers at this time. However, providers can download the files that contain the logic, rates, wage indices, and off-set amounts used by the OPPS Pricer program to calculate APC rates, copayments, and deductibles from the CMS Web site at: http://www.cms.hhs.gov/​PCPricer/​08_​OPPS.asp.

B. Conversion Factor Update

Section 1833(t)(3)(C)(ii) of the Act requires us to update the conversion factor used to determine payment rates under the OPPS on an annual basis. Under the authority in section 1833(t)(3)(C)(iv) of the Act, for CY 2010, the update is equal to the hospital inpatient market basket percentage increase applicable to hospital discharges under section 1886(b)(3)(B)(iii) of the Act. The final hospital market basket increase for FY 2010 published in the FY 2010 IPPS/LTCH PPS final rule (74 FR 44002) is 2.1 percent. To set the OPPS conversion factor for CY 2010, we increased the CY 2009 conversion factor of $66.059, as specified in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68584 through 68585), by 2.1 percent. Hospitals that fail to meet the reporting requirements of the Hospital Outpatient Quality Data Reporting Program (HOP QDRP) are subject to a reduction of 2.0 percentage points from the market basket update to the conversion factor. For a complete discussion of the HOP QDRP requirements and the payment reduction for hospitals that fail to meet those requirements, we refer readers to section XVI. of this final rule with comment period.

In accordance with section 1833(t)(9)(B) of the Act, we further adjusted the conversion factor for CY 2010 to ensure that any revisions we made to our updates for a revised wage index and rural adjustment are made on a budget neutral basis. We calculated an overall budget neutrality factor of 0.9997 for wage index changes by comparing total payments from our simulation model using the FY 2010 IPPS final wage index values to those payments using the current (FY 2009) IPPS wage index values. For CY 2010, we did not propose a change to our rural adjustment policy. Therefore, the budget neutrality factor for the rural adjustment is 1.0000.

For this final rule with comment period, we estimated that pass-through spending for both drugs and biologicals and devices for CY 2010 will equal approximately $45.5 million, which represents 0.14 percent of total projected CY 2010 OPPS spending. Therefore, the conversion factor was also adjusted by the difference between the 0.11 percent estimate of pass-through spending set aside for CY 2009 and the 0.14 percent estimate of CY 2010 pass-through spending. Finally, estimated payments for outliers remain at 1.0 percent of total OPPS payments for CY 2010.

The market basket increase update factor of 2.1 percent for CY 2010, the required wage index budget neutrality adjustment of approximately 0.9997, and the adjustment of 0.03 percent of projected OPPS spending for the difference in the pass-through spending set aside resulted in a full market basket conversion factor for CY 2010 of $67.406. To calculate the CY 2010 reduced market basket conversion factor for those hospitals that fail to meet the requirements of the HOP QDRP for the full CY 2010 payment update, we made all other adjustments discussed above, but used a reduced market basket increase update factor of 0.1 percent. This resulted in a reduced market basket conversion factor for CY 2010 of $66.086 for those hospitals that fail to meet the HOP QDRP requirements.

We did not receive any public comments on the calculation of the conversion factor. Therefore, we are finalizing our CY 2010 proposal, without modification, to update the OPPS conversion factor by the FY 2010 IPPS market basket increase update factor of 2.1 percent, resulting in a final full conversion factor of $67.406 and in a reduced conversion factor of $66.086 for those hospitals that fail to meet the HOP QDRP reporting requirements for the full CY 2010 payment update.

C. Wage Index Changes

Section 1833(t)(2)(D) of the Act requires the Secretary to determine a wage adjustment factor to adjust, for geographic wage differences, the portion of the OPPS payment rate, which includes the copayment standardized amount, that is attributable to labor and labor-related cost. This adjustment must be made in a budget neutral manner and budget neutrality is discussed in section II.B. of this final rule with comment period.

The OPPS labor-related share is 60 percent of the national OPPS payment. This labor-related share is based on a regression analysis that determined that approximately 60 percent of the costs of services paid under the OPPS were attributable to wage costs. We confirmed that this labor-related share for outpatient services is still appropriate during our regression analysis for the payment adjustment for rural hospitals in the CY 2006 OPPS final rule with comment period (70 FR 68553). Therefore, in the CY 2010 OPPS/ASC proposed rule (74 FR 35291), we did not propose to revise this policy for the CY 2010 OPPS. We refer readers to section II.G. of this final rule with comment period for a description and example of how the wage index for a particular hospital is used to determine the payment for the hospital.

As discussed in section II.A.2.c. of this final rule with comment period, for estimating national median APC costs, we standardize 60 percent of estimated claims costs for geographic area wage variation using the same FY 2010 pre-reclassified wage indices that the IPPS uses to standardize costs. This standardization process removes the effects of differences in area wage levels from the determination of a national unadjusted OPPS payment rate and the copayment amount.

As published in the original OPPS April 7, 2000 final rule with comment period (65 FR 18545), the OPPS has consistently adopted the final IPPS wage indices as the wage indices for adjusting the OPPS standard payment amounts for labor market differences. Thus, the wage index that applies to a particular acute care short-stay hospital under the IPPS also applies to that hospital under the OPPS. As initially explained in the September 8, 1998 OPPS proposed rule, we believed and continue to believe that using the IPPS wage index as the source of an adjustment factor for the OPPS is reasonable and logical, given the inseparable, subordinate status of the HOPD within the hospital overall. In accordance with section 1886(d)(3)(E) of the Act, the IPPS wage index is updated annually. Therefore, in accordance with our established policy, we proposed to use the final FY 2010 version of the IPPS wage indices used to pay IPPS hospitals to adjust the CY 2010 OPPS payment rates and copayment amounts for geographic differences in labor cost for all providers that participate in the Start Printed Page 60420OPPS, including providers that are not paid under the IPPS (referred to in this section as “non-IPPS” providers).

We note that the final FY 2010 IPPS wage indices continue to reflect a number of adjustments implemented over the past few years, including revised Office of Management and Budget (OMB) standards for defining geographic statistical areas (Core-Based Statistical Areas or CBSAs), reclassification to different geographic areas, rural floor provisions and the accompanying budget neutrality adjustment, an adjustment for out-migration labor patterns, an adjustment for occupational mix, and a policy for allocating hourly wage data among campuses of multicampus hospital systems that cross CBSAs. For the FY 2010 wage indices, these changes include a continuing transition to the new reclassification threshold criteria that were finalized in the FY 2009 IPPS final rule (73 FR 48568 through 48570), updated 2007-2008 occupational mix survey data, and a continuing transition to state-level budget neutrality for the rural and imputed floors. We refer readers to the FY 2010 IPPS/LTCH PPS final rule (74 FR 43823) for a detailed discussion of all final changes to the FY 2010 IPPS wage indices. In addition, we refer readers to the CY 2005 OPPS final rule with comment period (69 FR 65842 through 65844) and subsequent OPPS rules for a detailed discussion of the history of these wage index adjustments as applied under the OPPS.

The IPPS wage indices that we proposed to adopt in the CY 2010 OPPS/ASC proposed rule (74 FR 35291) include all reclassifications that are approved by the Medicare Geographic Classification Review Board (MGCRB) for FY 2010.

As noted in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68585), after issuance of the CY 2009 OPPS/ASC proposed rule, section 124 of Public Law 110-275 further extended geographic reclassifications under section 508 and certain special exception reclassifications until September 30, 2009. We did not make any proposals related to these provisions for the CY 2009 OPPS wage indices in our CY 2009 proposed rule because Public Law 110-275 was enacted after issuance of the CY 2009 OPPS/ASC proposed rule. In accordance with section 124 of Public Law 110-275, for CY 2009, we adopted all section 508 geographic reclassifications through September 30, 2009. Similar to our treatment of section 508 reclassifications extended under Public Law 110-173 as described in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68586), hospitals with section 508 reclassifications revert to their home area wage index, with out-migration adjustment if applicable, or a current MGCRB reclassification, from October 1, 2009 to December 31, 2009. As we did for CY 2008, we also have extended the special exception wage indices for certain hospitals through December 31, 2009, under the OPPS, in order to give these hospitals the special exception wage indices under the OPPS for the same time period as under the IPPS. We refer readers to the Federal Register notice published subsequent to the FY 2009 IPPS final rule for a detailed discussion of the changes to the wage indices as required by section 124 of Public Law 110-275 (73 FR 57888). Because the provisions of section 124 of Public Law 110-275 expire in 2009 and are not applicable to FY 2010, we did not make any proposals related to those provisions for the OPPS wage indices for CY 2010.

For purposes of the OPPS, we proposed to continue our policy in CY 2010 to allow non-IPPS hospitals paid under the OPPS to qualify for the out-migration adjustment if they are located in a section 505 out-migration county. We note that because non-IPPS hospitals cannot reclassify, they are eligible for the out-migration wage adjustment. Table 4J in the FY 2010 IPPS final rule (74 FR 44118 through 44125), as subsequently corrected at 74 FR 51506, identifies counties eligible for the out-migration adjustment and providers receiving the adjustment. As we have done in prior years, we are reprinting Table 4J, as corrected, as Addendum L to this final rule with comment period, with the addition of non-IPPS hospitals that will receive the section 505 out-migration adjustment under the CY 2010 OPPS.

As stated earlier in this section, we continue to believe that using the IPPS wage indices as the source of an adjustment factor for the OPPS is reasonable and logical, given the inseparable, subordinate status of the HOPD within the hospital overall. Therefore, we proposed to use the final FY 2010 IPPS wage indices for calculating the OPPS payments in CY 2010. With the exception of the out-migration wage adjustment table (Addendum L to this final rule with comment period), which includes non-IPPS hospitals paid under the OPPS, we are not reprinting the FY 2010 IPPS final wage indices referenced in this discussion of the wage index. We refer readers to the CMS Web site for the OPPS at: http://www.cms.hhs.gov/​HospitalOutpatientPPS/​. At this link, readers will find a link to the FY 2010 IPPS final wage index tables.

Comment: Several commenters expressed support for the CMS proposal to extend the IPPS wage indices to the OPPS in CY 2010, consistent with prior year policies under the OPPS.

Response: We appreciate the support expressed by commenters for our proposed CY 2010 wage index policies.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal, without modification, to use the final FY 2010 IPPS wage indices to adjust the OPPS standard payment amounts for labor market differences.

D. Statewide Average Default CCRs

In addition to using CCRs to estimate costs from charges on claims for ratesetting, CMS uses overall hospital-specific CCRs calculated from the hospital's most recent cost report to determine outlier payments, payments for pass-through devices, and monthly interim transitional corridor payments under the OPPS during the PPS year. Medicare contractors cannot calculate a CCR for some hospitals because there is no cost report available. For these hospitals, CMS uses the statewide average default CCRs to determine the payments mentioned above until a hospital's Medicare contractor is able to calculate the hospital's actual CCR from its most recently submitted Medicare cost report. These hospitals include, but are not limited to, hospitals that are new, have not accepted assignment of an existing hospital's provider agreement, and have not yet submitted a cost report. CMS also uses the statewide average default CCRs to determine payments for hospitals that appear to have a biased CCR (that is, the CCR falls outside the predetermined ceiling threshold for a valid CCR) or for hospitals whose most recent cost report reflects an all-inclusive rate status (Medicare Claims Processing Manual, Pub. 100-04, Chapter 4, Section 10.11). In the CY 2010 OPPS/ASC proposed rule (74 FR 35292), we proposed to update the default ratios for CY 2010 using the most recent cost report data. We discuss our policy for using default CCRs, including setting the ceiling threshold for a valid CCR, in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 through 68599) in the context of our adoption of an outlier reconciliation policy for cost reports beginning on or after January 1, 2009.

For CY 2010, we used our standard methodology of calculating the statewide average default CCRs using the same hospital overall CCRs that we Start Printed Page 60421use to adjust charges to costs on claims data for setting the CY 2010 proposed OPPS relative weights. Table 12 that was published in the CY 2010 OPPS/ASC proposed rule (74 FR 35293 through 35294) listed the proposed CY 2010 default urban and rural CCRs by State and compared them to last year's default CCRs. These CCRs are the ratio of total costs to total charges from each hospital's most recently submitted cost report, for those cost centers relevant to outpatient services weighted by Medicare Part B charges. We also adjusted ratios from submitted cost reports to reflect final settled status by applying the differential between settled to submitted overall CCR for the cost centers relevant to outpatient services from the most recent pair of final settled and submitted cost reports. We then weighted each hospital's CCR by the volume of separately paid line-items on hospital claims corresponding to the year of the majority of cost reports used to calculate the overall CCRs. We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66680 through 66682) and prior OPPS rules for a more detailed discussion of our established methodology for calculating the statewide average default CCRs, including the hospitals used in our calculations and our trimming criteria.

For this CY 2010 OPPS/ASC final rule with comment period, approximately 44 percent of the submitted cost reports utilized in the default ratio calculations represented data for cost reporting periods ending in CY 2008 and 55 percent were for cost reporting periods ending in CY 2007. For Maryland, we used an overall weighted average CCR for all hospitals in the nation as a substitute for Maryland CCRs. Few hospitals in Maryland are eligible to receive payment under the OPPS, which limits the data available to calculate an accurate and representative CCR. In general, observed changes in the statewide average default CCRs between CY 2009 and CY 2010 are modest and the few significant changes are associated with areas that have a small number of hospitals.

We did not receive any public comments concerning our CY 2010 proposal to apply our standard methodology of calculating the statewide average default CCRs using the same hospital overall CCRs that we use to adjust charges to costs on claims data for setting the CY 2010 proposed OPPS relative weights. Therefore, we are finalizing the statewide average default CCRs as shown in Table 17 below for OPPS services furnished on or after January 1, 2010.

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E. OPPS Payment to Certain Rural and Other Hospitals

1. Hold Harmless Transitional Payment Changes Made by Public Law 110-275 (MIPPA)

When the OPPS was implemented, every provider was eligible to receive an additional payment adjustment (called either transitional corridor payments or transitional outpatient payment (TOPs)) if the payments it received for covered OPD services under the OPPS were less than the payments it would have received for the same services under the Start Printed Page 60425prior reasonable cost-based system (referred to as the pre-BBA amount). Section 1833(t)(7) of the Act provides that the transitional corridor payments are temporary payments for most providers and were intended to ease their transition from the prior reasonable cost-based payment system to the OPPS system. There are two exceptions to this provision, cancer hospitals and children's hospitals, and those hospitals receive the transitional corridor payments on a permanent basis. Section 1833(t)(7)(D)(i) of the Act originally provided for transitional corridor payments to rural hospitals with 100 or fewer beds for covered OPD services furnished before January 1, 2004. However, section 411 of Public Law 108-173 amended section 1833(t)(7)(D)(i) of the Act to extend these payments through December 31, 2005, for rural hospitals with 100 or fewer beds. Section 411 also extended the transitional corridor payments to SCHs located in rural areas for services furnished during the period that began with the provider's first cost reporting period beginning on or after January 1, 2004, and ended on December 31, 2005. Accordingly, the authority for making transitional corridor payments under section 1833(t)(7)(D)(i) of the Act, as amended by section 411 of Public Law 108-173, for rural hospitals having 100 or fewer beds and SCHs located in rural areas expired on December 31, 2005.

Section 5105 of Public Law 109-171 reinstituted the TOPs for covered OPD services furnished on or after January 1, 2006, and before January 1, 2009, for rural hospitals having 100 or fewer beds that are not SCHs. When the OPPS payment was less than the provider's pre-BBA amount, the amount of payment was increased by 95 percent of the amount of the difference between the two payment systems for CY 2006, by 90 percent of the amount of that difference for CY 2007, and by 85 percent of the amount of that difference for CY 2008.

For CY 2006, we implemented section 5105 of Public Law 109-171 through Transmittal 877, issued on February 24, 2006. In the Transmittal, we did not specifically address whether TOPs apply to essential access community hospitals (EACHs), which are considered to be SCHs under section 1886(d)(5)(D)(iii)(III) of the Act. Accordingly, under the statute, EACHs are treated as SCHs. In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010), we stated that EACHs were not eligible for TOPs under Public Law 109-171. However, we stated they were eligible for the adjustment for rural SCHs. In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 and 68228), we updated § 419.70(d) of our regulations to reflect the requirements of Public Law 109-171.

In the CY 2009 OPPS/ASC proposed rule (73 FR 41461), we stated that, effective for services provided on or after January 1, 2009, rural hospitals having 100 or fewer beds that are not SCHs would no longer be eligible for TOPs, in accordance with section 5105 of Public Law 109-171. However, subsequent to issuance of the CY 2009 OPPS/ASC proposed rule, section 147 of Public Law 110-275 amended section 1833(t)(7)(D)(i) of the Act by extending the period of TOPs to rural hospitals with 100 beds or fewer for 1 year, for services provided before January 1, 2010. Section 147 of Public Law 110-275 also extended TOPs to SCHs (including EACHs) with 100 or fewer beds for covered OPD services provided on or after January 1, 2009, and before January 1, 2010. In accordance with section 147 of Public Law 110-275, when the OPPS payment is less than the provider's pre-BBA amount, the amount of payment is increased by 85 percent of the amount of the difference between the two payment systems for CY 2009.

For CY 2009, we revised our regulations at §§ 419.70(d)(2) and (d)(4) and added a new paragraph (d)(5) to incorporate the provisions of section 147 of Public Law 110-275. In addition, we made other technical changes to § 419.70(d)(2) to more precisely capture our existing policy and to correct an inaccurate cross-reference. We also made technical corrections to the cross-references in paragraphs (e), (g), and (i) of § 419.70. In the CY 2010 OPPS/ASC proposed rule (74 FR 35295), for CY 2010, we proposed to make a technical correction to the heading of § 419.70(d)(5) to correctly identify the policy as described in the subsequent regulation text. The paragraph heading should indicate that the adjustment applies to small SCHs, rather than to rural SCHs.

Effective for services provided on or after January 1, 2010, rural hospitals and SCHs (including EACHs) having 100 or fewer beds will no longer be eligible for hold harmless TOPs, in accordance with section 147 of Public Law 110-275.

2. Adjustment for Rural SCHs Implemented in CY 2006 Related to Public Law 108-173 (MMA)

In the CY 2006 OPPS final rule with comment period (70 FR 68556), we finalized a payment increase for rural SCHs of 7.1 percent for all services and procedures paid under the OPPS, excluding drugs, biologicals, brachytherapy sources, and devices paid under the pass-through payment policy in accordance with section 1833(t)(13)(B) of the Act, as added by section 411 of Public Law 108-173. Section 411 gave the Secretary the authority to make an adjustment to OPPS payments for rural hospitals, effective January 1, 2006, if justified by a study of the difference in costs by APC between hospitals in rural areas and hospitals in urban areas. Our analysis showed a difference in costs for rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a payment adjustment for rural SCHs of 7.1 percent for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, brachytherapy sources, and devices paid under the pass-through payment policy, in accordance with section 1833(t)(13)(B) of the Act.

In CY 2007, we became aware that we did not specifically address whether the adjustment applies to EACHs, which are considered to be SCHs under section 1886(d)(5)(D)(iii)(III) of the Act. Thus, under the statute, EACHs are treated as SCHs. Therefore, in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 and 68227), for purposes of receiving this rural adjustment, we revised § 419.43(g) to clarify that EACHs are also eligible to receive the rural SCH adjustment, assuming these entities otherwise meet the rural adjustment criteria. Currently, fewer than 10 hospitals are classified as EACHs and as of CY 1998, under section 4201(c) of Public Law 105-33, a hospital can no longer become newly classified as an EACH.

This adjustment for rural SCHs is budget neutral and applied before calculating outliers and copayment. As stated in the CY 2006 OPPS final rule with comment period (70 FR 68560), we would not reestablish the adjustment amount on an annual basis, but we may review the adjustment in the future and, if appropriate, would revise the adjustment. We provided the same 7.1 percent adjustment to rural SCHs, including EACHs, again in CY 2008 and CY 2009. Further, in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68590), we updated the regulations at § 419.43(g)(4) to specify, in general terms, that items paid at charges adjusted to costs by application of a hospital-specific CCR are excluded from the 7.1 percent payment adjustment.

In the CY 2010 OPPS/ASC proposed rule (74 FR 35295), for the CY 2010 OPPS, we proposed to continue our policy of a budget neutral 7.1 percent payment adjustment for rural SCHs, including EACHs, for all services and procedures paid under the OPPS, Start Printed Page 60426excluding separately payable drugs and biologicals, devices paid under the pass-through payment policy, and items paid at charges reduced to costs. We intend to reassess the 7.1 percent adjustment in the near future by examining differences between urban and rural hospitals' costs using updated claims, cost reports, and provider information.

Comment: A number of commenters generally supported the proposal to continue the rural SCH (including EACHs) adjustment for CY 2010 OPPS. Several commenters also asked that CMS extend for CY 2010 the TOPs payment policies that were in effect for CY 2009. The commenters recommended that CMS evaluate the differences in cost between urban and rural hospitals over an extended 3-year period using updated claims, cost reports, and provider information. They further suggested that, during the 3-year period in which CMS would be gathering data, CMS pay SCHs and rural hospitals with less than 100 beds that are not SCHs the greater of the TOPs payment in effect for CY 2009 or the OPPS payment for the applicable calendar year plus the 7.1 percent rural adjustment, whichever is greater. The commenters claimed that CMS' reversal of the TOPs allowance after only 1 year of reimplementation for certain rural hospitals was unreasonable and could irreparably harm those rural hospitals absent a safety net mechanism in place.

Response: We agree that it is appropriate to continue the 7.1 percent adjustment for rural SCHs (including EACHs) as we proposed for CY 2010. However, we are not extending the CY 2009 TOPs payment policies for rural hospitals with 100 beds or less and for SCHs (including EACHs) with 100 or fewer beds for CY 2010. Section 1833(t)(7)(D)(i)(II) of the Act provides that, in the case of a hospital located in a rural area with 100 beds or fewer and that is not a sole community hospital, for covered OPD services furnished on or after January 1, 2006 and before January 1, 2010, for which the PPS amount is less than the pre-BBA amount, the amount of payment should be increased by the applicable percentage of the amount of such difference. Section 1833(t)(7)(D)(i)(III) of the Act also extends TOPs to SCHs (including EACHs) with 100 or fewer beds for covered OPD services provided on or after January 1, 2009 and before January 1, 2010, under the specific circumstances outlined in the statute. Therefore, sections 1833(t)(D)(i)(II) and (III) of the Act specifically expire TOPs payment to these categories of hospitals for services furnished on and after January 1, 2010. Accordingly, in CY 2010, neither rural SCHs nor rural hospitals with less than 100 beds will receive payment at whichever is greater, the TOPs payment in place for CY 2009 or payment for CY 2010, which includes the rural adjustment for rural SCHs, because sections 1833(t)(7)(D)(i)(II) and (III) of the Act expire TOPS payments as explained above. As we indicate above, we intend to reassess the 7.1 percent rural adjustment in the near future by examining differences between urban and rural hospitals' costs using updated claims, cost reports, and provider information.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal, without modification, to apply the 7.1 percent payment adjustment to rural SCHs for most services paid under the CY 2010 OPPS, excluding drugs, biologicals, and devices paid under the pass-through payment policy, and items paid at charges adjusted to cost. We also are making a technical correction to the heading of § 419.70(d)(5) to correctly identify the policy described in the regulation text of § 419.70(d)(5). The paragraph heading indicates that the adjustment applies to small SCHs, rather than to rural SCHs.

F. Hospital Outpatient Outlier Payments

1. Background

Currently, the OPPS pays outlier payments on a service-by-service basis. For CY 2009, the outlier threshold is met when the cost of furnishing a service or procedure by a hospital exceeds 1.75 times the APC payment amount and exceeds the APC payment rate plus a $1,800 fixed-dollar threshold. We introduced a fixed-dollar threshold in CY 2005 in addition to the traditional multiple threshold in order to better target outliers to those high cost and complex procedures where a very costly service could present a hospital with significant financial loss. If the cost of a service meets both of these conditions, the multiple threshold and the fixed-dollar threshold, the outlier payment is calculated as 50 percent of the amount by which the cost of furnishing the service exceeds 1.75 times the APC payment rate. Before CY 2009, this outlier payment had historically been considered a final payment by longstanding OPPS policy. We implemented a reconciliation process similar to the IPPS outlier reconciliation process for cost reports with cost reporting periods beginning on or after January 1, 2009 (73 FR 68594 through 68599).

It has been our policy for the past several years to report the actual amount of outlier payments as a percent of total spending in the claims being used to model the proposed OPPS. We previously estimated that CY 2008 outlier payments were approximately 0.73 percent of the total CY 2008 OPPS payments (73 FR 68592). Our current estimate of total outlier payments as a percent of total CY 2008 OPPS payment, using CY 2008 claims processed through June 30, 2009, and the revised OPPS expenditure estimate for the 2009 Trustees Report, is approximately 1.2 percent of the total aggregated OPPS payments. Therefore, for CY 2008, we estimate that we paid approximately 0.2 percent more than the CY 2008 outlier target of 1.0 percent of total aggregated OPPS payments.

As explained in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594), we set our projected target for aggregate outlier payments at 1.0 percent of the aggregate total payments under the OPPS for CY 2009. The outlier thresholds were set so that estimated CY 2009 aggregate outlier payments would equal 1.0 percent of the total aggregated payments under the OPPS. Using our final rule CY 2008 claims data and CY 2009 payment rates, we currently estimate that the aggregate outlier payments for CY 2009 would be approximately 1.03 percent of the total CY 2009 OPPS payments. The difference between 1.0 percent and 1.03 percent is reflected in the regulatory impact analysis in section XXI.B. of this final rule with comment period. We note that we provide estimated CY 2010 outlier payments for hospitals and CMHCs with claims included in the claims data that we used to model impacts in the Hospital-Specific Impacts—Provider-Specific Data file on the CMS Web site at: http://www.cms.hhs.gov/​HospitalOutpatientPPS/​.

2. Outlier Calculation

In the CY 2010 OPPS/ASC proposed rule (74 FR 35296), we proposed to continue our policy of estimating outlier payments to be 1.0 percent of the estimated aggregate total payments under the OPPS in CY 2010. We proposed that a portion of that 1.0 percent, specifically 0.02 percent, would be allocated to CMHCs for PHP outlier payments. This is the amount of estimated outlier payments that would result from the proposed CMHC outlier threshold as a proportion of total estimated outlier payments. As discussed in section X.C. of this final rule with comment period, for CMHCs, we proposed that if a CMHC's cost for partial hospitalization services, paid under either APC 0172 (Level I Partial Start Printed Page 60427Hospitalization (3 services)) or APC 0173 (Level II Partial Hospitalization (4 or more services)), exceeds 3.40 times the payment for APC 0173, the outlier payment would be calculated as 50 percent of the amount by which the cost exceeds 3.40 times the APC 0173 payment rate. For further discussion of CMHC outlier payments, we refer readers to section X.C. of this final rule with comment period.

To ensure that the estimated CY 2010 aggregate outlier payments would equal 1.0 percent of estimated aggregate total payments under the OPPS, we proposed that the hospital outlier threshold be set so that outlier payments would be triggered when the cost of furnishing a service or procedure by a hospital exceeds 1.75 times the APC payment amount and exceeds the APC payment rate plus a $2,225 fixed-dollar threshold. This proposed threshold reflected the methodology discussed below in this section, as well as the proposed APC recalibration for CY 2010.

We calculated the fixed-dollar threshold for the CY 2010 OPPS/ASC proposed rule using largely the same methodology as we did in CY 2009 (73 FR 41462). For purposes of estimating outlier payments for the CY 2010 OPPS/ASC proposed rule, we used the hospital-specific overall ancillary CCRs available in the April 2009 update to the Outpatient Provider-Specific File (OPSF). The OPSF contains provider-specific data, such as the most current CCR, which are maintained by the Medicare contractors and used by the OPPS Pricer to pay claims. The claims that we use to model each OPPS update lag by 2 years. For the CY 2010 OPPS/ASC proposed rule, we used CY 2008 claims to model the CY 2010 OPPS. In order to estimate the CY 2010 hospital outlier payments for the CY 2010 OPPS/ASC proposed rule, we inflated the charges on the CY 2008 claims using the same inflation factor of 1.1511 that we used to estimate the IPPS fixed-dollar outlier threshold for the FY 2010 IPPS/LTCH PPS proposed rule (74 FR 24245). For 1 year, the inflation factor we used was 1.0729. The methodology for determining this charge inflation factor was discussed in the FY 2010 IPPS/LTCH PPS proposed rule (74 FR 24245). As we stated in the CY 2005 OPPS final rule with comment period (69 FR 65845), we believe that the use of this charge inflation factor is appropriate for the OPPS because, with the exception of the routine service cost centers, hospitals use the same cost centers to capture costs and charges across inpatient and outpatient services.

As noted in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68011), we are concerned that we could systematically overestimate the OPPS hospital outlier threshold if we did not apply a CCR inflation adjustment factor. Therefore, we proposed to apply the same CCR inflation adjustment factor that we proposed to apply for the FY 2010 IPPS outlier calculation to the CCRs used to simulate the CY 2010 OPPS outlier payments that determine the fixed-dollar threshold. Specifically, for CY 2010, we proposed to apply an adjustment of 0.9840 to the CCRs that were in the April 2009 OPSF to trend them forward from CY 2009 to CY 2010. The methodology for calculating this adjustment is discussed in the FY 2010 IPPS/LTCH PPS proposed rule (74 FR 24245 through 24247) and the FY 2010 IPPS/LTCH PPS final rule (74 FR 44007 through 44011).

Therefore, to model hospital outlier payments for the CY 2010 OPPS/ASC proposed rule, we applied the overall CCRs from the April 2009 OPSF file after adjustment (using the proposed CCR inflation adjustment factor of 0.9840 to approximate CY 2010 CCRs) to charges on CY 2008 claims that were adjusted (using the proposed charge inflation factor of 1.1511 to approximate CY 2010 charges). We simulated aggregated CY 2010 hospital outlier payments using these costs for several different fixed-dollar thresholds, holding the 1.75 multiple threshold constant and assuming that outlier payment would continue to be made at 50 percent of the amount by which the cost of furnishing the service would exceed 1.75 times the APC payment amount, until the total outlier payments equaled 1.0 percent of aggregated estimated total CY 2010 OPPS payments. We estimated that a proposed fixed-dollar threshold of $2,225, combined with the proposed multiple threshold of 1.75 times the APC payment rate, would allocate 1.0 percent of aggregated total OPPS payments to outlier payments. We proposed to continue to make an outlier payment that equals 50 percent of the amount by which the cost of furnishing the service exceeds 1.75 times the APC payment amount when both the 1.75 multiple threshold and the proposed fixed-dollar $2,225 threshold are met. For CMHCs, if a CMHC's cost for partial hospitalization services, paid under either APC 0172 or APC 0173, exceeds 3.40 times the payment for APC 0173, the outlier payment would be calculated as 50 percent of the amount by which the cost exceeds 3.40 times the APC 0173 payment rate.

Section 1833(t)(17)(A) of the Act, which applies to hospitals as defined under section 1886(d)(1)(B) of the Act, requires that hospitals that fail to report data required for the quality measures selected by the Secretary, in the form and manner required by the Secretary under 1833(t)(17)(B) of the Act, incur a 2.0 percentage point reduction to their OPD fee schedule increase factor, that is, the annual payment update factor. The application of a reduced OPD fee schedule increase factor results in reduced national unadjusted payment rates that will apply to certain outpatient items and services furnished by hospitals that are required to report outpatient quality data and that fail to meet the HOP QDRP requirements. For hospitals that fail to meet the HOP QDRP requirements, we proposed to continue our policy that we implemented in CY 2009 that the hospitals' costs would be compared to the reduced payments for purposes of outlier eligibility and payment calculation. For more information on the HOP QDRP, we refer readers to section XVI. of this final rule with comment period.

Comment: Several commenters supported the proposal to increase the outlier fixed-dollar threshold to maintain a target outlier spending percentage of 1.0 percent. One commenter requested that CMS not overestimate the fixed-dollar outlier threshold by decreasing the CY 2010 proposed threshold proportionally to only account for the amount Medicare paid in excess of the 1 percent target outlier percentage in CY 2009. A few commenters suggested that the target outlier spending percentage be raised. One commenter recommended that the target outlier spending percentage be raised to maintain the $1,800 fixed-dollar threshold that is in effect for CY 2009. Another commenter requested that CMS increase the amount of outlier payment from 50 percent to 80 percent of the difference between the OPPS payment and the estimated provider cost for the service to make OPPS outlier policy more consistent with IPPS outlier policy. One commenter expressed concern that changes in outlier payments disproportionately affected the safety net hospitals. One commenter supported the proposal to use the same assumptions regarding charge inflation and CCR inflation as under the IPPS.

Response: We appreciate the commenters' support regarding the development of the OPPS outlier policy. We are not raising the threshold to recover the 0.03 percent of OPPS payment that we estimate was paid in Start Printed Page 60428addition to the target outlier percent of 1 percent for CY 2009 because we do not adjust the fixed-dollar threshold in future years for either paying too much or too little in outlier payments in past years. We are not increasing the percent of total OPPS payment that we attribute to outlier payments, either for general purposes or to maintain the $1,800 threshold for CY 2010, because we continue to believe that it is appropriate to maintain the target outlier percentage of 1 percent of total payment under the OPPS and to have a fixed-dollar threshold so that OPPS outlier payments are made only where the hospital would experience a significant loss for supplying a particular service. Similarly, we are not increasing the outlier payment percentage from 50 percent to 80 percent of the difference between the amount by which the cost of furnishing the service exceeds 1.75 times the APC payment rate because we do not believe that hospitals carry the same level of risk when they furnish outpatient hospital services as when they furnish inpatient hospital services. OPPS outlier payments are intended to protect hospitals from excessive losses when providing an extraordinarily costly service, and we believe that the potential for loss when furnishing OPPS services is limited. Payment bundles under the OPPS are small relative to those under the IPPS, and the OPPS pays separately for many services. The OPPS would pay hospitals for many individual services provided to a very costly patient reducing their financial risk. Patients for whom a hospital may incur extraordinary costs for providing individual OPPS services would usually require hospital admission. As described above, outlier payments are designed to protect hospitals from financial risk in providing services to costly patients, and are not designed to affect any specific hospital classes, such as safety net hospitals. With regard to the application of charge inflation factors, we agree that the charge inflation factors that apply to inpatient hospitals services are equally applicable to services provided under the OPPS. Therefore, as specified below, we are applying the charge inflation factors that were used to calculate the outlier fixed-dollar threshold for the IPPS in the calculation of the fixed-dollar threshold for the CY 2010 OPPS.

Comment: Several commenters asked that CMS eliminate outlier payments for CMHCs and use the funds allocated to outlier payments for CMHCs to increase payments for services provided by CMHCs.

Response: Outlier payments to CMHCs are discussed in section X.C. of this final rule with public comment. We respond to this comment as part of that discussion.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal for the outlier calculation, without modification, as outlined below.

3. Final Outlier Calculation

For CY 2010, we are applying the overall CCRs from the July 2009 OPSF file with a CCR adjustment factor of 0.988 to approximate CY 2010 CCRs to charges on the final CY 2008 claims that were adjusted to approximate CY 2010 charges (using the final 2-year charge inflation factor of 1.1418). We simulated aggregated CY 2010 hospital outlier payments using these costs for several different fixed-dollar thresholds, holding the 1.75 multiple threshold constant and assuming that outlier payment would continue to be made at 50 percent of the amount by which the cost of furnishing the service would exceed 1.75 times the APC payment amount, until the total outlier payments equaled 1.0 percent of aggregated estimated total CY 2010 OPPS payments. We estimate that a fixed-dollar threshold of $2,175, combined with the multiple threshold of 1.75 times the APC payment rate, will allocate 1.0 percent of aggregated total OPPS payments to outlier payments.

In summary, for CY 2010, we will continue to make an outlier payment that equals 50 percent of the amount by which the cost of furnishing the service exceeds 1.75 times the APC payment amount when both the 1.75 multiple threshold and the final fixed-dollar $2,175 threshold are met. For CMHCs, if a CMHC's cost for PHP services, paid under either APC 0172 or APC 0173, exceeds 3.40 times the payment for APC 0173, the outlier payment is calculated as 50 percent of the amount by which the cost exceeds 3.40 times the APC 0173 payment rate. We estimate that this threshold will allocate 0.03 percent of outlier payments to CMHCs for PHP outlier payments.

4. Outlier Reconciliation

In the CY 2009 OPPS/ASC final rule with comment period (73 CFR 68599), we adopted as final policy a process to reconcile hospital or CMHC outlier payments at cost report settlement for services furnished during cost reporting periods beginning in CY 2009. OPPS outlier reconciliation ensures accurate outlier payments for those facilities whose CCRs fluctuate significantly relative to the CCRs of other facilities, and who receive a significant amount of outlier payments. OPPS outlier reconciliation thresholds are provided in the Medicare Claims Processing Manual (Pub. 100-4), Chapter 4, Section 10.7.2.1, reevaluated annually, and modified if necessary. When the cost report is settled, reconciliation of outlier payments will be based on the hospital-specific overall ancillary CCR, calculated as the ratio of costs and charges computed from the cost report at the time the cost report coinciding with the service dates is settled. Reconciling outlier payments ensures that the outlier payments made are appropriate and that final outlier payments reflect the most accurate cost data. In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68599), we also finalized a proposal to adjust the amount of final outlier payments determined during reconciliation for the time value of money. The OPPS outlier reconciliation process will require recalculating outlier payments for individual claims in order to accurately determine the net effect of a change in a hospital's or CMHC's overall CCR on the facility's total outlier payments. For cost reporting periods beginning in CY 2009, Medicare contractors will begin to identify cost reports that require outlier reconciliation as a component of cost report settlement. At this time, CMS continues to develop a method for reexamining claims to calculate the change in total outlier payments in order to reconcile outlier payments for these cost reports.

As under the IPPS, we do not adjust the fixed-dollar threshold or amount of total OPPS payment set aside for outlier payments for reconciliation activity. The predictability of the fixed-dollar threshold is an important component of a prospective payment system. We do not adjust the prospectively set outlier threshold for the amount of outlier payment reconciled at cost report settlement because such action would be contrary to the prospective nature of the system. Our outlier threshold calculation assumes that overall ancillary CCRs accurately estimate hospital costs based on the information available to us at the time we set the prospective fixed-dollar outlier threshold. For these reasons, we are not incorporating any assumptions about the effects of reconciliation into our calculation of the OPPS fixed-dollar outlier threshold.

Comment: A number of commenters asked that CMS report the amount of outlier reconciliation activity, including aggregate amounts recovered by provider type and region. They suggested that, if the reconciled amounts are significant, these amounts Start Printed Page 60429should be factored into the annual fixed-dollar outlier threshold. Several commenters supported the current reconciliation thresholds identified in the CMS manual (Medicare Claims Processing Manual (Pub. 100-04), Chapter 4, Section 10.7.2.1). One commenter asked that CMS apply the outlier reconciliation thresholds established in manual instructions to the claims used for estimating outlier payment and the fixed-dollar threshold to achieve the most accurate estimates possible.

Response: We revised Worksheet E, Part B, of the Medicare hospital cost report form CMS 2552-10 to collect OPPS outlier reconciliation information for cost reports beginning on or after January 1, 2009. This information will be available to the public through the Hospital Cost Report Information System (HCRIS). We do not expect to take outlier reconciliation amounts into account in our projections of future outlier payments. We believe that the reconciliation CCR and outlier payment thresholds implemented in the final rule (73 CFR 68599) are generous and that most hospitals will not be subject to outlier reconciliation upon cost report settlement. Further, it is difficult to predict the specific hospitals that will have CCRs and outlier payments reconciled in any given year. We also note that reconciliation occurs because hospitals' actual CCRs for the cost reporting period are different than the interim CCRs used to calculate outlier payment when a bill is processed. Our fixed-dollar threshold calculation assumes that CCRs accurately estimate hospital costs based on information available to us at the time we set the prospective fixed-dollar outlier threshold. We do not believe that estimating the fixed-dollar threshold to estimate the amount of payment that may be recovered as a result of outlier reconciliation in any given year would necessarily result in a more accurate estimate of outlier payments or a more accurate calculation of the fixed-dollar threshold for outlier payment for the prospective payment year. For these reasons, we will not make any assumptions about the amount of anticipated reconciliation of outlier payments on the outlier threshold calculation.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal, without modification, for an OPPS outlier reconciliation policy. We are implementing the outlier reconciliation policy for each hospital and CMHC for services furnished during cost reporting periods beginning in CY 2010, and we are including an adjustment for the time value of money.

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

The basic methodology for determining prospective payment rates for HOPD services under the OPPS is set forth in existing regulations at 42 CFR part 419, subparts C and D. The payment rate for most services and procedures for which payment is made under the OPPS is the product of the conversion factor calculated in accordance with section II.B. of this final rule with comment period and the relative weight determined under section II.A. of this final rule with comment period. Therefore, the final national unadjusted payment rate for most APCs contained in Addendum A to this final rule with comment period and for most HCPCS codes to which separate payment under the OPPS has been assigned in Addendum B to this final rule with comment period was calculated by multiplying the final CY 2010 scaled weight for the APC by the final CY 2010 conversion factor.

We note that section 1833(t)(17) of the Act, which applies to hospitals as defined under section 1886(d)(1)(B) of the Act, requires that hospitals that fail to submit data required to be submitted on quality measures selected by the Secretary, in the form and manner and at a time specified by the Secretary, receive a 2.0 percentage point reduction to their OPD fee schedule increase factor, that is, the annual payment update factor. The application of a reduced OPD fee schedule increase factor results in reduced national unadjusted payment rates that apply to certain outpatient items and services provided by hospitals that are required to report outpatient quality data and that fail to meet the Hospital Outpatient Quality Data Reporting Program (HOP QDRP) requirements. For further discussion of the payment reduction for hospitals that fail to meet the requirements of the HOP QDRP, we refer readers to section XVI.D. of this final rule with comment period.

We demonstrate in the steps below how to determine the APC payments that would be made in a calendar year under the OPPS to a hospital that fulfills the HOP QDRP requirements and to a hospital that fails to meet the HOP QDRP requirements for a service that has any of the following status indicator assignments: “P,” “Q1,” “Q2,” “Q3,” “R,” “S,” “T,” “U,” “V,” or “X” (as defined in Addendum D1 to this final rule with comment period), in a circumstance in which the multiple procedure discount does not apply, the procedure is not bilateral, and conditionally packaged services (status indicator of “Q1” and “Q2”) qualify for separate payment. We note that blood and blood products with status indicator “R” are not subject to wage adjustment but are subject to reduced payments when a hospital fails to meet the HOP QDRP requirements, as outlined in the steps and examples below.

Individual providers interested in calculating the payment amount that they would receive for a specific service from the national unadjusted payment rates presented in Addenda A and B to this final rule with comment period should follow the formulas presented in the following steps. For purposes of the payment calculations below, we refer to the national unadjusted payment rate for hospitals that meet the requirements of the HOP QDRP as the “full” national unadjusted payment rate. We refer to the national unadjusted payment rate for hospitals that fail to meet the requirements of the HOP QDRP as the “reduced” national unadjusted payment rate. The reduced national unadjusted payment rate is calculated by multiplying the reporting ratio of 0.98 times the “full” national unadjusted payment rate. The national unadjusted payment rate used in the calculations below is either the full national unadjusted payment rate or the reduced national unadjusted payment rate, depending on whether the hospital met its HOP QDRP requirements in order to receive the full CY 2010 OPPS increase factor.

Step 1. Calculate 60 percent (the labor-related portion) of the national unadjusted payment rate. Since the initial implementation of the OPPS, we have used 60 percent to represent our estimate of that portion of costs attributable, on average, to labor. We refer readers to the April 7, 2000 OPPS final rule with comment period (65 FR 18496 through 18497) for a detailed discussion of how we derived this percentage. We confirmed that this labor-related share for hospital outpatient services is still appropriate during our regression analysis for the payment adjustment for rural hospitals in the CY 2006 OPPS final rule with comment period (70 FR 68553).

The formula below is a mathematical representation of Step 1 and identifies the labor-related portion of a specific payment rate for a specific service.

X is the labor-related portion of the national unadjusted payment rate.

X = .60 * (national unadjusted payment rate)

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Step 2. Determine the wage index area in which the hospital is located and identify the wage index level that applies to the specific hospital. The wage index values assigned to each area reflect the geographic statistical areas (which are based upon OMB standards) to which hospitals are assigned for FY 2010 under the IPPS, reclassifications through the MGCRB, section 1886(d)(8)(B) “Lugar” hospitals, reclassifications under section 1886(d)(8)(E) of the Act, as defined in § 412.103 of the regulations and hospitals designated as urban under section 601(g) of Public Law 98-21. We note that the reclassifications of hospitals under section 508 of Public Law 108-173, as extended by section 124 of Public Law 110-275, expired on September 30, 2009, and will not be applicable under the IPPS for FY 2010. Therefore, these reclassifications will not apply to the CY 2010 OPPS. For further discussion of the changes to the FY 2010 IPPS wage indices, as applied to the CY 2010 OPPS, we refer readers to section II.C. of this final rule with comment period. The wage index values include the occupational mix adjustment described in section II.C. of this final rule with comment period that was developed for the FY 2010 IPPS final payment rates published in the Federal Register on August 27, 2009 (74 FR 43827).

Step 3. Adjust the wage index of hospitals located in certain qualifying counties that have a relatively high percentage of hospital employees who reside in the county, but who work in a different county with a higher wage index, in accordance with section 505 of Public Law 108-173. Addendum L to this final rule with comment period contains the qualifying counties and the final wage index increase developed for the FY 2010 IPPS and published as Table 4J in the FY 2010 IPPS final rule (74 FR 44118 through 44125), as corrected in the Federal Register on October 2, 2009 (74 FR 51506) This step is to be followed only if the hospital is not reclassified or redesignated under section 1886(d)(8) or section 1886(d)(10) of the Act.

Step 4. Multiply the applicable wage index determined under Steps 2 and 3 by the amount determined under Step 1 that represents the labor-related portion of the national unadjusted payment rate.

The formula below is a mathematical representation of Step 4 and adjusts the labor-related portion of the national payment rate for the specific service by the wage index.

Xais the labor-related portion of the national unadjusted payment rate (wage adjusted).

Xa= .60 * (national unadjusted payment rate) * applicable wage index.

Step 5. Calculate 40 percent (the nonlabor-related portion) of the national unadjusted payment rate and add that amount to the resulting product of Step 4. The result is the wage index adjusted payment rate for the relevant wage index area.

The formula below is a mathematical representation of Step 5 and calculates the remaining portion of the national payment rate, the amount not attributable to labor, and the adjusted payment for the specific service.

Y is the nonlabor-related portion of the national unadjusted payment rate.

Y = .40 * (national unadjusted payment rate)

Adjusted Medicare Payment = Y + Xa

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

The formula below is a mathematical representation of Step 6 and applies the rural adjustment for rural SCHs.

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

We have provided examples below of the calculation of both the full and reduced national unadjusted payment rates that would apply to certain outpatient items and services performed by hospitals that meet and that fail to meet the HOP QDRP requirements, using the steps outlined above. For purposes of this example, we use a provider that is located in Wayne, New Jersey that is assigned to CBSA 35644. This provider bills one service that is assigned to APC 0019 (Level I Excision/Biopsy). The CY 2010 full national unadjusted payment rate for APC 0019 is $294.06. The reduced national unadjusted payment rate for a hospital that fails to meet the HOP QDRP requirements is $288.17. This reduced rate is calculated by multiplying the reporting ratio of 0.98 by the full unadjusted payment rate for APC 0019.

The FY 2010 wage index for a provider located in CBSA 35644 in New Jersey is 1.3005. The labor-related portion of the full national unadjusted payment is $229.45 (.60 * $294.06 * 1.3005). The labor-related portion of the reduced national unadjusted payment is $224.85 (.60 * $288.17 * 1.3005). The nonlabor-related portion of the full national unadjusted payment is $117.62 (.40 * $294.06). The nonlabor-related portion of the reduced national unadjusted payment is $115.26 (.40 * $288.17). The sum of the labor-related and nonlabor-related portions of the full national adjusted payment is $347.07 ($229.45 + $117.62). The sum of the reduced national adjusted payment is $340.11 ($224.85 + $115.26).

We did not receive any public comments concerning our proposed methodology for calculating an adjusted payment from the national unadjusted Medicare payment amount for CY 2010. Therefore, we are finalizing our proposed CY 2010 methodology, without modification.

H. Beneficiary Copayments

1. Background

Section 1833(t)(3)(B) of the Act requires the Secretary to set rules for determining the unadjusted copayment amounts to be paid by beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of the Act specifies that the Secretary must reduce the national unadjusted copayment amount for a covered OPD service (or group of such services) furnished in a year in a manner so that the effective copayment rate (determined on a national unadjusted basis) for that service in the year does not exceed a specified percentage. As specified in section 1833(t)(8)(C)(ii)(V) of the Act, for all services paid under the OPPS in CY 2010, and in calendar years thereafter, the percentage is 40 percent of the APC payment rate.

Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered OPD service (or group of such services) furnished in a year, the national unadjusted copayment amount cannot be less than 20 percent of the OPD fee schedule amount. Sections 1834(d)(2)(C)(ii) and (d)(3)(C)(ii) of the Act further require that the copayment for screening flexible sigmoidoscopies and screening colonoscopies be equal to 25 percent of the payment amount. Since the beginning of the OPPS, we have applied the 25-percent copayment to screening flexible sigmoidoscopies and screening colonoscopies.

2. Copayment Policy

In the CY 2010 OPPS/ASC proposed rule (74 FR 35298), for CY 2010, we proposed to determine copayment amounts for new and revised APCs using the same methodology that we implemented beginning in CY 2004. (We refer readers to the November 7, Start Printed Page 604312003 OPPS final rule with comment period (68 FR 63458)). In addition, we proposed to use the same standard rounding principles that we have historically used in instances where the application of our standard copayment methodology would result in a copayment amount that is less than 20 percent and cannot be rounded, under standard rounding principles, to 20 percent. (We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66687) in which we discuss our rationale for applying these rounding principles.) The national unadjusted copayment amounts for services payable under the OPPS that will be effective January 1, 2010, are shown in Addenda A and B to this final rule with comment period. As discussed in section XVI.D. of this final rule with comment period, as we proposed, we are providing that, for CY 2010, the Medicare beneficiary's minimum unadjusted copayment and national unadjusted copayment for a service to which a reduced national unadjusted payment rate applies will equal the product of the reporting ratio and the national unadjusted copayment, or the product of the reporting ratio and the minimum unadjusted copayment, respectively, for the service.

Comment: One commenter recommended that CMS continue its educational outreach and keep Medicare beneficiaries informed about the benefits of supplemental/secondary insurance in reducing their out-of-pocket costs for orthopedic procedures.

Response: We appreciate the commenter's support for our educational efforts on the availability of supplemental/secondary insurance and refer beneficiaries seeking information about their Medicare benefits and supplemental/secondary insurance coverage to the Web site at: http://www.medicare.gov.

After consideration of the public comments we received, we are finalizing our CY 2010 proposal, without modification, for determining APC copayment amounts.

3. Calculation of an Adjusted Copayment Amount for an APC Group

Individuals interested in calculating the national copayment liability for a Medicare beneficiary for a given service provided by a hospital that met or failed to meet its HOP QDRP requirements should follow the formulas presented in the following steps.

Step 1. Calculate the beneficiary payment percentage for the APC by dividing the APC's national unadjusted copayment by its payment rate. For example, using APC 0019, $64.51 is 22 percent of the full national unadjusted payment rate of $294.06. For APCs with only a minimum unadjusted copayment in Addendum A and B of this final rule with comment period, identify a beneficiary payment percentage of 20 percent.

The formula below is a mathematical representation of Step 1 and calculates national copayment as a percentage of national payment for a given service.

B is the beneficiary payment percentage.

B = National unadjusted copayment for APC/national unadjusted payment rate for APC

Step 2. Calculate the appropriate wage-adjusted payment rate for the APC for the provider in question, as indicated in Steps 2 through 4 under section II.G. of this final rule with comment period. Calculate the rural adjustment for eligible providers as indicated in Step 6 under section II.G. of this final rule with comment period.

Step 3. Multiply the percentage calculated in Step 1 by the payment rate calculated in Step 2. The result is the wage-adjusted copayment amount for the APC.

The formula below is a mathematical representation of Step 3 and applies the beneficiary percentage to the adjusted payment rate for a service calculated under section II.G. of this final rule with comment period, with and without the rural adjustment, to calculate the adjusted beneficiary copayment for a given service.

Wage-adjusted copayment amount for the APC = Adjusted Medicare Payment * B

Wage-adjusted copayment amount for the APC (SCH or EACH) = (Adjusted Medicare Payment * 1.071) * B

Step 4. For a hospital that failed to meet its HOP QDRP requirements, multiply the copayment calculated in Step 3 by the reporting ratio of 0.98.

The unadjusted copayments for services payable under the OPPS that will be effective January 1, 2010, are shown in Addenda A and B to this final rule with comment period. We note that the national unadjusted payment rates and copayment rates shown in Addenda A and B to this final rule with comment period reflect the full market basket conversion factor increase, as discussed in section XVI.D. of this final rule with comment period.

III. OPPS Ambulatory Payment Classification (APC) Group Policies

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

CPT and Level II HCPCS codes are used to report procedures, services, items, and supplies under the hospital OPPS. Specifically, CMS recognizes the following codes on OPPS claims: (1) Category I CPT codes, which describe medical services and procedures; (2) Category III CPT codes, which describe new and emerging technologies, services, and procedures; and (3) Level II HCPCS codes, which are used primarily to identify products, supplies, temporary procedures, and services not described by CPT codes. CPT codes are established by the AMA and the Level II HCPCS codes are established by the CMS HCPCS Workgroup. These codes are updated and changed throughout the year. CPT and HCPCS code changes that affect the OPPS are published both through the annual rulemaking cycle and through the OPPS quarterly update Change Requests (CRs). CMS releases new Level II HCPCS codes to the public or recognizes the release of new CPT codes by the AMA and makes these codes effective (that is, the codes can be reported on Medicare claims) outside of the formal rulemaking process via OPPS quarterly update CRs. This quarterly process offers hospitals access to codes that may more accurately describe items or services furnished and/or provides payment or more accurate payment for these items or services in a timelier manner than if CMS waited for the annual rulemaking process. We solicit comments on these new codes and finalize our proposals related to these codes through our annual rulemaking process.

We note that we sought public comments in the CY 2009 OPPS/ASC final rule with comment period on the new CPT and Level II HCPCS codes that were effective January 1, 2009. We also sought public comments in the CY 2009 OPPS/ASC final rule with comment period on the new Level II HCPCS codes effective October 1, 2008. These new codes with an effective date of October 1, 2008 or January 1, 2009 were flagged with comment indicator “NI” (New code, interim APC assignment; comments will be accepted on the interim APC assignment for the new code) in Addendum B to the CY 2009 OPPS/ASC final rule with comment period to indicate that we were assigning them an interim payment status and an APC and payment rate, if applicable, which were subject to public comment following publication of the CY 2009 OPPS/ASC final rule with comment period. Summaries of public comments on the codes flagged with comment indicator “NI” in the CY 2009 OPPS/ASC final rule with comment period and our responses are included in the sections of this final rule with Start Printed Page 60432comment period that are relevant to the services described by those codes.

In Table 13 of the CY 2010 OPPS/ASC proposed rule (74 FR 35299), which is reproduced as Table 18 in this final rule with comment period, we summarized our process for updating codes through our OPPS quarterly update CRs, seeking public comment, and finalizing their treatment under the OPPS.

Table 18—Comment Timeframe for New or Revised HCPCS Codes

OPPS quarterly update CRType of codeEffective dateComments soughtWhen finalized
April 1, 2009Level II HCPCS CodesApril 1, 2009CY 2010 OPPS/ASC proposed ruleCY 2010 OPPS/ASC final rule with comment period.
July 1, 2009Level II HCPCS CodesJuly 1, 2009CY 2010 OPPS/ASC proposed ruleCY 2010 OPPS/ASC final rule with comment period.
Category I (certain vaccine codes) and Category III CPT CodesJuly 1, 2009CY 2010 OPPS/ASC proposed ruleCY 2010 OPPS/ASC final rule with comment period.
October 1, 2009Level II HCPCS CodesOctober 1, 2009CY 2010 OPPS/ASC final rule with comment periodCY 2011 OPPS/ASC final rule with comment period.
January 1, 2010Level II HCPCS CodesJanuary 1, 2010CY 2010 OPPS/ASC final rule with Comment PeriodCY 2011 OPPS/ASC final rule with comment period.
Category I and Category III CPT CodesJanuary 1, 2010CY 2010 OPPS/ASC final rule with comment periodCY 2011 OPPS/ASC final rule with comment period.

1. Treatment of New Level II HCPCS Codes and Category I CPT Vaccine Codes and Category III CPT Codes

In the April 1 and July 1 CRs for CY 2009, we made effective a total of 13 new Level II HCPCS codes that were not addressed in the CY 2009 OPPS/ASC final rule with comment period that updated the OPPS and we allowed separate payment for 12 of these new codes. Through the April 1, 2009 CR, we also changed the OPPS status indicator for one existing Level II HCPCS code from the interim status indicator designated in the CY 2009 OPPS/ASC final rule with comment period to a status indicator that allowed separate pass-through payment for this code. In addition to the changes for Level II HCPCS codes, we made effective 5 new Category I vaccine and Category III CPT codes that were not addressed in the CY 2009 OPPS/ASC final rule with comment period that updated the OPPS and we allowed separate payment for 3 of these new codes.

Through the April 2009 OPPS quarterly update CR (Transmittal 1702, Change Request 6416, dated March 13, 2009), we allowed separate payment for a total of 2 additional Level II HCPCS codes, specifically existing HCPCS code C9247 (Iobenguane, I-123, diagnostic, per study dose, up to 10 millicuries) and new HCPCS code C9249 (Injection, certolizumab pegol, 1 mg). HCPCS code C9249, which received separate payment as a result of its pass-through status under the OPPS, was made effective on April 1, 2009. HCPCS code C9247 was released January 1, 2009 through the January 2009 OPPS quarterly update CR (Transmittal 1657, Change Request 6320, dated December 31, 2008). From January 1, 2009 through March 31, 2009, HCPCS code C9247 was packaged under the OPPS and assigned status indicator “N” (Items and Services Packaged into APC Rates). We note that between January 1, 2009 through March 31, 2009, HCPCS code C9247 was recognized as a nonpass-through diagnostic radiopharmaceutical. Because nonpass-through diagnostic radiopharmaceuticals are packaged under the OPPS, there was no separate APC payment for HCPCS code C9247 from January 1, 2009 through March 31, 2009. However, effective April 1, 2009, HCPCS code C9247 was allowed separate pass-through payment and its status indicator was revised from “N” to “G” (Pass-Through Drugs and Biologicals).

In the CY 2010 OPPS/ASC proposed rule, we solicited public comments on the status indicators and APC assignments of HCPCS codes C9247 and C9249, which were listed in Table 14 of that proposed rule (74 FR 35301) and now appear in Table 19 of this final rule with comment period.

We did not receive any public comments on the proposed APC assignments and status indicators for HCPCS codes C9247 and C9249. However, for CY 2010, the HCPCS Workgroup replaced both HCPCS C-codes with permanent HCPCS codes. Specifically, C9247 was replaced with A9582 (Iodine I-123 iobenguane, diagnostic, per study dose, up to 15 millicuries) and C9249 was replaced with J0718 (Injection, certolizumab pegol, 1 mg). Consistent with our general policy of using permanent HCPCS codes if appropriate rather than HCPCS C-codes for the reporting of drugs under the OPPS in order to streamline coding, we are showing the replacement HCPCS codes in Table 19 that will replace the HCPCS C-codes effective January 1, 2010. Both HCPCS C-codes will be deleted December 31, 2009. Because HCPCS code J0718 describes the same drug and the same dosage currently designated by HCPCS code C9249 and this drug will continue on pass-through status in CY 2010, we are assigning HCPCS code J0718 the same status indicator and APC as its predecessor C-code, as shown in Table 19. Although the dosage descriptor of HCPCS code A9582 indicates “per study dose, up to 15 millicuries” and the descriptor of its predecessor C-code designates “per study dose, up to 10 millicuries,” because we believe that the reporting of one unit for a study dose would be the same in almost all cases under either HCPCS code, we are assigning HCPCS code A9582 to the same APC as its predecessor C-code, as shown in Table 19. The recommended dose of I-123 iobenguane is 10 millicuries for adult patients, so we expect that hospitals would report 1 unit of new HCPCS code A9582 for the typical dose in CY 2010, just as they would have reported one unit of HCPCS code C9247 previously for the typical dose. We also note this diagnostic radiopharmaceutical will continue on Start Printed Page 60433pass-through status in CY 2010; therefore, its CY 2010 status indicator remains as “G.” Because we did not receive any public comments on the new Level II HCPCS codes that were implemented in April 2009, we are adopting as final, without modification, our proposal to assign the Level II HCPCS codes listed in Table 19 to the APCs and status indicators as proposed for CY 2010.

Table 19 below shows the final APC and status indicator assignments for both HCPCS codes A9582 and J0718.

Table 19—Level II HCPCS Codes WITH A Change in OPPS Status Indicator or Newly Implemented in April 2009

CY 2010 HCPCS codeCY 2009 HCPCS codeCY 2010 long descriptorFinal CY 2010 status indicatorFinal CY 2010 APC
A9582C9247Iodine I-123 iobenguane, diagnostic, per study dose, up to 15 millicuriesG9247
J0718C9249Injection, certolizumab pegol, 1 mgG9249

Through the July 2009 OPPS quarterly update CR (Transmittal 107, Change Request 6492, dated May 22, 2009), which included HCPCS codes that were made effective July 1, 2009, we allowed separate payment for a total of 11 new Level II HCPCS codes for pass-through drugs and biologicals and nonpass-through drugs and nonimplantable biologicals. Specifically, we provided separate payment for HCPCS codes C9250 (Human plasma fibrin sealant, vapor-heated, solvent-detergent (Artiss), 2ml); C9251 (Injection, C1 esterase inhibitor (human), 10 units); C9252 (Injection, plerixafor, 1 mg); C9253 (Injection, temozolomide, 1 mg); C9360 (Dermal substitute, native, non-denatured collagen, neonatal bovine origin (SurgiMend Collagen Matrix), per 0.5 square centimeters); C9361 (Collagen matrix nerve wrap (NeuroMend Collagen Nerve Wrap), per 0.5 centimeter length); C9362 (Porous purified collagen matrix bone void filler (Integra Mozaik Osteoconductive Scaffold Strip), per 0.5 cc); C9363 (Skin substitute, Integra Meshed Bilayer Wound Matrix, per square centimeter); C9364 (Porcine implant, Permacol, per square centimeter); Q2023 (Injection, factor viii (antihemophilic factor, recombinant) (Xyntha), per i.u.); and Q4116 (Skin substitute, Alloderm, per square centimeter).

Although HCPCS code Q4115 (Skin substitute, Alloskin, per square centimeter) was made effective July 1, 2009, because ASP pricing information was not available at the time the code was made effective, the HCPCS code was not paid separately and it was assigned status indicator “M” (Items and Services Not Billable to the Fiscal Intermediary/MAC) in the CY 2010 OPPS/ASC proposed rule (74 FR 35300 through 35301). For the October 2009 OPPS quarterly update, the status indicator for HCPCS code Q4115 was revised from “M” to K” (Nonpass-Through Drugs and Biologicals) effective October 1, 2009 because pricing information was available, and this product was paid separately as a new biological HCPCS code based on the ASP methodology, consistent with the final CY 2009 policy and the final CY 2010 policy for payment of new drug and biological HCPCS codes without pass-through status. The change in status indicator assignment was announced through the October 2009 OPPS quarterly update CR (Transmittal 1803, Change Request 6626, dated August 28, 2009).

In the CY 2010 OPPS/ASC proposed rule, we solicited public comments on the status indicators, APC assignments, and payment rates of these codes, which were listed in Table 15 of that proposed rule (74 FR 35301) and now appear in Table 20 of this final rule with comment period. Because of the timing of the proposed rule, the codes implemented in the July 2009 OPPS update were not included in Addendum B of that proposed rule, while those codes based upon the April 2009 OPPS update were included in Addendum B. In the CY 2009 OPPS/ASC proposed rule, we proposed to assign the new HCPCS codes for CY 2010 to the designated APCs listed in Table 15 for each HCPCS code and incorporate them into our final rule with comment period for CY 2010, which is consistent with our annual APC updating policy.

We did not receive any public comments on the proposed APC assignments, payment rates, and status indicators designated for the codes listed in Table 15 of the proposed rule. However, for CY 2010, the HCPCS Workgroup created permanent HCPCS J-codes for 4 of the 11 separately payable drug codes. Consistent with our general policy of using permanent HCPCS codes if appropriate rather than HCPCS C-codes for the reporting of drugs under the OPPS in order to streamline coding, we are showing the HCPCS J-codes in Table 20 of this final rule with comment period that will replace the HCPCS C-codes effective January 1, 2010. HCPCS code C9251 is replaced with J0598 (Injection, C1 esterase inhibitor (human), 10 units); C9252 with J2562 (Injection, plerixafor, 1 mg); C9253 is replaced with J9328 (Injection, temozolomide, 1 mg); and Q2023 is replaced with J7185 (Injection, factor viii (antihemophilic factor, recombinant) (Xyntha), per i.u.). The HCPCS J-codes describe the same drugs and the same dosages as the HCPCS C-codes that will be deleted December 31, 2009. We note that HCPCS C-codes are temporary national HCPCS codes. To avoid duplication, temporary national HCPCS codes, such as “C,” “G,” “K,” and “Q” codes, are generally deleted once permanent national HCPCS codes are created that describe the same item, service, or procedure. Because three of the four new HCPCS J-codes describe the same drugs and the same dosages that are currently designated by HCPCS codes C9251, C9252, and C9253 and all three of these drugs will continue on pass-through status in CY 2010, we are assigning the HCPCS J-codes to the same APCs and status indicators as their predecessor HCPCS C-codes, as shown in Table 20. That is, HCPCS code J0598 is assigned to the same APC and status indicator as HCPCS code C9251 (APC 9251); HCPCS code J2562 is assigned to APC 9252; and HCPCS J9328 is assigned to APC 9253. Also, we note that, effective January 1, 2010, HCPCS code Q2023 will be replaced with HCPCS code J7185, which has the same descriptor and is assigned to the same APC and status indicator as HCPCS code Q2023.

Because we did not receive any public comments on the new Level II HCPCS codes that were implemented in July 2009, we are adopting as final, without modification, our proposal to assign the Level II HCPCS codes listed in Table 20 to the APCs and status indicators as proposed for CY 2010.Start Printed Page 60434

Table 20—New Level II HCPCS Codes Implemented in July 2009

CY 2010 HCPCS codeCY 2009 HCPCS codeCY 2010 Long descriptorFinal CY 2010 status indicatorFinal CY 2010 APC
C9250C9250Human plasma fibrin sealant, vapor-heated, solvent-detergent (Artiss), 2mlG9250
J0598C9251Injection, C1 esterase inhibitor (human), 10 unitsG9251
J2562C9252Injection, plerixafor, 1 mgG9252
J9328C9253Injection, temozolomide, 1 mgG9253
C9360C9360Dermal substitute, native, non-denatured collagen, neonatal bovine origin (SurgiMend Collagen Matrix), per 0.5 square centimetersG9360
C9361C9361Collagen matrix nerve wrap (NeuroMend Collagen Nerve Wrap), per 0.5 centimeter lengthG9361
C9362C9362Porous purified collagen matrix bone void filler (Integra Mozaik Osteoconductive Scaffold Strip), per 0.5 ccG9362
C9363C9363Skin substitute, Integra Meshed Bilayer Wound Matrix, per square centimeterG9363
C9364C9364Porcine implant, Permacol, per square centimeterG9364
J7185Q2023Injection, factor viii (antihemophilic factor, recombinant) (Xyntha), per i.u.K1268
Q4115Q4115Skin substitute, Alloskin, per square centimeterK1287
Q4116Q4116Skin substitute, Alloderm, per square centimeterK1270

In the CY 2010 OPPS/ASC proposed rule (74 FR 35300), we proposed to continue our established policy of recognizing Category I CPT vaccine codes for which FDA approval is imminent and Category III CPT codes that the AMA releases in January of each year for implementation in July through the OPPS quarterly update process. Under the OPPS, Category I vaccine codes and Category III CPT codes that are released on the AMA Web site in January are made effective in July of the same year through the July OPPS quarterly update CR, consistent with the AMA's implementation date for the codes. Through the July 2009 OPPS quarterly update CR, we allowed separate payment for 3 of the 5 new Category I vaccine and Category III CPT Codes effective July 1, 2009. Specifically, as displayed in Table 16 of the CY 2010 OPPS/ASC proposed rule (74 FR 35301) and reproduced in this final rule with comment period as Table 21, we allowed payment for CPT codes 0199T (Physiologic recording of tremor using accelerometer(s) and gyroscope(s), (including frequency and amplitude) including interpretation and report); 0200T (Percutaneous sacral augmentation (sacroplasty), unilateral injection(s), including the use of a balloon or mechanical device (if utilized), one or more needles); and 0201T (Percutaneous sacral augmentation (sacroplasty), bilateral injections, including the use of a balloon or mechanical device (if utilized), two or more needles). We note that CPT code 0202T (Posterior vertebral joint(s) arthroplasty (e.g., facet joint[s] replacement) including facetectomy, laminectomy, foraminotomy and vertebral column fixation, with or without injection of bone cement, including fluoroscopy, single level, lumbar spine) was assigned status indicator “C” (Inpatient Procedures) because we believe that this procedure may only be safely performed on Medicare beneficiaries in the hospital inpatient setting. In addition, CPT code 90670 (Pneumococcal conjugate vaccine, 13 valent, for intramuscular use), a Category I CPT vaccine code, was assigned status indicator “E” (Items, Codes, and Services not paid by Medicare when submitted on outpatient claims (any outpatient bill type)) because the drug has not yet been approved by the FDA for marketing.

Because the July 2009 OPPS quarterly update CR was issued close to the publication of the CY 2010 OPPS/ASC proposed rule, the Category I vaccine and Category III CPT codes implemented through the July 2009 OPPS quarterly update CR were not be included in Addendum B to the proposed rule, but these codes were listed in Table 16 of the proposed rule. Additionally, we proposed to incorporate them into Addendum B to this CY 2010 OPPS/ASC final rule with comment period, which is consistent with our annual OPPS update policy.

In the CY 2010 OPPS/ASC proposed rule (74 FR 35301), we solicited public comments on the proposed status indicators, APC assignments, and payment rates for the new Category I and III CPT codes. We did not receive any public comments on our proposals for CPT codes 0199T, 0200T, 0201T, 0202T, and 90670. Therefore, we are finalizing our CY 2010 proposals for these codes, without modification. The final CY 2010 status indicators and APC assignments for CPT codes 0199T, 0200T, 0201T, 0202T, and 90670 are listed in Table 21 below, as well as in Addendum B to this final rule with comment period.

Table 21—Category I Vaccine and Category III CPT Codes Implemented in July 2009

CY 2010 HCPCS codeCY 2010 long descriptorFinal CY 2010 status indicatorFinal CY 2010 APC
0199TPhysiologic recording of tremor using accelerometer(s) and gyroscope(s), (including frequency and amplitude) including interpretation and reportS0215
0200TPercutaneous sacral augmentation (sacroplasty), unilateral injection(s), including the use of a balloon or mechanical device (if utilized), one or more needlesT0049
Start Printed Page 60435
0201TPercutaneous sacral augmentation (sacroplasty), bilateral injections, including the use of a balloon or mechanical device (if utilized), two or more needlesT0050
0202TPosterior vertebral joint(s) arthroplasty (e.g., facet joint[s] replacement) including facetectomy, laminectomy, foraminotomy and vertebral column fixation, with or without injection of bone cement, including fluoroscopy, single level, lumbar spineCNot applicable.
90670Pneumococcal conjugate vaccine, 13 valent, for intramuscular useENot applicable.

2. Process for New Level II HCPCS Codes and Category I and Category III CPT Codes for Which We Are Soliciting Public Comments on the CY 2010 OPPS/ASC Final Rule With Comment Period

As has been our practice in the past, we incorporate those new Category I and III CPT codes and new Level II HCPCS codes that are effective January 1 in the final rule with comment period updating the OPPS for the following calendar year. These codes are released to the public via the CMS HCPCS (for Level II HCPCS codes) and AMA Web sites (for CPT codes), and also through the January OPPS quarterly update CRs. In the past, we also have released new Level II HCPCS codes that are effective October 1 through the October OPPS quarterly update CRs and incorporated these new codes in the final rule with comment period updating the OPPS for the following calendar year. All of these codes are flagged with comment indicator “NI” in Addendum B to the OPPS/ASC final rule with comment period to indicate that we are assigning them an interim payment status which is subject to public comment. Specifically, the status indicator and the APC assignment, and payment rate, if applicable, for all such codes flagged with comment indicator “NI” are open to public comment in this final rule with comment period, and we respond to these comments in the final rule with comment period for the next calendar year's OPPS/ASC update. In the CY 2010 OPPS/ASC proposed rule (74 FR 35302), we proposed to continue this process for CY 2010. Specifically, for CY 2010, we proposed to include in Addendum B to the CY 2010 OPPS/ASC final rule with comment period the new Category I and III CPT codes effective January 1, 2010 (including those Category I vaccine and Category III CPT codes that were released by the AMA in July 2009) that would be incorporated in the January 2010 OPPS quarterly update CR and the new Level II HCPCS codes, effective October 1, 2009 or January 1, 2010, that would be released by CMS in its October 2009 and January 2010 OPPS quarterly update CRs. Excluding those Category I vaccine and Category III CPT codes that were released by the AMA in July 2009 which were subject to comment in the CY 2010 OPPS/ASC proposed rule as described above, these codes would be flagged with comment indicator “NI” in Addendum B to this CY 2010 OPPS/ASC final rule with comment period to indicate that we have assigned them an interim OPPS payment status. We proposed that their status indicators and their APC assignments and payment rates, if applicable, would be open to public comment in the CY 2010 OPPS/ASC final rule with comment period and would be finalized in the CY 2011 OPPS/ASC final rule with comment period.

Comment: One commenter requested that CMS solicit public comments on APC assignments for the newly implemented CPT codes that go into effect January 1 and, when necessary, revise their APC assignments and implement the changes in the next quarterly OPPS update to promote payment accuracy.

Response: For new HCPCS codes with an interim final APC and/or status indicator designation in a final rule, we are only able to finalize their assignments in another OPPS final rule in order to allow for the necessary public notice and comment period and to allow for CMS to respond to such comments. Therefore, we only assign HCPCS codes permanently for the year through the annual regulatory process. Because we are not able to revise APC and/or status indicator assignments for the newly implemented HCPCS codes in CY 2010 that are assigned an interim final status in this CY 2010 OPPS/ASC final rule with comment period outside of the rulemaking process, the next available opportunity to update an APC or status indicator for these codes is in the CY 2011 OPPS update. These HCPCS codes retain their interim final APC and status indicator assignments for all of CY 2010. Therefore, only in the CY 2011 OPPS/ASC final rule with comment period will we be able to finalize the APC and/or status indicator assignments of the new CY 2010 HCPCS codes and respond to all public comments received on their interim designations.

After consideration of the public comment we received, we are finalizing our proposal, without modification, to provide interim final status indicators and APC assignments and payment rates, if applicable, for all CPT codes newly implemented in January 2010 and all HCPCS codes newly implemented in October 2009 or January 2010 in Addendum B to this final rule with comment period. The interim final OPPS treatment of these codes is open to public comment in the CY 2010 OPPS/ASC final rule with comment period and will be finalized in the CY 2011 OPPS/ASC final rule with comment period.

B. OPPS Changes—Variations Within APCs

1. Background

Section 1833(t)(2)(A) of the Act requires the Secretary to develop a classification system for covered outpatient department services. Section 1833(t)(2)(B) of the Act provides that the Secretary may establish groups of covered outpatient department services within this classification system, so that services classified within each group are comparable clinically and with respect to the use of resources (and so that an implantable item is classified to the group that includes the service to which the item relates). In accordance with these provisions, we developed a grouping classification system, referred to as APCs, as set forth in § 419.31 of the regulations. We use Level I and Level II HCPCS codes and descriptors to identify and group the services within each APC. The APCs are organized such that each group is homogeneous both clinically and in terms of resource use. Using this classification system, we have Start Printed Page 60436established distinct groups of similar services, as well as medical visits. We also have developed separate APC groups for certain medical devices, drugs, biologicals, therapeutic radiopharmaceuticals, and brachytherapy devices.

We have packaged into payment for each procedure or service within an APC group the costs associated with those items or services that are directly related to and supportive of performing the main independent procedures or furnishing the services. Therefore, we do not make separate payment for these packaged items or services. For example, packaged items and services include: (1) Use of an operating, treatment, or procedure room; (2) use of a recovery room; (3) observation services; (4) anesthesia; (5) medical/surgical supplies; (6) pharmaceuticals (other than those for which separate payment may be allowed under the provisions discussed in section V.3. of this final rule with comment period); (7) incidental services such as venipuncture; and (8) guidance services, image processing services, intraoperative services, imaging supervision and interpretation services, diagnostic radiopharmaceuticals, and contrast media. Further discussion of packaged services is included in section II.A.4. of this final rule with comment period.

In CY 2008 (72 FR 66650), we implemented composite APCs to provide a single payment for groups of services that are typically performed together during a single clinical encounter and that result in the provision of a complete service. Under our CY 2010 OPPS policy, we provide composite APC payment for certain extended assessment and management services, low dose rate (LDR) prostate brachytherapy, cardiac electrophysiologic evaluation and ablation, mental health services, and multiple imaging services. Further discussion of composite APCs is included in section II.A.2.e. of this final rule with comment period.

Under the OPPS, we generally pay for hospital outpatient services on a rate-per-service basis, where the service may be reported with one or more HCPCS codes. Payment varies according to the APC group to which the independent service or combination of services is assigned. Each APC weight represents the hospital median cost of the services included in that APC relative to the hospital median cost of the services included in APC 0606 (Level 3 Hospital Clinic Visits). The APC weights are scaled to APC 0606 because it is the middle level clinic visit APC (that is, where the Level 3 clinic visit CPT code of five levels of clinic visits is assigned), and because middle level clinic visits are among the most frequently furnished services in the hospital outpatient setting.

Section 1833(t)(9)(A) of the Act requires the Secretary to review not less often than annually and revise the groups, relative payment weights, and the wage and other adjustments under the OPPS to take into account changes in medical practice, changes in technology, the addition of new services, new cost data, and other relevant information and factors. Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of the BBRA, also requires the Secretary to consult with an outside panel of experts to review (and advise the Secretary concerning) the clinical integrity of the APC groups and the relative payment weights (the APC Panel recommendations for specific services for the CY 2010 OPPS and our responses to them are discussed in the relevant specific sections throughout this final rule with comment period).

Finally, section 1833(t)(2) of the Act provides that, subject to certain exceptions, the items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest median cost (or mean cost as elected by the Secretary) for an item or service in the group is more than 2 times greater than the lowest median cost (or mean cost, if so elected) for an item or service within the same group (referred to as the “2 times rule”). We use the median cost of the item or service in implementing this provision. In performing this analysis, we examine data from the significant services assigned to an APC, specifically those HCPCS codes with a single claim frequency of greater than 1,000 or a frequency of greater than 99 and a percentage of all single claims that is equal to or greater than 2 percent. Because, as a matter of policy, HCPCS codes that are unlisted procedures, not otherwise classified, or not otherwise specified codes are assigned to the lowest level APC that is appropriate to the clinical nature of the service (69 FR 65724 through 65725), we do not consider the costs of these services in assessing APCs for 2 times violations. Section 1833(t)(2) of the Act authorizes the Secretary to make exceptions to the 2 times rule in unusual cases, such as low-volume items and services (but the Secretary may not make such an exception in the case of a drug or biological that has been designated as an orphan drug under section 526 of the Federal Food, Drug, and Cosmetic Act).

2. Application of the 2 Times Rule

In accordance with section 1833(t)(2) of the Act and § 419.31 of the regulations, we annually review the items and services within an APC group to determine, with respect to comparability of the use of resources, if the median cost of the highest cost item or service within an APC group is more than 2 times greater than the median of the lowest cost item or service within that same group. In the CY 2010 OPPS/ASC proposed rule (74 FR 35303), we proposed to make exceptions to this limit on the variation of costs within each APC group in unusual cases, such as low-volume items and services for CY 2010.

During the APC Panel's February 2009 meeting, we presented median cost and utilization data for services furnished during the period of January 1, 2008 through September 30, 2008, because we had concerns or the public had raised concerns regarding their APC assignments, status indicator assignments, or payment rates. In addition to the assignment of specific services to APCs that we discussed with the APC Panel, we also identified APCs with 2 times violations that were not specifically discussed with the APC Panel but for which we proposed changes to their HCPCS codes' APC assignments in Addendum B to the CY 2010 OPPS/ASC proposed rule. In these cases, to eliminate a 2 times violation or to improve clinical and resource homogeneity, we proposed to reassign the codes to APCs that contain services that are similar with regard to both their clinical and resource characteristics. We also proposed to rename existing APCs or create new clinical APCs to complement proposed HCPCS code reassignments. In many cases, the proposed HCPCS code reassignments and associated APC reconfigurations for CY 2010 included in the proposed rule were related to changes in median costs of services that were observed in the CY 2008 claims data newly available for CY 2010 ratesetting. In addition, we proposed changes to the status indicators for some codes that were not specifically and separately discussed in the proposed rule. In these cases, we proposed to change the status indicators for some codes because we believed that another status indicator would more accurately describe their payment status from an OPPS perspective based on the policies that we proposed for CY 2010.

Addendum B to the CY 2010 OPPS/ASC proposed rule identified, with comment indicator “CH,” those HCPCS codes for which we proposed a change to the APC assignment or status Start Printed Page 60437indicator that were initially assigned in the April 2009 Addendum B update (Transmittal 1702, Change Request 6416, dated March 13, 2009).

Comment: One commenter generally supported CMS' adherence to the 2 times rule to ensure appropriate payment for OPPS services and to provide incentives for patients to be treated in the most suitable clinical setting. In particular, the commenter supported the proposed reassignments of the following CPT codes: CPT code 20103 (Exploration of penetrating wound (separate procedure); extremity) from APC 0136 (Level IV Skin Repair) to APC 0007 (Level II Incision & Drainage); and CPT code 29888 (Arthroscopically aided anterior cruciate ligament repair/augmentation or reconstruction) and CPT code 29889 (Arthroscopically aided posterior cruciate ligament repair/augmentation or reconstruction) from APC 0042 (Level II Arthroscopy) to APC 0052 (Level IV Musculoskeletal Procedures Except Hand and Foot).

Response: We appreciate the commenter's support for the 2 times rule in general and for the proposed APC reassignments of CPT codes 20103, 29888, and 29889 in particular. We agree with the commenter that the 2 times rule is an important mechanism for ensuring appropriate payment for OPPS services. Based on the CY 2008 claims and cost report data available for this final rule with comment period, we also agree with the commenter that we should adopt the proposed reassignments of CPT codes 20103, 29888, and 29889 in order to improve clinical and resource homogeneity.

Therefore, after consideration of the public comment we received, we are finalizing, without modification, our CY 2010 proposals to reassign CPT code 20103 to APC 0007, with a final CY 2010 APC median cost of approximately $843 and CPT codes 29888 and 29889 to APC 0052, with a final CY 2010 APC median cost of approximately $5,921.

3. Exceptions to the 2 Times Rule

As discussed earlier, we may make exceptions to the 2 times limit on the variation of costs within each APC group in unusual cases such as low-volume items and services. We stated in the CY 2010 OPPS/ASC proposed rule (74 FR 35303) that we took into account the APC changes that we proposed for CY 2010 based on the APC Panel recommendations, the other proposed changes to status indicators and APC assignments as identified in Addendum B to the proposed rule, and the use of CY 2008 claims data available for the proposed rule to calculate the median costs of procedures classified in the APCs. We then reviewed all of the APCs to determine which APCs would not satisfy the 2 times rule and to determine which APCs should be proposed as exceptions to the 2 times rule for CY 2010. We used the following criteria to decide whether to propose exceptions to the 2 times rule for affected APCs:

  • Resource homogeneity;
  • Clinical homogeneity;
  • Hospital outpatient setting;
  • Frequency of service (volume); and
  • Opportunity for upcoding and code fragments.

For a detailed discussion of these criteria, we refer readers to the April 7, 2000 OPPS final rule with comment period (65 FR 18457).

Table 17 of the CY 2010 OPPS/ASC proposed rule (74 FR 35303) listed 14 APCs that we proposed to exempt from the 2 times rule for CY 2010 based on the criteria cited above. For cases in which a recommendation by the APC Panel appeared to result in or allow a violation of the 2 times rule, we generally accepted the APC Panel's recommendation because those recommendations were based on explicit consideration of resource use, clinical homogeneity, hospital specialization, and the quality of the CY 2008 claims data used to determine the APC payment rates that we proposed for CY 2010. The median costs for hospital outpatient services for these and all other APCs that were used in the development of the CY 2010 OPPS/ASC proposed rule and this final rule with comment period can be found on the CMS Web site at: http://www.cms.hhs.gov/​HospitalOutpatientPPS/​01_​overview.asp.

For the CY 2010 OPPS/ASC proposed rule, we based the listed exceptions to the 2 times rule on claims data for dates of service between January 1, 2008, and December 31, 2008, that were processed before January 1, 2009. For this final rule with comment period, we used claims data for dates of service between January 1, 2008, and December 31, 2008, that were processed on or before June 30, 2008, and updated CCRs, if available. Thus, after responding to all of the public comments on the CY 2010 OPPS/ASC proposed rule and making changes to APC assignments based on those comments, we analyzed the CY 2008 claims data used for this final rule with comment period to identify the APCs with 2 times violations. Based on the final CY 2008 claims data, we found that there are 15 APCs with 2 times rule violations, a cumulative increase of 1 APC from the proposed rule. We applied the criteria as described earlier to identify the APCs that are exceptions to the 2 times rule for CY 2010, and identified 4 additional APCs that meet the criteria for exception to the 2 times rule for this final rule with comment period: APC 0057 (Bunion Procedures); APC 0060 (Manipulation Therapy); APC 0341 (Skin Tests); and APC 0409 (Red Blood Cell Tests). These APC exceptions are listed in Table 22 below. We also determined that there are 3 APCs that no longer violate the 2 times rule: APC 0237 (Level II Posterior Segment Eye Procedures); APC 0325 (Group Psychotherapy); and APC 0436 (Level I Drug Administration). We have not included in this count those APCs where a 2 times violation is not a relevant concept, such as APC 0375 (Ancillary Outpatient Services when Patient Expires), with an APC median cost set based on multiple procedure claims, so that we have identified only final APCs, including those with criteria-based median costs, such as device-dependent APCs, with 2 times violations.

Comment: One commenter requested that CMS not exempt any imaging and radiation therapy APCs from the 2 times rule. According to the commenter, violations of the 2 times rule should demonstrate to CMS that a particular APC is incorrectly constructed. The commenter recommended that, rather than exempting these APCs from the 2 times rule, CMS review the configurations of the APCs and make any necessary revisions.

Response: We do not agree with the commenter that we should not exempt any imaging and radiation therapy APCs from the 2 times rule. As stated earlier in this section, we may make exceptions to the 2 times limit on the variation of costs within each APC group in unusual cases such as low-volume items and services. In the CY 2010 OPPS/ASC proposed rule (74 FR 35303), we proposed to exempt one imaging APC and one radiation therapy APC from the 2 times rule, specifically APC 0128 (Echocardiogram with Contrast) and APC 0664 (Level I Proton Beam Radiation Therapy), respectively. As discussed in greater detail in section II.A.2.d.(4) of this final rule with comment period, we believe that the median costs of the echocardiography procedures assigned to APC 0128 do not warrant assignment of any of those procedures to a new clinical APC. APC 0664 includes CPT code 77520 (Proton treatment delivery; simple, without compensation), with a median cost of approximately $396 (based on 243 single claims of 251 total claims), and CPT code 77522 (Proton treatment delivery; simple, with compensation), Start Printed Page 60438with a median cost of approximately $934 (based on 11,012 single claims of 12,252 total claims). We continue to believe that the resources and clinical characteristics of the low-volume procedure described by CPT code 77520 are sufficiently similar to the procedure described by CPT code 77522 to warrant continued assignment of both CPT codes to APC 0664. Therefore, we are finalizing our proposal to exempt APC 0128 and APC 0664 from the 2 times rule for CY 2010. Consistent with our standard policy, we will continue to review, on an annual basis, the APC assignments for all OPPS services to ensure appropriate placement.

We also received a number of specific public comments regarding some of the procedures assigned to APCs that we proposed to exempt from the 2 times rule for CY 2010. Discussions of those public comments are included elsewhere in this final rule with comment period in the specific sections related to the types of procedures that were the subjects of the comments.

After consideration of the public comments we received and our review of the CY 2008 costs from claims available for this final rule with comment period, we are exempting 15 APCs from the 2 times rule for CY 2010, as described previously in this section. Our final list of 15 APCs exempted from the 2 times rule is displayed in Table 22 below.

Table 22—Final APC Exceptions to the 2 Times Rule for CY 2010

Final CY 2010 APCFinal CY 2010 APC Title
0057Bunion Procedures.
0060Manipulation Therapy.
0080Diagnostic Cardiac Catheterization.
0105Repair/Revision/Removal of Pacemakers, AICDs, or Vascular Devices.
0128Echocardiogram with Contrast.
0141Level I Upper GI Procedures.
0142Small Intestine Endoscopy.
0245Level I Cataract Procedures without IOL Insert.
0303Treatment Device Construction.
0341Skin Tests.
0381Single Allergy Tests.
0409Red Blood Cell Tests.
0432Health and Behavior Services.
0604Level 1 Hospital Clinic Visits.
0664Level I Proton Beam Radiation Therapy.

C. New Technology APCs

1. Background

In the November 30, 2001 final rule (66 FR 59903), we finalized changes to the time period a service was eligible for payment under a New Technology APC. Beginning in CY 2002, we retain services within New Technology APC groups until we gather sufficient claims data to enable us to assign the service to a clinically appropriate APC. This policy allows us to move a service from a New Technology APC in less than 2 years if sufficient data are available. It also allows us to retain a service in a New Technology APC for more than 2 years if sufficient data upon which to base a decision for reassignment have not been collected.

We note that the cost bands for New Technology APCs range from $0 to $50 in increments of $10, from $50 to $100 in increments of $50, from $100 through $2,000 in increments of $100, and from $2,000 through $10,000 in increments of $500. These cost bands identify the APCs to which new technology procedures and services with estimated service costs that fall within those cost bands are assigned under the OPPS. Payment for each APC is made at the mid-point of the APC's assigned cost band. For example, payment for New Technology APC 1507 (New Technology—Level VII ($500-$600)) is made at $550. Currently, there are 82 New Technology APCs, ranging from the lowest cost band assigned to APC 1491 (New Technology—Level IA ($0-$10)) through the highest cost band assigned to APC 1574 (New Technology—Level XXXVII ($9,500-$10,000). In CY 2004 (68 FR 63416), we last restructured the New Technology APCs to make the cost intervals more consistent across payment levels and refined the cost bands for these APCs to retain two parallel sets of New Technology APCs, one set with a status indicator of “S” (Significant Procedures, Not Discounted when Multiple. Paid under OPPS; separate APC payment) and the other set with a status indicator of “T” (Significant Procedure, Multiple Reduction Applies. Paid under OPPS; separate APC payment). These current New Technology APC configurations allow us to price new technology services more appropriately and consistently.

2. Movement of Procedures From New Technology APCs to Clinical APCs

As we explained in the November 30, 2001 final rule (66 FR 59902), we generally keep a procedure in the New Technology APC to which it is initially assigned until we have collected sufficient data to enable us to move the procedure to a clinically appropriate APC. However, in cases where we find that our original New Technology APC assignment was based on inaccurate or inadequate information (although it was the best information available at the time), or where the New Technology APCs are restructured, we may, based on more recent resource utilization information (including claims data) or the availability of refined New Technology APC cost bands, reassign the procedure or service to a different New Technology APC that most appropriately reflects its cost.

Consistent with our current policy, in the CY 2010 OPPS/ASC proposed rule (74 FR 35304), for CY 2010, we proposed to retain services within New Technology APC groups until we gather sufficient claims data to enable us to assign the service to a clinically appropriate APC. The flexibility associated with this policy allows us to move a service from a New Technology APC in less than 2 years if sufficient data are available. It also allows us to retain a service in a New Technology APC for more than 2 years if sufficient Start Printed Page 60439hospital claims data upon which to base a decision for reassignment have not been collected.

Table 18 of the proposed rule (74 FR 35304) listed the HCPCS code and its associated status indicator that we proposed to reassign from a New Technology APC to a clinically appropriate APC for CY 2010. Based on the CY 2008 OPPS claims data available for the proposed rule, we believe we had sufficient claims data to propose reassignment of CPT code 0182T to a clinically appropriate APC. Specifically, we proposed to reassign this electronic brachytherapy service from APC 1519 (New Technology—Level IXX ($1,700-$1,800)) to APC 0313 (Brachytherapy), where other brachytherapy services also reside. Based on hospital claims data for CPT code 0182T, its hospital resource costs are similar to those of other services assigned to APC 0313.

The proposed CY 2010 APC reassignment of CPT code 0182T was discussed with the APC Panel at its August 2009 meeting. One public presenter indicated that CPT code 0182T describes both single-fraction and multiple-fraction electronic brachytherapy, and that most of the claims on which CMS based its CY 2010 proposal were from hospitals reporting multi-fraction electronic brachytherapy. The presenter believed that the hospital resources required for these two types of brachytherapy were significantly different from one another. The presenter also stated that, unlike the conventional brachytherapy procedures that are assigned to APC 0313 and for which the associated brachytherapy sources are all paid separately under the OPPS, payment for the brachytherapy source associated with CPT code 0182T is packaged into the procedure payment. The APC Panel noted that the problem of distinguishing single-fraction from multiple-fraction electronic brachytherapy is a coding issue that would not be resolved by additional claims data because the two types of procedures are reported with the same CPT code. After discussion of the median cost of CPT code 0182T observed in claims data and the potential contribution of the brachytherapy source cost to the overall procedure cost, the APC Panel made no recommendation on the CY 2010 APC assignment for CPT code 0182T.

Comment: Several commenters disagreed with the CMS proposal to reassign CPT code 0182T to APC 0313 for CY 2010. Commenters responding regarding both single-fraction and multiple-fraction electronic brachytherapy procedures reported with CPT code 0182T asserted that the proposed payment of approximately $747 does not cover the full costs of providing these services. They indicated that the current payment rate of $1,750 that is associated with APC 1519, where CPT code 0182T is assigned, includes the cost of the electronic brachytherapy source, whereas the payment rate for APC 0313 does not. Several commenters noted that the claims data used in determining the reassignment for CPT code 0182T are very limited and pointed out that the claims data for this service came from only a few hospitals that were early adopters of the multiple-source electronic brachytherapy technology. They argued that data from these hospitals represented pre-commercial clinical site data and that, therefore, these hospitals had received equipment and sources at reduced cost. One commenter suggested that CMS should develop coding that would distinguish between single-fraction and multiple-fraction electronic brachytherapy procedures in order to pay appropriately for each type of service because the current single payment for both technologies provides a financial incentive for the use of multiple-fraction electronic brachytherapy. Most commenters urged CMS to continue to assign CPT code 0182T to APC 1519 for at least another year to enable CMS to gather sufficient claims data from more hospitals in order to appropriately reassign CPT code 0182T to a clinical APC based on the clinical and resource costs of the procedure.

Response: CPT code 0182T was initially assigned to New Technology APC 1519 with a payment rate of $1,750 when the code was implemented in July 2007, and it has been assigned to that same APC through CY 2009. For CY 2010, we proposed to reassign CPT code 0182T from New Technology APC 1519 to APC 0313, which had a proposed payment rate of approximately $747 and a proposed median cost of approximately $753 (and now has a final rule median cost of $770). Analysis of hospital claims data from CY 2007 and CY 2008 revealed that the procedure described by CPT code 0182T is not commonly performed on Medicare patients. For CY 2008, claims data show 223 total claims with a median cost of about $506 for this procedure. For CY 2007, claims data (6 months due to implementation of the code in July 2007) show only 21 total claims with a median cost of about $495. Therefore, we believe that the hospital resources required for CPT code 0182T are consistent with the costs of other services assigned to APC 0313 and payment for CPT code 0182T would be appropriately made through that clinical APC.

We are not creating a new Level II HCPCS code for single-fraction electronic brachytherapy at this time because we believe that the two forms of electronic brachytherapy, whether provided in a single-fraction or multiple-fraction regimen, depending on the technology, are both described by CPT code 0182T, which is appropriately assigned to a single APC. We note that the payment is per-fraction according to the code descriptor for CPT code 0182T, and that would include a single-fraction treatment as well. While we recognize that CPT code 0182T describes both single- and multiple-fraction electronic brachytherapy, we commonly pay for different technologies under the OPPS that are reported in a single CPT code and we expect the hospital claims data to reflect the resources required for all of the different technologies reported under the one code. To the extent that one technology is predominantly used by hospitals, then the costs of that technology will have a greater effect on the procedure's median cost, but we do not believe payment through such groupings inappropriately encourages the use of certain technologies, such as the provision of multiple-fraction electronic brachytherapy in the case of CPT code 0182T. Our standard OPPS ratesetting methodology provides a single payment based on historical hospital costs that reflect utilization patterns of the various technologies, consistent with prospective payment for groups of similar services in order to encourage hospital efficiencies. The hospital cost information for services always reflects the discounts available to hospitals in the claims year, such as the commenters indicate was the case for multiple-fraction electronic brachytherapy in CY 2008, that may not be available in the payment year for those services, and those discounts may vary from year to year for different HOPD services. Nevertheless, we rely on the relativity of median costs as reflected in claims data to be appropriate. Payment based on a measure of central tendency is a principle of any prospective payment system like the OPPS. In some individual cases payment exceeds the average cost and in other cases payment is less than the average cost. On balance, however, payment should approximate the relative cost of the average case, recognizing that, as a prospective payment system, the OPPS is a system of averages. In the case of CPT code 0182T, we believe that its assignment to Start Printed Page 60440APC 0313 for CY 2010 is fully consistent with our standard ratesetting methodology that provides appropriate incentives for efficiency.