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Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2017 Rates; Quality Reporting Requirements for Specific Providers; Graduate Medical Education; Hospital Notification Procedures Applicable to Beneficiaries Receiving Observation Services; Technical Changes Relating to Costs to Organizations and Medicare Cost Reports; Finalization of Interim Final Rules With Comment Period on LTCH PPS Payments for Severe Wounds, Modifications of Limitations on Redesignation by the Medicare Geographic Classification Review Board, and Extensions of Payments to MDHs and Low-Volume Hospitals

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Start Preamble Start Printed Page 56762

AGENCY:

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

ACTION:

Final rule.

SUMMARY:

We are revising the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals to implement changes arising from our continuing experience with these systems for FY 2017. Some of these changes will implement certain statutory provisions contained in the Pathway for Sustainable Growth Reform Act of 2013, the Improving Medicare Post-Acute Care Transformation Act of 2014, the Notice of Observation Treatment and Implications for Care Eligibility Act of 2015, and other legislation. We also are providing the estimated market basket update to apply to the rate-of-increase limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis subject to these limits for FY 2017.

We are updating the payment policies and the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs) for FY 2017.

In addition, we are making changes relating to direct graduate medical education (GME) and indirect medical education payments; establishing new requirements or revising existing requirements for quality reporting by specific Medicare providers (acute care hospitals, PPS-exempt cancer hospitals, LTCHs, and inpatient psychiatric facilities), including related provisions for eligible hospitals and critical access hospitals (CAHs) participating in the Electronic Health Record Incentive Program; updating policies relating to the Hospital Value-Based Purchasing Program, the Hospital Readmissions Reduction Program, and the Hospital-Acquired Condition Reduction Program; implementing statutory provisions that require hospitals and CAHs to furnish notification to Medicare beneficiaries, including Medicare Advantage enrollees, when the beneficiaries receive outpatient observation services for more than 24 hours; announcing the implementation of the Frontier Community Health Integration Project Demonstration; and making technical corrections and changes to regulations relating to costs to related organizations and Medicare cost reports; we are providing notice of the closure of three teaching hospitals and the opportunity to apply for available GME resident slots under section 5506 of the Affordable Care Act.

We are finalizing the provisions of interim final rules with comment period that relate to a temporary exception for certain wound care discharges from the application of the site neutral payment rate under the LTCH PPS for certain LTCHs; application of two judicial decisions relating to modifications of limitations on redesignation by the Medicare Geographic Classification Review Board; and legislative extensions of the Medicare-dependent, small rural hospital program and changes to the payment adjustment for low-volume hospitals.

DATES:

Effective Date: These final rules are effective on October 1, 2016.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Ing Jye Cheng, (410) 786-4548, and Donald Thompson, (410) 786-44487, Operating Prospective Payment, MS-DRGs, Wage Index, New Medical Service and Technology Add-On Payments, Hospital Geographic Reclassifications, Graduate Medical Education, Capital Prospective Payment, Excluded Hospitals, Medicare Disproportionate Share Hospital (DSH) Issues, Medicare-Dependent Small Rural Hospital (MDH) Program, and Low-Volume Hospital Payment Adjustment Issues.

Michele Hudson, (410) 786-4487, and Emily Lipkin, (410) 786-3633, Long-Term Care Hospital Prospective Payment System and MS-LTC-DRG Relative Weights Issues.

Mollie Knight (410) 786-7948, and Bridget Dickensheets, (410) 786-8670, Rebasing and Revising the LTCH Market Basket Issues.

Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital Demonstration Program Issues.

Jason Pteroski, (410) 786-4681, and Siddhartha Mazumdar, (410) 786-6673, Frontier Community Health Integration Project Demonstration Issues.

Kathryn McCann Smith, (410) 786-7623, Hospital Notification Procedures for Beneficiaries Receiving Outpatient Observation Services Issues; or Stephanie Simons, (206) 615-2420, only for Related Medicare Health Plans Issues.

Lein Han, (617) 879-0129, Hospital Readmissions Reduction Program—Readmission Measures for Hospitals Issues.

Delia Houseal, (410) 786-2724, Hospital-Acquired Condition Reduction Program and Hospital Readmissions Reduction Program—Administration Issues.

Joseph Clift, (410) 786-4165, Hospital-Acquired Condition Reduction Program—Measures Issues.

James Poyer, (410) 786-2261, Hospital Inpatient Quality Reporting and Hospital Value-Based Purchasing—Program Administration, Validation, and Reconsideration Issues.

Cindy Tourison, (410) 786-1093, Hospital Inpatient Quality Reporting—Measures Issues Except Hospital Consumer Assessment of Healthcare Providers and Systems Issues; and Readmission Measures for Hospitals Issues.

Kim Spaulding Bush, (410) 786-3232, Hospital Value-Based Purchasing Efficiency Measures Issues.

Elizabeth Goldstein, (410) 786-6665, Hospital Inpatient Quality Reporting—Hospital Consumer Assessment of Healthcare Providers and Systems Measures Issues.

James Poyer, (410) 786-2261, PPS-Exempt Cancer Hospital Quality Reporting Issues.

Mary Pratt, (410) 786-6867, Long-Term Care Hospital Quality Data Reporting Issues.

Jeffrey Buck, (410) 786-0407 and Cindy Tourison (410) 786-1093, Inpatient Psychiatric Facilities Quality Data Reporting Issues.

Deborah Krauss, (410) 786-5264, and Lisa Marie Gomez, (410) 786-1175, EHR Incentive Program Clinical Quality Measure Related Issues.

Elizabeth Myers, (410) 786-4751, EHR Incentive Program Nonclinical Quality Measure Related Issues.

Lauren Wu, (202) 690-7151, Certified EHR Technology Related Issues.Start Printed Page 56763

Kellie Shannon, (410) 786-0416, Technical Changes Relating to Costs to Organizations and Medicare Cost Reports Issues.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

Electronic Access

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

Tables Available Only Through the Internet on the CMS Web Site

In the past, a majority of the tables referred to throughout this preamble and in the Addendum to the proposed rule and the final rule were published in the Federal Register as part of the annual proposed and final rules. However, beginning in FY 2012, some of the IPPS tables and LTCH PPS tables are no longer published in the Federal Register. Instead, these tables generally will be available only through the Internet. The IPPS tables for this final rule are available through the Internet on the CMS Web site at: http://www.cms.hhs.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html. Click on the link on the left side of the screen titled, “FY 2017 IPPS Final Rule Home Page” or “Acute Inpatient—Files for Download”. The LTCH PPS tables for this FY 2017 final rule are available through the Internet on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​LongTermCareHospitalPPS/​index.html under the list item for Regulation Number CMS-1655-F. For further details on the contents of the tables referenced in this final rule, we refer readers to section VI. of the Addendum to this final rule.

Readers who experience any problems accessing any of the tables that are posted on the CMS Web sites identified above should contact Michael Treitel at (410) 786-4552.

Acronyms

3M 3M Health Information System

AAMC Association of American Medical Colleges

ACGME Accreditation Council for Graduate Medical Education

ACoS American College of Surgeons

AHA American Hospital Association

AHIC American Health Information Community

AHIMA American Health Information Management Association

AHRQ Agency for Healthcare Research and Quality

AJCC American Joint Committee on Cancer

ALOS Average length of stay

ALTHA Acute Long-Term Hospital Association

AMA American Medical Association

AMGA American Medical Group Association

AMI Acute myocardial infarction

AOA American Osteopathic Association

APR DRG All Patient Refined Diagnosis Related Group System

APRN Advanced practice registered nurse

ARRA American Recovery and Reinvestment Act of 2009, Public Law 111-5

ASCA Administrative Simplification Compliance Act of 2002, Public Law 107-105

ASITN American Society of Interventional and Therapeutic Neuroradiology

ASPE Assistant Secretary for Planning and Evaluation (DHHS)

ATRA American Taxpayer Relief Act of 2012, Public Law 112-240

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

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

BIPA Medicare, Medicaid, and SCHIP [State Children's Health Insurance Program] Benefits Improvement and Protection Act of 2000, Public Law 106-554

BLS Bureau of Labor Statistics

CABG Coronary artery bypass graft [surgery]

CAH Critical access hospital

CARE [Medicare] Continuity Assessment Record & Evaluation [Instrument]

CART CMS Abstraction & Reporting Tool

CAUTI Catheter-associated urinary tract infection

CBSAs Core-based statistical areas

CC Complication or comorbidity

CCN CMS Certification Number

CCR Cost-to-charge ratio

CDAC [Medicare] Clinical Data Abstraction Center

CDAD Clostridium difficile-associated disease

CDC Centers for Disease Control and Prevention

CERT Comprehensive error rate testing

CDI Clostridium difficile [C. difficile] infection

CFR Code of Federal Regulations

CLABSI Central line-associated bloodstream infection

CIPI Capital input price index

CMI Case-mix index

CMS Centers for Medicare & Medicaid Services

CMSA Consolidated Metropolitan Statistical Area

COBRA Consolidated Omnibus Reconciliation Act of 1985, Public Law 99-272

COLA Cost-of-living adjustment

CoP [Hospital] condition of participation

COPD Chronic obstructive pulmonary disease

CPI Consumer price index

CQL Clinical quality language

CQM Clinical quality measure

CY Calendar year

DACA Data Accuracy and Completeness Acknowledgement

DPP Disproportionate patient percentage

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

DRG Diagnosis-related group

DSH Disproportionate share hospital

EBRT External beam radiotherapy

ECE Extraordinary circumstances exemption

ECI Employment cost index

eCQM Electronic clinical quality measure

EDB [Medicare] Enrollment Database

EHR Electronic health record

EMR Electronic medical record

EMTALA Emergency Medical Treatment and Labor Act of 1986, Public Law 99-272

EP Eligible professional

FAH Federation of American Hospitals

FDA Food and Drug Administration

FFY Federal fiscal year

FPL Federal poverty line

FQHC Federally qualified health center

FR Federal Register

FTE Full-time equivalent

FY Fiscal year

GAF Geographic Adjustment Factor

GME Graduate medical education

HAC Hospital-acquired condition

HAI Healthcare-associated infection

HCAHPS Hospital Consumer Assessment of Healthcare Providers and Systems

HCFA Health Care Financing Administration

HCO High-cost outlier

HCP Healthcare personnel

HCRIS Hospital Cost Report Information System

HF Heart failure

HHA Home health agency

HHS Department of Health and Human Services

HICAN Health Insurance Claims Account Number

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

HIPC Health Information Policy Council

HIS Health information system

HIT Health information technology

HMO Health maintenance organization

HPMP Hospital Payment Monitoring Program

HSA Health savings account

HSCRC [Maryland] Health Services Cost Review Commission

HSRV Hospital-specific relative value

HSRVcc Hospital-specific relative value cost center

HQA Hospital Quality Alliance

HQI Hospital Quality Initiative

HwH Hospital-within-hospital

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

ICD-10-CM International Classification of Diseases, Tenth Revision, Clinical Modification

ICD-10-PCS International Classification of Diseases, Tenth Revision, Procedure Coding System

ICR Information collection requirement

ICU Intensive care unit

IGI IHS Global Insight, Inc.

IHS Indian Health Service

IME Indirect medical education

IMPACT Act Improving Medicare Post-Acute Care Transformation Act of 2014, Public Law 113-185Start Printed Page 56764

I-O Input-Output

IOM Institute of Medicine

IPF Inpatient psychiatric facility

IPFQR Inpatient Psychiatric Facility Quality Reporting [Program]

IPPS [Acute care hospital] inpatient prospective payment system

IRF Inpatient rehabilitation facility

IQR [Hospital] Inpatient Quality Reporting

LAMCs Large area metropolitan counties

LEP Limited English proficiency

LOC Limitation on charges

LOS Length of stay

LTC-DRG Long-term care diagnosis-related group

LTCH Long-term care hospital

LTCH QRP Long-Term Care Hospital Quality Reporting Program

MA Medicare Advantage

MAC Medicare Administrative Contractor

MACRA Medicare Access and CHIP Reauthorization Act of 2015, Public Law 114-10

MAP Measure Application Partnership

MCC Major complication or comorbidity

MCE Medicare Code Editor

MCO Managed care organization

MDC Major diagnostic category

MDH Medicare-dependent, small rural hospital

MedPAC Medicare Payment Advisory Commission

MedPAR Medicare Provider Analysis and Review File

MEI Medicare Economic Index

MGCRB Medicare Geographic Classification Review Board

MIEA-TRHCA Medicare Improvements and Extension Act, Division B of the Tax Relief and 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

MMEA Medicare and Medicaid Extenders Act of 2010, Public Law 111-309

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

MOON Medicare Outpatient Observation Notice

MRHFP Medicare Rural Hospital Flexibility Program

MRSA Methicillin-resistant Staphylococcus aureus

MSA Metropolitan Statistical Area

MS-DRG Medicare severity diagnosis-related group

MS-LTC-DRG Medicare severity long-term care diagnosis-related group

MU Meaningful Use [EHR Incentive Program]

MUC Measure under consideration

NAICS North American Industrial Classification System

NALTH National Association of Long Term Hospitals

NCD National coverage determination

NCHS National Center for Health Statistics

NCQA National Committee for Quality Assurance

NCVHS National Committee on Vital and Health Statistics

NECMA New England County Metropolitan Areas

NHSN National Healthcare Safety Network

NOP Notice of Participation

NOTICE Act Notice of Observation Treatment and Implication for Care Eligibility Act, Public Law 114-42

NQF National Quality Forum

NQS National Quality Strategy

NTIS National Technical Information Service

NTTAA National Technology Transfer and Advancement Act of 1991, Public Law 104-113

NUBC National Uniform Billing Code

NVHRI National Voluntary Hospital Reporting Initiative

OACT [CMS'] Office of the Actuary

OBRA 86 Omnibus Budget Reconciliation Act of 1986, Public Law 99-509

OES Occupational employment statistics

OIG Office of the Inspector General

OMB [Executive] Office of Management and Budget

ONC Office of the National Coordinator for Health Information Technology

OPM [U.S.] Office of Personnel Management

OQR [Hospital] Outpatient Quality Reporting

O.R. Operating room

OSCAR Online Survey Certification and Reporting [System]

PAC Post-acute care

PAMA Protecting Access to Medicare Act of 2014, Public Law 113-93

PCH PPS-exempt cancer hospital

PCHQR PPS-exempt cancer hospital quality reporting

PMSAs Primary metropolitan statistical areas

POA Present on admission

PPI Producer price index

PPR Potentially Preventable Readmissions

PPS Prospective payment system

PRA Paperwork Reduction Act

PRM Provider Reimbursement Manual

ProPAC Prospective Payment Assessment Commission

PRRB Provider Reimbursement Review Board

PRTFs Psychiatric residential treatment facilities

PSF Provider-Specific File

PSI Patient safety indicator

PS&R Provider Statistical and Reimbursement [System]

PQRS Physician Quality Reporting System

PUF Public use file

QDM Quality data model

QIES ASAP Quality Improvement Evaluation System Assessment Submission and Processing

QIG Quality Improvement Group [CMS]

QIO Quality Improvement Organization

QM Quality measure

QRDA Quality Reporting Document Architecture

RFA Regulatory Flexibility Act, Public Law 96-354

RHC Rural health clinic

RHQDAPU Reporting hospital quality data for annual payment update

RIM Reference information model

RNHCI Religious nonmedical health care institution

RPL Rehabilitation psychiatric long-term care (hospital)

RRC Rural referral center

RSMR Risk-standard mortality rate

RSP Risk-standardized payment

RSSR Risk-standard readmission rate

RTI Research Triangle Institute, International

RUCAs Rural-urban commuting area codes

RY Rate year

SAF Standard Analytic File

SCH Sole community hospital

SCHIP State Child Health Insurance Program

SCIP Surgical Care Improvement Project

SFY State fiscal year

SGR Sustainable Growth Rate

SIC Standard Industrial Classification

SIR Standardized infection ratio

SNF Skilled nursing facility

SNF QRP Skilled Nursing Facility Quality Reporting Program

SNF VBP Skilled Nursing Facility Value-Based Purchasing

SOCs Standard occupational classifications

SOM State Operations Manual

SRR Standardized risk ratio

SSI Surgical site infection

SSI Supplemental Security Income

SSO Short-stay outlier

SUD Substance use disorder

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

TEP Technical expert panel

THA/TKA Total hip arthroplasty/total knee arthroplasty

TMA TMA [Transitional Medical Assistance], Abstinence Education, and QI [Qualifying Individuals] Programs Extension Act of 2007, Public Law 110-90

TPS Total Performance Score

UHDDS Uniform hospital discharge data set

UR Utilization review

VBP [Hospital] Value Based Purchasing [Program]

VTE Venous thromboembolism

Table of Contents

I. Executive Summary and Background

A. Executive Summary

1. Purpose and Legal Authority

2. Summary of the Major Provisions

3. Summary of Costs and Benefits

B. Summary

1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)

2. Hospitals and Hospital Units Excluded From the IPPS

3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)

4. Critical Access Hospitals (CAHs)

5. Payments for Graduate Medical Education (GME)

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

1. American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240)

2. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)

3. Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) (Pub. L. 113-185)

4. The Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 (Public Law 114-10)

5. The Consolidated Appropriations Act, 2016 (Public Law 114-113)Start Printed Page 56765

6. The Notice of Observation Treatment and Implication for Care Eligibility Act (the NOTICE Act) of 2015 (Public Law 114-42)

D. Issuance of Notice of Proposed Rulemaking

E. Finalization of Interim Final Rule With Comment Period on the Temporary Exception to the Site Neutral Payment Rate Under the LTCH PPS for Certain Severe Wound Discharges From Certain LTCHs as Required by the Consolidated Appropriations Act, 2016; and Modification of Limitation on Redesignation by the Medicare Geographic Classification Review Board

G. Finalization of Interim Final Rule With Comment Period on Medicare Dependent Small Rural Hospital Program and Payment to Low-Volume Hospitals

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

A. Background

B. MS-DRG Reclassifications

C. Adoption of the MS-DRGs in FY 2008

D. FY 2017 MS-DRG Documentation and Coding Adjustment

1. Background on the Prospective MS-DRG Documentation and Coding Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90

2. Adjustment to the Average Standardized Amounts Required by Public Law 110-90

a. Prospective Adjustment Required by Section 7(b)(1)(A) of Public Law 110-90

b. Recoupment or Repayment Adjustments in FYs 2010 Through 2012 Required by Section 7(b)(1)(B) of Public Law 110-90

3. Retrospective Evaluation of FY 2008 and FY 2009 Claims Data

4. Prospective Adjustments for FY 2008 and FY 2009 Authorized by Section 7(b)(1)(A) of Public Law 110-90

5. Recoupment or Repayment Adjustment Authorized by Section 7(b)(1)(B) of Public Law 110-90

6. Recoupment or Repayment Adjustment Authorized by Section 631 of the American Taxpayer Relief Act of 2012 (ATRA)

E. Refinement of the MS-DRG Relative Weight Calculation

1. Background

2. Discussion of Policy for FY 2017

F. Changes to Specific MS-DRG Classifications

1. Discussion of Changes to Coding System and Basis for MS-DRG Updates

a. Conversion of MS-DRGs to the International Classification of Diseases, 10th Revision (ICD-10)

b. Basis for FY 2017 MS-DRG Updates

2. Pre-Major Diagnostic Category (Pre-MDC): Total Artificial Heart Replacement

3. MDC 1 (Diseases and Disorders of the Nervous System)

a. Endovascular Embolization (Coiling) or Occlusion of Head and Neck Procedures

b. Mechanical Complication Codes

4. MDC 4 (Diseases and Disorders of the Ear, Nose, Mouth and Throat)

a. Reassignment of Diagnosis Code R22.2 (Localized Swelling, Mass and Lump, Trunk)

b. Pulmonary Embolism With tPA or Other Thrombolytic Therapy

5. MDC 5 (Diseases and Disorders of the Circulatory System)

a. Implant of Loop Recorder

b. Endovascular Thrombectomy of the Lower Limbs

c. Pacemaker Procedures Code Combinations

d. Transcatheter Mitral Valve Repair With Implant

e. MS-DRG 245 (AICD Generator Procedures)

6. MDC 6 (Diseases and Disorders of the Digestive System): Excision of Ileum

7. MDC 7 (Diseases and Disorders of the Hepatobiliary System and Pancreas): Bypass Procedures of the Veins

8. MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue)

a. Updates to MS-DRGs 469 and 470 (Major Joint Replacement or Reattachment of Lower Extremity With and Without MCC, Respectively)

(1) Total Ankle Replacement (TAR) Procedures

(2) Hip Replacements Procedures With Principal Diagnosis of Hip Fracture

b. Revision of Total Ankle Replacement Procedures

(1) Revision of Total Ankle Replacement Procedures

(2) Combination Codes for Removal and Replacement of Knee Joints

c. Decompression Laminectomy

d. Lordosis

9. MDC 13 (Diseases and Disorders of the Female Reproductive System): Pelvic Evisceration

10. MDC 19 (Mental Diseases and Disorders): Modification of Title of MS-DRG 884 (Organic Disturbances and Mental Retardation)

11. MDC 23 (Factors Influencing Health Status and Other Contacts With Health Services): Logic of MS-DRGs 945 and 946 (Rehabilitation With and Without CC/MCC, Respectively)

12. Medicare Code Editor (MCE) Changes

a. Age Conflict Edit

(1) Newborn Diagnosis Category

(2) Pediatric Diagnosis Category

b. Sex Conflict Edit

c. Non-Covered Procedure Edit

(1) Endovascular Mechanical Thrombectomy

(2) Radical Prostatectomy

d. Unacceptable Principal Diagnosis Edit

(1) Liveborn Infant

(2) Multiple Gestation

(3) Supervision of High Risk Pregnancy

e. Other MCE Issues

(1) Procedure Inconsistent With Length of Stay Edit

(2) Maternity Diagnoses

(3) Manifestation Codes Not Allowed as Principal Diagnosis Edit

(4) Questionable Admission Edit

(5) Removal of Edits and Future Enhancement

13. Changes to Surgical Hierarchies

14. Changes to the MS-DRG Diagnosis Codes for FY 2017

15. Complications or Comorbidity (CC) Exclusions List

a. Background of the CC List and the CC Exclusions List

b. CC Exclusions List for FY 2017

16. Review of Procedure Codes in MS DRGs 981 Through 983; 984 Through 986; and 987 Through 989

a. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-DRGs 987 Through 989 Into MDCs

b. Reassignment of Procedures Among MS-DRGs 981 Through 983, 984 Through 986, and 987 Through 989

c. Adding Diagnosis or Procedure Codes to MDCs

(1) Angioplasty of Extracranial Vessel

(2) Excision of Abdominal Arteries

(3) Excision of Retroperitoneal Tissue

(4) Occlusion of Vessels: Esophageal Varices

(5) Excision of Vulva

(6) Lymph Node Biopsy

(7) Obstetrical Laceration Repair

17. Changes to the ICD-10-CM and ICD-10-PCS Coding Systems

a. ICD-10 Coordination and Maintenance Committee

b. Code Freeze

18. Replaced Devices Offered Without Cost or With a Credit

a. Background

b. Changes for FY 2017

19. Other Policy Changes

a. MS-DRG GROUPER Logic

(1) Operations on Products of Conception

(2) Other Heart Revascularization

(3) Procedures on Vascular Bodies: Chemoreceptors

(4) Repair of the Intestine

(5) Insertion of Infusion Pump

(6) Procedures on the Bursa

(7) Procedures on the Breast

(8) Excision of Subcutaneous Tissue and Fascia

(9) Shoulder Replacement

(10) Reposition

(11) Insertion of Infusion Device

(12) Bladder Neck Repair

(13) Future Consideration

b. Issues Relating to MS-DRG 999 (Ungroupable)

c. Other Operating Room (O.R.) and Non-O.R. Issues

(1) O.R. Procedures to Non-O.R. Procedures

(a) Endoscopic/Transorifice Insertion

(b) Endoscopic/Transorifice Removal

(c) Tracheostomy Device Removal

(d) Endoscopic/Percutaneous Insertion

(e) Percutaneous Removal

(f) Percutaneous Drainage

(g) Percutaneous Inspection

(h) Inspection Without Incision

(i) Dilation of Stomach

(j) Endoscopic/Percutaneous Occlusion

(k) Infusion Device

(2) Non-O.R. Procedures to O.R. Procedures

(a) Drainage of Pleural Cavity

(b) Drainage of Cerebral Ventricle

20. Out of Scope Public Comments Received

G. Recalibration of the FY 2017 MS-DRG Relative Weights

1. Data Sources for Developing the Relative Weights

2. Methodology for Calculation of the Relative Weights

3. Development of National Average CCRsStart Printed Page 56766

H. Add-On Payments for New Services and Technologies

1. Background

2. Public Input Before Publication of a Notice of Proposed Rulemaking on Add-On Payments

3. ICD-10-PCS Section “X” Codes for Certain New Medical Services and Technologies

4. FY 2017 Status of Technologies Approved for FY 2016 Add-On Payments

a. KcentraTM

b. Argus® II Retinal Prosthesis System

c. CardioMEMSTM HF (Heart Failure) Monitoring System

d. MitraClip® System

e. Responsive Neurostimulator (RNS®) System

f. Blinatumomab (BLINCYTOTM Trade Brand)

g. Lutonix® Drug Coated Balloon PTA Catheter and In.PACTTM AdmiralTM Pacliaxel Coated Percutaneous Transluminal Angioplasty (PTA) Balloon Catheter

5. FY 2017 Applications for New Technology Add-On Payments

a. MAGEC® Spinal Bracing and Distraction System (MAGEC® Spine)

b. MIRODERM Biologic Wound Matrix (MIRODERM)

c. Idarucizumab

d. Titan Spine (Titan Spine Endoskeleton® nanoLOCKTM Interbody Device)

e. Defitelio® (Defibrotide)

f. GORE® EXCLUDER® Iliac Branch Endoprosthesis (IBE)

g VistogardTM (Uridine Triacetate)

III. Changes to the Hospital Wage Index for Acute Care Hospitals

A. Background

1. Legislative Authority

2. Core-Based Statistical Areas (CBSAs) Revisions for the FY 2017 Hospital Wage Index

B. Worksheet S-3 Wage Data for the FY 2017 Wage Index

1. Included Categories of Costs

2. Excluded Categories of Costs

3. Use of Wage Index Data by Suppliers and Providers Other Than Acute Care Hospitals Under the IPPS

C. Verification of Worksheet S-3 Wage Data

D. Method for Computing the FY 2017 Unadjusted Wage Index

E. Occupational Mix Adjustment to the FY 2017 Wage Index

1. Use of 2013 Occupational Mix Survey for the FY 2017 Wage Index

2. Development of the 2016 Medicare Wage Index Occupational Mix Survey for the FY 2019 Wage Index

3. Calculation of the Occupational Mix Adjustment for FY 2017

F. Analysis and Implementation of the Occupational Mix Adjustment and the FY 2017 Occupational Mix Adjusted Wage Index

G. Transitional Wage Indexes

1. Background

2. Transition for Hospitals in Urban Areas That Became Rural

3. Transition for Hospitals Deemed Urban Under Section 1886(d)(8)(B) of the Act Where the Urban Area Became Rural Under the New OMB Delineations

4. Budget Neutrality

H. Application of the Rural, Imputed, and Frontier Floors

1. Rural Floor

2. Imputed Floor for FY 2017

3. State Frontier Floor for FY 2017

I. FY 2017 Wage Index Tables

J. Revisions to the Wage Index Based on Hospital Redesignations and Reclassifications

1. General Policies and Effects of Reclassification and Redesignation

2. Finalization of Interim Final Rule With Comment Period on Provisions Related to Modification on Limitations on Redesignations by the Medicare Geographic Classification Review Board (MGCRB)

a. Background

b. Criteria for an Individual Hospital Seeking Redesignation to Another Area (§ 412.103)—Application of Policy Provisions

c. Final Rule Provisions

d. Impact

3. Other MGCRB Reclassification and Redesignation Issues for FY 2017

a. FY 2017 Reclassification Requirements and Approvals

b. Requirements for FY 2018 Applications and Revisions Regarding Paper Application Requirements

c. Other Policy Regarding Reclassifications for Terminated Hospitals

4. Redesignation of Hospitals Under Section 1886(d)(8)(B) of the Act

5. Waiving Lugar Redesignation for the Out-Migration Adjustment

K. Out-Migration Adjustment Based on Commuting Patterns of Hospital Employees for FY 2017

L. Notification Regarding CMS “Lock-In” Date for Urban to Rural Reclassifications Under § 412.103

M. Process for Requests for Wage Index Data Corrections

N. Labor Market Share for the FY 2017 Wage Index

O. Public Comments on Treatment of Overhead and Home Office Costs in the Wage Index Calculation as a Result of Our Solicitation

IV. Other Decisions and Changes to the IPPS for Operating Costs and Graduate Medical Education (GME) Costs

A. Changes to Operating Payments for Subsection (d) Puerto Rico Hospitals as a Result of Section 601 of Pub. L. 114-113

B. Changes in the Inpatient Hospital Updates for FY 2017 (§§ 412.64(d) and 412.211(c))

1. FY 2017 Inpatient Hospital Update

2. FY 2017 Puerto Rico Hospital Update

3. Electronic Health Records (EHR) Adjustment to IPPS Market Basket

C. Rural Referral Centers (RRCs): Annual Updates to Case-Mix Index (CMI) and Discharge Criteria (§ 412.96)

1. Case-Mix Index (CMI)

2. Discharges

D. Payment Adjustment for Low-Volume Hospitals (§ 412.101)

E. Indirect Medical Education (IME) Payment Adjustment (§ 412.105)

1. IME Adjustment Factor for FY 2017

2. Other Policy Changes Affecting IME

F. Payment Adjustment for Medicare Disproportionate Share Hospitals (DSHs) for FY 2017 and Subsequent Years (§ 412.106)

1. General Discussion

2. Eligibility for Empirically Justified Medicare DSH Payments and Uncompensated Care Payments

3. Empirically Justified Medicare DSH Payments

4. Uncompensated Care Payments

a. Calculation of Factor 1 for FY 2017

b. Calculation of Factor 2 for FY 2017

c. Calculation of Factor 3 for FY 2017

d. Calculation of Factor 3 for FY 2018 and Subsequent Fiscal Years

(1) Background

(2) Proposed and Finalized Data Source and Time Period for FY 2018 and Subsequent Years, Including Methodology for Incorporating Worksheet S-10 Data

(3) Definition of Uncompensated Care for FY 2018 and Subsequent Fiscal Years

(4) Other Methodological Considerations for FY 2018 and Subsequent Fiscal Years

G. Hospital Readmissions Reduction Program: Updates and Changes (§§ 412.150 Through 412.154)

1. Statutory Basis for the Hospital Readmissions Reduction Program

2. Regulatory Background

3. Policies for the FY 2017 Hospital Readmissions Reduction Program

4. Maintenance of Technical Specifications for Quality Measures

5. Applicable Period for FY 2017

6. Calculation of Aggregate Payments for Excess Readmissions for FY 2017

7. Extraordinary Circumstance Exception Policy

8. Timeline for Public Reporting of Excess Readmission Ratios on Hospital Compare for the FY 2017 Payment Determination

H. Hospital Value-Based Purchasing (VBP) Program: Policy Changes for the FY 2018 Program Year and Subsequent Years

1. Background

a. Statutory Background and Overview of Past Program Years

b. FY 2017 Program Year Payment Details

2. PSI 90 Measure in the FY 2018 Program and Future Program Years

a. PSI 90 Measure Performance Period Change for the FY 2018 Program Year

b. Intent To Propose in Future Rulemaking To Adopt the Modified PSI 90 Measure

3. Retention Policy, Domain Name Change, and Updating of Quality Measures for the FY 2019 Program Year

a. Retention of Previously Adopted Hospital VBP Program Measures

b. Domain Name Change

c. Inclusion of Selected Ward Non-Intensive Care Unit (ICU) Locations in Certain NHSN Measures Beginning With the FY 2019 Program Year

d. Summary of Previously Adopted Measures and Newly Finalized Measure Refinements for the FY 2019 Program Year

4. Finalized Measures and Measure Refinements for the FY 2021 Program Year and Subsequent YearsStart Printed Page 56767

a. Condition-Specific Hospital Level, Risk-Standardized Payment Measures

b. Finalized Update to an Existing Measure for the FY 2021 Program Year: Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Pneumonia (PN) Hospitalization (NQF #0468) (Updated Cohort)

5. New Measure for the FY 2022 Program Year: Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Coronary Artery Bypass Graft (CABG) Surgery (NQF #2558)

6. Previously Adopted and Newly Finalized Baseline and Performance Periods

a. Background

b. Patient- and Caregiver-Centered Experience of Care/Care Coordination Domain (Person and Community Engagement Domain Beginning With the FY 2019 Program Year)

c. Efficiency and Cost Reduction Domain

d. Safety Domain

e. Clinical Care Domain

f. Summary of Previously Adopted and Newly Finalized Baseline and Performance Periods for the FY 2018, FY 2019, FY 2020, FY 2021, and FY 2022 Program Years

7. Immediate Jeopardy Policy Changes

a. Background

b. Increase of Immediate Jeopardy Citations From Two to Three Surveys

c. EMTALA-Related Immediate Jeopardy Citations

8. Performance Standards for the Hospital VBP Program

a. Background

b. Previously Adopted and Newly Finalized Performance Standards for the FY 2019 Program Year

c. Previously Adopted Performance Standards for Certain Measures for the FY 2020 Program Year

d. Previously Adopted and Newly Finalized Performance Standards for Certain Measures for the FY 2021 Program Year

e. Performance Standards for Certain Measures for the FY 2022 Program Year

9. FY 2019 Program Year Scoring Methodology

a. Domain Weighting for the FY 2019 Program Year for Hospitals That Receive a Score on All Domains

b. Domain Weighting for the FY 2019 Program Year for Hospitals Receiving Scores on Fewer Than Four Domains

I. Changes to the Hospital-Acquired Condition (HAC) Reduction Program

1. Background

2. Implementation of the HAC Reduction Program for FY 2017

a. Clarification of Complete Data Requirements for Domain 1

b. Clarification of NHSN CDC HAI Data Submission Requirements for Newly Opened Hospitals

3. Implementation of the HAC Reduction Program for FY 2018

a. Adoption of Modified PSI 90: Patient Safety and Adverse Events Composite (NQF #0531)

b. Applicable Time Periods for the FY 2018 HAC Reduction Program and the FY 2019 HAC Reduction Program

c. Changes to the HAC Reduction Program Scoring Methodology

4. Comments on Additional Measures for Potential Future Adoption

5. Maintenance of Technical Specifications for Quality Measures

6. Extraordinary Circumstance Exception Policy for the HAC Reduction Program Beginning in FY 2016 and for Subsequent Years

J. Payment for Graduate Medical Education (GME) and Indirect Medical Education (IME) Costs (§§ 412.105, 413.75 Through 413.83)

1. Background

2. Change in New Program Growth From 3 Years to 5 Years

a. Urban and Rural Hospitals

b. Policy Changes Relating to Rural Training Tracks at Urban Hospitals

c. Effective Date

3. Section 5506 Closed Hospitals

K. Rural Community Hospital Demonstration Program

1. Background

2. Budget Neutrality Offset Adjustments: Fiscal Years 2005 Through 2016

a. Fiscal Years 2005 Through 2013

b. Fiscal Years 2014 and 2015

c. Fiscal Year 2016

3. Budget Neutrality Methodology for FY 2017 and Reconciliation for FYs 2011 Through 2016

a. Budget Neutrality Methodology for FY 2017

b. Budget Neutrality Offset Reconciliation for FYs 2011 Through 2016

L. Hospital and CAH Notification Procedures for Outpatients Receiving Observation Services

1. Background

a. Statutory Authority

b. Effective Date

2. Implementation of the NOTICE Act Provisions

a. Notice Process

b. Notification Recipients

c. Timing of Notice Delivery

d. Requirements for Written Notice

e. Outpatient Observation Services and Beneficiary Financial Liability

f. Delivering the Medicare Outpatient Observation Notice

g. Oral Notice

h. Signature Requirements

i. No Appeal Rights Under the NOTICE Act

M. Technical Changes and Correction of Typographical Errors in Certain Regulations Under 42 CFR Part 413 Relating to Costs to Related Organizations and Medicare Cost Reports

1. General Background

2. Technical Change to Regulations at 42 CFR 413.17(d)(1) on Cost to Related Organizations

3. Changes to 42 CFR 413.24(f)(4)(i) Relating to Electronic Submission of Cost Reports

4. Technical Changes to 42 CFR 413.24(f)(4)(ii) Relating to Electronic Submission of Cost Reports and Due Dates

5. Technical Changes to 42 CFR 413.24(f)(4)(iv) Relating to Reporting Entities, Cost Report Certification Statement, Electronic Submission and Cost Reports Due Dates

6. Technical Correction to 42 CFR 413.200(c)(1)(i) Relating to Medicare Cost Report Due Dates for Organ Procurement Organizations and Histocompatibility Laboratories

N. Finalization of Interim Final Rule With Comment Period Implementing Legislative Extensions Relating to the Payment Adjustments for Low-Volume Hospitals and the Medicare-Dependent, Small Rural Hospital (MDH) Program

O. Clarification Regarding the Medicare Utilization Requirement for Medicare-Dependent, Small Rural Hospitals (MDHs) (§ 412.108)

P. Adjustment to IPPS Rates Resulting From 2-Midnight Policy

V. Changes to the IPPS for Capital-Related Costs

A. Overview

B. Additional Provisions

1. Exception Payments

2. New Hospitals

3. Changes in Payments for Hospitals Located in Puerto Rico

C. Annual Update for FY 2017

VI. Changes for Hospitals Excluded From the IPPS

A. Rate-of-Increase in Payments to Excluded Hospitals for FY 2017

B. Report of Adjustment (Exceptions) Payments

C. Critical Care Hospitals (CAHs)

1. Background

2. Frontier Community Health Integration Project (FCHIP) Demonstration

VII. Changes to the Long-Term Care Hospital Prospective Payment System (LTCH PPS) for FY 2017

A. Background of the LTCH PPS

1. Legislative and Regulatory Authority

2. Criteria for Classification as a LTCH

a. Classification as a LTCH

b. Hospitals Excluded From the LTCH PPS

3. Limitation on Charges to Beneficiaries

4. Administrative Simplification Compliance Act (ASCA) and Health Insurance Portability and Accountability Act (HIPAA) Compliance

B. Modifications to the Application of the Site Neutral Payment Rate (§ 412.522)

1. Background

2. Technical Correction of Definition of “Subsection (d) Hospital” for the Site Neutral Payment Rate (§ 412.503)

3. Finalization of Interim Final Rule With Comment Period: Temporary Exception to the Site Neutral Payment Rate Under the LTCH PPS for Certain Severe Wound Discharges From Certain LTCHs

C. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-LTC-DRG) Classifications and Relative Weights for FY 2017

1. Background

2. Patient Classifications Into MS-LTC-DRGs

a. Background

b. Changes to the MS-LTC-DRGs for FY 2017

3. Development of the FY 2017 MS-LTC-DRG Relative Weights

a. General Overview of the Development of the MS-LTC-DRG Relative Weights

b. Development of the MS-LTC-DRG Relative Weights for FY 2017Start Printed Page 56768

c. Data

d. Hospital-Specific Relative Value (HSRV) Methodology

e. Treatment of Severity Levels in Developing the MS-LTC-DRG Relative Weights

f. Low-Volume MS-LTC-DRGs

g. Steps for Determining the FY 2017 MS-LTC-DRG Relative Weights

D. Rebasing of the LTCH Market Basket

1. Background

2. Overview of the 2013-Based LTCH Market Basket

3. Development of the 2013-Based LTCH Market Basket Cost Categories and Weights

a. Use of Medicare Cost Report Data

(1) Wages and Salaries Costs

(2) Employee Benefit Costs

(3) Contract Labor Costs

(4) Pharmaceutical Costs

(5) Professional Liability Insurance Costs

(6) Capital Costs

b. Final Major Cost Category Computation

c. Derivation of the Detailed Operating Cost Weights

d. Derivation of the Detailed Capital Cost Weights

e. 2013-Based LTCH Market Basket Cost Categories and Weights

4. Selection of Price Proxies

a. Price Proxies for the Operating Portion of the 2013-Based LTCH Market Basket

(1) Wages and Salaries

(2) Employee Benefits

(3) Electricity

(4) Fuel, Oil, and Gasoline

(5) Water and Sewage

(6) Professional Liability Insurance

(7) Pharmaceuticals

(8) Food: Direct Purchases

(9) Food: Contract Services

(10) Chemicals

(11) Medical Instruments

(12) Rubber and Plastics

(13) Paper and Printing Products

(14) Miscellaneous Products

(15) Professional Fees: Labor-Related

(16) Administrative and Facilities Support Services

(17) Installation, Maintenance, and Repair Services

(18) All Other: Labor-Related Services

(19) Professional Fees: Nonlabor-Related

(20) Financial Services

(21) Telephone Services

(22) All Other: Nonlabor-Related Services

b. Price Proxies for the Capital Portion of the 2013-Based LTCH Market Basket

(1) Capital Price Proxies Prior to Vintage Weighting

(2) Vintage Weights for Price Proxies

c. Summary of Price Proxies of the 2013-Based LTCH Market Basket

d. FY 2017 Market Basket Update for LTCHs

e. FY 2017 Labor-Related Share

E. Changes to the LTCH PPS Payment Rates and Other Changes to the LTCH PPS for FY 2017

1. Overview of Development of the LTCH PPS Standard Federal Payment Rates

2. FY 2017 LTCH PPS Standard Federal Payment Rate Annual Market Basket Update

a. Overview

b. Market Basket Under the LTCH PPS for FY 2017

c. Revision of Certain Market Basket Updates as Required by the Affordable Care Act

d. Adjustment to the LTCH PPS Standard Federal Payment Rate Under the Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

e. Annual Market Basket Update Under the LTCH PPS for FY 2017

3. Update Under the Payment Adjustment for “Subclause (II)” LTCHs

F. Modifications to the “25-Percent Threshold Policy” Payment Adjustments (§§ 412.534 and 412.536)

G. Refinement to the Payment Adjustment for “Subclause II” LTCHs

VIII. Quality Data Reporting Requirements for Specific Providers and Suppliers

A. Hospital Inpatient Quality Reporting (IQR) Program

1. Background

a. History of the Hospital IQR Program

b. Maintenance of Technical Specifications for Quality Measures

c. Public Display of Quality Measures

2. Process for Retaining Previously Adopted Hospital IQR Program Measures for Subsequent Payment Determinations

3. Removal and Suspension of Hospital IQR Program Measures

a. Considerations in Removing Quality Measures From the Hospital IQR Program

b. Removal of Hospital IQR Program Measures for the FY 2019 Payment Determination and Subsequent Years

4. Previously Adopted Hospital IQR Program Measures for the FY 2018 Payment Determination and Subsequent Years

5. Expansion and Updating of Quality Measures

6. Refinements to Existing Measures in the Hospital IQR Program

a. Expansion of the Cohort for the PN Payment Measure: Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Pneumonia (NQF #2579)

b. Adoption of Modified PSI 90: Patient Safety and Adverse Events Composite Measure (NQF #0531)

7. Additional Hospital IQR Program Measures for the FY 2019 Payment Determinations and Subsequent Years

a. Adoption of Three Clinical Episode-Based Payment Measures

b. Adoption of Excess Days in Acute Care After Hospitalization for Pneumonia (PN Excess Days) Measure

c. Summary of Previously Adopted and Newly Finalized Hospital IQR Program Measures for the FY 2019 Payment Determination and Subsequent Years

8. Changes to Policies on Reporting of eCQMs

a. Requirement That Hospitals Report on an Increased Number of eCQMs in the Hospital IQR Program Measure Set for the CY 2017 Reporting Period/FY 2019 Payment Determination and Subsequent Years

b. Requirement That Hospitals Report a Full Year of eCQM Data

c. Clarification Regarding Data Submission for ED-1, ED-2, PC-01, STK-4, VTE-5, and VTE-6

9. Possible New Quality Measures and Measure Topics for Future Years

a. Potential Inclusion of the National Institutes of Health (NIH) Stroke Scale for the Hospital 30-Day Mortality Following Acute Ischemic Stroke Hospitalization Measure Beginning as Early as the FY 2022 Payment Determination

b. Potential Inclusion of National Healthcare Safety Network (NHSN) Antimicrobial Use Measure (NQF #2720)

c. Potential Measures for Behavioral Health in the Hospital IQR Program

d. Potential Public Reporting of Quality Measures Data Stratified by Race, Ethnicity, Sex, and Disability and Future Hospital Quality Measures That Incorporate Health Equity

10. Form, Manner, and Timing of Quality Data Submission

a. Background

b. Procedural Requirements for the FY 2019 Payment Determination and Subsequent Years

c. Data Submission Requirements for Chart-Abstracted Measures

d. Alignment of the Hospital IQR Program With the Medicare and Medicaid EHR Incentive Programs for Eligible Hospitals and CAHs

e. Sampling and Case Thresholds for the FY 2019 Payment Determination and Subsequent Years

f. HCAHPS Requirements for the FY 2019 Payment Determination and Subsequent Years

g. Data Submission Requirements for Structural Measures for the FY 2019 Payment Determination and Subsequent Years

h. Data Submission and Reporting Requirements for HAI Measures Reported via NHSN

11. Modifications to the Existing Processes for Validation of Hospital IQR Program Data

a. Background

b. Modifications to the Existing Processes for Validation of Hospital IQR Program Data

12. Data Accuracy and Completeness Acknowledgement (DACA) Requirements for the FY 2019 Payment Determination and Subsequent Years

13. Public Display Requirements for the FY 2019 Payment Determination and Subsequent Years

14. Reconsideration and Appeal Procedures for the FY 2019 Payment Determination and Subsequent Years

15. Changes to the Hospital IQR Program Extraordinary Circumstances Extensions or Exemptions (ECE) Policy

a. Extension of the General ECE Request Deadline for Non-eCQM Circumstances

b. Establishment of a Separate Submission Deadline for ECE Requests Related to eCQMs

B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program

1. Background

2. Criteria for Removal and Retention of PCHQR Program MeasuresStart Printed Page 56769

3. Retention and Update to Previously Finalized Quality Measures for PCHs Beginning With the FY 2019 Program Year

a. Background

b. Update of Oncology: Radiation Dose Limits to Normal Tissues (NQF #0382) Measure for FY 2019 Program Year and Subsequent Years

4. New Quality Measure Beginning With the FY 2019 Program Year

a. Considerations in the Selection of Quality Measures

b. Adoption of the Admissions and Emergency Department (ED) Visits for Patients Receiving Outpatient Chemotherapy Measure

5. Possible New Quality Measure Topics for Future Years

6. Maintenance of Technical Specifications for Quality Measures

7. Public Display Requirements

a. Background

b. Additional Public Display Requirements

c. Public Display of Additional PCHQR Measure

d. Public Display of Updated Measure

e. Postponement of Public Display of Two Measures

8. Form, Manner, and Timing of Data Submission

9. Exceptions From PCHQR Program Requirements

C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

1. Background and Statutory Authority

2. General Considerations Used for Selection of Quality, Resource Use, and Other Measures for the LTCH QRP

3. Policy for Retention of LTCH QRP Measures Adopted for Previous Payment Determinations

4. Policy for Adopting Changes to LTCH QRP Measures

5. Quality Measures Previously Finalized for and Currently Used in the LTCH QRP

6. LTCH QRP Quality, Resource Use and Other Measures for the FY 2018 Payment Determination and Subsequent Years

a. Measure To Address the IMPACT Act Domain of Resource Use and Other Measures: Total Estimated MSPB—PAC LTCH QRP

b. Measure To Address the IMPACT Act Domain of Resource Use and Other Measures: Discharge to Community-Post Acute Care (PAC) LTCH QRP

c. Measure To Address the IMPACT Act Domain of Resource Use and Other Measures: Potentially Preventable 30-Day Post-Discharge Readmission Measure for the LTCH QRP

7. LTCH QRP Quality Measure Finalized for the FY 2020 Payment Determination and Subsequent Years

a. Background

b. Measure To Address the IMPACT Act Domain of Medication Reconciliation: Drug Regimen Review Conducted With Follow-Up for Identified Issues-Post Acute Care LTCH QRP

8. LTCH QRP Quality Measures and Measure Concepts Under Consideration for Future Years

9. Form, Manner, and Timing of Quality Data Submission for the FY 2018 Payment Determination and Subsequent Years

a. Background

b. Timeline for Data Submission Under the LTCH QRP for the FY 2018 Payment Determination and Subsequent Years

c. Timeline and Data Submission Mechanisms for the FY 2018 Payment Determination and Subsequent Years for the LTCH QRP Resource Use and Other Measures—Claims-Based Measures

d. Revisions to the Previously Adopted Data Collection Period and Submission Deadlines for Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF #0680) for the FY 2019 Payment Determination and Subsequent Years

e. Timeline and Data Submission Mechanisms for the Newly Finalized LTCH QRP Quality Measure for the FY 2020 Payment Determination and Subsequent Years

10. LTCH QRP Data Completion Thresholds for the FY 2016 Payment Determination and Subsequent Years

11. LTCH QRP Data Validation Process for the FY 2016 Payment Determination and Subsequent Years

12. Change to Previously Codified LTCH QRP Submission Exception and Extension Policies

13. Previously Finalized LTCH QRP Reconsideration and Appeals Procedures

14. Policies Regarding Public Display of Measure Data for the LTCH QRP and Procedures for the Opportunity To Review and Correct Data and Information

a. Public Display of Measures

b. Procedures for the Opportunity To Review and Correct Data and Information

15. Mechanism for Providing Feedback Reports to LTCHs

D. Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program

1. Background

a. Statutory Authority

b. Covered Entities

c. Considerations in Selecting Quality Measures

2. Retention of IPFQR Program Measures Adopted in Previous Payment Determinations

3. Update to Previously Finalized Measure: Screening for Metabolic Disorders

4. New Quality Measures for the FY 2019 Payment Determination and Subsequent Years

a. SUB-3—Alcohol and Other Drug Use Disorder Treatment Provided or Offered at Discharge and the Subset Measure SUB-3a—Alcohol and Other Drug Use Disorder Treatment at Discharge (NQF #1664) (SUB-3 and SUB3a)

b. Thirty-Day All-Cause Unplanned Readmission Following Psychiatric Hospitalization in an IPF

5. Summary of Measures for the FY 2019 Payment Determination and Subsequent Years

6. Possible IPFQR Program Measures and Topics for Future Consideration

7. Public Display and Review Requirements

8. Form, Manner, and Timing of Quality Data Submission

a. Procedural and Submission Requirements

b. Change to the Reporting Periods and Submission Timeframes

c. Population and Sampling

d. Data Accuracy and Completeness Acknowledgement (DACA) Requirements

9. Reconsideration and Appeals Procedures

10. Exceptions to Quality Reporting Requirements

E. Clinical Quality Measurement for Eligible Hospitals and Critical Access Hospitals (CAHs) Participating in the EHR Incentive Programs in 2017

1. Background

2. CQM Reporting for the Medicare and Medicaid EHR Incentive Programs in 2017

a. Background

b. CQM Reporting Period for the Medicare and Medicaid EHR Incentive Programs in CY 2017

c. CQM Reporting Form and Method for the Medicare EHR Incentive Program in 2017

IX. MedPAC Recommendations

X. Other Required Information

A. Requests for Data From the Public

B. Collection of Information Requirements

1. Statutory Requirement for Solicitation of Comments

2. ICRs for Add-On Payments for New Services and Technologies

3. ICRs for the Occupational Mix Adjustment to the FY 2017 Wage Index (Hospital Wage Index Occupational Mix Survey)

4. Hospital Applications for Geographic Reclassifications by the MGCRB

5. ICRs for Applications for GME Resident Slots

6. ICRs for the Notice of Observation Treatment by Hospitals and CAHs

7. ICRs for the Hospital Inpatient Quality Reporting (IQR) Program

8. ICRs for PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program

9. ICRs for Hospital Value-Based Purchasing (VBP) Program

10. ICRs for the Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

11. ICRs for the Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program

12. ICRs for the Electronic Health Record (EHR) Incentive Programs and Meaningful Use

Regulation Text

Addendum—Schedule of Standardized Amounts, Update Factors, and Rate-of-Increase Percentages Effective With Cost Reporting Periods Beginning on or after October 1, 2016 and Payment Rates for LTCHs Effective With Discharges Occurring on or After October 1, 2016

I. Summary and Background

II. Changes to the Prospective Payment Rates for Hospital Inpatient Operating Costs for Acute Care Hospitals for FY 2017

A. Calculation of the Adjusted Standardized AmountStart Printed Page 56770

B. Adjustments for Area Wage Levels and Cost-of-Living

C. Calculation of the Prospective Payment Rates

III. Changes to Payment Rates for Acute Care Hospital Inpatient Capital-Related Costs for FY 2017

A. Determination of Federal Hospital Inpatient Capital-Related Prospective Payment Rate Update

B. Calculation of the Inpatient Capital-Related Prospective Payments for FY 2017

C. Capital Input Price Index

IV. Changes to Payment Rates for Excluded Hospitals: Rate-of-Increase Percentages for FY 2017

V. Updates to the Payment Rates for the LTCH PPS for FY 2017

A. LTCH PPS Standard Federal Payment Rate for FY 2017

B. Adjustment for Area Wage Levels Under the LTCH PPS for FY 2017

1. Background

2. Geographic Classifications (Labor Market Areas) for the LTCH PPS Standard Federal Payment Rate

3. Labor-Related Share for the LTCH PPS Standard Federal Payment Rate

4. Wage Index for FY 2017 for the LTCH PPS Standard Federal Payment Rate

5. Budget Neutrality Adjustment for Changes to the LTCH PPS Standard Federal Payment Rate Area Wage Level Adjustment

C. LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs Located in Alaska and Hawaii

D. Adjustment for LTCH PPS High-Cost Outlier (HCO) Cases

E. Update to the IPPS Comparable/Equivalent Amounts To Reflect the Statutory Changes to the IPPS DSH Payment Adjustment Methodology

F. Computing the Adjusted LTCH PPS Federal Prospective Payments for FY 2017

VI. Tables Referenced in This Final Rule and Available Through the Internet on the CMS Web site

Appendix A—Economic Analyses

I. Regulatory Impact Analysis

A. Introduction

B. Need

C. Objectives of the IPPS

D. Limitations of Our Analysis

E. Hospitals Included in and Excluded From the IPPS

F. Effects on Hospitals and Hospital Units Excluded From the IPPS

G. Quantitative Effects of the Policy Changes Under the IPPS for Operating Costs

1. Basis and Methodology of Estimates

2. Analysis of Table I

3. Impact Analysis of Table II

H. Effects of Other Policy Changes

1. Effects of Policy Relating to New Medical Service and Technology Add-On Payments

2. Effect of Changes Relating to Payment Adjustment for Medicare Disproportionate Share Hospitals

3. Effects of Reduction Under the Hospital Readmissions Reduction Program

4. Effects of Changes Under the FY 2017 Hospital Value-Based Purchasing (VBP) Program

5. Effects of the Changes to the HAC Reduction Program for FY 2017

6. Effects of Policy Changes Relating to Direct GME and IME Payments for Rural Training Tracks at Urban Hospitals

7. Effects of Implementation of Rural Community Hospital Demonstration Program

8. Effects of Implementation of the Notice of Observation Treatment and Implications for Care Eligibility Act (NOTICE Act)

9. Effects of Technical Changes and Correction of Typographical Errors in Certain Regulations Under 42 CFR part 413 Relating to Costs to Related Organizations and Medicare Cost Reports

10. Effects of Implementation of the Frontier Community Health Integration Project (FCHIP) Demonstration

I. Effects of Changes in the Capital IPPS

1. General Considerations

2. Results

J. Effects of Payment Rate Changes and Policy Changes Under the LTCH PPS

1. Introduction and General Considerations

2. Impact on Rural Hospitals

3. Anticipated Effects of LTCH PPS Payment Rate Changes and Policy Changes

4. Effect on the Medicare Program

5. Effect on Medicare Beneficiaries

K. Effects of Requirements for Hospital Inpatient Quality Reporting (IQR) Program

L. Effects of Requirements for the PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program

M. Effects of Requirements for the Long-Term Care Hospital Quality Reporting Program (LTCH QRP) for the FY 2018 Payment Determination and Subsequent Years

N. Effects of Updates to the Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program

O. Effects of Requirements Regarding the Electronic Health Record (EHR) Incentive Programs and Meaningful Use

P. Alternatives Considered

Q. Overall Conclusion

1. Acute Care Hospitals

2. LTCHs

II. Accounting Statements and Tables

A. Acute Care Hospitals

B. LTCHs

III. Regulatory Flexibility Act (RFA) Analysis

IV. Impact on Small Rural Hospitals

V. Unfunded Mandate Reform Act (UMRA) Analysis

VI. Executive Order 12866

Appendix B: Recommendation of Update Factors for Operating Cost Rates of Payment for Inpatient Hospital Services

I. Background

II. Inpatient Hospital Update for FY 2017

A. FY 2017 Inpatient Hospital Update

B. Update for SCHs and MDHs for FY 2017

C. FY 2017 Puerto Rico Hospital Update

D. Update for Hospitals Excluded From the IPPS

E. Update for LTCHs for FY 2017

III. Secretary's Recommendation

IV. MedPAC Recommendation for Assessing Payment Adequacy and Updating Payments in Traditional Medicare

I. Executive Summary and Background

A. Executive Summary

1. Purpose and Legal Authority

This final rule makes payment and policy changes under the Medicare inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals as well as for certain hospitals and hospital units excluded from the IPPS. In addition, it makes payment and policy changes for inpatient hospital services provided by long-term care hospitals (LTCHs) under the long-term care hospital prospective payment system (LTCH PPS). It also makes policy changes to programs associated with Medicare IPPS hospitals, IPPS-excluded hospitals, and LTCHs.

We are establishing new requirements or revising requirements for quality reporting by specific providers (acute care hospitals, PPS-exempt cancer hospitals, LTCHs, and inpatient psychiatric facilities) that are participating in Medicare, including related provisions for eligible hospitals and critical access hospitals (CAHs) participating in the Electronic Health Record (EHR) Incentive Program. We are updating policies relating to the Hospital Value-Based Purchasing (VBP) Program, the Hospital Readmissions Reduction Program, and the Hospital-Acquired Condition (HAC) Reduction Program. We are implementing statutory provisions that require hospitals and CAHs to furnish notification to Medicare beneficiaries, including Medicare Advantage enrollees, when the beneficiaries receive outpatient observation services for more than 24 hours; announcing the implementation of the Frontier Community Health Integration Project Demonstration; and making technical corrections and changes to regulations relating to costs to organizations and Medicare cost reports. In addition, in this final rule, we are providing notice of the closure of three teaching hospitals and the opportunity for hospitals to apply for available graduate medical education resident slots under section 5506 of the Affordable Care Act.

Under various statutory authorities, we are making changes to the Medicare IPPS, to the LTCH PPS, and to other related payment methodologies and programs for FY 2017 and subsequent fiscal years. These statutory authorities include, but are not limited to, the following:Start Printed Page 56771

  • Section 1886(d) of the Social Security Act (the Act), which sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. Section 1886(g) of the Act requires that, instead of paying for capital-related costs of inpatient hospital services on a reasonable cost basis, the Secretary use a prospective payment system (PPS).
  • Section 1886(d)(1)(B) of the Act, which specifies that certain hospitals and hospital units are excluded from the IPPS. These hospitals and units are: Rehabilitation hospitals and units; LTCHs; psychiatric hospitals and units; children's hospitals; cancer hospitals; and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa). Religious nonmedical health care institutions (RNHCIs) are also excluded from the IPPS.
  • Sections 123(a) and (c) of the BBRA (Pub. L. 106-113) and section 307(b)(1) of the BIPA (Pub. L. 106-554) (as codified under section 1886(m)(1) of the Act), which provide for the development and implementation of a prospective payment system for payment for inpatient hospital services of long-term care hospitals (LTCHs) described in section 1886(d)(1)(B)(iv) of the Act.
  • Sections 1814(l), 1820, and 1834(g) of the Act, which specify that payments are made to critical access hospitals (CAHs) (that is, rural hospitals or facilities that meet certain statutory requirements) for inpatient and outpatient services and that these payments are generally based on 101 percent of reasonable cost.
  • Section 1866(k) of the Act, as added by section 3005 of the Affordable Care Act, which establishes a quality reporting program for hospitals described in section 1886(d)(1)(B)(v) of the Act, referred to as “PPS-exempt cancer hospitals.”
  • Section 1886(a)(4) of the Act, which specifies that costs of approved educational activities are excluded from the operating costs of inpatient hospital services. Hospitals with approved graduate medical education (GME) programs are paid for the direct costs of GME in accordance with section 1886(h) of the Act.
  • Section 1886(b)(3)(B)(viii) of the Act, which requires the Secretary to reduce the applicable percentage increase in payments to a subsection (d) hospital for a fiscal year if the hospital does not submit data on measures in a form and manner, and at a time, specified by the Secretary.
  • Section 1886(o) of the Act, which requires the Secretary to establish a Hospital Value-Based Purchasing (VBP) Program under which value-based incentive payments are made in a fiscal year to hospitals meeting performance standards established for a performance period for such fiscal year.
  • Section 1886(p) of the Act, as added by section 3008 of the Affordable Care Act, which establishes a Hospital-Acquired Condition (HAC) Reduction Program, under which payments to applicable hospitals are adjusted to provide an incentive to reduce hospital-acquired conditions.
  • Section 1886(q) of the Act, as added by section 3025 of the Affordable Care Act and amended by section 10309 of the Affordable Care Act, which establishes the “Hospital Readmissions Reduction Program” effective for discharges from an “applicable hospital” beginning on or after October 1, 2012, under which payments to those hospitals under section 1886(d) of the Act will be reduced to account for certain excess readmissions.
  • Section 1886(r) of the Act, as added by section 3133 of the Affordable Care Act, which provides for a reduction to disproportionate share hospital (DSH) payments under section 1886(d)(5)(F) of the Act and for a new uncompensated care payment to eligible hospitals. Specifically, section 1886(r) of the Act requires that, for fiscal year 2014 and each subsequent fiscal year, subsection (d) hospitals that would otherwise receive a DSH payment made under section 1886(d)(5)(F) of the Act will receive two separate payments: (1) 25 percent of the amount they previously would have received under section 1886(d)(5)(F) of the Act for DSH (“the empirically justified amount”), and (2) an additional payment for the DSH hospital's proportion of uncompensated care, determined as the product of three factors. These three factors are: (1) 75 percent of the payments that would otherwise be made under section 1886(d)(5)(F) of the Act; (2) 1 minus the percent change in the percent of individuals under the age of 65 who are uninsured (minus 0.1 percentage points for FY 2014, and minus 0.2 percentage points for FY 2015 through FY 2017); and (3) a hospital's uncompensated care amount relative to the uncompensated care amount of all DSH hospitals expressed as a percentage.
  • Section 1886(m)(6) of the Act, as added by section 1206(a)(1) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113-67), which provided for the establishment of site neutral payment rate criteria under the LTCH PPS with implementation beginning in FY 2016.
  • Section 1886(m)(5)(D)(iv) of the Act, as added by section 1206 (c) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113-67), which provides for the establishment of a functional status quality measure under the LTCH QRP for change in mobility among inpatients requiring ventilator support.
  • Section 1899B of the Act, as added by the Improving Medicare Post-Acute Care Transformation Act of 2014 (the IMPACT Act, Pub. L. 113-185), which imposes data reporting requirements for certain post-acute care providers, including LTCHs.
  • Section 1886(d)(12) of the Act, as amended by section 204 of the Medicare Access and CHIP Reauthorization Act of 2015, which extends, through FY 2017, changes to the inpatient hospital payment adjustment for certain low-volume hospitals; and section 1886(d)(5)(G) of the Act, as amended by section 205 of the Medicare Access and CHIP Reauthorization Act of 2015, which extends, through FY 2017, the Medicare-dependent, small rural hospital (MDH) program.
  • Section 1886(m)(6)(A)(i) and (E) of the Act, as amended and added by section 231 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), which established a temporary exception to the site neutral payment rate under the LTCH PPS for certain severe wound discharges from certain LTCHs occurring prior to January 1, 2017.

2. Summary of the Major Provisions

a. MS-DRG Documentation and Coding Adjustment

Section 631 of the American Taxpayer Relief Act (ATRA, Pub. L. 112-240) amended section 7(b)(1)(B) of Pub. L. 110-90 to require the Secretary to make a recoupment adjustment to the standardized amount of Medicare payments to acute care hospitals to account for changes in MS-DRG documentation and coding that do not reflect real changes in case-mix, totaling $11 billion over a 4-year period of FYs 2014, 2015, 2016, and 2017. This adjustment represents the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Pub. L. 110-90 until FY 2013. Prior to the ATRA, this amount could not have been recovered under Pub. L. 110-90.

While our actuaries estimated that a −9.3 percent adjustment to the Start Printed Page 56772standardized amount would be necessary if CMS were to fully recover the $11 billion recoupment required by section 631 of the ATRA in one year, it is often our practice to delay or phase in rate adjustments over more than one year, in order to moderate the effects on rates in any one year. Therefore, consistent with the policies that we have adopted in many similar cases, we made a −0.8 percent recoupment adjustment to the standardized amount in FY 2014, FY 2015, and FY 2016. For FY 2017, we are making an additional −1.5 percent recoupment adjustment to the standardized amount.

b. Adjustment to IPPS Rates Resulting From 2-Midnight Policy

In this final rule, we are making a permanent adjustment of (1/0.998) to the standardized amount, the hospital-specific payment rates, and the national capital Federal rate using our authority under sections 1886(d)(5)(I)(i) and 1886(g) of the Act to prospectively remove the 0.2 percent reduction to the rate put in place in FY 2014 to offset the estimated increase in IPPS expenditures as a result of the 2-midnight policy. In addition, we are making a temporary one-time prospective increase to the FY 2017 standardized amount, the hospital-specific payment rates, and the national capital Federal rate of 0.6 percent by including a temporary one-time factor of 1.006 in the calculation of the standardized amount, the hospital-specific payment rates, and the national capital Federal rate using our authority under sections 1886(d)(5)(I)(i) and 1886(g) of the Act, to address the effects of the 0.2 percent reduction to the rate for the 2-midnight policy in effect for FYs 2014, 2015, and 2016.

c. Reduction of Hospital Payments for Excess Readmissions

We are making changes to policies for the Hospital Readmissions Reduction Program, which is established under section 1886(q) of the Act, as added by section 3025 of the Affordable Care Act, as amended by section 10309 of the Affordable Care Act. The Hospital Readmissions Reduction Program requires a reduction to a hospital's base operating DRG payment to account for excess readmissions of selected applicable conditions. For FY 2017 and subsequent years, the reduction is based on a hospital's risk-adjusted readmission rate during a 3-year period for acute myocardial infarction (AMI), heart failure (HF), pneumonia, chronic obstructive pulmonary disease (COPD), total hip arthroplasty/total knee arthroplasty (THA/TKA), and coronary artery bypass graft (CABG). In this final rule, to align with other quality reporting programs and allow us to post data as soon as possible, we are clarifying our public reporting policy so that excess readmission rates will be posted to the Hospital Compare Web site as soon as feasible following the preview period, and we are revising the methodology to include the addition of the CABG applicable condition in the calculation of the readmissions payment adjustment for FY 2017.

d. Hospital Value-Based Purchasing (VBP) Program

Section 1886(o) of the Act requires the Secretary to establish a Hospital VBP Program under which value-based incentive payments are made in a fiscal year to hospitals based on their performance on measures established for a performance period for such fiscal year. In this final rule, we are updating one previously adopted measure beginning with the FY 2019 program year; indicating our intent to propose to remove one measure beginning with the FY 2019 program year and our intent to propose to adopt one measure in future rulemaking; adopting two new measures beginning with the FY 2021 program year; updating one previously adopted measure beginning with the FY 2021 program year; and adopting one new measure beginning with the FY 2022 program year. We also are changing the performance period for one previously adopted measure for the FY 2018 program year and changing the name of the Patient- and Caregiver-Centered Experience of Care/Care Coordination domain to the Person and Community Engagement domain beginning with the FY 2019 program year. In addition, we are making changes to the immediate jeopardy citation policy.

e. Hospital-Acquired Condition (HAC) Reduction Program

Section 1886(p) of the Act, as added under section 3008(a) of the Affordable Care Act, establishes an incentive to hospitals to reduce the incidence of hospital-acquired conditions by requiring the Secretary to make an adjustment to payments to applicable hospitals effective for discharges beginning on October 1, 2014. This 1-percent payment reduction applies to a hospital whose ranking is in the top quartile (25 percent) of all applicable hospitals, relative to the national average, of conditions acquired during the applicable period and on all of the hospital's discharges for the specified fiscal year. In this final rule, we are promulgating the following HAC Reduction Program policies: (1) Establishing NHSN CDC HAI data submission requirements for newly opened hospitals; (2) clarifying data requirements for Domain 1 scoring; (3) establishing performance periods for the FY 2018 and FY 2019 HAC Reduction Programs, including revising our regulations to accommodate variable timeframes; (4) adopting the refined PSI 90: Patient Safety and Adverse Events Composite (NQF #0531); and (5) changing the program scoring methodology from the current decile-based scoring to a continuous scoring methodology.

f. DSH Payment Adjustment and Additional Payment for Uncompensated Care

Section 3133 of the Affordable Care Act modified the Medicare disproportionate share hospital (DSH) payment methodology beginning in FY 2014. Under section 1886(r) of the Act, which was added by section 3133 of the Affordable Care Act, starting in FY 2014, DSHs will receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of the Act. The remaining amount, equal to 75 percent of what otherwise would have been paid as Medicare DSH payments, will be paid as additional payments after the amount is reduced for changes in the percentage of individuals that are uninsured. Each Medicare DSH will receive an additional payment based on its share of the total amount of uncompensated care for all Medicare DSHs for a given time period.

In this final rule, we are updating our estimates of the three factors used to determine uncompensated care payments for FY 2017 and continuing our methodology of using a hospital's share of insured low-income days for purposes of determining Factor 3. For Puerto Rico hospitals, we are using 14 percent of Medicaid days as a proxy for SSI days in the calculation of Factor 3. We are continuing to use the methodology we established in FY 2015 to calculate the uncompensated care payment amounts for merged hospitals such that we combine uncompensated care data for the hospitals that have undergone a merger in order to calculate their relative share of uncompensated care. We are expanding the time period of the data used to calculate the uncompensated care payment amounts to be distributed, from one cost reporting period to three cost reporting periods. At this time, we are not finalizing a future transition to using Worksheet S-10 data to determine the amounts and distribution of uncompensated care payments. Start Printed Page 56773Specifically, we had proposed to use a 3-year transition beginning in FY 2018 where we use a combination of Worksheet S-10 and proxy data until FY 2020 when all data used in computing the uncompensated care payment amounts to be distributed would come from Worksheet S-10. In light of public comments, we believe it would be appropriate to institute certain additional quality control and data improvement measures to the Worksheet S-10 instructions and data prior to moving forward with incorporation of Worksheet S-10 data into the calculation of Factor 3. Consequently, we are not finalizing our proposal to begin to incorporate Worksheet S-10 data into the computation of Factor 3 for FY 2018. In light of the significant concerns expressed by commenters regarding the Worksheet S-10 data, we are postponing the decision regarding when to begin incorporating data from Worksheet S-10 and proceeding with revisions to the cost report instructions for Worksheet S-10. We expect data from the revised Worksheet S-10 to be available to use in the calculation of Factor 3 in the near future, and no later than FY 2021. With regard to how Factor 3 will be computed in FY 2018 and subsequent years, we intend to explore whether there is an appropriate proxy for uncompensated care that could be used to calculate Factor 3 until we determine that data from the revised Worksheet S-10 can be used for this purpose. We will undertake further notice-and-comment rulemaking to address the issue of the appropriate data to use to determine Factor 3 for FY 2018 and subsequent fiscal years.

g. Payments for Capital-Related Costs for Hospitals Located in Puerto Rico

Capital IPPS payments to hospitals located in Puerto Rico are currently computed based on a blend of 25 percent of the capital IPPS Puerto Rico rate and 75 percent of the capital IPPS Federal rate. Section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113) increased the applicable Federal percentage of the operating IPPS payment for hospitals located in Puerto Rico from 75 percent to 100 percent and decreased the applicable Puerto Rico percentage of the operating IPPS payments for hospitals located in Puerto Rico from 25 percent to zero percent, applicable to discharges occurring on or after January 1, 2016. In this final rule, we are revising the calculation of capital IPPS payments to hospitals located in Puerto Rico to parallel the change in the statutory calculation of operating IPPS payments to hospitals located in Puerto Rico, beginning in FY 2017.

h. Changes to the LTCH PPS

In this final rule, we are revising and rebasing the market basket used under the LTCH PPS (currently the 2009-based LTCH-specific market basket) to reflect a 2013 base year. In addition, in this final rule, we are changing our 25-percent threshold policy by sunsetting our existing regulations at 42 CFR 412.534 and 412.536 and replacing them with a single consolidated 25-percent threshold policy at § 412.538. We also are amending our existing regulations limiting allowable charges to beneficiaries for “subclause (II)” LTCHs and making technical corrections to § 412.503. In addition, in this document, we are finalizing an April 21, 2016 interim final rule with comment period relating to a temporary exception from the site neutral payment rate under the LTCH PPS for certain severe wound care discharges from certain LTCHs.

i. Hospital Inpatient Quality Reporting (IQR) Program

Under section 1886(b)(3)(B)(viii) of the Act, hospitals are required to report data on measures selected by the Secretary for the Hospital IQR Program in order to receive the full annual percentage increase in payments. In past years, we have established measures for reporting data and the process for submittal and validation of the data.

In this final rule, we are making several changes. First, we are removing 15 measures for the FY 2019 payment determination and subsequent years. Thirteen of these measures are electronic clinical quality measures (eCQMs), two of which we are also removing in their chart-abstracted form, because they are “topped-out,” and two others are structural measures.

Second, we are refining two previously adopted measures beginning with the FY 2018 payment determination: (1) The Hospital-level, Risk-standardized Payment Associated with a 30-day Episode-of-Care for Pneumonia (NQF # 2579); and (2) the Patient Safety and Adverse Events Composite (NQF #0531).

Third, we are adding four new claims-based measures: (1) Aortic Aneurysm Procedure Clinical Episode-Based Payment Measure; (2) Cholecystectomy and Common Duct Exploration Clinical Episode-Based Payment Measure; (3) Spinal Fusion Clinical Episode-Based Payment Measure; and (4) Excess Days in Acute Care after Hospitalization for Pneumonia for the FY 2019 payment determination and subsequent years.

Fourth, we summarize public comment we received on potential new quality measures under consideration for future inclusion in the Hospital IQR Program: (1) A refined version of the NIH Stroke Scale for the Hospital 30-Day Mortality Following Acute Ischemic Stroke Hospitalization Measure beginning as early as the FY 2022 payment determination; (2) the National Healthcare Safety Network (NHSN) Antimicrobial Use Measure (NQF #2720); and (3) one or more measures of behavioral health for the inpatient hospital setting, including measures previously adopted for the IPFQR Program (80 FR 46417). Also, we summarize public comment we received on the possibility of future stratification of Hospital IQR Program data by race, ethnicity, sex, and disability on Hospital Compare, as well as on potential future hospital quality measures that incorporate health equity.

Fifth, we are modifying our proposal and requiring hospitals to select and submit 8 of the available eCQMs included in the Hospital IQR Program measure set for four quarters of data, on an annual basis, for the CY 2017 reporting period/FY 2019 payment determination and the CY 2018 reporting period/FY 2020 payment determination, in order to align the Hospital IQR Program with the Medicare and Medicaid EHR Incentive Programs. Also, we are establishing related eCQM submission requirements beginning with the FY 2019 payment determination.

Sixth, we are modifying the existing validation process for Hospital IQR Program data to include validation of eCQMs beginning with the FY 2020 payment determination.

Seventh, we are updating our Extraordinary Circumstances Extensions or Exemptions (ECE) policy by: (1) Extending the ECE request deadline for non-eCQM circumstances from 30 to 90 calendar days following an extraordinary circumstance, beginning in FY 2017 as related to extraordinary circumstance events that occur on or after October 1, 2016; and (2) establishing a separate submission deadline of April 1 following the end of the reporting calendar year for ECEs related to eCQMs beginning with an April 1, 2017 deadline and applying for subsequent eCQM reporting years.

j. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

Section 3004(a) of the Affordable Care Act amended section 1886(m)(5) of the Act to require the Secretary to establish the Long-Term Care Hospital Quality Reporting Program (LTCH QRP). This Start Printed Page 56774program applies to all hospitals certified by Medicare as LTCHs. Beginning with the FY 2014 payment determination and subsequent years, the Secretary is required to reduce any annual update to the LTCH PPS standard Federal rate for discharges occurring during such fiscal year by 2 percentage points for any LTCH that does not comply with the requirements established by the Secretary.

The Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) amended the Act in ways that affect the LTCH QRP. Specifically, section 2(a) of the IMPACT Act amended title XVIII of the Act by adding section 1899B, titled Standardized Post-Acute Care (PAC) Assessment Data for Quality, Payment, and Discharge Planning. The Act requires that each LTCH submit, for FYs beginning on or after the specified application date (as defined in section 1899B(a)(2)(E) of the Act), data on quality measures specified under section 1899B(c)(1) of the Act and data on resource use and other measures specified under section 1899B(d)(1) of the Act in a manner and within the timeframes specified by the Secretary. In addition, each LTCH is required to submit standardized patient assessment data required under section 1899B(b)(1) of the Act in a manner and within the timeframes specified by the Secretary. Sections 1899B(c)(1) and 1899B(d)(1) of the Act require the Secretary to specify quality measures and resource use and other measures with respect to certain domains no later than the specified application date in section 1899B(a)(2)(E) of the Act that applies to each measure domain and PAC provider setting.

In this final rule, we are specifying three new measures for the FY 2018 payment determination and subsequent years to meet the requirements as set forth by the IMPACT Act. These measures are: (1) MSPB-PAC LTCH QRP; (2) Discharge to Community-PAC LTCH QRP; and (3) Potentially Preventable 30-Day Post-Discharge Readmission Measure for the PAC LTCH QRP. We also are establishing one new quality measure to meet the requirements of the IMPACT Act for the FY 2020 determination and subsequent years. That measure, Drug Regimen Review Conducted with Follow-Up for Identified Issues-PAC LTCH QRP, addresses the IMPACT Act domain of Medication Reconciliation.

In addition, we will publicly report LTCH quality data beginning in fall 2016, on a CMS Web site, such as Hospital Compare. Initially, we publicly reported quality data on four quality measures. In this final rule, we are providing that we will publicly report data in 2017 on four additional measures. We are promulgating additional details regarding procedures that will allow individual LTCHs to review and correct their data and information on measures that are to be made public before those measure data are made public. We also will provide confidential feedback reports to LTCHs on their performance on the specified measures, beginning 1 year after the specified application date that applies to such measures and LTCHs.

Finally, we are changing the timing for submission of exception and extension requests from 30 days to 90 days from the date of the qualifying event which is preventing an LTCH from submitting their quality data for the LTCH QRP.

k. Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program

Section 1886(s)(4) of the Act, as added and amended by sections 3401(f) and 10322(a) of the Affordable Care Act, requires the Secretary to implement a quality reporting program for inpatient psychiatric hospitals and psychiatric units. Section 1886(s)(4)(C) of the Act requires that, for FY 2014 (October 1, 2013 through September 30, 2014) and each subsequent year, each psychiatric hospital and psychiatric unit must submit to the Secretary data on quality measures as specified by the Secretary. The data must be submitted in a form and manner and at a time specified by the Secretary. In this final rule, for the IPFQR Program, we are making several changes. We are making a technical update to the previously finalized measure, “Screening for Metabolic Disorders.” We are finalizing two new measures beginning with the FY 2019 payment determination:

  • SUB-3 Alcohol & Other Drug Use Disorder Treatment Provided or Offered at Discharge and SUB-3a Alcohol & Other Drug Use Disorder Treatment at Discharge (NQF #1664); and
  • Thirty-Day All-Cause Unplanned Readmission Following Psychiatric Hospitalization in an IPF.

In addition, we are finalizing our proposal to include SUB-3: Alcohol & Other Drug Use Disorder Treatment Provided or Offered at Discharge and subset measure SUB-3a: Alcohol & Other Drug Use Disorder Treatment at Discharge (NQF #1664) in the list of measures covered by the global sample for the FY 2019 payment determination and subsequent years as proposed. Also, we are finalizing that we will make the data for the IPFQR Program available as soon as possible and announce both the date of the public display of the program's data and the 30-day preview period, which will be approximately 12 weeks before the public display date, via subregulatory methods, as opposed to rulemaking. For the FY 2017 payment determination only, we also are finalizing our proposal that, if it is technically feasible to display the data in December 2016, we would provide data to IPFs for a 2-week preview period that would start on October 1, 2016, as proposed. Moreover, we are finalizing as proposed that as a courtesy, for the FY 2017 payment determination only, if we are able to display the data in December 2016, we would ensure that IPFs have approximately 30 days for review if they so choose by providing IPFs with their data as early as mid-September.

3. Summary of Costs and Benefits

  • Adjustment for MS-DRG Documentation and Coding Changes. We are making a −1.5 percent recoupment adjustment to the standardized amount for FY 2017 to implement, in part, the requirement of section 631 of the ATRA that the Secretary make an adjustment totaling $11 billion over a 4-year period of FYs 2014, 2015, 2016, and 2017. This recoupment adjustment represents the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Public Law 110-90 until FY 2013. Prior to the ATRA, this amount could not have been recovered under Pub. L. 110-90.

While our actuaries estimated that a −9.3 percent recoupment adjustment to the standardized amount would be necessary if CMS were to fully recover the $11 billion recoupment required by section 631 of the ATRA in FY 2014, it is often our practice to delay or phase in rate adjustments over more than one year, in order to moderate the effects on rates in any one year. Taking into account the cumulative effects of this adjustment and the adjustments made in FYs 2014, 2015, and 2016, we estimate that we will recover the full $11 billion required under section 631 of the ATRA by the end of FY 2017. We note that section 414 of the MACRA (Pub. L. 114-10), enacted on April 16, 2015, requires us to not make the single positive adjustment we intended to make in FY 2018, but instead make a 0.5 percent positive adjustment for each of FYs 2018 through 2023. The provision under section 414 of the MACRA does not impact our FY 2017 recoupment adjustment, and we will address this MACRA provision in future rulemaking.

  • Adjustment to IPPS Payment Rates as a Result of the 2-Midnight Policy. The adjustment to IPPS rates resulting Start Printed Page 56775from the 2-midnight policy will increase IPPS payment rates by (1/0.998) * 1.006 for FY 2017. The 1.006 is a one-time factor that will be applied to the standardized amount, the hospital-specific rates, and the national capital Federal rate for FY 2017 only. Therefore, for FY 2018, we will apply a one-time factor of (1/1.006) in the calculation of the rates to remove this one-time prospective increase.
  • Changes to the Hospital Readmissions Reduction Program. For FY 2017 and subsequent years, the reduction is based on a hospital's risk-adjusted readmission rate during a 3-year period for acute myocardial infarction (AMI), heart failure (HF), pneumonia, chronic obstructive pulmonary disease (COPD), total hip arthroplasty/total knee arthroplasty (THA/TKA), and coronary artery bypass graft (CABG). Overall, in this final rule, we estimate that 2,588 hospitals will have their base operating DRG payments reduced by their determined proxy FY 2017 hospital-specific readmission adjustment. As a result, we estimate that the Hospital Readmissions Reduction Program will save approximately $528 million in FY 2017, an increase of approximately $108 million over the estimated FY 2016 savings. This increase in the estimated savings for the Hospital Readmissions Reduction Program in FY 2017 as compared to FY 2016 is primarily due to the inclusion of the refinement of the pneumonia readmissions measure, which expanded the measure cohort, along with the addition of the CABG readmission measure, in the calculation of the payment adjustment.
  • Value-Based Incentive Payments under the Hospital VBP Program. We estimate that there will be no net financial impact to the Hospital VBP Program for the FY 2017 program year in the aggregate because, by law, the amount available for value-based incentive payments under the program in a given year must be equal to the total amount of base operating MS-DRG payment amount reductions for that year, as estimated by the Secretary. The estimated amount of base operating MS-DRG payment amount reductions for the FY 2017 program year and, therefore, the estimated amount available for value-based incentive payments for FY 2017 discharges is approximately $1.8 billion.
  • Changes to the HAC Reduction Program. In regard to the five changes to existing HAC Reduction Program policies described earlier, because a hospital's Total HAC score and its ranking in comparison to other hospitals in any given year depends on several different factors, any significant impact due to the HAC Reduction Program changes for FY 2017, including which hospitals will receive the adjustment, will depend on actual experience.
  • Medicare DSH Payment Adjustment and Additional Payment for Uncompensated Care. Under section 1886(r) of the Act (as added by section 3133 of the Affordable Care Act), DSH payments to hospitals under section 1886(d)(5)(F) of the Act are reduced and an additional payment for uncompensated care is made to eligible hospitals beginning in FY 2014. Hospitals that receive Medicare DSH payments will receive 25 percent of the amount they previously would have received under the current statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of the Act. The remainder, equal to an estimate of 75 percent of what otherwise would have been paid as Medicare DSH payments, will be the basis for determining the additional payments for uncompensated care after the amount is reduced for changes in the percentage of individuals that are uninsured and additional statutory adjustments. Each hospital that receives Medicare DSH payments will receive an additional payment for uncompensated care based on its share of the total uncompensated care amount reported by Medicare DSHs. The reduction to Medicare DSH payments is not budget neutral.

For FY 2017, we are providing that the 75 percent of what otherwise would have been paid for Medicare DSH is adjusted to approximately 55.36 percent of the amount to reflect changes in the percentage of individuals that are uninsured and additional statutory adjustments. In other words, approximately 41.52 percent (the product of 75 percent and 55.36 percent) of our estimate of Medicare DSH payments, prior to the application of section 3133 of the Affordable Care Act, is available to make additional payments to hospitals for their relative share of the total amount of uncompensated care. We project that estimated Medicare DSH payments, and additional payments for uncompensated care made for FY 2017, will reduce payments overall by approximately 0.4 percent as compared to overall payments with the estimate of Medicare DSH payments and uncompensated care payments that will be distributed in FY 2016. The additional payments have redistributive effects based on a hospital's uncompensated care amount relative to the uncompensated care amount for all hospitals that are estimated to receive Medicare DSH payments, and the calculated payment amount is not directly tied to a hospital's number of discharges.

  • Update to the LTCH PPS Payment Rates and Other Payment Factors. Based on the best available data for the 420 LTCHs in our data base, we estimate that the changes to the payment rates and factors that we are presenting in the preamble and Addendum of this final rule, which includes the second year under the transition of the statutory application of the new site neutral payment rate required by section 1886(m)(6)(A) of the Act, the update to the LTCH PPS standard Federal payment rate for FY 2017, the update to the LTCH PPS adjustment for differences in area wage levels (which includes the update to the labor-related share based on the revised and rebased LTCH PPS market basket) and estimated changes to the site neutral payment rate and short-stay outlier (SSO) and high-cost outlier (HCO) payments will result in an estimated decrease in payments from FY 2016 of approximately $376 million.
  • Hospital Inpatient Quality Reporting (IQR) Program. In this final rule, we are removing 15 measures for the FY 2019 payment determination and subsequent years. We are adding 4 new claims-based measures to the Hospital IQR Program for the FY 2019 payment determination and subsequent years. We also are modifying our proposal and requiring hospitals to report on 8 of the available Hospital IQR Program electronic clinical quality measures that align with the Medicare and Medicaid EHR Incentive Programs for four quarters of data on an annual basis for the FY 2019 and FY 2020 payment determination. In addition, we are modifying the existing validation process for the Hospital IQR Program data to include a random sample of up to 200 hospitals for validation of eCQMs. We estimate that our policies for the adoption and removal of measures will result in a total hospital cost decrease of $50.4 million across 3,300 IPPS hospitals.
  • Changes Related to the LTCH QRP. In this final rule, we are specifying four quality measures for the LTCH QRP. We estimate that the total cost related to one of these proposed measures, the Drug Regimen Review Conducted with Follow-up for Identified Issues-PAC measure, would be $3,080 per LTCH annually, or $1,330,721 for all LTCHs annually. We also estimate that while there will be some additional burden associated with our expansion of data collection for the measure NQF #0680 Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (77 FR Start Printed Page 5677653624 through 53627), this burden has been previously accounted for in PRA submissions approved under OMB control number 0938-1163. For a detailed explanation, we refer readers to section I.M. of Appendix A (Economic Analyses) of this final rule. There is no additional burden for the three other claims-based measures being adopted. Overall, we estimate the total cost for the 13 previously adopted measures and the 4 new measures will be $27,905 per LTCH annually or $12,054,724 for all LTCHs annually. These estimates are based on 432 LTCHs that are currently certified by Medicare. This is an average increase of 14 percent over the burden for FY 2016. This increase includes all quality measures that LTCHs are required to report, with the exception of the four new measures for FY 2017. Section VIII.C. of the preamble of this final rule includes a detailed discussion of the policies.
  • Changes to the IPFQR Program. In this final rule, we are adding two new measures beginning with the FY 2019 payment determination and for subsequent years. One of these measures, the 30-Day All-Cause Unplanned Readmission Following Psychiatric Hospitalization in an IPF measure, is calculated from administrative claims data. For the second measure, we estimate that our policies will result in total costs of $11,834,748 for 1,684 IPFs nationwide.

B. Summary

1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)

Section 1886(d) of the Social Security Act (the Act) sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. Section 1886(g) of the Act requires the Secretary to use a prospective payment system (PPS) to pay for the capital-related costs of inpatient hospital services for these “subsection (d) hospitals.” Under these PPSs, Medicare payment for hospital inpatient operating and capital-related costs is made at predetermined, specific rates for each hospital discharge. Discharges are classified according to a list of diagnosis-related groups (DRGs).

The base payment rate is comprised of a standardized amount that is divided into a labor-related share and a nonlabor-related share. The labor-related share is adjusted by the wage index applicable to the area where the hospital is located. If the hospital is located in Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-living adjustment factor. This base payment rate is multiplied by the DRG relative weight.

If the hospital treats a high percentage of certain low-income patients, it receives a percentage add-on payment applied to the DRG-adjusted base payment rate. This add-on payment, known as the disproportionate share hospital (DSH) adjustment, provides for a percentage increase in Medicare payments to hospitals that qualify under either of two statutory formulas designed to identify hospitals that serve a disproportionate share of low-income patients. For qualifying hospitals, the amount of this adjustment varies based on the outcome of the statutory calculations. The Affordable Care Act revised the Medicare DSH payment methodology and provides for a new additional Medicare payment that considers the amount of uncompensated care beginning on October 1, 2013.

If the hospital is training residents in an approved residency program(s), it receives a percentage add-on payment for each case paid under the IPPS, known as the indirect medical education (IME) adjustment. This percentage varies, depending on the ratio of residents to beds.

Additional payments may be made for cases that involve new technologies or medical services that have been approved for special add-on payments. To qualify, a new technology or medical service must demonstrate that it is a substantial clinical improvement over technologies or services otherwise available, and that, absent an add-on payment, it would be inadequately paid under the regular DRG payment.

The costs incurred by the hospital for a case are evaluated to determine whether the hospital is eligible for an additional payment as an outlier case. This additional payment is designed to protect the hospital from large financial losses due to unusually expensive cases. Any eligible outlier payment is added to the DRG-adjusted base payment rate, plus any DSH, IME, and new technology or medical service add-on adjustments.

Although payments to most hospitals under the IPPS are made on the basis of the standardized amounts, some categories of hospitals are paid in whole or in part based on their hospital-specific rate, which is determined from their costs in a base year. For example, sole community hospitals (SCHs) receive the higher of a hospital-specific rate based on their costs in a base year (the highest of FY 1982, FY 1987, FY 1996, or FY 2006) or the IPPS Federal rate based on the standardized amount. SCHs are the sole source of care in their areas. Specifically, section 1886(d)(5)(D)(iii) of the Act defines an SCH as a hospital that is located more than 35 road miles from another hospital or that, by reason of factors such as isolated location, weather conditions, travel conditions, or absence of other like hospitals (as determined by the Secretary), is the sole source of hospital inpatient services reasonably available to Medicare beneficiaries. In addition, certain rural hospitals previously designated by the Secretary as essential access community hospitals are considered SCHs.

Under current law, the Medicare-dependent, small rural hospital (MDH) program is effective through FY 2017. Through and including FY 2006, an MDH received the higher of the Federal rate or the Federal rate plus 50 percent of the amount by which the Federal rate was exceeded by the higher of its FY 1982 or FY 1987 hospital-specific rate. For discharges occurring on or after October 1, 2007, but before October 1, 2017, an MDH receives the higher of the Federal rate or the Federal rate plus 75 percent of the amount by which the Federal rate is exceeded by the highest of its FY 1982, FY 1987, or FY 2002 hospital-specific rate. MDHs are a major source of care for Medicare beneficiaries in their areas. Section 1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital that is located in a rural area, has not more than 100 beds, is not an SCH, and has a high percentage of Medicare discharges (not less than 60 percent of its inpatient days or discharges in its cost reporting year beginning in FY 1987 or in two of its three most recently settled Medicare cost reporting years).

Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of inpatient hospital services in accordance with a prospective payment system established by the Secretary. The basic methodology for determining capital prospective payments is set forth in our regulations at 42 CFR 412.308 and 412.312. Under the capital IPPS, payments are adjusted by the same DRG for the case as they are under the operating IPPS. Capital IPPS payments are also adjusted for IME and DSH, similar to the adjustments made under the operating IPPS. In addition, hospitals may receive outlier payments for those cases that have unusually high costs.

The existing regulations governing payments to hospitals under the IPPS are located in 42 CFR part 412, subparts A through M.

2. Hospitals and Hospital Units Excluded From the IPPS

Under section 1886(d)(1)(B) of the Act, as amended, certain hospitals and hospital units are excluded from the Start Printed Page 56777IPPS. These hospitals and units are: inpatient rehabilitation facility (IRF) hospitals and units; long-term care hospitals (LTCHs); psychiatric hospitals and units; children's hospitals; cancer hospitals; and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa). Religious nonmedical health care institutions (RNHCIs) are also excluded from the IPPS. Various sections of the Balanced Budget Act of 1997 (BBA, Pub. L. 105-33), the Medicare, Medicaid and SCHIP [State Children's Health Insurance Program] Balanced Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113), and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA, Pub. L. 106-554) provide for the implementation of PPSs for IRF hospitals and units, LTCHs, and psychiatric hospitals and units (referred to as inpatient psychiatric facilities (IPFs)). (We note that the annual updates to the LTCH PPS are now included as part of the IPPS annual update document. Updates to the IRF PPS and IPF PPS are issued as separate documents.) Children's hospitals, cancer hospitals, hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa), and RNHCIs continue to be paid solely under a reasonable cost-based system subject to a rate-of-increase ceiling on inpatient operating costs.

The existing regulations governing payments to excluded hospitals and hospital units are located in 42 CFR parts 412 and 413.

3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)

The Medicare prospective payment system (PPS) for LTCHs applies to hospitals described in section 1886(d)(1)(B)(iv) of the Act effective for cost reporting periods beginning on or after October 1, 2002. The LTCH PPS was established under the authority of sections 123 of the BBRA and section 307(b) of the BIPA (as codified under section 1886(m)(1) of the Act). During the 5-year (optional) transition period, a LTCH's payment under the PPS was based on an increasing proportion of the LTCH Federal rate with a corresponding decreasing proportion based on reasonable cost principles. Effective for cost reporting periods beginning on or after October 1, 2006, all LTCHs are paid 100 percent of the Federal rate. Section 1206(a) of the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) established the site neutral payment rate under the LTCH PPS, which made the LTCH PPS a dual rate payment system beginning in FY 2016. Under this statute, based on a rolling effective date that is linked to the date on which a given LTCH's Federal FY 2016 cost reporting period begins, LTCHs are paid for LTCH discharges at the site neutral payment rate unless the discharge meets the patient criteria for payment at the LTCH PPS standard Federal payment rate. The existing regulations governing payment under the LTCH PPS are located in 42 CFR Part 412, subpart O. Beginning October 1, 2009, we issue the annual updates to the LTCH PPS in the same documents that update the IPPS (73 FR 26797 through 26798).

4. Critical Access Hospitals (CAHs)

Under sections 1814(l), 1820, and 1834(g) of the Act, payments made to critical access hospitals (CAHs) (that is, rural hospitals or facilities that meet certain statutory requirements) for inpatient and outpatient services are generally based on 101 percent of reasonable cost. Reasonable cost is determined under the provisions of section 1861(v)(1)(A) of the Act and existing regulations under 42 CFR parts 413 and 415.

5. Payments for Graduate Medical Education (GME)

Under section 1886(a)(4) of the Act, costs of approved educational activities are excluded from the operating costs of inpatient hospital services. Hospitals with approved graduate medical education (GME) programs are paid for the direct costs of GME in accordance with section 1886(h) of the Act. The amount of payment for direct GME costs for a cost reporting period is based on the hospital's number of residents in that period and the hospital's costs per resident in a base year. The existing regulations governing payments to the various types of hospitals are located in 42 CFR part 413.

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

1. American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240)

The American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240), enacted on January 2, 2013, made a number of changes that affect the IPPS. In this final rule, we are making policy changes to implement section 631 of the ATRA, which amended section 7(b)(1)(B) of Public Law 110-90 and requires a recoupment adjustment to the standardized amounts under section 1886(d) of the Act based upon the Secretary's estimates for discharges occurring in FY 2014 through FY 2017 to fully offset $11 billion (which represents the amount of the increase in aggregate payments from FYs 2008 through 2013 for which an adjustment was not previously applied).

2. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)

The Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) introduced new payment rules in the LTCH PPS. Under section 1206 of this law, discharges in cost reporting periods beginning on or after October 1, 2015 under the LTCH PPS will receive payment under a site neutral rate unless the discharge meets certain patient-specific criteria. In this final rule, we are providing clarifications to prior policy changes that implemented provisions under section 1206 of the Pathway for SGR Reform Act.

3. Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) (Pub. L. 113-185)

The Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act (Pub. L. 113-185), enacted on October 6, 2014, made a number of changes that affect the Long-Term Care Quality Reporting Program (LTCH QRP). In this final rule, we are continuing to implement portions of section 1899B of the Act, as added by section 2 of the IMPACT Act, which, in part, requires LTCHs, among other postacute care providers, to report standardized patient assessment data, data on quality measures, and data on resource use and other measures.

4. The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114-10)

The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114-10) extended the MDH program and changes to the payment adjustment for low-volume hospitals through FY 2017. In this final rule, we are updating the low-volume hospital payment adjustment for FY 2017 under the extension of the temporary changes to the low-volume hospital payment adjustment provided for by section 204 of Public Law 114-10. We also are finalizing in this FY 2017 IPPS/LTCH PPS final rule the provisions of the FY 2016 IPPS/LTCH PPS interim final rule with comment period (80 FR 49594 through 49597) that implemented sections 204 and 205 of Public Law 114-10.Start Printed Page 56778

5. The Consolidated Appropriations Act, 2016 (Pub. L. 114-113)

The Consolidated Appropriations Act, 2016 (Pub. L. 114-113), enacted on December 18, 2015, made changes that affect the IPPS and the LTCH PPS. Section 231 of Public Law 114-113 amended section 1886(m)(6) of the Act to provide for a temporary exception to the site neutral payment rate under the LTCH PPS for certain severe wound discharges from certain LTCHs occurring prior to January 1, 2017. This provision was implemented in an interim final rule with comment period that appeared in the Federal Register on April 21, 2016 (81 FR 23428 through 23438). We are finalizing that interim final rule with comment period in section VII.B.3. of this FY 2017 IPPS/LTCH PPS final rule. Section 601 of Public Law 114-113 made changes to the payment calculation for operating IPPS payments for hospitals located in Puerto Rico. Section 602 of Public Law 114-113 specifies that Puerto Rico hospitals are eligible for incentive payments for the meaningful use of certified EHR technology, effective beginning FY 2016, and also applies the adjustments to the applicable percentage increase under the statute for Puerto Rico hospitals that are not meaningful EHR users, effective FY 2022. In this final rule, we are making conforming changes to our regulations to reflect the provisions of section 601 of Public Law 114-113, which increased the applicable Federal percentage of the operating IPPS payment for hospitals located in Puerto Rico from 75 percent to 100 percent and decreased the applicable Puerto Rico percentage of the operating IPPS payments for hospitals located in Puerto Rico from 25 percent to zero percent, applicable to discharges occurring on or after January 1, 2016.

6. The Notice of Observation Treatment and Implication for Care Eligibility Act (the NOTICE Act) (Pub. L. 114-42)

The Notice of Observation Treatment and Implication for Care Eligibility Act (the NOTICE Act) (Pub. L. 114-42) enacted on August 6, 2015, amended section 1866(a)(1) of the Act by adding new subparagraph (Y) that requires hospitals and CAHs to provide written notification and an oral explanation of such notification to individuals receiving observation services as outpatients for more than 24 hours at the hospitals or CAHs. In this final rule, we are implementing the provisions of Public Law 114-42.

D. Issuance of a Notice of Proposed Rulemaking

In the proposed rule that appeared in the Federal Register on April 27, 2016 (81 FR 24946), we set forth proposed payment and policy changes to the Medicare IPPS for FY 2017 operating costs and for capital-related costs of acute care hospitals and certain hospitals and hospital units that are excluded from IPPS, including proposed changes relating to payments for IME and direct GME to certain hospitals that continue to be excluded from the IPPS and paid on a reasonable cost basis. In addition, we set forth proposed changes to the payment rates, factors, and other payment and policy-related changes to programs associated with payment rate policies under the LTCH PPS for FY 2017.

Below is a summary of the major changes that we proposed to make:

1. Proposed Changes to MS-DRG Classifications and Recalibrations of Relative Weights

In section II. of the preamble of the proposed rule, we included—

  • Proposed changes to MS-DRG classifications based on our yearly review for FY 2017.
  • Proposed application of the documentation and coding adjustment for FY 2017 resulting from implementation of the MS-DRG system.
  • Proposed recalibrations of the MS-DRG relative weights.
  • A discussion of the FY 2017 status of new technologies approved for add-on payments for FY 2016 and a presentation of our evaluation and analysis of the FY 2017 applicants for add-on payments for high-cost new medical services and technologies (including public input, as directed by Pub. L. 108-173, obtained in a town hall meeting).

2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals

In section III. of the preamble to the proposed rule, we proposed to make revisions to the wage index for acute care hospitals and the annual update of the wage data. Specific issues addressed included, but were not limited to, the following:

  • The proposed FY 2017 wage index update using wage data from cost reporting periods beginning in FY 2013.
  • Calculation of the proposed occupational mix adjustment for FY 2017 based on the 2013 Occupational Mix Survey.
  • Analysis and implementation of the proposed FY 2017 occupational mix adjustment to the wage index for acute care hospitals.
  • Proposed application of the rural floor, the proposed imputed floor, and the proposed frontier State floor.
  • Transitional wage indexes relating to the continued use of the revised OMB labor market area delineations based on 2010 Decennial Census data.
  • Proposed revisions to the wage index for acute care hospitals based on hospital redesignations and reclassifications under sections 1886(d)(8)(B), (d)(8)(E), and (d)(10) of the Act.
  • Notification regarding the proposed CMS “lock-in” date for urban to rural reclassifications under § 412.103.
  • The proposed adjustment to the wage index for acute care hospitals for FY 2017 based on commuting patterns of hospital employees who reside in a county and work in a different area with a higher wage index.
  • Determination of the labor-related share for the proposed FY 2017 wage index.
  • Solicitation of Comments on Treatment of Overhead and Home Office Costs in the Wage Index Calculation

3. Other Decisions and Proposed Changes to the IPPS for Operating Costs and GME Costs

In section IV. of the preamble of the proposed rule, we discussed proposed changes or clarifications of a number of the provisions of the regulations in 42 CFR parts 412 and 413, including the following:

  • Proposed conforming changes to our regulations to reflect the changes to operating payments for subsection (d) Puerto Rico hospitals in accordance with the provisions of section 601 of Public Law 114-113.
  • Proposed changes to the inpatient hospital update for FY 2017.
  • Proposed updated national and regional case-mix values and discharges for purposes of determining RRC status.
  • Proposed payment adjustment for low-volume hospitals for FY 2017.
  • The statutorily required IME adjustment factor for FY 2017.
  • Proposed changes to the methodologies for determining Medicare DSH payments and the additional payments for uncompensated care.
  • Proposed changes to the rules for payment adjustments under the Hospital Readmissions Reduction Program based on hospital readmission measures and the process for hospital review and correction of those rates for FY 2017.
  • Proposed changes to the requirements and provision of value-based incentive payments under the Hospital Value-Based Purchasing Program.Start Printed Page 56779
  • Proposed requirements for payment adjustments to hospitals under the HAC Reduction Program for FY 2017.
  • Proposed changes relating to direct GME and IME payments to urban hospitals with rural track training programs.
  • Discussion of the Rural Community Hospital Demonstration Program and a proposal for making a budget neutrality adjustment for the demonstration program.
  • Proposed implementation of the Notice of Observation Treatment and Implications for Care Eligibility Act (the NOTICE Act) for hospitals and CAHs.
  • Proposed technical changes and corrections to regulations relating to cost to related organizations and Medicare cost reports.

4. Proposed FY 2017 Policy Governing the IPPS for Capital-Related Costs

In section V. of the preamble to the proposed rule, we discussed the proposed payment policy requirements for capital-related costs and capital payments to hospitals for FY 2017. In addition, we discussed proposed changes to the calculation of capital IPPS payments to hospitals located in Puerto Rico to parallel the change in the statutory calculation of operating IPPS payments to hospitals located in Puerto Rico, beginning in FY 2017.

5. Proposed Changes to the Payment Rates for Certain Excluded Hospitals: Rate-of-Increase Percentages

In section VI. of the preamble of the proposed rule, we discussed—

  • Proposed changes to payments to certain excluded hospitals for FY 2017.
  • Proposed implementation of the Frontier Community Health Integration Project (FCHIP) Demonstration.

6. Proposed Changes to the LTCH PPS

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

  • Proposed changes to the LTCH PPS Federal payment rates, factors, and other payment rate policies under the LTCH PPS for FY 2017.
  • Proposals to sunset our existing 25-percent threshold policy regulations, and replace them with single consolidated 25 percent threshold policy regulation.
  • Proposed changes to the limitation on charges to beneficiaries and related billing requirements for “subclause (II)” LTCHs to align those LTCH PPS payment adjustment policies with the limitation on charges policies applied in the TEFRA payment context.
  • Proposed technical corrections to certain definitions to correct and clarify their use under the application of the site neutral payment rate and proposed additional definitions in accordance with our proposed modifications to the 25-percent policy.
  • Proposed rebasing and revising of the LTCH market basket to update the LTCH PPS, effective for FY 2017.

7. Proposed Changes Relating to Quality Data Reporting for Specific Providers and Suppliers

In section VIII. of the preamble of the proposed rule, we addressed—

  • Proposed requirements for the Hospital Inpatient Quality Reporting (IQR) Program as a condition for receiving the full applicable percentage increase.
  • Proposed changes to the requirements for the quality reporting program for PPS-exempt cancer hospitals (PCHQR Program).
  • Proposed changes to the requirements under the LTCH Quality Reporting Program (LTCH QRP).
  • Proposed changes to the requirements under the Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program.
  • Proposed changes relating to clinical quality measures for the Medicare Electronic Health Record (EHR) Incentive Program and eligible hospitals and CAHs.

8. Determining Prospective Payment Operating and Capital Rates and Rate-of-Increase Limits for Acute Care Hospitals

In section V. of the Addendum to the proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2017 prospective payment rates for operating costs and capital-related costs for acute care hospitals. We proposed to establish the threshold amounts for outlier cases. In addition, we addressed the update factors for determining the rate-of-increase limits for cost reporting periods beginning in FY 2017 for certain hospitals excluded from the IPPS.

9. Determining Prospective Payment Rates for LTCHs

In the Addendum to the proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2017 LTCH PPS standard Federal payment rate and other factors used to determine LTCH PPS payments under both the LTCH PPS standard Federal payment rate and the site neutral payment rate in FY 2017. We proposed to establish the adjustments for wage levels, the labor-related share, the cost-of-living adjustment, and high-cost outliers, including the applicable fixed-loss amounts and the LTCH cost-to-charge ratios (CCRs) for both payment rates. We also provided the estimated market basket update to apply to the ceiling used to determine payments under the existing payment adjustment for “subclause (II)” LTCHs for cost reporting periods beginning in FY 2017.

10. Impact Analysis

In Appendix A of the proposed rule, we set forth an analysis of the impact that the proposed changes would have on affected acute care hospitals, CAHs, LTCHs, PCHs, and IPFs.

11. Recommendation of Update Factors for Operating Cost Rates of Payment for Hospital Inpatient Services

In Appendix B of the proposed rule, as required by sections 1886(e)(4) and (e)(5) of the Act, we provided our recommendations of the appropriate percentage changes for FY 2017 for the following:

  • A single average standardized amount for all areas for hospital inpatient services paid under the IPPS for operating costs of acute care hospitals (and hospital-specific rates applicable to SCHs and MDHs).
  • Target rate-of-increase limits to the allowable operating costs of hospital inpatient services furnished by certain hospitals excluded from the IPPS.
  • The LTCH PPS standard Federal payment rate and the site neutral payment rate for hospital inpatient services provided for LTCH PPS discharges.

12. Discussion of Medicare Payment Advisory Commission Recommendations

Under section 1805(b) of the Act, MedPAC is required to submit a report to Congress, no later than March 15 of each year, in which MedPAC reviews and makes recommendations on Medicare payment policies. MedPAC's March 2016 recommendations concerning hospital inpatient payment policies address the update factor for hospital inpatient operating costs and capital-related costs for hospitals under the IPPS. We addressed these recommendations in Appendix B of the proposed rule. For further information relating specifically to the MedPAC March 2016 report or to obtain a copy of the report, contact MedPAC at (202) 220-3700 or visit MedPAC's Web site at: http://www.medpac.gov.Start Printed Page 56780

E. Finalization of Interim Final Rule With Comment Period on the Temporary Exception to the Site Neutral Payment Rate Under the LTCH PPS for Certain Severe Wound Discharges From Certain LTCHs Required by the Consolidated Appropriations Act, 2016 and Modification of Limitations on Redesignation by the Medicare Geographic Classification Review Board

In the interim final rule with comment period that appeared in the Federal Register on April 21, 2016 (CMS-1664-IFC; 81 FR 23428 through 23438), we addressed provisions relating to (1) a temporary exception to the site neutral payment rate under the LTCH PPS for certain severe wound discharges from certain LTCHs; and (2) application of two judicial decisions relating to modifications of the limitations on redesignation by the Medicare Geographic Classification Review Board.

In response to the section of the interim final rule with comment period on the temporary exception to the site neutral payment rate under the LTCH PPS for certain severe wound discharges from certain LTCHs, we received 22 timely pieces of correspondence. In section VII.B.3. of the preamble of this final rule, we summarize our policies and these public comments, present our responses, and finalize our policies regarding this temporary exception.

In response to the section of the interim final rule with comment period on modification of limitations on redesignation by the MGCRB, we received 7 timely pieces of correspondence. In section III,J,2. of the preamble of this final rule, we summarize these public comments, present our responses, and finalize these provisions.

F. Finalization of Interim Final Rule With Comment Period Implementing Legislative Extensions Relating to the Payment Adjustment for Low-Volume Hospitals and the Medicare-Dependent, Small Rural Hospital (MDH) Program

In the interim final rule with comment period that appeared in the Federal Register on August 17, 2015, as part of the FY 2017 IPPS/LTCH PPS final rule, we addressed the legislative extensions relating to the payment adjustment for low-volume hospitals and the MDH program (CMS-1632-IFC; 80 FR 49594). In response to this interim final rule with comment period, we received 14 timely pieces of correspondence. However, all of the correspondence included public comments that were outside the scope of the provisions of the interim final rule with comment period. We are finalizing this interim final rule with comment in section IV.N. of the preamble of this final rule.

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

A. Background

Section 1886(d) of the Act specifies that the Secretary shall establish a classification system (referred to as diagnosis-related groups (DRGs)) for inpatient discharges and adjust payments under the IPPS based on appropriate weighting factors assigned to each DRG. Therefore, under the IPPS, Medicare pays for inpatient hospital services on a rate per discharge basis that varies according to the DRG to which a beneficiary's stay is assigned. The formula used to calculate payment for a specific case multiplies an individual hospital's payment rate per case by the weight of the DRG to which the case is assigned. Each DRG weight represents the average resources required to care for cases in that particular DRG, relative to the average resources used to treat cases in all DRGs.

Congress recognized that it would be necessary to recalculate the DRG relative weights periodically to account for changes in resource consumption. Accordingly, section 1886(d)(4)(C) of the Act requires that the Secretary adjust the DRG classifications and relative weights at least annually. These adjustments are made to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources.

B. MS-DRG Reclassifications

For general information about the MS-DRG system, including yearly reviews and changes to the MS-DRGs, we refer readers to the previous discussions in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43764 through 43766) and the FYs 2011, 2012, 2013, 2014, 2015, and 2016 IPPS/LTCH PPS final rules (75 FR 50053 through 50055; 76 FR 51485 through 51487; 77 FR 53273; 78 FR 50512; 79 FR 49871; and 80 FR 49342, respectively).

C. Adoption of the MS-DRGs in FY 2008

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

D. FY 2017 MS-DRG Documentation and Coding Adjustment

1. Background on the Prospective MS-DRG Documentation and Coding Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90

In the FY 2008 IPPS final rule with comment period (72 FR 47140 through 47189), we adopted the MS-DRG patient classification system for the IPPS, effective October 1, 2007, to better recognize severity of illness in Medicare payment rates for acute care hospitals. The adoption of the MS-DRG system resulted in the expansion of the number of DRGs from 538 in FY 2007 to 745 in FY 2008. (As a result of this final rule, for FY 2017, there are 757 MS-DRGs.) By increasing the number of MS-DRGs and more fully taking into account patient severity of illness in Medicare payment rates for acute care hospitals, MS-DRGs encourage hospitals to improve their documentation and coding of patient diagnoses.

In the FY 2008 IPPS final rule with comment period (72 FR 47175 through 47186), we indicated that the adoption of the MS-DRGs had the potential to lead to increases in aggregate payments without a corresponding increase in actual patient severity of illness due to the incentives for additional documentation and coding. In that final rule with comment period, we exercised our authority under section 1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget neutrality by adjusting the national standardized amount, to eliminate the estimated effect of changes in coding or classification that do not reflect real changes in case-mix. Our actuaries estimated that maintaining budget neutrality required an adjustment of −4.8 percent to the national standardized amount. We provided for phasing in this −4.8 percent adjustment over 3 years. Specifically, we established prospective documentation and coding adjustments of −1.2 percent for FY 2008, −1.8 percent for FY 2009, and −1.8 percent for FY 2010.

On September 29, 2007, Congress enacted the TMA [Transitional Medical Assistance], Abstinence Education, and QI [Qualifying Individuals] Programs Extension Act of 2007 (Public Law 110-90). Section 7(a) of Public Law 110-90 reduced the documentation and coding adjustment made as a result of the MS-DRG system that we adopted in the FY 2008 IPPS final rule with comment period to −0.6 percent for FY 2008 and −0.9 percent for FY 2009, and we finalized the FY 2008 adjustment through rulemaking, effective October 1, 2007 (72 FR 66886).Start Printed Page 56781

For FY 2009, section 7(a) of Public Law 110-90 required a documentation and coding adjustment of −0.9 percent, and we finalized that adjustment through rulemaking effective October 1, 2008 (73 FR 48447). The documentation and coding adjustments established in the FY 2008 IPPS final rule with comment period, which reflected the amendments made by section 7(a) of Public Law 110-90, are cumulative. As a result, the −0.9 percent documentation and coding adjustment for FY 2009 was in addition to the −0.6 percent adjustment for FY 2008, yielding a combined effect of −1.5 percent.

2. Adjustment to the Average Standardized Amounts Required by Public Law 110-90

a. Prospective Adjustment Required by Section 7(b)(1)(A) of Public Law 110-90

Section 7(b)(1)(A) of Public Law 110-90 requires that, if the Secretary determines that implementation of the MS-DRG system resulted in changes in documentation and coding that did not reflect real changes in case-mix for discharges occurring during FY 2008 or FY 2009 that are different than the prospective documentation and coding adjustments applied under section 7(a) of Public Law 110-90, the Secretary shall make an appropriate adjustment under section 1886(d)(3)(A)(vi) of the Act.

Section 1886(d)(3)(A)(vi) of the Act authorizes adjustments to the average standardized amounts for subsequent fiscal years in order to eliminate the effect of such coding or classification changes. These adjustments are intended to ensure that future annual aggregate IPPS payments are the same as the payments that otherwise would have been made had the prospective adjustments for documentation and coding applied in FY 2008 and FY 2009 reflected the change that occurred in those years.

b. Recoupment or Repayment Adjustments in FYs 2010 Through 2012 Required by Section 7(b)(1)(B) Public Law 110-90

If, based on a retroactive evaluation of claims data, the Secretary determines that implementation of the MS-DRG system resulted in changes in documentation and coding that did not reflect real changes in case-mix for discharges occurring during FY 2008 or FY 2009 that are different from the prospective documentation and coding adjustments applied under section 7(a) of Public Law 110-90, section 7(b)(1)(B) of Public Law 110-90 requires the Secretary to make an additional adjustment to the standardized amounts under section 1886(d) of the Act. This adjustment must offset the estimated increase or decrease in aggregate payments for FYs 2008 and 2009 (including interest) resulting from the difference between the estimated actual documentation and coding effect and the documentation and coding adjustment applied under section 7(a) of Public Law 110-90. This adjustment is in addition to making an appropriate adjustment to the standardized amounts under section 1886(d)(3)(A)(vi) of the Act as required by section 7(b)(1)(A) of Public Law 110-90. That is, these adjustments are intended to recoup (or repay, in the case of underpayments) spending in excess of (or less than) spending that would have occurred had the prospective adjustments for changes in documentation and coding applied in FY 2008 and FY 2009 matched the changes that occurred in those years. Public Law 110-90 requires that the Secretary only make these recoupment or repayment adjustments for discharges occurring during FYs 2010, 2011, and 2012.

3. Retrospective Evaluation of FY 2008 and FY 2009 Claims Data

In order to implement the requirements of section 7 of Public Law 110-90, we performed a retrospective evaluation of the FY 2008 data for claims paid through December 2008 using the methodology first described in the FY 2009 IPPS/LTCH PPS final rule (73 FR 43768 and 43775) and later discussed in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43768 through 43772). We performed the same analysis for FY 2009 claims data using the same methodology as we did for FY 2008 claims (75 FR 50057 through 50068). The results of the analysis for the FY 2011 IPPS/LTCH PPS proposed and final rules, and subsequent evaluations in FY 2012, supported that the 5.4 percent estimate accurately reflected the FY 2009 increases in documentation and coding under the MS-DRG system. We were persuaded by both MedPAC's analysis (as discussed in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50064 through 50065)) and our own review of the methodologies proposed by various commenters that the methodology we employed to determine the required documentation and coding adjustments was sound.

As in prior years, the FY 2008, FY 2009, and FY 2010 MedPAR files are available to the public to allow independent analysis of the FY 2008 and FY 2009 documentation and coding effects. Interested individuals may still order these files through the CMS Web site at: http://www.cms.gov/​Research-Statistics-Data-and-Systems/​Files-for-Order/​LimitedDataSets/​ by clicking on MedPAR Limited Data Set (LDS)-Hospital (National). This CMS Web page describes the file and provides directions and further detailed instructions for how to order.

Persons placing an order must send the following: a Letter of Request, the LDS Data Use Agreement and Research Protocol (refer to the Web site for further instructions), the LDS Form, and a check (refer to the Web site for the required payment amount) to:

Mailing address if using the U.S. Postal Service: Centers for Medicare & Medicaid Services, RDDC Account, Accounting Division, P.O. Box 7520, Baltimore, MD 21207-0520.

Mailing address if using express mail: Centers for Medicare & Medicaid Services, OFM/Division of Accounting—RDDC, 7500 Security Boulevard, C3-07-11, Baltimore, MD 21244-1850.

4. Prospective Adjustments for FY 2008 and FY 2009 Authorized by Section 7(b)(1)(A) of Public Law 110-90

In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43767 through 43777), we opted to delay the implementation of any documentation and coding adjustment until a full analysis of case-mix changes based on FY 2009 claims data could be completed. We refer readers to the FY 2010 IPPS/RY LTCH PPS final rule for a detailed description of our proposal, responses to comments, and finalized policy. After analysis of the FY 2009 claims data for the FY 2011 IPPS/LTCH PPS final rule (75 FR 50057 through 50073), we found a total prospective documentation and coding effect of 5.4 percent. After accounting for the −0.6 percent and the −0.9 percent documentation and coding adjustments in FYs 2008 and 2009, we found a remaining documentation and coding effect of 3.9 percent. As we have discussed, an additional cumulative adjustment of −3.9 percent would be necessary to meet the requirements of section 7(b)(1)(A) of Public Law 110-90 to make an adjustment to the average standardized amounts in order to eliminate the full effect of the documentation and coding changes that do not reflect real changes in case-mix on future payments. Unlike section 7(b)(1)(B) of Public Law 110-90, section 7(b)(1)(A) does not specify when we must apply the prospective adjustment, but merely requires us to make an “appropriate” adjustment. Therefore, as we stated in the FY 2011 IPPS/LTCH Start Printed Page 56782PPS final rule (75 FR 50061), we believed the law provided some discretion as to the manner in which we applied the prospective adjustment of −3.9 percent. As we discussed extensively in the FY 2011 IPPS/LTCH PPS final rule, it has been our practice to moderate payment adjustments when necessary to mitigate the effects of significant downward adjustments on hospitals, to avoid what could be widespread, disruptive effects of such adjustments on hospitals. Therefore, we stated that we believed it was appropriate to not implement the −3.9 percent prospective adjustment in FY 2011 because we finalized a −2.9 percent recoupment adjustment for that fiscal year. Accordingly, we did not propose a prospective adjustment under section 7(b)(1)(A) of Public Law 110-90 for FY 2011 (75 FR 23868 through 23870). We noted that, as a result, payments in FY 2011 (and in each future fiscal year until we implemented the requisite adjustment) would be higher than they would have been if we had implemented an adjustment under section 7(b)(1)(A) of Public Law 110-90.

In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51489 and 51497), we indicated that, because further delay of this prospective adjustment would result in a continued accrual of unrecoverable overpayments, it was imperative that we implement a prospective adjustment for FY 2012, while recognizing CMS' continued desire to mitigate the effects of any significant downward adjustments to hospitals. Therefore, we implemented a −2.0 percent prospective adjustment to the standardized amount instead of the full −3.9 percent.

In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53274 through 53276), we completed the prospective portion of the adjustment required under section 7(b)(1)(A) of Public Law 110-90 by finalizing a −1.9 percent adjustment to the standardized amount for FY 2013. We stated that this adjustment would remove the remaining effect of the documentation and coding changes that do not reflect real changes in case-mix that occurred in FY 2008 and FY 2009. We believed that it was imperative to implement the full remaining adjustment, as any further delay would result in an overstated standardized amount in FY 2013 and any future fiscal years until a full adjustment was made.

We noted again that delaying full implementation of the prospective portion of the adjustment required under section 7(b)(1)(A) of Public Law 110-90 until FY 2013 resulted in payments in FY 2010 through FY 2012 being overstated. These overpayments could not be recovered by CMS, as section 7(b)(1)(B) of Public Law 110-90 limited recoupments to overpayments made in FY 2008 and FY 2009.

5. Recoupment or Repayment Adjustment Authorized by Section 7(b)(1)(B) of Public Law 110-90

Section 7(b)(1)(B) of Public Law 110-90 requires the Secretary to make an adjustment to the standardized amounts under section 1886(d) of the Act to offset the estimated increase or decrease in aggregate payments for FY 2008 and FY 2009 (including interest) resulting from the difference between the estimated actual documentation and coding effect and the documentation and coding adjustments applied under section 7(a) of Public Law 110-90. This determination must be based on a retrospective evaluation of claims data. Our actuaries estimated that there was a 5.8 percentage point difference resulting in an increase in aggregate payments of approximately $6.9 billion. Therefore, as discussed in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50062 through 50067), we determined that an aggregate adjustment of −5.8 percent in FYs 2011 and 2012 would be necessary in order to meet the requirements of section 7(b)(1)(B) of Public Law 110-90 to adjust the standardized amounts for discharges occurring in FYs 2010, 2011, and/or 2012 to offset the estimated amount of the increase in aggregate payments (including interest) in FYs 2008 and 2009.

It is often our practice to phase in payment rate adjustments over more than one year in order to moderate the effect on payment rates in any one year. Therefore, consistent with the policies that we have adopted in many similar cases, in the FY 2011 IPPS/LTCH PPS final rule, we made an adjustment to the standardized amount of −2.9 percent, representing approximately half of the aggregate adjustment required under section 7(b)(1)(B) of Public Law 110-90, for FY 2011. An adjustment of this magnitude allowed us to moderate the effects on hospitals in one year while simultaneously making it possible to implement the entire adjustment within the timeframe required under section 7(b)(1)(B) of Public Law 110-90 (that is, no later than FY 2012). For FY 2012, in accordance with the timeframes set forth by section 7(b)(1)(B) of Public Law 110-90, and consistent with the discussion in the FY 2011 IPPS/LTCH PPS final rule, we completed the recoupment adjustment by implementing the remaining −2.9 percent adjustment, in addition to removing the effect of the −2.9 percent adjustment to the standardized amount finalized for FY 2011 (76 FR 51489 and 51498). Because these adjustments, in effect, balanced out, there was no year-to-year change in the standardized amount due to this recoupment adjustment for FY 2012. In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53276), we made a final +2.9 percent adjustment to the standardized amount, completing the recoupment portion of section 7(b)(1)(B) of Public Law 110-90. We note that with this positive adjustment, according to our estimates, all overpayments made in FY 2008 and FY 2009 have been fully recaptured with appropriate interest, and the standardized amount has been returned to the appropriate baseline.

6. Recoupment or Repayment Adjustment Authorized by Section 631 of the American Taxpayer Relief Act of 2012 (ATRA)

Section 631 of the ATRA amended section 7(b)(1)(B) of Public Law 110-90 to require the Secretary to make a recoupment adjustment or adjustments totaling $11 billion by FY 2017. This adjustment represents the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Public Law 110-90 until FY 2013. As discussed earlier, this delay in implementation resulted in overstated payment rates in FYs 2010, 2011, and 2012. The resulting overpayments could not have been recovered under Public Law 110-90.

Similar to the adjustments authorized under section 7(b)(1)(B) of Public Law 110-90, the adjustment required under section 631 of the ATRA is a one-time recoupment of a prior overpayment, not a permanent reduction to payment rates. Therefore, we anticipated that any adjustment made to reduce payment rates in one year would eventually be offset by a positive adjustment in 2018, once the necessary amount of overpayment was recovered. However, section 414 of the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015, Public Law 114-10, enacted on April 16, 2015, replaced the single positive adjustment we intended to make in FY 2018 with a 0.5 percent positive adjustment for each of FYs 2018 through 2023. We stated in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49345) that we will address this MACRA provision in future rulemaking.

As we stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50515 through 50517), our actuaries estimated that a −9.3 percent adjustment to the standardized amount would be necessary if CMS were to fully recover the $11 billion recoupment required by Start Printed Page 56783section 631 of the ATRA in FY 2014. It is often our practice to phase in payment rate adjustments over more than one year, in order to moderate the effect on payment rates in any one year. Therefore, consistent with the policies that we have adopted in many similar cases, and after consideration of the public comments we received, in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50515 through 50517), we implemented a −0.8 percent recoupment adjustment to the standardized amount in FY 2014. We stated that if adjustments of approximately −0.8 percent are implemented in FYs 2014, 2015, 2016, and 2017, using standard inflation factors, we estimate that the entire $11 billion will be accounted for by the end of the statutory 4-year timeline. As estimates of any future adjustments are subject to slight variations in total savings, we did not provide for specific adjustments for FYs 2015, 2016, or 2017 at that time. We stated that we believed that this level of adjustment for FY 2014 was a reasonable and fair approach that satisfies the requirements of the statute while mitigating extreme annual fluctuations in payment rates.

Consistent with the approach discussed in the FY 2014 rulemaking for recouping the $11 billion required by section 631 of the ATRA, in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49874) and the FY 2016 IPPS/LTCH PPS final rule (80 FR 49345), we implemented additional −0.8 percent recoupment adjustments to the standardized amount in FY 2015 and FY 2016, respectively. We estimated that these adjustments, combined with leaving the prior −0.8 percent adjustments in place, would recover up to $2 billion in FY 2015 and another $3 billion in FY 2016. When combined with the approximately $1 billion adjustment made in FY 2014, we estimated that approximately $5 to $6 billion would be left to recover under section 631 of the ATRA by the end of FY 2016.

However, as indicated in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24966), due to lower than previously estimated inpatient spending, we determined that an adjustment of −0.8 percent in FY 2017 would not recoup the $11 billion under section 631 of the ATRA. Based on the FY 2017 President's Budget, our actuaries estimated for the proposed rule that FY 2014 through FY 2016 spending subject to the documentation and coding recoupment adjustment in the absence of the −0.8 percent adjustments made in FYs 2014 through 2016 would have been $123.783 billion in FY 2014, $124.361 billion in FY 2015, and $127.060 billion in FY 2016. As shown in the following table, the amount recouped in each of those fiscal years is therefore calculated as the difference between those amounts and the amounts determined to have been spent in those years with the −0.8 percent adjustment applied, namely $122.801 billion in FY 2014, $122.395 billion in FY 2015, and $124.059 billion in FY 2016. This yields an estimated total recoupment through the end of FY 2016 of $5.950 billion.

Recoupment Made Under Section 631 of the American Taxpayer Relief Act of 2012

[ATRA]

IPPS Spending* (billions)Cumulative adjustment factorAdjusted IPPS spending (billions)Recoupment amount (billions)
FY 2014$122.8011.00800$123.783$0.98
FY 2015122.3951.01606124.3611.97
FY 2016124.0591.02419127.0603.00
Total5.95
* Based on FY 2017 President's Budget, including capital, IME, and DSH payments.

These estimates and the estimate of FY 2017 spending subject to the documentation and coding recoupment adjustment also are included in a memorandum from the Office of the Actuary that we made publicly available on the CMS Web site at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS on the FY 2017 IPPS Proposed Rule Home Page. A description of the President's Budget for FY 2017 is currently available on the OMB Web site at: https://www.whitehouse.gov/​omb/​budget.

For the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24967), our actuaries estimated that the FY 2017 spending subject to the documentation and coding recoupment adjustment (including capital, IME, and DSH payment) would be $129.625 billion in the absence of any documentation and recoupment adjustments from FY 2014 through FY 2017. Therefore, at the time of issuance of the FY 2017 proposed rule, our actuaries estimated that, to the nearest tenth of a percent, the FY 2017 documentation and coding adjustment factor that will recoup as closely as possible $11 billion from FY 2014 through FY 2017 without exceeding this amount is −1.5 percent. This adjustment factor yields an estimated spending amount in FY 2017 of $124.693 billion, calculated as $129.625/(1.008*1.008*1.008*1.015). We indicated in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24967) that this estimated proposed −1.5 percent adjustment factor would be updated for the final rule based on the FY 2017 President's Budget Midsession Review. We noted that, based on updated estimates, the necessary adjustment factor to the nearest tenth of a percent could be different than our actuaries' estimate of −1.5 percent.

Comment: MedPAC reiterated its previous support for the recovery of past overpayments due to documentation and coding. MedPAC stated that the law stipulates the amount of the recovery and the timing of the recovery. MedPAC also stated that CMS has little discretion and is proceeding as required by law.

Response: We appreciate MedPAC's support for our proposal.

Comment: The vast majority of commenters urged CMS to use its older estimate of the required adjustment for FY 2017 of −0.8 percentage point, rather than its updated proposed estimate of −1.5 percentage points. Commenters argued that the ATRA does not require CMS to update the initial FY 2017 estimate discussed in the FY 2014 final rule with more recent data, that the law allows CMS to continue using the older analysis, and that revisiting the actual recoupments for the preceding fiscal years is not consistent with the ATRA. The commenters' bases for this argument included that it would be a better interpretation of the statute and it is more consistent with CMS' approach regarding its use of estimates for outlier payments. The commenters also stated Start Printed Page 56784that CMS should take into account any savings in Medicare Advantage (MA) payments when determining the $11 billion recoupment or otherwise adjust the $11 billion for policies that have been implemented since the passage of the ATRA. Many commenters also believed that the proposed −1.5 percent adjustment was inconsistent with Congressional intent in the ATRA and the MACRA, which they asserted reflected Congress' expectation that the final reduction would be 0.8 percentage points or at least statutorily limited the difference between the negative recoupment adjustments under the ATRA and the positive adjustments under the MACRA. Commenters further stated that if CMS does finalize its proposed adjustment under the ATRA for FY 2017, it should make an offsetting adjustment in FY 2018 to address the difference between the FY 2017 adjustment and the positive adjustments provided for under the MACRA.

Response: We believe our proposed adjustment for FY 2017 is most consistent with the requirement under section 631 of the ATRA to make an adjustment to “fully offset” $11 billion by FY 2017. While we recognize that the commenters have advocated for alternative interpretations of the legislation, we believe the most straightforward reading is that the ATRA requires us to make a recoupment adjustment or adjustments totaling $11 billion by FY 2017. If we were to use the older estimate of a −0.8 percent adjustment for FY 2017, we would only recoup an estimated $10.1 billion, which we do not believe would be consistent with the requirement under the ATRA to offset $11 billion by FY 2017. As we explained in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49345) and prior rules, because estimates of future adjustments were subject to variations in total estimated savings, we did not address the specific amount of the final adjustment required under section 631 of the ATRA for FY 2017 at that time.

In response to comments that we should take into account any savings in MA payments when determining the $11 billion recoupment or otherwise adjust the $11 billion for policies that have been implemented since the passage of the ATRA, we note that our approach for estimating the FY 2017 adjustment is consistent with our historic approach for estimating adjustments to address documentation and coding effects. There is no evidence in the legislative language that, in determining the adjustments necessary to achieve the $11 billion offset required under the ATRA, CMS should include impacts on MA payments or make adjustments for policies that have been implemented since the passage of the ATRA. We also believe that the commenters' suggestion should be evaluated in the context of MedPAC's comment and prior comments on this issue that we should recover past overpayments due to changes in documentation and coding. As stated previously, the $11 billion recoupment under the ATRA represents the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Public Law 110-90 until FY 2013. Adopting an interpretation that reduces the amount of our proposed FY 2017 adjustment creates a greater differential by the end of FY 2017 between the payment increases that occurred due to documentation and coding and the amount recovered. We do not believe increasing this differential would be an appropriate policy. We also note that it has been our consistent practice in implementing the ATRA to not account for MA discharges or savings and find no indication or expectation under the MACRA to change this approach.

With respect to the additional issues of Congressional intent raised by commenters, we disagree that the ATRA and the MACRA, in conjunction, somehow ratify a −0.8 percent adjustment for FY 2017 or statutorily limit the difference between the adjustments under the ATRA and adjustments under the MACRA. As commenters have noted, even if we did adopt an adjustment of −0.8 percent for FY 2017, the cumulative effect of our ATRA adjustment would be −3.2 percentage points, while the MACRA only requires cumulative positive adjustments of +3.0 percent, leaving a −0.2 percent gap between our ATRA adjustments and the MACRA adjustments. It is not clear to us that the MACRA provision was intended to augment or limit CMS' separate obligation, pursuant to the ATRA, to fully offset $11 billion by FY 2017 under section 7(b)(1)(A)(ii) of the TMA, when that language was not changed by the MACRA and, as noted, the MACRA would not fully restore even an estimated −3.2 percent adjustment. Moreover, limiting the ATRA adjustment in this manner would create a greater differential by the end of FY 2017 between the payment increases that occurred due to documentation and coding and the amount recovered.

With regard to the comments stating that if CMS finalizes its proposed adjustment under ATRA for FY 2017, it should make an offsetting adjustment in FY 2018, as we indicated in the proposed rule, we will address the adjustments for FY 2018 and later years in future rulemaking.

Comment: One commenter objected to CMS' use of actuarial assumptions as the basis for determining the level of adjustment required under ATRA. The commenter questioned the variance in the figures for OACT's 2013 and 2016 estimates and stated that OACT's most recent estimate could not be externally replicated. The commenter stated that there should be much greater certainty in the estimate before imposing the higher adjustment proposed for FY 2017. Other commenters requested that CMS reexamine the assumption and estimates made by OACT.

Response: While the OACT memorandum containing the estimates acknowledges the uncertainty in the estimates, it also states that the results shown are OACT's latest and best estimates for Medicare payments for FYs 2014-2017, and that OACT believes that the spending estimates presented, as well as the assumptions used to develop the estimates, are reasonable. We also note that, as explained in OACT's memorandum and the proposed rule, the estimate from the proposed rule was based on the FY 2017 President's Budget, subject to certain adjustments. As discussed in the memorandum, the major changes in the projections were due to lower updates to hospital payments than were assumed in 2013, mostly due to the lower than expected market basket adjustments and a lower number of discharges than assumed in 2013. These changes caused the spending levels to be lower than the 2013 projections. However, in 2013, when CMS made the original projections, everything that was included for 2014 through 2017 was a projection (except for the 2014 update). Now when we make the current projection, we have actual updates for the whole period through 2017, and we have complete data for the number of discharges for 2014 and 2015 and for part of 2016. For that reason, the current projections of spending for 2014 through 2017 are calculated with greater precision than the projections that were done in 2013. For additional information on the specific economic assumptions used in the President's FY 2017 Budget, we refer readers to the OMB Web site at: https://www.whitehouse.gov/​omb/​budget. The estimates for this final rule are similarly based on the Midsession Review of the President's FY 2017 Budget. For additional information on the specific economic assumptions used in the Start Printed Page 56785Midsession Review of the President's FY 2017 Budget, we refer readers to the “Midsession Review of the President's FY 2017 Budget” available on the OMB Web site at: https://www.whitehouse.gov/​sites/​default/​files/​omb/​budget/​fy2017/​assets/​17msr.pdf, under “Economic Assumptions.” For a general overview of the principal steps involved in projecting future costs and utilization, we refer readers to the “2016 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds” available on the CMS Web site at: https://www.cms.gov/​Research-Statistics-Data-and-Systems/​Statistics-Trends-and-Reports/​ReportsTrustFunds/​index.html?​redirect=​/​reportstrustfunds/​ under “Downloads.” As we did with the proposed adjustment, we are making available on the CMS Web site a memorandum containing our actuaries' estimates relating to our finalized adjustment (https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS on the FY 2017 IPPS Final Rule Home Page).

After consideration of the public comments we received, we are finalizing our proposal without modification. For this final rule, based on updated estimates by the Office of the Actuary using the Midsession Review of the President's FY 2017 Budget, we are making an -1.5 percent adjustment as the final adjustment required under section 631 of the ATRA, and when combined with the effects of previous adjustments made in FY 2014, FY 2015, and FY 2016, we estimate will satisfy the recoupment under section 631 of the ATRA. In other words, our actuaries currently estimate that, to the nearest tenth of a percent, the FY 2017 documentation and coding adjustment factor that will recoup as closely as possible $11 billion from FY 2014 through FY 2017 without exceeding this amount is −1.5 percent. As we stated earlier, the estimates by our actuaries related to this finalized adjustment are included in a memorandum that we are making publicly available on the CMS Web site.

The updated table from our actuaries based on the Midsession Review of the President's FY 2017 Budget is below. The interpretation of the table and the calculations are the same as those described in the proposed rule (81 FR 24966 through 24967), except for the update from the FY 2017 President's Budget to the FY 2017 President's Budget Midsession Review.

Recoupment Made Under Section 631 of the American Taxpayer Relief Act of 2012

[ATRA]

IPPS Spending* (billions)Cumulative adjustment factorAdjusted IPPS spending (billions)Recoupment amount (billions)
FY 2014$122.841.00800$123.82$0.98
FY 2015122.481.01606124.451.97
FY 2016124.021.02419127.023.00
FY 2017126.401.03956131.405.00
Total10.95
* Based on FY 2017 President's Budget Midsession Review, including capital, IME, and DSH payments.

For this FY 2017 IPPS/LTCH PPS final rule, our actuaries estimate that the FY 2017 spending subject to the documentation and coding recoupment adjustment (including capital, IME, and DSH payment) would be $131.40 billion in the absence of any documentation and recoupment adjustments from FY 2014 through FY 2017 based on the FY 2017 President's Budget Midsession Review. Therefore our actuaries estimated that, to the nearest tenth of a percent, the FY 2017 documentation and coding adjustment factor that will recoup as closely as possible $11 billion from FY 2014 through FY 2017 without exceeding this amount is −1.5 percent. This adjustment factor yields an estimated spending amount in FY 2017 of $126.4 billion, calculated as $131.4/(1.008*1.008*1.008*1.015).

As stated in the proposed rule, once the recoupment was complete, we had anticipated making a single positive adjustment in FY 2018 to offset the reductions required to recoup the $11 billion under section 631 of the ATRA. However, section 414 of the MACRA replaced the single positive adjustment we intended to make in 2018 with a 0.5 percent positive adjustment for each of FYs 2018 through 2023. The provision under section 414 of the MACRA does not impact our FY 2017 adjustment, as discussed above. As noted previously, while we received public comments on adjustments for FY 2018 and later fiscal years, we will address these adjustments in future rulemaking as we indicated in the proposed rule.

E. Refinement of the MS-DRG Relative Weight Calculation

1. Background

Beginning in FY 2007, we implemented relative weights for DRGs based on cost report data instead of charge information. We refer readers to the FY 2007 IPPS final rule (71 FR 47882) for a detailed discussion of our final policy for calculating the cost-based DRG relative weights and to the FY 2008 IPPS final rule with comment period (72 FR 47199) for information on how we blended relative weights based on the CMS DRGs and MS-DRGs.

As we implemented cost-based relative weights, some public commenters raised concerns about potential bias in the weights due to “charge compression,” which is the practice of applying a higher percentage charge markup over costs to lower cost items and services, and a lower percentage charge markup over costs to higher cost items and services. As a result, the cost-based weights would undervalue high-cost items and overvalue low-cost items if a single cost-to-charge ratio (CCR) is applied to items of widely varying costs in the same cost center. To address this concern, in August 2006, we awarded a contract to the Research Triangle Institute, International (RTI) to study the effects of charge compression in calculating the relative weights and to consider methods to reduce the variation in the CCRs across services within cost centers. For a detailed summary of RTI's findings, recommendations, and public comments that we received on the report, we refer readers to the FY 2009 IPPS/LTCH PPS final rule (73 FR 48452 through 48453). In addition, we refer readers to RTI's July 2008 final report titled “Refining Cost to Charge Ratios for Calculating APC and MS-DRG Relative Payment Weights” (available at: http://www.rti.org/​reports/​cms/​HHSM-Start Printed Page 56786500-2005-0029I/​PDF/​Refining_​Cost_​to_​Charge_​Ratios_​200807_​Final.pdf).

In the FY 2009 IPPS final rule (73 FR 48458 through 48467), in response to the RTI's recommendations concerning cost report refinements, we discussed our decision to pursue changes to the cost report to split the 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.” We acknowledged, as RTI had found, that charge compression occurs in several cost centers that exist on the Medicare cost report. However, as we stated in the FY 2009 IPPS final rule, we focused on the CCR for Medical Supplies and Equipment because RTI found that the largest impact on the MS-DRG relative weights could result from correcting charge compression for devices and implants. In determining the items that should be reported in these respective cost centers, we adopted the commenters' recommendations that hospitals use revenue codes established by the AHA's National Uniform Billing Committee to determine the items that should be reported in the “Medical Supplies Charged to Patients” and the “Implantable Devices Charged to Patients” cost centers. Accordingly, a new subscripted line for “Implantable Devices Charged to Patients” was created in July 2009. This new subscripted cost center has been available for use for cost reporting periods beginning on or after May 1, 2009.

As we discussed in the FY 2009 IPPS final rule (73 FR 48458) and in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68519 through 68527), in addition to the findings regarding implantable devices, RTI found that the costs and charges of computed tomography (CT) scans, magnetic resonance imaging (MRI), and cardiac catheterization differ significantly from the costs and charges of other services included in the standard associated cost center. RTI also concluded that both the IPPS and the OPPS relative weights would better estimate the costs of those services if CMS were to add standard cost centers for CT scans, MRIs, and cardiac catheterization in order for hospitals to report separately the costs and charges for those services and in order for CMS to calculate unique CCRs to estimate the costs from charges on claims data. In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through 50080), we finalized our proposal to create standard cost centers for CT scans, MRIs, and cardiac catheterization, and to require that hospitals report the costs and charges for these services under new cost centers on the revised Medicare cost report Form CMS-2552-10. (We refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through 50080) for a detailed discussion of the reasons for the creation of standard cost centers for CT scans, MRIs, and cardiac catheterization.) The new standard cost centers for CT scans, MRIs, and cardiac catheterization are effective for cost reporting periods beginning on or after May 1, 2010, on the revised cost report Form CMS-2552-10.

In the FY 2009 IPPS final rule (73 FR 48468), we stated that, due to what is typically a 3-year lag between the reporting of cost report data and the availability for use in ratesetting, we anticipated that we might be able to use data from the new “Implantable Devices Charged to Patients” cost center to develop a CCR for “Implantable Devices Charged to Patients” in the FY 2012 or FY 2013 IPPS rulemaking cycle. However, as noted in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43782), due to delays in the issuance of the revised cost report Form CMS 2552-10, we determined that a new CCR for “Implantable Devices Charged to Patients” might not be available before FY 2013. Similarly, when we finalized the decision in the FY 2011 IPPS/LTCH PPS final rule to add new cost centers for CT scans, MRIs, and cardiac catheterization, we explained that data from any new cost centers that may be created will not be available until at least 3 years after they are first used (75 FR 50077). In preparation for the FY 2012 IPPS/LTCH PPS rulemaking, we checked the availability of data in the “Implantable Devices Charged to Patients” cost center on the FY 2009 cost reports, but we did not believe that there was a sufficient amount of data from which to generate a meaningful analysis in this particular situation. Therefore, we did not propose to use data from the “Implantable Devices Charged to Patients” cost center to create a distinct CCR for “Implantable Devices Charged to Patients” for use in calculating the MS-DRG relative weights for FY 2012. We indicated that we would reassess the availability of data for the “Implantable Devices Charged to Patients” cost center for the FY 2013 IPPS/LTCH PPS rulemaking cycle and, if appropriate, we would propose to create a distinct CCR at that time.

During the development of the FY 2013 IPPS/LTCH PPS proposed and final rules, hospitals were still in the process of transitioning from the previous cost report Form CMS-2552-96 to the new cost report Form CMS-2552-10. Therefore, we were able to access only those cost reports in the FY 2010 HCRIS with fiscal year begin dates on or after October 1, 2009, and before May 1, 2010; that is, those cost reports on Form CMS-2552-96. Data from the Form CMS-2552-10 cost reports were not available because cost reports filed on the Form CMS-2552-10 were not accessible in the HCRIS. Further complicating matters was that, due to additional unforeseen technical difficulties, the corresponding information regarding charges for implantable devices on hospital claims was not yet available to us in the MedPAR file. Without the breakout in the MedPAR file of charges associated with implantable devices to correspond to the costs of implantable devices on the cost report, we believed that we had no choice but to continue computing the relative weights with the current CCR that combines the costs and charges for supplies and implantable devices. We stated in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53281 through 53283) that when we do have the necessary data for supplies and implantable devices on the claims in the MedPAR file to create distinct CCRs for the respective cost centers for supplies and implantable devices, we hoped that we would also have data for an analysis of creating distinct CCRs for CT scans, MRIs, and cardiac catheterization, which could then be finalized through rulemaking. In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53281), we stated that, prior to proposing to create these CCRs, we would first thoroughly analyze and determine the impacts of the data, and that distinct CCRs for these new cost centers would be used in the calculation of the relative weights only if they were first finalized through rulemaking.

At the time of the development of the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27506 through 27507), we had a substantial number of hospitals completing all, or some, of these new cost centers on the FY 2011 Medicare cost reports, compared to prior years. We stated that we believed that the analytic findings described using the FY 2011 cost report data and FY 2012 claims data supported our original decision to break out and create new cost centers for implantable devices, MRIs, CT scans, and cardiac catheterization, and we saw no reason to further delay proposing to implement the CCRs of each of these cost centers. Therefore, beginning in FY 2014, we proposed a policy to calculate the MS-DRG relative weights using 19 CCRs, Start Printed Page 56787creating distinct CCRs from cost report data for implantable devices, MRIs, CT scans, and cardiac catheterization.

We refer readers to the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27507 through 27509) and final rule (78 FR 50518 through 50523) in which we presented data analyses using distinct CCRs for implantable devices, MRIs, CT scans, and cardiac catheterization. The FY 2014 IPPS/LTCH PPS final rule also set forth our responses to public comments we received on our proposal to implement these CCRs. As explained in more detail in the FY 2014 IPPS/LTCH PPS final rule, we finalized our proposal to use 19 CCRs to calculate MS-DRG relative weights beginning in FY 2014—the then existing 15 cost centers and the 4 new CCRs for implantable devices, MRIs, CT scans, and cardiac catheterization. Therefore, beginning in FY 2014, we calculate the IPPS MS-DRG relative weights using 19 CCRs, creating distinct CCRs for implantable devices, MRIs, CT scans, and cardiac catheterization.

2. Discussion of Policy for FY 2017

Consistent with our established policy, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24968), we stated that we calculated the proposed MS-DRG relative weights for FY 2017 using two data sources: the MedPAR file as the claims data source and the HCRIS as the cost report data source. We adjusted the charges from the claims to costs by applying the 19 national average CCRs developed from the cost reports. The description of the calculation of the 19 CCRs and the MS-DRG relative weights for FY 2017 is included in section II.G. of the preamble of this final rule.

Comment: One commenter recommended that CMS work with stakeholders to update cost reporting instructions and improve the accuracy and validity of the national average CCRs. The commenter expressed concern that the differences between hospitals' use of nonstandard cost center codes and CMS' procedures for mapping and rolling up nonstandard codes to the standard cost centers will continue to result in invalid CCRs and inaccurate payments. The commenter stressed the need for flexibility in cost reporting, to accommodate any new or unique services that certain hospitals may provide, which may not be easily captured through the cost reporting software. Finally, the commenter again recommended, as it had done in response to prior IPPS rules, that CMS pay particular attention to data used for CT scanand MRI cost centers; the commenter believed that the hospital payment rates established by CMS from the CT scan and MRI CCRs simply do not correlate with resources used for these capital-intensive services.

Response: We appreciate the commenter's desire to increase the accuracy and validity of the CCRs. As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49347 through 49350), we noticed inconsistencies in hospital cost reporting of nonstandard cost centers and were concerned about the implication that some of these discrepancies might have on the aspects of the IPPS that rely on CCRs. While we did not propose any changes to the methodology or data sources for the FY 2016 CCRs and relative weights, we stated in that final rule that we would continue to explore ways in which we can improve the accuracy of the cost report data and calculated CCRs used in the cost estimation process and that, to the extent possible, we will continue to seek stakeholder input in efforts to limit the impact on providers. We also note that the concern regarding hospitals' use of nonstandard cost center codes and CMS' procedures for mapping and rolling up nonstandard codes to the standard cost centers does not specifically apply to the standard CT scan and MRI cost centers. Although these centers were previously nonstandard cost centers, they were implemented as standard cost centers in Form CMS-2552-10. Therefore, many of the issues relating to inconsistent coding and issues with information “rollup” would not be specifically relevant for the CT scan and MRI standard cost centers. We have previously addressed stakeholder concerns related to the flexibility of cost reporting and accuracy of the CT scan and MRI standard cost centers in setting the IPPS relative weights. For a detailed discussion of the CT scan and MRI standard cost centers, we refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50520 through 50523), and the FY 2011 IPPS/LTCH PPS final rule (7 FR 50077 through 50079).

Consistent with our established policy, we calculated the final MS-DRG relative weights for FY 2017 using two data sources: the MedPAR file as the claims data source and the HCRIS as the cost report data source. We adjusted the charges from the claims to costs by applying the 19 national average CCRs developed from the cost reports. As we did with the FY 2016 IPPS/LTCH PPS final rule, we are providing the version of the HCRIS from which we calculated these 19 CCRs on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html. Click on the link on the left side of the screen titled, “FY 2017 IPPS Final Rule Home Page” or “Acute Inpatient Files for Download.”

F. Changes to Specific MS-DRG Classifications

1. Discussion of Changes to Coding System and Basis for MS-DRG Updates

a. Conversion of MS-DRGs to the International Classification of Diseases, 10th Revision (ICD-10)

As of October 1, 2015, providers use the International Classification of Diseases, 10th Revision (ICD-10) coding system to report diagnoses and procedures for Medicare hospital inpatient services under the MS-DRG system instead of the ICD-9-CM coding system, which was used through September 30, 2015. The ICD-10 coding system includes the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) for diagnosis coding and the International Classification of Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) for inpatient hospital procedure coding, as well as the Official ICD-10-CM and ICD-10-PCS Guidelines for Coding and Reporting. The ICD-10 coding system was initially adopted for transactions conducted on or after October 1, 2013, as described in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Administrative Simplification: Modifications to Medical Data Code Set Standards to Adopt ICD-10-CM and ICD-10-PCS Final Rule published in the Federal Register on January 16, 2009 (74 FR 3328 through 3362) (hereinafter referred to as the “ICD-10-CM and ICD-10-PCS final rule”). However, the Secretary of Health and Human Services (the Secretary) issued a final rule that delayed the compliance date for ICD-10 from October 1, 2013, to October 1, 2014. That final rule, entitled “Administrative Simplification: Adoption of a Standard for a Unique Health Plan Identifier; Addition to the National Provider Identifier Requirements; and a Change to the Compliance Date for ICD-10-CM and ICD-10-PCS Medical Data Code Sets,” CMS-0040-F, was published in the Federal Register on September 5, 2012 (77 FR 54664) and is available for viewing on the Internet at: http://www.gpo.gov/​fdsys/​pkg/​FR-2012-09-05/​pdf/​2012-21238.pdf. On April 1, 2014, the Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113-93) was enacted, which specified that the Secretary may not adopt ICD-10 prior to October 1, 2015. Accordingly, the U.S. Department of Health and Human Start Printed Page 56788Services released a final rule in the Federal Register on August 4, 2014 (79 FR 45128 through 45134) that included a new compliance date that required the use of ICD-10 beginning October 1, 2015. The rule also required HIPAA-covered entities to continue to use ICD-9-CM through September 30, 2015.

The anticipated move to ICD-10 necessitated the development of an ICD-10-CM/ICD-10-PCS version of the MS-DRGs. CMS began a project to convert the ICD-9-CM-based MS-DRGs to ICD-10 MS-DRGs. In response to the FY 2011 IPPS/LTCH PPS proposed rule, we received public comments on the creation of the ICD-10 version of the MS-DRGs to be implemented at the same time as ICD-10 (75 FR 50127 and 50128). While we did not propose an ICD-10 version of the MS-DRGs in the FY 2011 IPPS/LTCH PPS proposed rule, we noted that we have been actively involved in converting current MS-DRGs from ICD-9-CM codes to ICD-10 codes and sharing this information through the ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee. We undertook this early conversion project to assist other payers and providers in understanding how to implement their own conversion projects. We posted ICD-10 MS-DRGs based on Version 26.0 (FY 2009) of the MS-DRGs. We also posted a paper that describes how CMS went about completing this project and suggestions for other payers and providers to follow. Information on the ICD-10 MS-DRG conversion project can be found on the ICD-10 MS-DRG Conversion Project Web site at: http://cms.hhs.gov/​Medicare/​Coding/​ICD10/​ICD-10-MS-DRG-Conversion-Project.html. We have continued to keep the public updated on our maintenance efforts for ICD-10-CM and ICD-10-PCS coding systems, as well as the General Equivalence Mappings that assist in conversion through the ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee. Information on these committee meetings can be found on the CMS Web site at: http://www.cms.hhs.gov/​Medicare/​Coding/​ICD9ProviderDiagnosticCodes/​index.html.

During FY 2011, we developed and posted Version 28.0 of the ICD-10 MS-DRGs based on the FY 2011 MS-DRGs (Version 28.0) that we finalized in the FY 2011 IPPS/LTCH PPS final rule on the CMS Web site. This ICD-10 MS-DRGs Version 28.0 also included the CC Exclusion List and the ICD-10 version of the hospital-acquired conditions (HACs), which was not posted with Version 26. We also discussed this update at the September 15-16, 2010 and the March 9-10, 2011 meetings of the ICD-9-CM Coordination and Maintenance Committee. The minutes of these two meetings are posted on the CMS Web site at: http://www.cms.hhs.gov/​Medicare/​Coding/​ICD9ProviderDiagnosticCodes/​index.html.

We reviewed comments on the ICD-10 MS-DRGs Version 28 and made updates as a result of these comments. We called the updated version the ICD-10 MS-DRGs Version 28-R1. We posted a Definitions Manual of ICD-10 MS-DRGs Version 28-R1 on our ICD-10 MS-DRG Conversion Project Web site. To make the review of Version 28-R1 updates easier for the public, we also made available pilot software on a CD-ROM that could be ordered through the National Technical Information Service (NTIS). A link to the NTIS ordering page was provided on the CMS ICD-10 MS-DRGs Web site. We stated that we believed that, by providing the ICD-10 MS-DRGs Version 28-R1 Pilot Software (distributed on CD-ROM), the public would be able to more easily review and provide feedback on updates to the ICD-10 MS-DRGs. We discussed the updated ICD-10 MS-DRGs Version 28-R1 at the September 14, 2011 ICD-9-CM Coordination and Maintenance Committee meeting. We encouraged the public to continue to review and provide comments on the ICD-10 MS-DRGs so that CMS could continue to update the system.

In FY 2012, we prepared the ICD-10 MS-DRGs Version 29, based on the FY 2012 MS-DRGs (Version 29.0) that we finalized in the FY 2012 IPPS/LTCH PPS final rule. We posted a Definitions Manual of ICD-10 MS-DRGs Version 29 on our ICD-10 MS-DRG Conversion Project Web site. We also prepared a document that describes changes made from Version 28 to Version 29 to facilitate a review. The ICD-10 MS-DRGs Version 29 was discussed at the ICD-9-CM Coordination and Maintenance Committee meeting on March 5, 2012. Information was provided on the types of updates made. Once again the public was encouraged to review and comment on the most recent update to the ICD-10 MS-DRGs.

CMS prepared the ICD-10 MS-DRGs Version 30 based on the FY 2013 MS-DRGs (Version 30) that we finalized in the FY 2013 IPPS/LTCH PPS final rule. We posted a Definitions Manual of the ICD-10 MS-DRGs Version 30 on our ICD-10 MS-DRG Conversion Project Web site. We also prepared a document that describes changes made from Version 29 to Version 30 to facilitate a review. We produced mainframe and computer software for Version 30, which was made available to the public in February 2013. Information on ordering the mainframe and computer software through NTIS was posted on the ICD-10 MS-DRG Conversion Project Web site. The ICD-10 MS-DRGs Version 30.0 computer software facilitated additional review of the ICD-10 MS-DRGs conversion.

We provided information on a study conducted on the impact of converting the MS-DRGs to ICD-10. Information on this study is summarized in a paper entitled “Impact of the Transition to ICD-10 on Medicare Inpatient Hospital Payments.” This paper was posted on the CMS ICD-10 MS-DRGs Conversion Project Web site and was distributed and discussed at the September 15, 2010 ICD-9-CM Coordination and Maintenance Committee meeting. The paper described CMS' approach to the conversion of the MS-DRGs from ICD-9-CM codes to ICD-10 codes. The study was undertaken using the ICD-9-CM MS-DRGs Version 27.0 (FY 2010), which was converted to the ICD-10 MS-DRGs Version 27.0. The study estimated the impact on aggregate payment to hospitals and the distribution of payments across hospitals. The impact of the conversion from ICD-9-CM to ICD-10 on Medicare MS-DRG hospital payments was estimated using FY 2009 Medicare claims data. The study found a hospital payment increase of 0.05 percent using the ICD-10 MS-DRGs Version 27.

CMS provided an overview of this hospital payment impact study at the March 5, 2012 ICD-9-CM Coordination and Maintenance Committee meeting. This presentation followed presentations on the creation of ICD-10 MS-DRGs Version 29.0. A summary report of this meeting can be found on the CMS Web site at: http://www.cms.hhs.gov/​Medicare/​Coding/​ICD9ProviderDiagnosticCodes/​index.html. At this March 2012 meeting, CMS announced that it would produce an update on this impact study based on an updated version of the ICD-10 MS-DRGs. This update of the impact study was presented at the March 5, 2013 ICD-9-CM Coordination and Maintenance Committee meeting. The study found that moving from an ICD-9-CM-based system to an ICD-10 MS-DRG replicated system would lead to DRG reassignments on only 1 percent of the 10 million MedPAR sample records used in the study. Ninety-nine percent of the records did not shift to another MS-DRG when using an ICD-10 MS-DRG system. For the 1 percent of the records that shifted, 45 percent of the shifts were to a higher-weighted MS-DRG, while 55 percent of the shifts were Start Printed Page 56789to lower-weighted MS-DRGs. The net impact across all MS-DRGs was a reduction by 4/10000 or minus 4 pennies per $100. The updated paper is posted on the CMS Web site at: http://cms.hhs.gov/​Medicare/​Coding/​ICD10/​ICD-10-MS-DRG-Conversion-Project.html under the “Downloads” section. Information on the March 5, 2013 ICD-9-CM Coordination and Maintenance Committee meeting can be found on the CMS Web site at: http://cms.hhs.gov/​Medicare/​Coding/​ICD9ProviderDiagnosticCodes/​ICD-9-CM-C-and-M-Meeting-Materials.html. This update of the impact paper and the ICD-10 MS-DRG Version 30 software provided additional information to the public who were evaluating the conversion of the MS-DRGs to ICD-10 MS-DRGs.

CMS prepared the ICD-10 MS-DRGs Version 31 based on the FY 2014 MS-DRGs (Version 31) that we finalized in the FY 2014 IPPS/LTCH PPS final rule. In November 2013, we posted a Definitions Manual of the ICD-10 MS-DRGs Version 31 on the ICD-10 MS-DRG Conversion Project Web site at: http://www.cms.hhs.gov/​Medicare/​Coding/​ICD10/​ICD-10-MS-DRG-Conversion-Project.html. We also prepared a document that described changes made from Version 30 to Version 31 to facilitate a review. We produced mainframe and computer software for Version 31, which was made available to the public in December 2013. Information on ordering the mainframe and computer software through NTIS was posted on the CMS Web site at: http://cms.hhs.gov/​Medicare/​Coding/​ICD10/​ICD-10-MS-DRG-Conversion-Project.html under the “Related Links” section. This ICD-10 MS-DRGs Version 31.0 computer software facilitated additional review of the ICD-10 MS-DRGs conversion. We encouraged the public to submit to CMS any comments on areas where they believed the ICD-10 MS-DRGs did not accurately reflect grouping logic found in the ICD-9-CM MS-DRGs Version 31.

We reviewed public comments received and developed an update of ICD-10 MS-DRGs Version 31, which we called ICD-10 MS-DRGs Version 31-R. We posted a Definitions Manual of the ICD-10 MS-DRGs Version 31-R on the ICD-10 MS-DRG Conversion Project Web site at: http://www.cms.hhs.gov/​Medicare/​Coding/​ICD10/​ICD-10-MS-DRG-Conversion-Project.html. We also prepared a document that describes changes made from Version 31 to Version 31-R to facilitate a review. We continued to share ICD-10 MS-DRG conversion activities with the public through this Web site.

CMS prepared the ICD-10 MS-DRGs Version 32 based on the FY 2015 MS-DRGs (Version 32) that we finalized in the FY 2015 IPPS/LTCH PPS final rule. In November 2014, we made available a Definitions Manual of the ICD-10 MS DRGs Version 32 on the ICD-10 MS-DRG Conversion Project Web site at: http://www.cms.gov/​Medicare/​Coding/​ICD10/​ICD-10-MS-DRG-Conversion-Project.html. We also prepared a document that described changes made from Version 31-R to Version 32 to facilitate a review. We produced mainframe and computer software for Version 32, which was made available to the public in January 2015. Information on ordering the mainframe and computer software through NTIS was made available on the CMS Web site at: http://www.cms.gov/​Medicare/​Coding/​ICD10/​ICD-10-MS-DRG-Conversion-Project.html under the “Related Links” section. This ICD-10 MS-DRGs Version 32 computer software facilitated additional review of the ICD-10 MS-DRGs conversion. We encouraged the public to submit to CMS any comments on areas where they believed the ICD-10 MS-DRGs did not accurately reflect grouping logic found in the ICD-9-CM MS-DRGs Version 32. We discussed five requests from the public to update the ICD-10 MS-DRGs Version 32 to better replicate the ICD-9-CM MS-DRGs in section II.G.3., 4., and 5. of the preamble of the FY 2016 IPPS/LTCH PPS final rule. In the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24351), we proposed to implement the MS-DRG code logic in the ICD-10 MS-DRGs Version 32 along with any finalized updates to the ICD-10 MS-DRGs Version 32 for the final ICD-10 MS-DRGs Version 33. In the proposed rule, we proposed the ICD-10 MS-DRGs Version 33 as the replacement logic for the ICD-9-CM based MS-DRGs Version 32 as part of the proposed MS-DRG updates for FY 2016. We invited public comments on how well the ICD-10 MS-DRGs Version 32 replicated the logic of the MS-DRGs Version 32 based on ICD-9-CM codes.

In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49356 through 49357 and 49363 through 49407), we addressed the public comments we received on the replication in the ICD-10 MS-DRGs Version 32 of the logic of the MS-DRGs Version 32 based on ICD-9-CM codes. We refer readers to that final rule for a discussion of the changes we made in response to public comments.

b. Basis for FY 2017 MS-DRG Updates

CMS encourages input from our stakeholders concerning the annual IPPS updates when that input is made available to us by December 7 of the year prior to the next annual proposed rule update. For example, to be considered for any updates or changes in FY 2017, comments and suggestions should have been submitted by December 7, 2015. The comments that were submitted in a timely manner for FY 2017 are discussed in this section of the final rule. Interested parties should submit any comments and suggestions for FY 2018 by December 7, 2016, via the new CMS MS-DRG Classification Change Requests Mailbox located at: MSDRGClassificationChange@cms.hhs.gov.

Following are the changes we proposed to the MS-DRGs for FY 2017 in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24971 through 25016). We invited public comment on each of the MS-DRG classification proposed changes as well as our proposals to maintain certain existing MS-DRG classifications discussed in the proposed rule. In some cases, we proposed changes to the MS-DRG classifications based on our analysis of claims data. In other cases, we proposed to maintain the existing MS-DRG classification based on our analysis of claims data. For the FY 2017 proposed rule, our MS-DRG analysis was based on claims data from the December 2015 update of the FY 2015 MedPAR file, which contains hospital bills received through September 30, 2015, for discharges occurring through September 30, 2015. In our discussion of the proposed MS-DRG reclassification changes, we referred to our analysis of claims data from the “December 2015 update of the FY 2015 MedPAR file.”

In this FY 2017 IPPS/LTCH PPS final rule, we summarize the public comments we received on our proposals, present our responses, and state our final policies. For this FY 2017 final rule, we did not perform any further MS-DRG analysis of claims data. Therefore, all of the data analysis is based on claims data from the December 2015 update of the FY 2015 MedPAR file, which contains hospital bills received through September 30, 2015, for discharges occurring through September 30, 2015.

As explained in previous rulemaking (76 FR 51487), in deciding whether to propose to make further modification to the MS-DRGs for particular circumstances brought to our attention, we consider whether the resource consumption and clinical characteristics of the patients with a given set of conditions are significantly different than the remaining patients in the MS-DRG. We evaluate patient care costs using average costs and lengths of stay Start Printed Page 56790and rely on the judgment of our clinical advisors to decide whether patients are clinically distinct or similar to other patients in the MS-DRG. In evaluating resource costs, we consider both the absolute and percentage differences in average costs between the cases we select for review and the remainder of cases in the MS-DRG. We also consider variation in costs within these groups; that is, whether observed average differences are consistent across patients or attributable to cases that are extreme in terms of costs or length of stay, or both. Further, we consider the number of patients who will have a given set of characteristics and generally prefer not to create a new MS-DRG unless it would include a substantial number of cases.

In our examination of the claims data, we apply the following criteria established in FY 2008 (72 FR 47169) to determine if the creation of a new complication or comorbidity (CC) or major complication or comorbidity (MCC) subgroup within a base MS-DRG is warranted:

  • A reduction in variance of costs of at least 3 percent.
  • At least 5 percent of the patients in the MS-DRG fall within the CC or MCC subgroup.
  • At least 500 cases are in the CC or MCC subgroup.
  • There is at least a 20-percent difference in average costs between subgroups.
  • There is a $2,000 difference in average costs between subgroups.

In order to warrant creation of a CC or MCC subgroup within a base MS-DRG, the subgroup must meet all five of the criteria.

We note that some of the issues evaluated for the FY 2017 MS-DRGs update continue to relate to the need for the ICD-10 MS-DRGs to accurately replicate the logic of the ICD-9-CM based version of the MS-DRGs. Replication is important because both the logic for the MS-DRGs and the data source used to calculate and develop proposed relative payment weights are based on the same MedPAR claims data. In other words, as the logic for the proposed and final FY 2017 ICD-10 MS-DRGs is based upon the FY 2015 ICD-9-CM MedPAR claims data, the data source used to calculate and develop the proposed and final FY 2017 relative payment weights is also based on the FY 2015 ICD-9-CM MedPAR claims data, including any MS-DRG classification changes discussed in the proposed rule and this final rule. This is consistent with how the current FY 2016 relative payment weights are based on the ICD-9-CM diagnosis and procedure codes from the FY 2014 MedPAR claims data that were grouped through the ICD-9-CM version of the FY 2016 GROUPER Version 33. We note that we made the MS-DRG GROUPER and Medicare Code Editor (MCE) ICD-9-CM Software Version 33 available to the public for use in analyzing ICD-9-CM data to create relative payment weights using ICD-9-CM data on our CMS Web site at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​FY2016-IPPS-Final-Rule-Home-Page.html?​DLSort=​0&​DLEntries=​10&​DLPage=​1&​DLSortDir=​ascending. Therefore, as discussed in section II.G. of the preamble of this final rule, ICD-9-CM data were used for computing the proposed and final FY 2017 MS-DRG relative payment weights. As we did for FY 2016, we note that, for FY 2017, we have made the MS-DRG GROUPER and Medicare Code Editor (MCE) ICD-9-CM Software Version 34 available to the public for use in analyzing ICD-9-CM data to create relative payment weights using ICD-9-CM data on our CMS Web site at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​FY2017-IPPS-Final-Rule-Home-Page.html. If the ICD-9 and ICD-10 versions of MS-DRGs cease to be replications of each other, the relative payment weights computed using the ICD-9 claims data and MS-DRGs would be inconsistent with the relative payment weights assigned for the ICD-10 MS-DRGs, causing unintended payment redistributions. Thus, if the findings of our data analyses and the recommendations of our clinical advisors supported modifications to the current ICD-10 MS-DRG structure, prior to proposing any changes, we first evaluated whether the requested change could be replicated in the ICD-9-CM MS-DRGs. If the answer was “yes,” from a replication perspective, the change was considered feasible. If the answer was “no,” we examined whether the change in the ICD-10 MS-DRGs was likely to cause a significant number of patient cases to change or “shift” ICD-10 MS-DRGs. If relatively few patient cases would be impacted, we evaluated if it would be feasible to propose the change even though it could not be replicated by the ICD-9 MS-DRGs because it would not cause a material payment redistribution. For the ICD-10 MS-DRG classification change requests that could not be replicated in ICD-9-CM and that would cause a significant number of patient cases to shift MS-DRG assignment, we considered other alternatives.

Comment: Some commenters requested that CMS make the FY 2017 finalized MS-DRG GROUPER logic proposals retroactive to October 1, 2015 for current FY 2016 claims. One commenter stated that if the corrected replication issues were retroactive to October 1, 2015, private payers would be able to appropriately adjust claims that had an inappropriate MS-DRG assignment.

Response: We acknowledge the commenters' request. However, we note that, in accordance with section 1886(d)(4)(C) of the Act, we adjust the DRG classifications and relative weights at least annually. The FY 2016 ICD-10 MS-DRGs Version 33 were subject to review and comment by the public as part of the FY 2016 IPPS/LTCH PPS proposed and final rulemaking process. We encouraged the public to submit any comments on areas where they believed the ICD-10 MS-DRGs did not accurately reflect the GROUPER logic found in the ICD-9-CM MS-DRGs (80 FR 49356), and discussed in the FY 2016 rulemaking the requests we received to update the ICD-10 MS-DRGs to better replicate the ICD-9 MS-DRGs. In the FY 2017 IPPS/LTCH PPS proposed rule, we proposed further updates to the MS-DRG GROUPER logic, to be effecive October 1, 2016.

With regard to the ability of private payers to adjust claims affected by replication issues, as noted in the FY 2008 IPPS final rule (72 FR 47152), we have stated many times in the past that we encourage private insurers and other non-Medicare payers to make refinements to Medicare's DRG system to better suit the needs of the patients they serve. Consistent with our general approach for implementing updates to the MS-DRGs, the proposals adopted as final policy in this FY 2017 IPPS/LTCH PPS final rule will apply beginning with the FY 2017 MS-DRGs.

2. Pre-Major Diagnostic Category (Pre-MDC): Total Artificial Heart Replacement

An ICD-10 MS-DRG replication issue regarding the assignment of two ICD-10-PCS procedure codes was identified after the October 1, 2015 implementation of the Version 33 ICD-10 MS-DRGs. ICD-10-PCS procedure codes 02RK0JZ (Replacement of right ventricle with synthetic substitute, open approach) and 02RL0JZ (Replacement of left ventricle with synthetic substitute, open approach), when reported together, describe a biventricular heart replacement (artificial heart). Under the Version 32 ICD-9-CM based MS-DRGs, this procedure was described by ICD-9-CM procedure code 37.52 (Implantation Start Printed Page 56791of total internal biventricular heart replacement system) and grouped to MS-DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System with and without MCC, respectively).

As discussed in section II.F.1.a. of the preamble of the proposed rule and this final rule, to assist in the conversion from the ICD-9-CM based MS-DRGs to ICD-10, beginning in FY 2011, draft versions of the ICD-10 based MS-DRGs were developed and made available for public comment. The two ICD-10-PCS procedure codes (02RK0JZ and 02RL0JZ) were assigned as a “cluster” to the draft ICD-10 based MS-DRGs 001 and 002 in prior draft versions of the ICD-10 MS-DRGs. In ICD-10-PCS, a cluster is the term used to describe when a combination of ICD-10-PCS procedure codes are needed to fully satisfy the equivalent meaning of an ICD-9-CM procedure code for it to be considered a plausible translation. Upon review of prior draft versions of the ICD-10 MS-DRGs, it was determined that Version 30 was the last version to include ICD-10-PCS procedure codes 02RK0JZ and 02RL0JZ as a code cluster (from ICD-9-CM procedure code 37.52) that grouped to the draft ICD-10 based MS-DRGs 001 and 002. Subsequent draft versions of the ICD-10 MS-DRGs inadvertently omitted this code cluster from those MS-DRGs.

Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24971 through 24972), for FY 2017, we proposed to assign ICD-10-PCS procedure codes 02RK0JZ and 02RL0JZ as a code cluster to ICD-10 Version 34 MS-DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System with and without MCC, respectively) to accurately replicate the Version 32 ICD-9-CM based MS-DRG logic of procedure code 37.52. We invited public comments on our proposal.

Comment: Commenters supported the proposal to assign ICD-10-PCS procedure codes 02RK0JZ and 02RL0JZ as a code cluster to ICD-10 Version 34 MS-DRGs 001 and 002. The commenters noted that this code cluster assignment is crucial to assure that all consumers who require a heart replacement with a total artificial heart will have access to care, regardless of whether they are a Medicare beneficiary, a Medicaid recipient, or a privately insured individual. Other commenters noted the proposal was reasonable, given the data, the ICD-10-PCS codes, and the information provided.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to assign ICD-10-PCS procedure codes 02RK0JZ (Replacement of right ventricle with synthetic substitute, open approach) and 02RL0JZ (Replacement of left ventricle with synthetic substitute, open approach) as a code cluster to MS-DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System with and without MCC, respectively) effective October 1, 2016 for ICD-10 MS-DRGs Version 34.

3. MDC 1 (Diseases and Disorders of the Nervous System)

a. Endovascular Embolization (Coiling) or Occlusion of Head and Neck Procedures

We received a repeat request to change the MS-DRG assignment for procedure codes describing endovascular embolization (coiling) or occlusion of the head and neck. This topic was discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28005 through 28007); the FY 2015 IPPS/LTCH PPS final rule (79 FR 49883 through 49886); the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24351 through 24356); and the FY 2016 IPPS/LTCH PPS final rule (80 FR 49358 through 49363). For these 2 fiscal years, we did not change the MS-DRG assignment for procedure codes describing endovascular embolization (coiling) or occlusion of the head and neck for the reasons discussed in these proposed and final rules.

For FY 2017, the requestor again asked that CMS change the MS-DRG assignment for procedure codes describing endovascular embolization or occlusion of the head and neck as well as several other codes describing endovascular procedures of the head and neck.

The ICD-10-PCS procedure codes listed in the following table capture endovascular embolization or occlusion of the head and neck procedures that are assigned to the following MS-DRGs in ICD-10 Version 33 MS-DRGs: MS-DRG 020 (Intracranial Vascular Procedures with Principal Diagnosis of Hemorrhage with MCC); MS-DRG 021 (Intracranial Vascular Procedures with Principal Diagnosis of Hemorrhage with CC); MS-DRG 022 (Intracranial Vascular Procedures with Principal Diagnosis of Hemorrhage without CC/MCC); MS-DRG 023 (Craniotomy with Major Device Implant/Acute Complex CNS Principal Diagnosis with MCC or Chemo Implant); MS-DRG 024 (Craniotomy with Major Device Implant/Acute Complex CNS Principal Diagnosis without MCC); MS-DRG 025 (Craniotomy and Endovascular Intracranial Procedures with MCC); MS-DRG 026 (Craniotomy and Endovascular Intracranial Procedures with CC); and MS-DRG 027 (Craniotomy and Endovascular Intracranial Procedures without CC/MCC):

ICD-10-PCS Codes for Endovascular Embolization or Occlusion of the Head and Neck Procedures Assigned to MS-DRGs 020 Through 027 in ICD-10 MS-DRGs Version 33

ICD-10-PCS codeCode description
03LG3BZOcclusion of intracranial artery with bioactive intraluminal device, percutaneous approach.
03LG3DZOcclusion of intracranial artery with intraluminal device, percutaneous approach.
03LG4BZOcclusion of intracranial artery with bioactive intraluminal device, percutaneous endoscopic approach.
03LG4DZOcclusion of intracranial artery with intraluminal device, percutaneous endoscopic approach.
03LH3BZOcclusion of right common carotid artery with bioactive intraluminal device, percutaneous approach.
03LH3DZOcclusion of right common carotid artery with intraluminal device, percutaneous approach.
03LH4BZOcclusion of right common carotid artery with bioactive intraluminal device, percutaneous endoscopic approach.
03LH4DZOcclusion of right common carotid artery with intraluminal device, percutaneous endoscopic approach.
03LJ3BZOcclusion of left common carotid artery with bioactive intraluminal device, percutaneous approach.
03LJ3DZOcclusion of left common carotid artery with intraluminal device, percutaneous approach.
03LJ4BZOcclusion of left common carotid artery with bioactive intraluminal device, percutaneous endoscopic approach.
03LJ4DZOcclusion of left common carotid artery with intraluminal device, percutaneous endoscopic approach.
03LK3BZOcclusion of right internal carotid artery with bioactive intraluminal device, percutaneous approach.
03LK3DZOcclusion of right internal carotid artery with intraluminal device, percutaneous approach.
03LK4BZOcclusion of right internal carotid artery with bioactive intraluminal device, percutaneous endoscopic approach.
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03LK4DZOcclusion of right internal carotid artery with intraluminal device, percutaneous endoscopic approach.
03LL3BZOcclusion of left internal carotid artery with bioactive intraluminal device, percutaneous approach.
03LL3DZOcclusion of left internal carotid artery with intraluminal device, percutaneous approach.
03LL4BZOcclusion of left internal carotid artery with bioactive intraluminal device, percutaneous endoscopic approach.
03LL4DZOcclusion of left internal carotid artery with intraluminal device, percutaneous endoscopic approach.
03LM3BZOcclusion of right external carotid artery with bioactive intraluminal device, percutaneous approach.
03LM3DZOcclusion of right external carotid artery with intraluminal device, percutaneous approach.
03LM4BZOcclusion of right external carotid artery with bioactive intraluminal device, percutaneous endoscopic approach.
03LM4DZOcclusion of right external carotid artery with intraluminal device, percutaneous endoscopic approach.
03LN3BZOcclusion of left external carotid artery with bioactive intraluminal device, percutaneous approach.
03LN3DZOcclusion of left external carotid artery with intraluminal device, percutaneous approach.
03LN4BZOcclusion of left external carotid artery with bioactive intraluminal device, percutaneous endoscopic approach.
03LN4DZOcclusion of left external carotid artery with intraluminal device, percutaneous endoscopic approach.
03LP3BZOcclusion of right vertebral artery with bioactive intraluminal device, percutaneous approach.
03LP3DZOcclusion of right vertebral artery with intraluminal device, percutaneous approach.
03LP4BZOcclusion of right vertebral artery with bioactive intraluminal device, percutaneous endoscopic approach.
03LP4DZOcclusion of right vertebral artery with intraluminal device, percutaneous endoscopic approach.
03LQ3BZOcclusion of left vertebral artery with bioactive intraluminal device, percutaneous approach.
03LQ3DZOcclusion of left vertebral artery with intraluminal device, percutaneous approach.
03LQ4BZOcclusion of left vertebral artery with bioactive intraluminal device, percutaneous endoscopic approach.
03LQ4DZOcclusion of left vertebral artery with intraluminal device, percutaneous endoscopic approach.
03LR3DZOcclusion of face artery with intraluminal device, percutaneous approach.
03LR4DZOcclusion of face artery with intraluminal device, percutaneous endoscopic approach.
03LS3DZOcclusion of right temporal artery with intraluminal device, percutaneous approach.
03LS4DZOcclusion of right temporal artery with intraluminal device, percutaneous endoscopic approach.
03LT3DZOcclusion of left temporal artery with intraluminal device, percutaneous approach.
03LT4DZOcclusion of left temporal artery with intraluminal device, percutaneous endoscopic approach.
03VG3BZRestriction of intracranial artery with bioactive intraluminal device, percutaneous approach.
03VG3DZRestriction of intracranial artery with intraluminal device, percutaneous approach.
03VG4BZRestriction of intracranial artery with bioactive intraluminal device, percutaneous endoscopic approach.
03VG4DZRestriction of intracranial artery with intraluminal device, percutaneous endoscopic approach.
03VH3BZRestriction of right common carotid artery with bioactive intraluminal device, percutaneous approach.
03VH3DZRestriction of right common carotid artery with intraluminal device, percutaneous approach.
03VH4BZRestriction of right common carotid artery with bioactive intraluminal device, percutaneous endoscopic approach.
03VH4DZRestriction of right common carotid artery with intraluminal device, percutaneous endoscopic approach.
03VJ3BZRestriction of left common carotid artery with bioactive intraluminal device, percutaneous approach.
03VJ3DZRestriction of left common carotid artery with intraluminal device, percutaneous approach.
03VJ4BZRestriction of left common carotid artery with bioactive intraluminal device, percutaneous endoscopic approach.
03VJ4DZRestriction of left common carotid artery with intraluminal device, percutaneous endoscopic approach.
03VK3BZRestriction of right internal carotid artery with bioactive intraluminal device, percutaneous approach.
03VK3DZRestriction of right internal carotid artery with intraluminal device, percutaneous approach.
03VK4BZRestriction of right internal carotid artery with bioactive intraluminal device, percutaneous endoscopic approach.
03VK4DZRestriction of right internal carotid artery with intraluminal device, percutaneous endoscopic approach.
03VL3BZRestriction of left internal carotid artery with bioactive intraluminal device, percutaneous approach.
03VL3DZRestriction of left internal carotid artery with intraluminal device, percutaneous approach.
03VL4BZRestriction of left internal carotid artery with bioactive intraluminal device, percutaneous endoscopic approach.
03VL4DZRestriction of left internal carotid artery with intraluminal device, percutaneous endoscopic approach.
03VM3BZRestriction of right external carotid artery with bioactive intraluminal device, percutaneous approach.
03VM3DZRestriction of right external carotid artery with intraluminal device, percutaneous approach.
03VM4BZRestriction of right external carotid artery with bioactive intraluminal device, percutaneous endoscopic approach.
03VM4DZRestriction of right external carotid artery with intraluminal device, percutaneous endoscopic approach.
03VN3BZRestriction of left external carotid artery with bioactive intraluminal device, percutaneous approach.
03VN3DZRestriction of left external carotid artery with intraluminal device, percutaneous approach.
03VN4BZRestriction of left external carotid artery with bioactive intraluminal device, percutaneous endoscopic approach.
03VN4DZRestriction of left external carotid artery with intraluminal device, percutaneous endoscopic approach.
03VP3BZRestriction of right vertebral artery with bioactive intraluminal device, percutaneous approach.
03VP3DZRestriction of right vertebral artery with intraluminal device, percutaneous approach.
03VP4BZRestriction of right vertebral artery with bioactive intraluminal device, percutaneous endoscopic approach.
03VP4DZRestriction of right vertebral artery with intraluminal device, percutaneous endoscopic approach.
03VQ3BZRestriction of left vertebral artery with bioactive intraluminal device, percutaneous approach.
03VQ3DZRestriction of left vertebral artery with intraluminal device, percutaneous approach.
03VQ4BZRestriction of left vertebral artery with bioactive intraluminal device, percutaneous endoscopic approach.
03VQ4DZRestriction of left vertebral artery with intraluminal device, percutaneous endoscopic approach.
03VR3DZRestriction of face artery with intraluminal device, percutaneous approach.
03VR4DZRestriction of face artery with intraluminal device, percutaneous endoscopic approach.
03VS3DZRestriction of right temporal artery with intraluminal device, percutaneous approach.
03VS4DZRestriction of right temporal artery with intraluminal device, percutaneous endoscopic approach.
03VT3DZRestriction of left temporal artery with intraluminal device, percutaneous approach.
03VT4DZRestriction of left temporal artery with intraluminal device, percutaneous endoscopic approach.
03VU3DZRestriction of right thyroid artery with intraluminal device, percutaneous approach.
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03VU4DZRestriction of right thyroid artery with intraluminal device, percutaneous endoscopic approach.
03VV3DZRestriction of left thyroid artery with intraluminal device, percutaneous approach.
03VV4DZRestriction of left thyroid artery with intraluminal device, percutaneous endoscopic approach.

Cases reporting any of the ICD-10-PCS procedures codes listed in the table above that are assigned to MS-DRGs 020, 021, and 022 under MDC 1 require a principal diagnosis of hemorrhage. Cases reporting any of the ICD-10-PCS procedure codes listed in the table above that are assigned to MS-DRGs 023 and 024 require the insertion of a major implant or an acute complex central nervous system (CNS) principal diagnosis. Cases reporting any of the ICD-10-PCS procedure codes listed in the table above that are assigned to MS-DRGs 025, 026, and 027 do not have a principal diagnosis of hemorrhage, an acute complex CNS principal diagnosis, or a major device implant.

The requestor expressed concerns about the appropriateness of the MS-DRG assignment for the endovascular embolization or occlusion of head and neck procedures. The requestor stated that past data demonstrated that the cost of cases involving endovascular coils exceeds the average cost of all cases within each of the MS-DRGs to which these procedures are assigned. The requestor pointed out that these procedures were formerly captured by the following ICD-9-CM codes that were assigned to MS-DRGs 020 through 027:

  • 39.72 (Endovascular (total) embolization or occlusion of head and neck vessels);
  • 39.75 (Endovascular embolization or occlusion of vessel(s) of head or neck using bare coils); and
  • 39.76 (Endovascular embolization or occlusion of vessel(s) of head or neck using bioactive coils).

The commenter also expressed concern about the appropriateness of the current ICD-10 MS-DRG assignment of the following ICD-9-CM codes that describe other endovascular procedures of head and neck that were previously assigned to MS-DRGs 023 through 027 in the ICD-9-CM MS-DRGs Version 32. The commenter stated that these procedures are more clinically complex than other procedures assigned to these MS-DRGs.

  • 00.62 (Percutaneous angioplasty of intracranial vessels(s));
  • 39.74 (Endovascular removal of obstruction from head and neck vessel(s)); and
  • 39.79 (Other endovascular procedures on other vessels).

As we discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24972 through 24976), we examined claims data from the December 2015 update of the FY 2015 MedPAR file for the endovascular embolization or occlusion of the head and neck procedures or other endovascular procedures reported under ICD-9-CM procedure codes 00.62, 39.72, 39.74, 39.75, 39.76, and 39.79 in MS-DRGs 020 through 027. The table below shows our findings.

Endovascular Embolization or Occlusion of the Head and Neck Procedures and Other Endovascular Procedures

MS-DRGNumber of casesAverage length of stayAverage costs
MS-DRG 020—All cases1,21316.44$70,716
MS-DRG 020—Cases with procedure code 00.62, 39.72, 39.74, 39.75, 39.76, or 39.7989516.1572,357
MS-DRG 021—All cases35013.7453,289
MS-DRG 021—Cases with procedure code 00.62, 39.72, 39.74, 39.75, 39.76, or 39.7927213.2153,478
MS-DRG 022—All cases847.8333,598
MS-DRG 022—Cases with procedure code 00.62, 39.72, 39.74, 39.75, 39.76, or 39.79637.2733,606
MS-DRG 023—All cases6,36010.6338,204
MS-DRG 023—Cases with procedure code 00.62, 39.72, 39.74, 39.75, 39.76, or 39.792,1838.5738,935
MS-DRG 024—All cases2,3765.5228,270
MS-DRG 024—Cases with procedure code 00.62, 39.72, 39.74, 39.75, 39.76, or 39.791,4025.4628,543
MS-DRG 025—All cases17,7569.1929,657
MS-DRG 025—Cases with procedure code 00.62, 39.72, 39.74, 39.75, 39.76 or 39.796719.2047,579
MS-DRG 026—All cases7,6305.8021,441
MS-DRG 026—Cases with procedure code 00.62, 39.72, 39.74, 39.75, 39.76, or 39.798253.1127,429
MS-DRG 027—All cases9,6282.9917,158
MS-DRG 027—Cases with procedure code 00.62, 39.72, 39.74, 39.75, 39.76 or 39.791,8471.6222,845

As can be seen from the table, most of the cases of endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures reported with procedure codes 00.62, 39.72, 39.74, 39.75, 39.76, and 39.79 occur in MS-DRGs 023, 024, and 027. There were 2,183 of these procedure cases reported in MS-DRG 023 with an average length of stay of 8.57 days and average costs of $38,935, compared to an average length of stay of 10.63 days and average costs of $38, 204 for all 6,360 cases reported in MS-DRG 023. There were 1,402 of these cases reported in MS-DRG 024 with an average length of stay of 5.46 days and average costs of $28,543, compared to an average length of stay of 5.52 days and average costs of $28,270 for all 2,376 cases reported in MS-DRG 024. There were 1,847 of these cases reported in MS-DRG 027 with an average length of stay of 1.62 days and average costs of $22,845, compared to an average length of stay of 2.99 days and average costs of $17,158 for all Start Printed Page 567949,628 cases reported in MS-DRG 027. The average costs for endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRGs 023 and 024 are not significantly different from the average costs for all cases reported in MS-DRGs 023 and 024. The average costs for endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRG 027 are higher ($22,845) than the average costs of all cases reported in MS-DRG 027 ($17,158). However, average costs are not significantly different for the endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRG 020 ($72,357) compared to the average costs for all cases ($70,716) reported in MS-DRG 020; for the endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRG 021 ($53,478) compared to the average costs for all cases ($53,289) reported in MS-DRG 021; and for the endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRG 022 ($33,606) compared to the average costs for all cases ($33,598) reported in MS-DRG 022.

Average costs were higher for the 671 endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRG 025 ($47,579) compared to the average costs for all 17,756 cases ($29,657) reported in MS-DRG 025. The average costs also were higher for the 825 endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRG 26 ($27,429) compared to the average costs for all 7,630 cases ($21,441) reported in MS-DRG 26. Given that average costs are similar for most endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRGs 020, 021, 022, 023, 024, 025, 026, and 027, we stated in the proposed rule that we did not believe that all endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures should be reassigned from these eight MS-DRGs.

We also examined the average costs for each specific ICD-9-CM code compared to the average costs of all cases within each of the eight MS-DRGs. The following table shows our findings.

MS-DRGNumber of casesAverage length of stayAverage costs
MS-DRG 020—All cases1,21316.44$70,716
MS-DRG 020—Cases with code 00.621116.0995,422
MS-DRG 020—Cases with code 39.7242216.3174,951
MS-DRG 020—Cases with code 39.74916.7871,478
MS-DRG 020—Cases with code 39.7542415.7969,081
MS-DRG 020—Cases with code 39.763918.2671,630
MS-DRG 020—Cases with code 39.792516.6473,043
MS-DRG 021—All cases35013.7453,289
MS-DRG 021—Cases with code 00.62111.0075,492
MS-DRG 021—Cases with code 39.7213013.1254,715
MS-DRG 021—Cases with code 39.74111.0075,492
MS-DRG 021—Cases with code 39.7513313.4652,819
MS-DRG 021—Cases with code 39.76710.5748,749
MS-DRG 021—Cases with code 39.79312.0040,458
MS-DRG 022—All cases847.8333,598
MS-DRG 022—Cases with code 00.62000
MS-DRG 022—Cases with code 39.72406.4332,598
MS-DRG 022—Cases with code 39.74000
MS-DRG 022—Cases with code 39.75218.8132,690
MS-DRG 022—Cases with code 39.76310.0062,417
MS-DRG 022—Cases with code 39.79000
MS-DRG 023—All cases6,36010.6338,204
MS-DRG 023—Cases with code 00.62679.3043,741
MS-DRG 023—Cases with code 39.725611.1452,589
MS-DRG 023—Cases with code 39.742,0168.3038,047
MS-DRG 023—Cases with code 39.752012.6553,837
MS-DRG 023—Cases with code 39.76323.0084,947
MS-DRG 023—Cases with code 39.797113.0850,720
MS-DRG 024—All cases2,3765.5228,270
MS-DRG 024—Cases with code 00.62766.7432,415
MS-DRG 024—Cases with code 39.72316.3529,977
MS-DRG 024—Cases with code 39.741,2845.3528,268
MS-DRG 024—Cases with code 39.7586.5050,333
MS-DRG 024—Cases with code 39.7621.5019,567
MS-DRG 024—Cases with code 39.79276.7428,019
MS-DRG 025—All cases17,7569.1929,657
MS-DRG 025—Cases with code 00.62175.8829,036
MS-DRG 025—Cases with code 39.723809.4651,082
MS-DRG 025—Cases with code 39.74559.8745,895
MS-DRG 025—Cases with code 39.751398.9452,188
MS-DRG 025—Cases with code 39.76255.8438,654
MS-DRG 025—Cases with code 39.798211.0439,839
MS-DRG 026—All cases7,6305.8021,441
MS-DRG 026—Cases with code 00.62313.4825,611
MS-DRG 026—Cases with code 39.724813.0027,180
MS-DRG 026—Cases with code 39.74164.6927,519
Start Printed Page 56795
MS-DRG 026—Cases with code 39.752532.7726,863
MS-DRG 026—Cases with code 39.76313.3227,891
MS-DRG 026—Cases with code 39.79455.4237,410
MS-DRG 027—All cases9,6282.9917,158
MS-DRG 027—Cases with code 00.62612.2321,337
MS-DRG 027—Cases with code 39.721,1591.5822,893
MS-DRG 027—Cases with code 39.74131.6269,081
MS-DRG 027—Cases with code 39.755801.6323,296
MS-DRG 027—Cases with code 39.76611.7427,403
MS-DRG 027—Cases with code 39.79301.5317,740

As can be seen from the table above, there were a large number of cases reporting procedure code 39.74 in MS-DRGs 023 and 024. There were 2,016 cases that reported procedure code 39.74 in MS-DRG 023 compared to 6,360 total cases reported in the MS-DRG. The cases that reported procedure code 39.74 in MS-DRG 023 had an average length of stay of 8.30 days and average costs of $38,047, compared to an average length of stay of 10.63 days and average costs of $38,204 for all cases reported in MS-DRG 023. There were 1,284 cases that reported procedure code 39.74 in MS-DRG 024 compared to 2,376 total cases reported in MS-DRG 024. The cases that reported procedure code 39.74 in MS-DRG 024 had an average length of stay of 5.35 days and average costs of $28,268, compared to an average length of stay of 5.52 days and average costs of $28,270 for all cases reported in MS-DRG 024. The average length of stay and average costs for cases that reported procedure code 39.74 are very similar to the average length of stay and average costs for all cases reported in MS-DRGs 023 and 024. The only other group of endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases that exceeded 1,000 in number was reported in MS-DRG 027. There were 1,159 cases that reported procedure code 39.72 in MS-DRG 027, compared to 9,628 total cases reported in MS-DRG 027. The cases that reported procedure code 39.72 in MS-DRG 027 had an average length of stay of 1.58 days and average costs of $22,893, compared to an average length of stay of 2.99 days and average costs of $17,158 for all cases reported in MS-DRG 027. In other words, the cases that reported procedure code 39.72 in MS-DRG 027 had a shorter average length of stay and average costs that were $5,735 higher than the average costs for all cases reported in MS-DRG 027. The cases that reported procedure code 39.72 in MS-DRG 020 had a shorter average length of stay and average costs that were $4,235 higher than the average costs for all cases reported in MS-DRG 020. However, the average costs for the cases that reported procedure code 39.72 in MS-DRGs 021, 022, and 024 were close to the average costs for all cases reported in the three MS-DRGs ($54,715 compared to $53,289 in MS-DRG 021; $32,598 compared to $33,598 in MS-DRG 022; and $29,997 compared to $28,270 in MS-DRG 024).

Our clinical advisors reviewed this issue and advised us that the endovascular embolization or occlusion of head and neck procedures and other endovascular procedures currently are appropriately assigned to MS-DRGs 020 through 027. They did not support reassigning these procedures from MS-DRGs 020 through 027 to another MS-DRG or creating a new MS-DRG for these procedures. Our clinical advisors stated that these procedures are all clinically similar to other procedures in these MS-DRGs. In addition, they stated that the surgical techniques are all designed to correct the same clinical problem and advised us against reassigning the procedures from MS-DRGs 020 through 027.

Based on the findings from our data analyses and the recommendations from our clinical advisors, in the FY 2017 IPPS/LTCH PPS proposed rule, we did not propose to reassign the cited endovascular embolization or occlusion of head and neck procedures and other endovascular procedures from MS-DRGs 020 through 027 to another MS-DRG or to create a new MS-DRG for these procedures for FY 2017. We invited public comments on our proposal to maintain the current MS-DRG assignments of these procedures in MS-DRGs 020 through 027.

Comment: Commenters supported the proposal to maintain the current MS-DRG assignments of endovascular embolization or occlusion of head and neck procedures and other endovascular procedures in MS-DRGs 020 through 027. The commenters did not support reassigning these procedures from MS-DRGs 020 through 027 to another MS-DRG or creating a new MS-DRG for these procedures. The commenters stated that the proposal was reasonable, given the data, the ICD-10-PCS codes, and the information provided. One commenter believed that the cost data and clinical profile of endovascular embolization procedures support MS-DRG refinements. This commenter requested that CMS reexamine the issue when ICD-10 claims data become available.

Response: We appreciate the commenters' support. We will review this and other related MS-DRG assignments once ICD-10 claims data become available.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current MS-DRG assignments for endovascular embolization or occlusion of head and neck procedures and other endovascular procedures in MS-DRGs 020 through 027.

b. Mechanical Complication Codes

We received a request to reassign the following four ICD-10-CM diagnosis codes from MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs) under MS-DRGs 919, 920, and 921 (Complications of Treatment with MCC, with CC, and without CC/MCC, respectively) to MDC 1 (Diseases and Disorders of the Nervous System) under MS-DRGs 091, 092, and 093 (Other Disorders of the Nervous System with MCC, with CC, and without CC/MCC, respectively):

  • T85.610A (Breakdown (mechanical) of epidural and subdural infusion catheter, initial encounter);
  • T85.620A (Displacement of epidural and subdural infusion catheter, initial encounter);
  • T85.630A (Leakage of epidural and subdural infusion catheter, initial encounter); and
  • T85.690A (Other mechanical complication of epidural and subdural infusion catheter, initial encounter).Start Printed Page 56796

The requestor stated that these ICD-10-CM diagnosis code titles clearly describe mechanical complications of nervous system devices, implants, or grafts and are unquestionably nervous system codes. Therefore, the requestor recommended that these diagnosis codes be reassigned to MDC 1 under MS-DRGs 091, 092, and 093.

As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24976), we examined ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A that are currently assigned to MDC 21 under MS-DRGs 919, 920, and 921. We noted that the predecessor ICD-9-CM diagnosis code for these four ICD-10-CM diagnosis codes was diagnosis code 996.59 (Mechanical complication due to other implant and internal device, not elsewhere classified), which also was assigned to MDC 21 under MS-DRGs 919, 920, and 921. ICD-9-CM diagnosis code 996.59 did not describe the location of the device. However, ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A provide additional detail that describes the location of the mechanical complication as being within the nervous system.

Based on the results of our examination, we agreed with the requestor that ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A describe conditions occurring within the nervous system. Within the ICD-9-CM MS-DRGs, codes describing nervous system disorders were assigned to MDC 1. The prior ICD-9-CM codes for mechanical complications did not indicate the type of complication and therefore could not be assigned to a specific MDC. Therefore, the nonspecific complication codes were assigned to MDC 21. These new ICD-10-CM diagnosis codes describe concepts not previously captured by the ICD-9-CM codes and capture nervous system conditions. Therefore, ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A should be reassigned from MDC 21 under MS-DRGs 919, 920, and 921 to MDC 1 under MS-DRGs 091, 092, and 093. Our clinical advisors reviewed this issue and also agree that the four ICD-10-CM diagnosis codes describe conditions occurring within the nervous system and therefore should be reassigned from MDC 21 to MDC 1. Based on the results of our analysis and the recommendations of our clinical advisors, in the FY 2017 IPPS/LTCH PPS proposed rule, we proposed to reassign ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A from MDC 21 under MS-DRGs 919, 920, and 921 to MDC 1 under MS-DRGs 091, 092, and 093.

We invited public comments on our proposal.

Comment: Commenters supported the proposal to reassign ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A from MDC 21 under MS-DRGs 919, 920, and 921 to MDC 1 under MS-DRGs 091, 092, and 093.

One commenter who supported the proposal suggested that the proposed MS-DRG assignment for 18 additional diagnosis codes describing similar conditions affecting the nervous system is inaccurate, both clinically and in terms of MS-DRG grouping principles. Specifically, the commenter requested that the 18 ICD-10-CN diagnosis codes in the following table be reassigned from MDC 21 under DRGs 919, 920 and 921, as currently proposed, to MDC 1 under MS-DRGs 091, 092, and 093.

ICD-10-CM Diagnosis Codes Recommended by Commenter for Reassignment From MDC 21 to MDC 1

T85.615A (Breakdown (mechanical) of other nervous system device, implant or graft, initial encounter).
T85.625A (Displacement of other nervous system device, implant or graft, initial encounter).
T85.635A (Leakage of other nervous system device, implant or graft, initial encounter).
T85.695A (Other mechanical complication of other nervous system device, implant or graft, initial encounter).
T85.730A (Infection and inflammatory reaction due to ventricular intracranial (communicating) shunt, initial encounter).
T85.731A (Infection and inflammatory reaction due to implanted electronic neurostimulator of brain, electrode (lead), initial encounter).
T85.732A (Infection and inflammatory reaction due to implanted electronic neurostimulator of peripheral nerve, electrode (lead), initial encounter).
T85.733A (Infection and inflammatory reaction due to implanted electronic neurostimulator of spinal cord, electrode (lead), initial encounter).
T85.734A (Infection and inflammatory reaction due to implanted electronic neurostimulator, generator, initial encounter).
T85.735A (Infection and inflammatory reaction due to cranial or spinal infusion catheter, initial encounter).
T85.738A (Infection and inflammatory reaction due to other nervous system device, implant or graft, initial encounter).
T85.810A (Embolism due to nervous system prosthetic devices, implants and grafts, initial encounter).
T85.820A (Fibrosis due to nervous system prosthetic devices, implants and grafts, initial encounter).
T85.830A (Hemorrhage due to nervous system prosthetic devices, implants and grafts, initial encounter).
T85.840A (Pain due to nervous system prosthetic devices, implants and grafts, initial encounter).
T85.850A (Stenosis due to nervous system prosthetic devices, implants and grafts, initial encounter).
T85.860A (Thrombosis due to nervous system prosthetic devices, implants and grafts, initial encounter).
T85.890A (Other specified complication of nervous system prosthetic devices, implants and grafts, initial encounter).

Response: We appreciate the commenters' support of our proposal. We also appreciate the commenter's recommendation to reassign the additional 18 ICD-10-CM diagnosis codes describing procedures performed on the nervous system from MDC 21 under MS-DRGs 919, 920, and 921 to MDC 1 under MS DRGs 091, 092, and 093. Our clinical advisors agree that these 18 diagnosis codes also should be reassigned from MDC 21 under MS-DRGs 919, 920 and 921 to MDC1 under MS-DRGs 091, 092 and 093.

After consideration of the public comments we received, we are finalizing our proposal to reassign ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A from MDC 21 under MS-DRGs 919, 920, and 921 to MDC 1 under MS-DRGs 091, 092, and 093. The official code titles for these four codes were revised after publication of the proposed rule. Effective October 1, 2016, the revised code titles are as follows (and are reflected in Table 6E associated with this final rule, which is available via the Internet on the CMS Web site):

  • T85.610A (Breakdown (mechanical) of cranial or spinal infusion catheter, initial encounter);
  • T85.620A (Displacement of cranial or spinal infusion catheter, initial encounter);
  • T85.630A (Leakage of cranial or spinal infusion catheter, initial encounter); and
  • T85.690A (Other mechanical complication of cranial or spinal infusion catheter, initial encounter).Start Printed Page 56797

We also are reassigning the 18 ICD-10-CM diagnosis codes listed in the table above that were recommended by the commenter from MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs) under MS-DRGs 919, 920, and 921 (Complications of Treatment with MCC, with CC, and without CC/MCC, respectively) to MDC 1 (Diseases and Disorders of the Nervous System) under MS-DRGs 091, 092, and 093 (Other Disorders of the Nervous System with MCC, with CC, and without CC/MCC, respectively) effective October 1, 2016. These 18 codes also are reflected in Table 6E associated with this final rule, which is available via the Internet on the CMS Web site.

4. MDC 4 (Diseases and Disorders of the Ear, Nose, Mouth and Throat)

a. Reassignment of Diagnosis Code R22.2 (Localized Swelling, Mass and Lump, Trunk)

We received a request to reassign ICD-10-CM diagnosis code R22.2 (Localized swelling, mass and lump, trunk) from MDC 4 (Diseases and Disorders of the Respiratory System) to MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast). The requestor stated that this code is used to capture a buttock mass. The requestor pointed out that the ICD-10-CM index for localized swelling and localized mass directs the coder to diagnosis code R22.2 for both the chest and the trunk as sites.

We reviewed this issue and note that diagnosis code R22.2 is included in a category of ICD-10-CM codes describing symptoms and signs involving the skin and subcutaneous tissue (categories R20 through R23). Diagnosis code R22.2 is clearly designated within the ICD-10 coding system as a code that describes a condition of the skin and subcutaneous tissue. Therefore, we agree with the requester that ICD-10-CM diagnosis code R22.2 should be reassigned from MDC 4 to MDC 9. One of the predecessor ICD-9-CM codes for ICD-10-CM diagnosis code R22.2 was diagnosis code 782.2 (Localized superficial swelling, mass, or lump), which is assigned to MS-DRG 606 and 607 (Minor Skin Disorders with and without MCC, respectively). Our clinical advisors reviewed this issue and agree that ICD-10-CM diagnosis code R22.2 captures a skin diagnosis. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24976), for FY 2017, we proposed to reassign ICD-10-CM diagnosis code R22.2 from MDC 4 to MDC 9 under MS-DRGs 606 and 607 (Minor Skin Disorders with and without MCC, respectively).

We invited public comments on our proposal to reassign ICD-10-CM diagnosis code R22.2 from MDC 4 to MDC 9 under MS-DRGs 606 and 607.

Comment: Commenters supported the proposal to reassign ICD-10-CM diagnosis code R22.2 from MDC 4 to MDC 9 under MS-DRGs 606 and 607.

Response: We appreciate the commenters' support of our proposal.

After consideration of the public comments we received, we are finalizing our proposal to reassign ICD-10-CM diagnosis code R22.2 from MDC 4 to MDC 9 under MS-DRGs 606 and 607 (Minor Skin Disorders with and without MCC, respectively).

b. Pulmonary Embolism With tPA or Other Thrombolytic Therapy

We received a request to create a new MS-DRG or to reassign cases with a principal diagnosis of pulmonary embolism where tPA or other thrombolytic therapy was administered from MS-DRGs 175 and 176 (Pulmonary Embolism with and without MCC, respectively) to a higher paying MS-DRG. The requestor suggested that CMS review cases reporting the following ICD-9-CM diagnosis codes describing pulmonary embolism: 415.11 (Iatrogenic pulmonary embolism and infarction), 415.12 (Septic pulmonary embolism), 415.13 (Saddle embolus of pulmonary artery), and 415.19 (Other pulmonary embolism and infarction), when reported in combination with ICD-9-CM procedure code 99.10 (Injection or infusion of thrombolytic agent), to identify that thrombolytic therapy was administered.

The comparable ICD-10-CM diagnosis code translations for the ICD-9-CM pulmonary embolism diagnosis codes to which the requestor cited consist of the following:

ICD-10-CM diagnosis codeDescription
I26.01Septic pulmonary embolism with acute cor pulmonale.
I26.02Saddle embolus of pulmonary artery with acute cor pulmonale.
I26.09Other pulmonary embolism with acute cor pulmonale.
I26.90Septic pulmonary embolism without acute cor pulmonale.
I26.92Saddle embolus of pulmonary artery without acute cor pulmonale.
I26.99Other pulmonary embolism without acute cor pulmonale.

Thrombolytic therapy is identified with the following ICD-10-PCS procedure codes:

ICD-10-PCS procedure codeDescription
3E03017Introduction of other thrombolytic into peripheral vein, open approach.
3E03317Introduction of other thrombolytic into peripheral vein, percutaneous approach.
3E04017Introduction of other thrombolytic into central vein, open approach.
3E04317Introduction of other thrombolytic into central vein, percutaneous approach.
3E05017Introduction of other thrombolytic into peripheral artery, open approach.
3E05317Introduction of other thrombolytic into peripheral artery, percutaneous approach.
3E06017Introduction of other thrombolytic into central artery, open approach.
3E06317Introduction of other thrombolytic into central artery, percutaneous approach.
Start Printed Page 56798

A pulmonary embolism is an obstruction of pulmonary vasculature most commonly caused by a venous thrombus, and less commonly by fat or tumor tissue or air bubbles or both. Risk factors for a pulmonary embolism include prolonged immobilization from any cause, obesity, cancer, fractured hip or leg, use of certain medications such as oral contraceptives, presence of certain medical conditions such as heart failure, sickle cell anemia, or certain congenital heart defects. Common symptoms of pulmonary embolism include shortness of breath with or without chest pain, tachycardia, hemoptysis, low grade fever, pleural effusion, and depending on the etiology of the embolus, might include lower extremity pain or swelling, syncope, jugular venous distention, and finally a pulmonary embolus could be asymptomatic.

As we discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24977 through 24979), we examined the claims data from the December 2015 update of the FY 2015 MedPAR file for ICD-9-CM MS-DRGs 175 and 176 for cases with a principal diagnosis of pulmonary embolism where tPA or other thrombolytic therapy (procedure code 99.10) was administered and cases of a principal diagnosis of pulmonary embolism where no tPA or other thrombolytic therapy was administered. Our findings are shown in the table below.

Principal Diagnosis of Pulmonary Embolism With and Without tPA or Other Thrombolytic Therapy Administered

MS-DRGNumber of casesAverage length of stayAverage costs
MS-DRG 175—All MCC cases19,2745.76$10,479
MS-DRG 175—MCC cases with principal diagnosis of pulmonary embolism with tPA or other thrombolytic therapy administered6306.3119,419
MS-DRG 175—MCC cases with principal diagnosis of pulmonary embolism without tPA or other thrombolytic therapy administered18,5295.7410,181
MS-DRG 176—All Without MCC cases33,5653.816,645
MS-DRG 176—Without MCC cases with principal diagnosis of pulmonary embolism with tPA or other thrombolytic therapy administered5445.0716,345
MS-DRG 176—Without MCC cases with principal diagnosis of pulmonary embolism without tPA or other thrombolytic therapy administered32,7893.796,483

As shown in the table above, for MS-DRG 175, there were a total of 19,274 cases with an average length of stay of 5.76 days and average costs of $10,479. Of the 19,274 cases in MS-DRG 175, there were 630 cases that reported a principal diagnosis of pulmonary embolism where tPA or other thrombolytic therapy was also reported with an average length of stay of 6.31 days and average costs of $19,419. For MS-DRG 176, there were a total of 33,565 cases with an average length of stay of 3.81 days and average costs of $6,645. Of the 33,565 cases reported in MS-DRG 176, there were 544 cases that reported a principal diagnosis of pulmonary embolism where tPA or other thrombolytic therapy also was reported with an average length of stay of 5.07 days and average costs of $16,345.

To address the request we received to create a new MS-DRG, we reviewed the data for the 1,174 total cases (630 and 544, respectively) that reported a principal diagnosis of pulmonary embolism that received tPA or other thrombolytic therapy in MS-DRGs 175 and 176. As shown in the table above, our data analysis demonstrates the average costs for these cases are higher ($19,419 compared to $10,479 for MS-DRG 175, and $16,345 compared to $6,645 for MS-DRG 176) and the length of stay is slightly longer (6.31 days compared to 5.76 days for MS-DRG 175, and 5.07 days compared to 3.81 days for MS-DRG 176) compared to all cases reported in MS-DRGs 175 and 176. Out of a total of 52,492 cases (630 + 18,529 +544 + 32,789) in MS-DRGs 175 and 176 reporting a principal diagnosis of pulmonary embolism, 1,174 (2.24 percent) of these cases also received tPA or other thrombolytic therapy. While we recognize the differences in average costs and length of stay for these cases, the volume of these cases as well as the potential creation of a new MS-DRG for this subset of patients raised some concerns with our clinical advisors. We present our clinical advisors' concerns following the additional data analysis discussions below.

We then conducted additional data analyses to determine if reassignment of cases with a principal diagnosis of pulmonary embolism where tPA or other thrombolytic therapy was administered to a higher paying MS-DRG was supported. As displayed in the data findings in the tables below, we explored reassigning cases with a principal diagnosis of pulmonary embolism that received tPA or other thrombolytic therapy from MS-DRG 176 to the higher severity level MS-DRG 175. The data do not adequately support this reassignment, as the cases with a principal diagnosis of pulmonary embolism where tPA or other thrombolytic therapy is administered would continue to be underpaid.

As shown in the data findings in the table below, the initial data analysis for MS-DRG 175 found the average costs for cases that reported a principal diagnosis of pulmonary embolism that received tPA or other thrombolytic therapy were $19,419, and for MS-DRG 176, the average costs for these cases were $16,345.

Principal Diagnosis of Pulmonary Embolism With tPA or Other Thrombolytic Therapy Administered

MS-DRGNumber of casesAverage length of stayAverage costs
MS-DRG 175—All MCC cases19,2745.76$10,479
Start Printed Page 56799
MS-DRG 175—MCC cases with principal diagnosis of pulmonary embolism with tPA or other thrombolytic therapy administered6306.3119,419
MS-DRG 176—All without MCC cases33,5653.816,645
MS-DRG 176—Without MCC cases with principal diagnosis of pulmonary embolism with tPA or other thrombolytic therapy administered5445.0716,345

As displayed in the table below, if we reassigned the 544 cases with a principal diagnosis of pulmonary embolism where tPA or other thrombolytic therapy is administered from the “without MCC” level, MS-DRG 176, to the “with MCC” severity level, MS-DRG 175, the average costs for all cases in MS-DRG 175 would be approximately $10,640. This figure continues to result in a difference of approximately $9,000 for the MCC cases and $6,000 for the without MCC cases when compared to findings for the average costs of these cases from the initial data analysis ($19,419−$10,640 = $8,779 and $16,345−$10,640 = $5,705, respectively). In addition, our clinical advisors had concerns about the prospect of moving the subset of 544 patients from the “without MCC” level to the “with MCC” level. We present these concerns following the additional data analysis discussion below.

Option of Reassignment of Cases of Principal Diagnosis of Pulmonary Embolism With and Without tPA

MS-DRG 175—Cases with pulmonary embolism with MCC or tPA or other thrombolytic therapy19,8185.74$10,640
MS-DRG 176—Cases with pulmonary embolism without MCC33,0213.796,486

We also reviewed claims data in considering the option of adding another severity level to the current structure of MS-DRGs 175 and 176 and assigning the cases with a principal diagnosis of pulmonary embolism that receive tPA or other thrombolytic therapy to the highest level. This option would involve modifying the current 2-way severity level split of “with MCC” and “without MCC” to a 3-way severity level split of “with MCC or tPA, with CC, and without CC/MCC.” Therefore, it would include proposing new MS-DRGs if the data and our clinical advisors supported creation of new MS-DRGs. However, as displayed in the data findings in the table below, the data did not support this option. In addition to similar results from the previous option's discussion regarding continued differences in average costs for these cases, the data failed to meet the criterion that there be at least a $2,000 difference between the “with CC” and “without CC/MCC” subgroups. Our data analysis shows the average costs in the hypothetical “with CC” subgroup of $6,932 and the average costs in the hypothetical “without CC/MCC” subgroup of $5,309. The difference only amounts to $1,623 ($6,932 minus $5,309 = $1,623).

Principal Diagnosis of Pulmonary Embolism With and Without tPA or Other Thrombolytic Therapy

Optional new MS-DRGNumber of casesAverage length of stayAverage costs
MS-DRG XXX—Pulmonary embolism with MCC or tPA or other thrombolytic therapy19,8195.74$10,641
MS-DRG XXX—Pulmonary embolism with CC23,9294.046,932
MS-DRG XXX—Pulmonary embolism without CC/MCC9,0913.135,309

Lastly, we explored reassigning cases with a principal diagnosis of pulmonary embolism that receive tPA or other thrombolytic therapy to other MS-DRGs within MDC 4. However, our review did not support reassignment of these cases to any other medical MS-DRGs as these cases would not be clinically coherent with the cases assigned to those other MS-DRGs.

In addition to the results of the various data analyses we performed for creating a new MS-DRG or for reassignment of cases of pulmonary embolism with tPA or other thrombolytic therapy to another higher paying MS-DRG, our clinical advisors also expressed a number of concerns. They pointed out that all patients with a diagnosis of pulmonary embolism are considered high risk and the small subset of patients receiving thrombolytic therapy does not necessarily warrant a separate MS-DRG or reassignment at this time. Our clinical advisors noted that it is unclear if: (1) The higher costs associated with receiving tPA or other thrombolytic therapy are due to a different subset of patients or complications; (2) if those patients treated with tPA or other thrombolytic therapy for pulmonary embolism are indeed sicker patients; (3) if the cost of tPA or other thrombolytic therapy for patients with pulmonary embolism is the reason for the higher costs seen with these cases; or (4) if the increased average costs for cases of pulmonary embolism with tPA or other thrombolytic therapy is a combination of numbers (1) through (3). They recommended maintaining the current structure of MS-DRGs 175 and 176.

As a result of the data analysis and the concerns expressed by our clinical advisors, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24977 through 24979), we did not propose to create a new MS-DRG or to reassign cases with a principal diagnosis of pulmonary embolism with tPA or other Start Printed Page 56800thrombolytic therapy for FY 2017. We invited public comment on our proposal.

Comment: Commenters supported the proposal to not create a new MS-DRG or to reassign cases with a principal diagnosis of pulmonary embolism with tPA or other thrombolytic therapy. The commenters stated that the proposal was reasonable, given the data, the ICD-10-CM/PCS codes, and information provided.

Response: We appreciate the commenters' support of our proposal.

After consideration of the public comments we received, we are finalizing our proposal to not create a new MS-DRG or to reassign cases with a principal diagnosis of pulmonary embolism with tPA or other thrombolytic therapy for FY 2017. The current structure of MS-DRGs 175 and 176 (Pulmonary Embolism with and without MCC, respectively) is maintained in the ICD-10 MS-DRGs Version 34 effective October 1, 2016.

5. MDC 5 (Diseases and Disorders of the Circulatory System)

a. Implant of Loop Recorder

We received a request to examine a potential ICD-9 to ICD-10 replication issue for procedures describing implantation or revision of loop recorder that were reported using ICD-9-CM procedure code 37.79 (Revision or relocation of cardiac device pocket). A loop recorder is also known as an implantable cardiac monitor. It is indicated for patients who experience episodes of unexplained syncope (fainting), heart palpitations, or patients at risk for various types of cardiac arrhythmias, such as atrial fibrillation or ventricular tachyarrhythmia. Loop recorders function by detecting and monitoring potential episodes of these kinds of conditions. The requestor acknowledged that these implantation procedures are frequently performed in the outpatient setting. However, the requestor also noted that the implantation procedures are often performed in the inpatient setting and suggested that they be recognized under the ICD-10 MS-DRGs as they had been under the ICD-9-CM based MS-DRG logic.

The requestor stated that, under the ICD-9-CM based MS-DRGs, procedure code 37.79 was designated as an operating room (O.R.) procedure in the Definitions Manual under Appendix E—Operating Room Procedures and Procedure Code/MS-DRG Index and grouped to MS-DRGs 040, 041, and 042 (Peripheral, Cranial Nerve and Other Nervous System Procedures with MCC, with CC or peripheral neurostimulator, and without CC/MCC, respectively); MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except Device Replacement with MCC, with CC, and without CC/MCC, respectively); MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, with CC and without CC/MCC, respectively); MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively).

Under the current Version 33 ICD-10 MS-DRGs, there are two comparable ICD-10-PCS code translations for ICD-9-CM code 37.79. They are procedure codes 0JWT0PZ (Revision of cardiac rhythm related device in trunk subcutaneous tissue and fascia, open approach) and 0JWT3PZ (Revision of cardiac rhythm related device in trunk subcutaneous tissue and fascia, percutaneous approach), which are designated as O.R. procedures and group to the above listed MS-DRGs.

According to the requestor, the following six ICD-10-PCS procedure codes identify the implantation or revision of a loop recorder and were not replicated appropriately because they are currently designated as nonoperating room (non-O.R.) procedures under the ICD-10 MS-DRGs. The requestor suggested that these codes be designated as O.R. procedures and assigned to the same MS-DRGs as the former ICD-9-CM procedure code 37.79:

ICD-10-PCS procedure codeDescription
0JH602ZInsertion of monitoring device into chest subcutaneous tissue and fascia, open approach.
0JH632ZInsertion of monitoring device into chest subcutaneous tissue and fascia, percutaneous approach.
0JH802ZInsertion of monitoring device into abdomen subcutaneous tissue and fascia, open approach.
0JH832ZInsertion of monitoring device into abdomen subcutaneous tissue and fascia, percutaneous approach.
0JWT02ZRevision of monitoring device in trunk subcutaneous tissue and fascia, open approach.
0JWT32ZRevision of monitoring device in trunk subcutaneous tissue and fascia, percutaneous approach.

We examined the six ICD-10-PCS procedure codes that the commenter recommended be designated as O.R. procedures and assigned to the same MS-DRGs as ICD-9-CM procedure code 37.79. As discussed in section II.F.1.b. of the preamble of the proposed rule and this final rule, in evaluating requested MS-DRG changes, we determined if they could be replicated in the ICD-9-CM MS-DRGs so as not to affect the FY 2017 relative payment weights. If the answer was “no,” we examined whether the change in the ICD-10 MS-DRGs was likely to cause a significant number of patient cases to change or “shift” ICD-10 MS-DRGs. If relatively few patient cases would be impacted, we evaluated if it would be feasible to propose the change even though it could not be replicated by the ICD-9 MS-DRGs logic because it would not cause a material payment redistribution.

Under our review, we recognized that the six ICD-10-PCS procedure codes are currently identified as comparable translations of ICD-9-CM procedure code 86.09 (Other incision of skin and subcutaneous tissue), which was designated as a non-O.R. procedure code under the ICD-9-CM based MS-DRGs. Therefore, changing the designation of the six ICD-10-PCS procedure codes from non-O.R. to O.R. for the ICD-10 MS-DRGs cannot be replicated in the ICD-9-CM based MS-DRGs. In other words, we cannot designate ICD-9-CM procedure code 86.09 as an O.R. code. However, we stated in the proposed rule that we believe that if we limit the change in designation to four of the six identified ICD-10-PCS procedure codes from non-O.R. to O.R., the change would not have any impact. We did not include the two ICD-10-PCS procedure codes that describe the insertion of a monitoring device into the abdomen in our proposal because a loop recorder is not inserted into that location and it would not be clinically appropriate.

Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24979 through 24980), for FY 2017, we proposed to designate the following four ICD-10-PCS codes as O.R. procedures Start Printed Page 56801within Appendix E of the Version 34 ICD-10 MS-DRG Definitions Manual:

  • 0JH602Z (Insertion of monitoring device into chest subcutaneous tissue and fascia, open approach);
  • 0JH632Z (Insertion of monitoring device into chest subcutaneous tissue and fascia, percutaneous approach);
  • 0JWT02Z (Revision of monitoring device in trunk subcutaneous tissue and fascia, open approach); and
  • 0JWT32Z (Revision of monitoring device in trunk subcutaneous tissue and fascia, percutaneous approach).

We also proposed that the ICD-10 MS-DRG assignment for these four ICD-10-PCS codes replicate the ICD-9-CM based MS-DRG assignment for procedure code 37.79; that is, MS-DRGs 040, 041, 042, 260, 261, 262, 579, 580, 581, 907, 908, 909, 957, 958, and 959 as cited earlier in this section.

We invited public comments on our proposals.

Comment: Commenters supported the proposal to designate the four ICD-10-PCS procedure codes listed in this section that describe the insertion or revision of a monitoring device from non-O.R. to O.R. to better reflect the resources involved with these procedures. The commenters also agreed with the proposed MS-DRG assignments for these procedure codes under the ICD-10 MS-DRGs, stating that the proposal was reasonable, given the data, the ICD-10-PCS codes and information provided. One commenter specifically expressed appreciation with CMS' review of this replication issue and agreed that the codes that were proposed to be changed from non-O.R. to O.R. are accurate and that this change will result in better data on claims. This commenter also commended CMS for the proposed MS-DRG assignments under the ICD-10 MS-DRGs.

Alternatively, another commenter noted that while it agreed with the proposal to change the designation of the four ICD-10-PCS procedure codes from non-O.R. to O.R. and supported the proposed MS-DRG assignments, the commenter believed that the two other ICD-10-PCS procedure codes describing insertion of a monitoring device into the abdomen subcutaneous tissue and fascia (ICD-10-PCS procedure codes 0JH802Z and 0JH832Z) also merit redesignation from non-O.R. to O.R. and assignment to the same corresponding surgical MS-DRGs in order to fully address the ICD-9 to ICD-10 replication issue. According to the commenter, the anatomical location of implants involving loop recorders does not affect the level of effort involved in performing such procedures. The commenter recommended that CMS consider ICD-9-CM procedure code 37.79 (Revision or relocation of cardiac device pocket) and its attributes versus ICD-9-CM procedure code 86.09 (Other incision of skin and subcutaneous tissue) as more appropriate for examining all the comparable ICD-10 code translations and MS-DRG assignments.

Response: We appreciate the commenters' support of our proposals. We agree with the commenters that this modification will better address the resources involved with these procedures.

With regard to the commenter who recommended that we include the two ICD-10-PCS codes describing insertion of a monitoring device into the abdomen subcutaneous tissue and fascia, we are not clear with respect to the commenter's statement that the anatomical location of implants involving loop recorders does not affect the level of effort involved in performing such procedures because loop recorders are not inserted in that area of the abdomen. As we noted in the FY 2017 IPPS/LTCH PPS proposed rule, when we were unable to fully replicate the ICD-9 to ICD-10 MS-DRG logic for a specific request, we sought and proposed an alternative option that would not cause MS-DRG shifts or a material payment distribution. For this particular issue, the request was to change the designation of the six ICD-10-PCS procedure codes from non-O.R. to O.R. and, as described above, we were not able to finalize that specific request. Rather, we finalized an alternative option, which was to change the designation for four of the six codes requested. We also point out that, currently, under the ICD-10 MS-DRGs Version 33, all six ICD-10-PCS procedure codes that were the subject of our specific proposal are designated as non-O.R. procedures affecting the MS-DRG assignment for MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, with CC and without CC/MCC, respectively). Therefore, while we are not finalizing the proposal to change the two ICD-10-PCS procedure codes describing the insertion of a monitoring device into the abdomen (0JH802Z and 0JH832Z) from non-OR to O.R., we note that these two procedure codes will continue to be recognized as non-O.R. procedures affecting MS-DRGs 579, 580, and 581 under the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

After consideration of the public comments we received, we are finalizing our proposal to designate the following four ICD-10-PCS codes as O.R. procedures within Appendix E of the Version 34 ICD-10 MS-DRG Definitions Manual:

  • 0JH602Z (Insertion of monitoring device into chest subcutaneous tissue and fascia, open approach);
  • 0JH632Z (Insertion of monitoring device into chest subcutaneous tissue and fascia, percutaneous approach);
  • 0JWT02Z (Revision of monitoring device in trunk subcutaneous tissue and fascia, open approach); and
  • 0JWT32Z (Revision of monitoring device in trunk subcutaneous tissue and fascia, percutaneous approach).

We also are finalizing our proposal that the ICD-10 MS-DRG assignment for the above four ICD-10-PCS procedure codes replicate the ICD-9-CM based MS-DRG assignment for procedure code 37.79; that is, MS-DRGs 040, 041, and 042 (Peripheral, Cranial Nerve and Other Nervous System Procedures with MCC, with CC or peripheral neurostimulator, and without CC/MCC, respectively); MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except Device Replacement with MCC, with CC, and without CC/MCC, respectively); MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, with CC and without CC/MCC, respectively); MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively), effective October 1, 2016.

b. Endovascular Thrombectomy of the Lower Limbs

We received a comment stating that the logic for ICD-10 MS-DRGs Version 33 is not compatible with the ICD-9-CM MS-DRGs Version 32 for the assignment of procedures describing endovascular thrombectomy of the lower limbs. The commenter asked CMS to reconfigure the MS-DRG structure within the ICD-10 MS-DRGs for endovascular thrombectomy of the lower limbs, specifically MS-DRGs 270, 271, and 272 (Other Major Cardiovascular Procedures with MCC, with CC, and without CC/MCC, respectively)). (We note that in the FY 2017 IPPS/LTCH PPS proposed rule, we incorrectly cited the titles for MS-DRGs 270, 271, and 272 as “(Endovascular Thrombectomy of the Lower Limbs with MCC, with CC, and without CC/MCC, respectively)”. The commenter believed that this requested restructuring would be consistent with the MS-DRG assignments for the other procedures describing lower extremity Start Printed Page 56802thrombectomy, and would accurately replicate the logic of the ICD-9-CM MS-DRGs Version 32. Under the ICD-9-CM, endovascular thrombectomy of the lower limbs is described by procedure code 39.79 (Other endovascular procedures on other vessels). The commenter stated that, with deep vein thrombosis (DVT) or any other circulatory system disorders as the principal diagnosis, cases involving procedures described by procedure code 39.79 grouped to ICD-9-CM MS-DRGs 237 and 238 (Major Cardiovascular Procedures with and without MCC, respectively). However, the commenter pointed out that, for FY 2016, ICD-9-CM MS-DRGs 237 and 238 were deleted and replaced with ICD-10 Version 33 MS-DRGs 268 and 269 (Aortic and Heart Assist Procedures Except Pulsation Balloon with and without MCC, respectively), for the higher complexity procedures, and MS-DRGs 270, 271, and 272 for the lower complexity procedures (80 FR 49389). The commenter stated that ICD-9-CM procedure code 39.79 describes the lower complexity procedures assigned to ICD-10-PCS MS-DRGs 270, 271, and 272. The commenter believed that the comparable ICD-10-PCS procedure codes also should have been assigned to MS-DRGs 270, 271, and 272.

We agreed with the requestor that procedures describing endovascular thrombectomy of the lower limbs should be assigned to ICD-10 MS-DRGs 270, 271, and 272. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24980 through 24981), for implementation October 1, 2016, we proposed to restructure the ICD-10-PCS MS-DRG configuration and add the ICD-10-PCS code translations listed in the following chart (which would capture procedures describing endovascular thrombectomy of the lower limbs) to ICD-10 Version 34 MS-DRGs 270, 271, and 272.

ICD-10-PCS Endovascular Thrombectomy Procedure Codes Proposed To Be Assigned to MS-DRGs 270, 271, and 272 for FY 2017

03C53ZZExtirpation of matter from right axillary artery, percutaneous approach.
03C63ZZExtirpation of matter from left axillary artery, percutaneous approach.
03C73ZZExtirpation of matter from right brachial artery, percutaneous approach.
03C83ZZExtirpation of matter from left brachial artery, percutaneous approach.
03C93ZZExtirpation of matter from right ulnar artery, percutaneous approach.
03CA3ZZExtirpation of matter from left ulnar artery, percutaneous approach.
03CB3ZZExtirpation of matter from right radial artery, percutaneous approach.
03CC3ZZExtirpation of matter from left radial artery, percutaneous approach.
03CD3ZZExtirpation of matter from right hand artery, percutaneous approach.
03CF3ZZExtirpation of matter from left hand artery, percutaneous approach.
03CY3ZZExtirpation of matter from upper artery, percutaneous approach.
04CK3ZZExtirpation of matter from right femoral artery, percutaneous approach.
04CL3ZZExtirpation of matter from left femoral artery, percutaneous approach.
04CM3ZZExtirpation of matter from right popliteal artery, percutaneous approach.
04CN3ZZExtirpation of matter from left popliteal artery, percutaneous approach.
04CP3ZZExtirpation of matter from right anterior tibial artery, percutaneous approach.
04CQ3ZZExtirpation of matter from left anterior tibial artery, percutaneous approach.
04CR3ZZExtirpation of matter from right posterior tibial artery, percutaneous approach.
04CS3ZZExtirpation of matter from left posterior tibial artery, percutaneous approach.
04CT3ZZExtirpation of matter from right peroneal artery, percutaneous approach.
04CU3ZZExtirpation of matter from left peroneal artery, percutaneous approach.
04CV3ZZExtirpation of matter from right foot artery, percutaneous approach.
04CW3ZZExtirpation of matter from left foot artery, percutaneous approach.
04CY3ZZExtirpation of matter from lower artery, percutaneous approach.
05C73ZZExtirpation of matter from right axillary vein, percutaneous approach.
05C83ZZExtirpation of matter from left axillary vein, percutaneous approach.
05C93ZZExtirpation of matter from right brachial vein, percutaneous approach.
05CA3ZZExtirpation of matter from left brachial vein, percutaneous approach.
05CB3ZZExtirpation of matter from right basilic vein, percutaneous approach.
05CC3ZZExtirpation of matter from left basilic vein, percutaneous approach.
05CD3ZZExtirpation of matter from right cephalic vein, percutaneous approach.
05CF3ZZExtirpation of matter from left cephalic vein, percutaneous approach.
05CG3ZZExtirpation of matter from right hand vein, percutaneous approach.
05CH3ZZExtirpation of matter from left hand vein, percutaneous approach.
05CL3ZZExtirpation of matter from intracranial vein, percutaneous approach.
05CM3ZZExtirpation of matter from right internal jugular vein, percutaneous approach.
05CN3ZZExtirpation of matter from left internal jugular vein, percutaneous approach.
05CP3ZZExtirpation of matter from right external jugular vein, percutaneous approach.
05CQ3ZZExtirpation of matter from left external jugular vein, percutaneous approach.
05CR3ZZExtirpation of matter from right vertebral vein, percutaneous approach.
05CS3ZZExtirpation of matter from left vertebral vein, percutaneous approach.
05CT3ZZExtirpation of matter from right face vein, percutaneous approach.
05CV3ZZExtirpation of matter from left face vein, percutaneous approach.
05CY3ZZExtirpation of matter from upper vein, percutaneous approach.
06C33ZZExtirpation of matter from esophageal vein, percutaneous approach.
06CM3ZZExtirpation of matter from right femoral vein, percutaneous approach.
06CN3ZZExtirpation of matter from left femoral vein, percutaneous approach.
06CP3ZZExtirpation of matter from right greater saphenous vein, percutaneous approach.
06CQ3ZZExtirpation of matter from left greater saphenous vein, percutaneous approach.
06CR3ZZExtirpation of matter from right lesser saphenous vein, percutaneous approach.
06CS3ZZExtirpation of matter from left lesser saphenous vein, percutaneous approach.
06CT3ZZExtirpation of matter from right foot vein, percutaneous approach.
Start Printed Page 56803

We invited public comments on our proposal to assign the ICD-10-PCS procedures describing the endovascular thrombectomy of the lower limbs listed in the table above to ICD-10 Version 34 MS-DRGs 270, 271, and 272 for FY 2017.

Comment: Several commenters supported the proposal to assign the ICD-10-PCS procedures describing the endovascular thrombectomy of the lower limbs listed in the table in the proposed rule to ICD-10 Version 34 MS-DRGs 270, 271 and 272 for FY 2017. The commenters noted it is important that endovascular thrombectomy procedures be assigned to the same MS-DRGs as other procedures describing lower extremity thrombectomy. However, some commenters also noted that a subset of the codes listed in the table in the proposed rule describe non-lower limb procedures. The commenters were concerned that moving the 34 non-lower limb procedure codes displayed in the following table would not support clinical and resource use homogeneity in the MS-DRG.

ICD-10-PCS Endovascular Thrombectomy Non-Lower Limb Procedure Codes Identified by Commenters

03C53ZZExtirpation of matter from right axillary artery, percutaneous approach.
03C63ZZExtirpation of matter from left axillary artery, percutaneous approach.
03C73ZZExtirpation of matter from right brachial artery, percutaneous approach.
03C83ZZExtirpation of matter from left brachial artery, percutaneous approach.
03C93ZZExtirpation of matter from right ulnar artery, percutaneous approach.
03CA3ZZExtirpation of matter from left ulnar artery, percutaneous approach.
03CB3ZZExtirpation of matter from right radial artery, percutaneous approach.
03CC3ZZExtirpation of matter from left radial artery, percutaneous approach.
03CD3ZZExtirpation of matter from right hand artery, percutaneous approach.
03CF3ZZExtirpation of matter from left hand artery, percutaneous approach.
03CY3ZZExtirpation of matter from upper artery, percutaneous approach.
04CT3ZZExtirpation of matter from right peroneal artery, percutaneous approach.
04CU3ZZExtirpation of matter from left peroneal artery, percutaneous approach.
05C73ZZExtirpation of matter from right axillary vein, percutaneous approach.
05C83ZZExtirpation of matter from left axillary vein, percutaneous approach.
05C93ZZExtirpation of matter from right brachial vein, percutaneous approach.
05CA3ZZExtirpation of matter from left brachial vein, percutaneous approach.
05CB3ZZExtirpation of matter from right basilic vein, percutaneous approach.
05CC3ZZExtirpation of matter from left basilic vein, percutaneous approach.
05CD3ZZExtirpation of matter from right cephalic vein, percutaneous approach.
05CF3ZZExtirpation of matter from left cephalic vein, percutaneous approach.
05CG3ZZExtirpation of matter from right hand vein, percutaneous approach.
05CH3ZZExtirpation of matter from left hand vein, percutaneous approach.
05CL3ZZExtirpation of matter from intracranial vein, percutaneous approach.
05CM3ZZExtirpation of matter from right internal jugular vein, percutaneous approach.
05CN3ZZExtirpation of matter from left internal jugular vein, percutaneous approach.
05CP3ZZExtirpation of matter from right external jugular vein, percutaneous approach.
05CQ3ZZExtirpation of matter from left external jugular vein, percutaneous approach.
05CR3ZZExtirpation of matter from right vertebral vein, percutaneous approach.
05CS3ZZExtirpation of matter from left vertebral vein, percutaneous approach.
05CT3ZZExtirpation of matter from right face vein, percutaneous approach.
05CV3ZZExtirpation of matter from left face vein, percutaneous approach.
05CY3ZZExtirpation of matter from upper vein, percutaneous approach.
06C33ZZExtirpation of matter from esophageal vein, percutaneous approach.

One commenter suggested adding two additional procedure codes describing thrombectomy of the lower limbs (ICD-10-PCS codes 06CV3Z (Extirpation of matter from left foot vein, percutaneous approach) and 06CY3Z (Extirpation of matter from lower vein, percutaneous approach)) to the list of procedure codes to be moved to MS-DRGs 270, 271 and 272.

Response: We appreciate the commenters' support for the assignment of ICD-10-PCS procedure codes describing endovascular thrombectomy of the lower limbs to ICD-10 Version 34 MS-DRGs 270, 271 and 272 for FY 2017. We agree with removing the 34 codes that the commenters identified as not describing endovascular thrombectomy of the lower limbs from the list of codes that were proposed to be reassigned to MS-DRGs 270, 271 and 272. Our clinical advisors reviewed and also agree with removing these 34 non-lower limb procedure codes from the proposed list of codes to be reassigned to MS-DRGs 270, 271 and 272. These 34 non-lower limb procedure codes will remain assigned to MS-DRGs 252, 253, and 254 (Other vascular procedures with MCC, with CC, and without CC/MCC, respectively) for FY 2017.

In addition, our clinical advisors agree with the commenter's recommendation to add procedure codes 06CV3Z and 06CY3Z to the list of lower limb procedure codes to be reassigned to MS-DRGs 270, 271, and 272. Therefore, we are reassigning these two procedure codes from MS-DRG 263 (Vein ligation and stripping) and MS-DRGs 252, 253, and 254 to MS-DRGs 270, 271, and 272 for FY 2017.

After consideration of the public comments we received, we are finalizing our proposal with these modifications. We are finalizing the assignment of the ICD-10-PCS procedure codes describing endovascular thrombectomy of the lower limbs listed in the following table to ICD-10 Version 34 MS-DRGs 270, 271 and 272 for FY 2017 (which reflects the removal of the 34 proposed procedure codes and the addition of the 2 procedure codes discussed in our response above).Start Printed Page 56804

ICD-10-PCS Endovascular Thrombectomy Procedure Codes Reassigned to MS-DRGs 270, 271, and 272 for FY 2017

04CK3ZZExtirpation of matter from right femoral artery, percutaneous approach.
04CL3ZZExtirpation of matter from left femoral artery, percutaneous approach.
04CM3ZZExtirpation of matter from right popliteal artery, percutaneous approach.
04CN3ZZExtirpation of matter from left popliteal artery, percutaneous approach.
04CP3ZZExtirpation of matter from right anterior tibial artery, percutaneous approach.
04CQ3ZZExtirpation of matter from left anterior tibial artery, percutaneous approach.
04CR3ZZExtirpation of matter from right posterior tibial artery, percutaneous approach.
04CS3ZZExtirpation of matter from left posterior tibial artery, percutaneous approach.
04CV3ZZExtirpation of matter from right foot artery, percutaneous approach.
04CW3ZZExtirpation of matter from left foot artery, percutaneous approach.
04CY3ZZExtirpation of matter from lower artery, percutaneous approach.
06CM3ZZExtirpation of matter from right femoral vein, percutaneous approach.
06CN3ZZExtirpation of matter from left femoral vein, percutaneous approach.
06CP3ZZExtirpation of matter from right greater saphenous vein, percutaneous approach.
06CQ3ZZExtirpation of matter from left greater saphenous vein, percutaneous approach.
06CR3ZZExtirpation of matter from right lesser saphenous vein, percutaneous approach.
06CS3ZZExtirpation of matter from left lesser saphenous vein, percutaneous approach.
06CT3ZZExtirpation of matter from right foot vein, percutaneous approach.
06CV3ZZExtirpation of matter from left foot vein, percutaneous approach.
06CY3ZZExtirpation of matter from lower vein, percutaneous approach.

c. Pacemaker Procedures Code Combinations

We received a request that CMS examine the list of ICD-10-PCS procedure code combinations that describe procedures involving pacemakers to determine if some procedure code combinations were excluded from the ICD-10 MS-DRG assignments for MS-DRGs 242, 243, and 244 (Permanent Cardiac Pacemaker Implant with MCC, with CC, and without CC/MCC). The requestor believed that some ICD-10-PCS procedure code combinations describing procedures involving pacemaker devices and leads are not included in the current list.

As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24981 through 24984), we reviewed the list of ICD-10-PCS procedure code combinations describing procedures involving pacemakers assigned to ICD-10 MS-DRGs 242, 243, and 244, and determined that our initial approach of using specified procedure code combinations to identify procedures involving pacemakers and leads was overly complex and may have led to inadvertent omissions of qualifying procedure code combinations. Under our initial approach, we developed a list of possible ICD-10-PCS procedure code combinations that describe procedures involving pacemaker devices and leads as well as ICD-10-PCS procedure code combinations for procedures describing the removal and replacement of pacemaker devices. We stated that we now believe that a more appropriate approach would be to compile a list of all procedure codes describing procedures involving pacemaker devices and a list of all procedure codes describing procedures involving pacemaker leads. If a procedure code from the list of procedure codes describing procedures involving pacemaker devices and a procedure code from the list of procedure codes describing procedures involving pacemaker leads are reported in combination with one another, the case would be assigned to ICD-10 MS-DRGs 242, 243, and 244. We stated that we believe that this more generic approach would capture a wider range of possible reported procedure codes describing procedures involving pacemaker devices and leads. Therefore, we proposed to modify the ICD-10 MS-DRG logic so that if one of the ICD-10-PCS procedure codes describing procedures involving pacemaker devices listed in column 1 of the table below is reported in combination with one of the ICD-10-PCS procedure codes describing procedures involving leads listed in column 3 of the table below, the case would be assigned to MS-DRGs 242, 243, and 244. We stated that we believe that this proposed simplified approach would capture all possible cases reporting procedure code combinations describing procedures involving pacemaker devices and leads to ensure that these cases would be assigned to MS-DRGs 242, 243, and 244.

ICD-10-PCS procedure codes describing procedures involving cardiac pacemaker devices (any one code reported from this column list) (1)in combination with (2)ICD-10-PCS procedure codes describing procedures involving cardiac pacemaker leads (any one code reported from this column list) (3)
Procedure codeCode descriptionProcedure codeCode description
0JH604ZInsertion of pacemaker, single chamber into chest subcutaneous tissue and fascia, open approach02H40JZInsertion of pacemaker lead into coronary vein, open approach.
0JH605ZInsertion of pacemaker, single chamber rate responsive into chest subcutaneous tissue and fascia, open approach02H40MZInsertion of cardiac lead into coronary vein, open approach.
0JH606ZInsertion of pacemaker, dual chamber into chest subcutaneous tissue and fascia, open approach02H43JZInsertion of pacemaker lead into coronary vein, percutaneous approach.
Start Printed Page 56805
0JH607ZInsertion of cardiac resynchronization pacemaker pulse generator into chest subcutaneous tissue and fascia, open approach02H43MZInsertion of cardiac lead into coronary vein, percutaneous approach.
0JH60PZInsertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, open approach02H44JZInsertion of pacemaker lead into coronary vein, percutaneous endoscopic approach.
0JH634ZInsertion of pacemaker, single chamber into chest subcutaneous tissue and fascia, percutaneous approach02H44MZInsertion of cardiac lead into coronary vein, percutaneous endoscopic approach.
0JH635ZInsertion of pacemaker, single chamber rate responsive into chest subcutaneous tissue and fascia, percutaneous approach02H60JZInsertion of pacemaker lead into right atrium, open approach.
0JH636ZInsertion of pacemaker, dual chamber into chest subcutaneous tissue and fascia, percutaneous approach02H60MZInsertion of cardiac lead into right atrium, open approach.
0JH637ZInsertion of cardiac resynchronization pacemaker pulse generator into chest subcutaneous tissue and fascia, percutaneous approach02H63JZInsertion of pacemaker lead into right atrium, percutaneous approach.
0JH63PZInsertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, percutaneous approach02H63MZInsertion of cardiac lead into right atrium, percutaneous approach.
0JH804ZInsertion of pacemaker, single chamber into abdomen subcutaneous tissue and fascia, open approach02H64JZInsertion of pacemaker lead into right atrium, percutaneous endoscopic approach.
0JH805ZInsertion of pacemaker, single chamber rate responsive into abdomen subcutaneous tissue and fascia, open approach02H64MZInsertion of cardiac lead into right atrium, percutaneous endoscopic approach.
0JH806ZInsertion of pacemaker, dual chamber into abdomen subcutaneous tissue and fascia, open approach02H70JZInsertion of pacemaker lead into left atrium, open approach.
0JH807ZInsertion of cardiac resynchronization pacemaker pulse generator into abdomen subcutaneous tissue and fascia, open approach02H70MZInsertion of cardiac lead into left atrium, open approach.
0JH80PZInsertion of cardiac rhythm related device into abdomen subcutaneous tissue and fascia, open approach02H73JZInsertion of pacemaker lead into left atrium, percutaneous approach.
0JH834ZInsertion of pacemaker, single chamber into abdomen subcutaneous tissue and fascia, percutaneous approach02H73MZInsertion of cardiac lead into left atrium, percutaneous approach.
0JH835ZInsertion of pacemaker, single chamber rate responsive into abdomen subcutaneous tissue and fascia, percutaneous approach02H74JZInsertion of pacemaker lead into left atrium, percutaneous endoscopic approach.
0JH836ZInsertion of pacemaker, dual chamber into abdomen subcutaneous tissue and fascia, percutaneous approach02H74MZInsertion of cardiac lead into left atrium, percutaneous endoscopic approach.
0JH837ZInsertion of cardiac resynchronization pacemaker pulse generator into abdomen subcutaneous tissue and fascia, percutaneous approach02HK0JZInsertion of pacemaker lead into right ventricle, open approach.
0JH83PZInsertion of cardiac rhythm related device into abdomen subcutaneous tissue and fascia, percutaneous approach02HK0MZInsertion of cardiac lead into right ventricle, open approach.
02HK3JZInsertion of pacemaker lead into right ventricle, percutaneous approach.
02HK3MZInsertion of cardiac lead into right ventricle, percutaneous approach.
02HK4JZInsertion of pacemaker lead into right ventricle, percutaneous endoscopic approach.
02HK4MZInsertion of cardiac lead into right ventricle, percutaneous endoscopic approach.
02HL0JZInsertion of pacemaker lead into left ventricle, open approach.
02HL0MZInsertion of cardiac lead into left ventricle, open approach.
Start Printed Page 56806
02HL3JZInsertion of pacemaker lead into left ventricle, percutaneous approach.
02HL3MZInsertion of cardiac lead into left ventricle, percutaneous approach.
02HL4JZInsertion of pacemaker lead into left ventricle, percutaneous endoscopic approach.
02HL4MZInsertion of cardiac lead into left ventricle, percutaneous endoscopic approach.
02HN0JZInsertion of pacemaker lead into pericardium, open approach.
02HN0MZInsertion of cardiac lead into pericardium, open approach.
02HN3JZInsertion of pacemaker lead into pericardium, percutaneous approach.
02HN3MZInsertion of cardiac lead into pericardium, percutaneous approach.
02HN4JZInsertion of pacemaker lead into pericardium, percutaneous endoscopic approach.
02HN4MZInsertion of cardiac lead into pericardium, percutaneous endoscopic approach.

We invited public comments on our proposal to modify the MS-DRG logic for MS-DRGs 242, 243, and 244 to establish that cases reporting one ICD-10-PCS code from the list of procedure codes describing procedures involving pacemaker devices and one ICD-10-PCS code from the list of procedure codes describing procedures involving pacemaker leads in combination with one another would qualify the case for assignment to MS-DRGs 242, 243, and 244.

Comment: Commenters supported the proposed updates for MS-DRGs 242, 243, and 244. The commenters stated that the proposed logic is simpler than the prior logic. One commenter stated that the proposal was logical and less complicated and appeared to be able to correctly capture procedures involving pacemaker devices. Several commenters recommended that CMS continue to monitor the impact of this change in future years to determine whether further modifications will be necessary.

Response: We appreciate the commenters' support for our proposed updates to MS-DRGs 242, 243, and 244. We agree that this is a simpler approach to the MS-DRG GROUPER logic. We will continue to monitor this and other related MS-DRGs as we receive ICD-10 claims data.

After consideration of the public comments we received, we are finalizing our proposal to modify the MS-DRG logic for MS-DRGs 242, 243, and 244 to establish that cases reporting one ICD-10-PCS code from the list of procedure codes describing procedures involving pacemaker devices and one ICD-10-PCS code from the list of procedure codes describing procedures involving pacemaker leads in combination with one another will qualify the case for assignment to MS-DRGs 242, 243, and 244.

We also examined our GROUPER logic for MS-DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with and without MCC, respectively). Assignments of cases to these MS-DRGs also include qualifying ICD-10-PCS procedure code combinations describing procedures that involve the removal of pacemaker devices and the insertion of new devices. We believe that this logic may also be overly complex. Moreover, we believe that a more simplified approach would be to compile a list of all ICD-10-PCS procedure codes describing procedures involving cardiac pacemaker device insertions. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24983 through 24984), we proposed this approach for FY 2017. Under the proposed approach, if one of the procedure codes describing procedures involving pacemaker device insertions is reported, and there are no other procedure codes describing procedures involving the insertion of a pacemaker lead reported in combination with one of these procedures, the case would be assigned to MS-DRG 258 and 259. We included in the proposed rule the following listing of ICD-10-PCS procedure codes describing procedures involving pacemaker device insertions that would be assigned to MS-DRG 258 and 259.

Procedure Codes Describing Procedures Involving Cardiac Pacemaker Device Insertions Reported Without Any Other Pacemaker Device Procedure Code Proposed To Be Assigned to ICD-10 MS-DRGs 258 and 259 for FY 2017

Procedure codeDescription
0JH604ZInsertion of pacemaker, single chamber into chest subcutaneous tissue and fascia, open approach.
0JH605ZInsertion of pacemaker, single chamber rate responsive into chest subcutaneous tissue and fascia, open approach.
0JH606ZInsertion of pacemaker, dual chamber into chest subcutaneous tissue and fascia, open approach.
0JH607ZInsertion of cardiac resynchronization pacemaker pulse generator into chest subcutaneous tissue and fascia, open approach.
0JH60PZInsertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, open approach.
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0JH634ZInsertion of pacemaker, single chamber into chest subcutaneous tissue and fascia, percutaneous approach.
0JH635ZInsertion of pacemaker, single chamber rate responsive into chest subcutaneous tissue and fascia, percutaneous approach.
0JH636ZInsertion of pacemaker, dual chamber into chest subcutaneous tissue and fascia, percutaneous approach.
0JH637ZInsertion of cardiac resynchronization pacemaker pulse generator into chest subcutaneous tissue and fascia, percutaneous approach.
0JH63PZInsertion of cardiac rhythm related device into chest subcutaneous tissue and fascia, percutaneous approach.
0JH804ZInsertion of pacemaker, single chamber into abdomen subcutaneous tissue and fascia, open approach.
0JH805ZInsertion of pacemaker, single chamber rate responsive into abdomen subcutaneous tissue and fascia, open approach.
0JH806ZInsertion of pacemaker, dual chamber into abdomen subcutaneous tissue and fascia, open approach.
0JH807ZInsertion of cardiac resynchronization pacemaker pulse generator into abdomen subcutaneous tissue and fascia, open approach.
0JH80PZInsertion of cardiac rhythm related device into abdomen subcutaneous tissue and fascia, open approach.
0JH834ZInsertion of pacemaker, single chamber into abdomen subcutaneous tissue and fascia, percutaneous approach.
0JH835ZInsertion of pacemaker, single chamber rate responsive into abdomen subcutaneous tissue and fascia, percutaneous approach.
0JH836ZInsertion of pacemaker, dual chamber into abdomen subcutaneous tissue and fascia, percutaneous approach.
0JH837ZInsertion of cardiac resynchronization pacemaker pulse generator into abdomen subcutaneous tissue and fascia, percutaneous approach.
0JH83PZInsertion of cardiac rhythm related device into abdomen subcutaneous tissue and fascia, percutaneous approach.

We invited public comments on our proposal to modify the GROUPER logic for MS-DRGs 258 and 259 to establish that a case reporting one procedure code from the proposed rule list of ICD-10-PCS procedure codes describing procedures involving pacemaker device insertions without any other procedure codes describing procedures involving pacemaker leads reported would be assigned to MS-DRGs 258 and 259.

Comment: Commenters supported the proposed updates to MS-DRGs 258 and 259. The commenters stated that the proposed updates appeared to be logical and less complicated and appeared to be able to correctly capture these circumstances.

Response: We appreciate the commenters' support for our proposed updates to MS-DRGs 258 and 259. We agree this approach is logical and less complicated.

After consideration of the public comments we received, we are finalizing our proposal to modify the MS-DRG logic for MS-DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with and without MCC, respectively) to establish that a case reporting one ICD-10-PCS procedure code describing procedures involving pacemaker device insertions without any other procedure codes describing procedures involving pacemaker leads reported is assigned to MS-DRGs 258 and 259 for FY 2017. We are finalizing the table above (which was included in the proposed rule) that lists the ICD-10-PCS procedure codes describing procedures involving pacemaker device insertions without any other procedure codes describing procedures involving pacemaker leads reported that are assigned to MS-DRGs 258 and 259 for FY 2017.

We also point out that the ICD-10-PCS pacemaker codes listed in the following table are classified as non-operating room (non-O.R.) codes within the MS-DRGs. The GROUPER logic will continue to classify these codes as non-O.R. codes. However, a case reporting one of these non-O.R. procedure codes describing procedures involving pacemaker device insertions without any other procedure codes describing procedures involving pacemaker leads reported is assigned to MS-DRGs 258 and 259 within MDC 5 in our final policy.

ICD-10-PCS code (non-O.R.)Description
0JH604ZInsertion of pacemaker, single chamber into chest subcutaneous tissue and fascia, open approach.
0JH605ZInsertion of pacemaker, single chamber rate responsive into chest subcutaneous tissue and fascia, open approach.
0JH606ZInsertion of pacemaker, dual chamber into chest subcutaneous tissue and fascia, open approach.
0JH634ZInsertion of pacemaker, single chamber into chest subcutaneous tissue and fascia, percutaneous approach.
0JH635ZInsertion of pacemaker, single chamber rate responsive into chest subcutaneous tissue and fascia, percutaneous approach.
0JH636ZInsertion of pacemaker, dual chamber into chest subcutaneous tissue and fascia, percutaneous approach.
0JH637ZInsertion of cardiac resynchronization pacemaker pulse generator into chest subcutaneous tissue and fascia, percutaneous approach.
0JH804ZInsertion of pacemaker, single chamber into abdomen subcutaneous tissue and fascia, open approach.
0JH805ZInsertion of pacemaker, single chamber rate responsive into abdomen subcutaneous tissue and fascia, open approach.
0JH806ZInsertion of pacemaker, dual chamber into abdomen subcutaneous tissue and fascia, open approach.
0JH834ZInsertion of pacemaker, single chamber into abdomen subcutaneous tissue and fascia, percutaneous approach.
0JH835ZInsertion of pacemaker, single chamber rate responsive into abdomen subcutaneous tissue and fascia, percutaneous approach.
0JH836ZInsertion of pacemaker, dual chamber into abdomen subcutaneous tissue and fascia, percutaneous approach.
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We also examined our GROUPER logic for MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except Device with MCC, with CC, and without CC/MCC, respectively). Cases assigned to MS-DRGs 260, 261, and 262 also include lists of procedure code combinations describing procedures involving the removal of pacemaker leads and the insertion of new leads, in addition to lists of single procedure codes describing procedures involving the insertion of pacemaker leads, removal of devices, and revision of devices. We stated in the proposed rule that we believe that this logic may also be overly complex. Moreover, we believe that a more simplified approach would be to provide a single list of procedure codes describing procedures involving cardiac pacemaker lead insertions and other related procedures involving device insertions that would be assigned to MS-DRGs 260, 261, and 262. If one of these procedure codes describing procedures involving the insertion of pacemaker leads is reported, and there are no other procedure codes describing procedures involving the insertion of a device reported, the case would be assigned to MS-DRGs 260, 261, and 262. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24984 through 24985), we proposed that the list of ICD-10-PCS procedure codes describing procedures involving pacemaker lead insertion, removal, or revisions and insertion of hemodynamic devices in a table included in the proposed rule (81 FR 24984 through 24985) would be assigned to MS-DRGs 260, 261, and 262. We simply proposed to use a single list of ICD-10-PCS procedure codes to determine the MS-DRG assignment.

We invited public comments on our proposal to modify the GROUPER logic for MS-DRGs 260, 261, and 262 so that cases reporting any one of the ICD-10-PCS procedure codes describing procedures involving pacemakers and related procedures and associated devices listed in the table in the proposed rule would be assigned to MS-DRGs 260, 261, and 262.

Comment: Commenters supported the proposal to modify the GROUPER logic for MS-DRGs 260, 261, and 262 so that cases reporting any one of the ICD-10-PCS procedure codes describing procedures involving pacemakers and related procedures and associated devices listed in the table in the proposed rule would be assigned to MS DRGs 260, 261, and 262. The commenters stated that the proposed updates were logical and less complicated and appeared to be able to correctly capture cardiac pacemaker revisions. However, several of the commenters supporting the proposal pointed out that there were errors in the code titles for codes included in the table labeled “List of Procedure Codes Proposed to be Assigned to MS-DRGs 260, 261, and 262” in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24984 through 24985). The commenters stated that the table included errors such as referring to a “pacemaker” lead instead of a “cardiac” lead in code 02H60MZ (Insertion of Cardiac Lead into Right Atrium, Open Approach) and referring to a “cardiac” lead instead of a “pacemaker” lead in code 02H63JZ (Insertion of Pacemaker Lead into Right Atrium, Percutaneous Approach). The commenters recommended that CMS correct the code titles to align with the official ICD-10-PCS code titles.

Response: We appreciate the commenter's support for our proposal. In addition, we reviewed the list of codes in the table included in the proposed rule and agree that there were errors in some of the code titles (ICD-10-PCS codes 02H60MZ through 02HN4MZ) in that table. We have corrected these title errors and are finalizing a corrected table below.

After consideration of the public comments we received, we are finalizing our proposal to modify the GROUPER logic for MS-DRGs 260, 261, and 262 so that cases reporting any one of the ICD-10-PCS procedure codes describing procedures involving pacemakers and related procedures and associated devices listed in the corrected table below are assigned to MS DRGs 260, 261, and 262.

List of Procedure Codes Assigned to MS-DRGs 260, 261, and 262

Procedure codeDescription
02H40JZInsertion of pacemaker lead into coronary vein, open approach.
02H40MZInsertion of cardiac lead into coronary vein, open approach.
02H43JZInsertion of pacemaker lead into coronary vein, percutaneous approach.
02H43MZInsertion of cardiac lead into coronary vein, percutaneous approach.
02H44JZInsertion of pacemaker lead into coronary vein, percutaneous endoscopic approach.
02H44MZInsertion of cardiac lead into coronary vein, percutaneous endoscopic approach.
02H60MZInsertion of Cardiac Lead into Right Atrium, Open Approach.
02H63JZInsertion of Pacemaker Lead into Right Atrium, Percutaneous Approach.
02H63MZInsertion of Cardiac Lead into Right Atrium, Percutaneous Approach.
02H64JZInsertion of Pacemaker Lead into Right Atrium, Percutaneous Endoscopic Approach.
02H64MZInsertion of Cardiac Lead into Right Atrium, Percutaneous Endoscopic Approach.
02H70JZInsertion of Pacemaker Lead into Left Atrium, Open Approach.
02H70MZInsertion of Cardiac Lead into Left Atrium, Open Approach.
02H73JZInsertion of Pacemaker Lead into Left Atrium, Percutaneous Approach.
02H73MZInsertion of Cardiac Lead into Left Atrium, Percutaneous Approach.
02H74JZInsertion of Pacemaker Lead into Left Atrium, Percutaneous Endoscopic Approach.
02H74MZInsertion of Cardiac Lead into Left Atrium, Percutaneous Endoscopic Approach.
02HK00ZInsertion of Pressure Sensor Monitoring Device into Right Ventricle, Open Approach.
02HK02ZInsertion of Monitoring Device into Right Ventricle, Open Approach.
02HK0JZInsertion of Pacemaker Lead into Right Ventricle, Open Approach.
02HK0MZInsertion of Cardiac Lead into Right Ventricle, Open Approach.
02HK30ZInsertion of Pressure Sensor Monitoring Device into Right Ventricle, Percutaneous Approach.
02HK32ZInsertion of Monitoring Device into Right Ventricle, Percutaneous Approach.
02HK3JZInsertion of Pacemaker Lead into Right Ventricle, Percutaneous Approach.
02HK3MZInsertion of Cardiac Lead into Right Ventricle, Percutaneous Approach.
02HK40ZInsertion of Pressure Sensor Monitoring Device into Right Ventricle, Percutaneous Endoscopic Approach.
02HK42ZInsertion of Monitoring Device into Right Ventricle, Percutaneous Endoscopic Approach.
02HK4JZInsertion of Pacemaker Lead into Right Ventricle, Percutaneous Endoscopic Approach.
02HK4MZInsertion of Cardiac Lead into Right Ventricle, Percutaneous Endoscopic Approach.
02HL0JZInsertion of Pacemaker Lead into Left Ventricle, Open Approach.
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02HL0MZInsertion of Cardiac Lead into Left Ventricle, Open Approach.
02HL3JZInsertion of Pacemaker Lead into Left Ventricle, Percutaneous Approach.
02HL3MZInsertion of Cardiac Lead into Left Ventricle, Percutaneous Approach.
02HL4JZInsertion of Pacemaker Lead into Left Ventricle, Percutaneous Endoscopic Approach.
02HL4MZInsertion of Cardiac Lead into Left Ventricle, Percutaneous Endoscopic Approach.
02HN0JZInsertion of cardiac lead into left ventricle, percutaneous endoscopic approach.
02HN0MZInsertion of pacemaker lead into pericardium, open approach.
02HN3JZInsertion of cardiac lead into pericardium, open approach.
02HN3MZInsertion of pacemaker lead into pericardium, percutaneous approach.
02HN4JZInsertion of cardiac lead into pericardium, percutaneous approach.
02HN4MZInsertion of pacemaker lead into pericardium, percutaneous endoscopic approach.
02PA0MZInsertion of cardiac lead into pericardium, percutaneous endoscopic approach.
02PA3MZRemoval of cardiac lead from heart, open approach.
02PA4MZRemoval of cardiac lead from heart, percutaneous approach.
02PAXMZRemoval of cardiac lead from heart, percutaneous endoscopic approach.
02WA0MZRevision of cardiac lead in heart, open approach.
02WA3MZRevision of cardiac lead in heart, percutaneous approach.
02WA4MZRevision of cardiac lead in heart, percutaneous endoscopic approach.
0JH600ZInsertion of hemodynamic monitoring device into chest subcutaneous tissue and fascia, open approach.
0JH630ZInsertion of hemodynamic monitoring device into chest subcutaneous tissue and fascia, percutaneous approach.
0JH800ZInsertion of hemodynamic monitoring device into abdomen subcutaneous tissue and fascia, open approach.
0JH830ZInsertion of hemodynamic monitoring device into abdomen subcutaneous tissue and fascia, percutaneous approach.
0JPT0PZRemoval of cardiac rhythm related device from trunk subcutaneous tissue and fascia, open approach.
0JPT3PZRemoval of cardiac rhythm related device from trunk subcutaneous tissue and fascia, percutaneous approach.
0JWT0PZRevision of cardiac rhythm related device in trunk subcutaneous tissue and fascia, open approach.
0JWT3PZRevision of cardiac rhythm related device in trunk subcutaneous tissue and fascia, percutaneous approach.

d. Transcatheter Mitral Valve Repair With Implant

As we did for the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28008 through 28010), for FY 2017, we received a request to modify the MS-DRG assignment for transcatheter mitral valve repair with implant procedures. We refer readers to detailed discussions of the MitraClip® System (hereafter referred to as MitraClip®) for transcatheter mitral valve repair in previous rulemakings, including the FY 2012 IPPS/LTCH PPS proposed rule (76 FR 25822) and final rule (76 FR 51528 through 51529) and the FY 2013 IPPS/LTCH PPS proposed rule (77 FR 27902 through 27903) and final rule (77 FR 53308 through 53310), in response to requests for MS-DRG reclassification, as well as the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27547 through 27552), under the new technology add-on payment policy. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50575), the application for a new technology add-on payment for MitraClip® was unable to be considered further due to lack of FDA approval by the July 1, 2013 deadline.

In the FY 2015 IPPS/LTCH PPS final rule, we finalized our proposal to not create a new MS-DRG or to reassign cases reporting procedures involving the MitraClip® to another MS-DRG (79 FR 49890 through 49892). Under a separate process, the request for a new technology add-on payment for the MitraClip® System was approved (79 FR 49941 through 49946). As discussed in section II.I.4.e. of the preamble of the proposed rule and this final rule, we proposed to discontinue the new technology add-on payment for MitraClip® for FY 2017 and are finalizing our proposal in this final rule.

In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49371), we finalized a modification to the MS-DRGs to which the procedure involving the MitraClip® System was assigned. For the ICD-10 based MS-DRGs to fully replicate the ICD-9-CM based MS-DRGs, ICD-10-PCS code 02UG3JZ (Supplement mitral valve with synthetic substitute, percutaneous approach), which identifies the use of the MitraClip® technology and is the ICD-10-PCS code translation for ICD-9-CM procedure code 35.97 (Percutaneous mitral valve repair with implant), was assigned to new MS-DRGs 273 and 274 (Percutaneous Intracardiac Procedures with and without MCC, respectively) and continued to be assigned to MS-DRGs 231 and 232 (Coronary Bypass with PTCA with MCC and without MCC, respectively). According to the requestor, there are substantial clinical and resource differences between the transcatheter mitral valve repair procedure and other procedures currently grouping to MS-DRGs 273 and 274, which are the focus of the request.

The requestor submitted three options for CMS to consider for FY 2017. The first option was to create a new MS-DRG for endovascular cardiac valve repair with implant; the second option was to reassign cases for the MitraClip® implant from MS-DRGs 273 and 274 to MS-DRGs 266 and 267 (Endovascular Cardiac Valve Replacement with and without MCC, respectively); and the third option was to reassign cases involving the MitraClip® system to another higher paying MS-DRG.

As discussed in the FY 2017 IPPS/LTCH PPS proposed rule, we analyzed claims data from the December 2015 update of the FY 2015 MedPAR file on reported cases of percutaneous mitral valve repair with implant (ICD-9-CM procedure code 35.97) in MS-DRGs 273 and 274. Our findings are shown in the table below.

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Percutaneous Mitral Valve Repair with Implant

MS-DRGNumber of casesAverage length of stayAverage costs
MS-DRG 273—All cases6,6208.01$27,625
MS-DRG 273—Cases with procedure code 35.974577.5750,560
MS-DRG 274—All cases14,2203.4619,316
MS-DRG 274—Cases with procedure code 35.976932.6737,686

As shown in the table, the total number of cases reported in MS-DRG 273 was 6,620 and had an average length of stay of 8.01 days and average costs of $27,625. The number of cases reporting the ICD-9-CM procedure code 35.97 in MS-DRG 273 totaled 457 and had an average length of stay of 7.57 days and average costs of $50,560. For MS-DRG 274, there were a total of 14,220 cases with an average length of stay of 3.46 days and average costs of $19,316. There were a total of 693 cases in MS-DRG 274 that reported procedure code 35.97; these cases had an average length of stay of 2.67 days and average costs of $37,686. We recognize that the cases reporting procedure code 35.97 had a shorter length of stay and higher average costs in comparison to all the cases within MS-DRGs 273 and 274.

As stated above, the first option of the requestor was that we create a new MS-DRG for endovascular cardiac valve repair with implant procedures for all cardiac valve repairs. We reviewed the following list of ICD-10-PCS procedure codes that the requestor submitted to comprise this proposed new MS-DRG.

ICD-10-PCS codeDescription
02UF37ZSupplement aortic valve with autologous tissue substitute, percutaneous approach.
02UF38ZSupplement aortic valve with zooplastic tissue, percutaneous approach.
02UF3JZSupplement aortic valve with synthetic substitute, percutaneous approach.
02UF3KZSupplement aortic valve with nonautologous tissue substitute, percutaneous approach.
02UG37ZSupplement mitral valve with autologous tissue substitute, percutaneous approach.
02UG38ZSupplement mitral valve with zooplastic tissue, percutaneous approach.
02UG3JZSupplement mitral valve with synthetic substitute, percutaneous approach.
02UG3KZSupplement mitral valve with nonautologous tissue substitute, percutaneous approach.
02UH37ZSupplement pulmonary valve with autologous tissue substitute, percutaneous approach.
02UH38ZSupplement pulmonary valve with zooplastic tissue, percutaneous approach.
02UH3JZSupplement pulmonary valve with synthetic substitute, percutaneous approach.
02UH3KZSupplement pulmonary valve with nonautologous tissue substitute, percutaneous approach.
02UJ37ZSupplement tricuspid valve with autologous tissue substitute, percutaneous approach.
02UJ38ZSupplement tricuspid valve with zooplastic tissue, percutaneous approach.
02UJ3JZSupplement tricuspid valve with synthetic substitute, percutaneous approach.
02UJ3KZSupplement tricuspid valve with nonautologous tissue substitute, percutaneous approach.

The above list of ICD-10-PCS procedure codes are currently assigned to MS-DRGs 216 through 221 (Cardiac Valve and Other Major Cardiovascular Procedures with and without Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively), with the exception of procedure code 02UG3JZ, which is assigned to MS-DRGs 273 and 274, as noted earlier in this section.

All 16 of the ICD-10-PCS procedure codes submitted by the requester are comparable translations of ICD-9-CM procedure code 35.33 (Annuloplasty), which also grouped to MS-DRGs 216 through 221. However, ICD-10-PCS procedure code 02UG3JZ (Supplement mitral valve with synthetic substitute, percutaneous approach) is the comparable translation for both ICD-9-CM procedure code 35.33 and ICD-9-CM procedure code 35.97 (Percutaneous mitral valve repair with implant), which group to MS-DRGs 273 and 274 as mentioned previously.

Upon review of the 16 ICD-10-PCS procedure codes submitted for consideration by the requestor, we stated in the proposed rule that we determined that we could not propose the suggestion of a new MS-DRG because the resulting ICD-10 MS-DRG logic would not be an accurate replication of the ICD-9-CM based MS-DRG logic. Specifically, it is not possible to replicate reassigning the percutaneous annuloplasty codes from ICD-9-CM based MS-DRGs 216 through 221 to a new MS-DRG because we cannot isolate those cases from procedure code 35.33. Under ICD-9-CM, procedure code 35.33 does not differentiate the specific type of approach used to perform the procedure. This is in contrast to the 60 comparable ICD-10 code translations that do differentiate among various approaches (open, percutaneous, and percutaneous endoscopic).

As stated previously, if the ICD-9-CM and ICD-10 versions of the MS-DRGs cease to be replications of each other, the relative payment weights (computed using the ICD-9-CM based MS-DRGs) would be inconsistent with the ICD-10 MS-DRG assignment, which may cause unintended payment redistribution. Therefore, we did not propose to create a new MS-DRG for transcatheter mitral valve repair with implant procedures for FY 2017.

The second option in the request was to evaluate reassigning cases involving the MitraClip® to MS-DRGs 266 and 267. This option is not supported for the same reasons provided in previous rulemaking regarding differences between valve replacements and valve repairs. Our clinical advisors did not believe that these procedures are clinically coherent or similar in terms of resource consumption because the MitraClip® technology is utilized for a percutaneous mitral valve repair, while the other technologies assigned to MS-DRGs 266 and 267 are utilized for transcatheter/endovascular cardiac valve replacements. In addition, if cases involving the MitraClip® were Start Printed Page 56811reassigned to MS-DRGs 266 and 267, they would be overpaid by approximately $10,000 as shown in the table below. Our clinical advisors agreed that we should not propose to reassign endovascular cardiac valve repair procedures to the endovascular cardiac valve replacement MS-DRGs.

Endovascular Cardiac Valve Replacement With and Without MCC

MS-DRG 266—All cases7,4368.54$59,675
MS-DRG 267—All cases8,4804.4547,013

Next, for the proposed rule, we analyzed claims data from the December 2015 update of the FY 2015 MedPAR file relating to the possible reassignment of cases involving the MitraClip® (identified by ICD-9-CM procedure code 35.97) to MS-DRGs 228, 229, and 230 (Other Cardiothoracic Procedures with MCC, with CC, and without CC/MCC, respectively). However, as shown in the findings in the table below, the claims data did not support this option under the current 3-way severity level split. That is, the data findings based on reassignment of MitraClip® cases (ICD-9-CM procedure code 35.97) to MS-DRGs 228, 229, and 230 did not support the required criterion that there be at least a $2,000 difference between subgroups. A reassignment would not meet the requirement for the “with CC” and “without CC/MCC” subgroups ($34,461 minus $33,216 = $1,245).

Other Cardiothoracic Procedures (with Procedure Code 35.97)

MS-DRGNumber of casesAverage length of stayAverage costs
MS-DRG 228—with MCC1,96611.53$51,634
MS-DRG 229—with CC2,3186.2834,461
MS-DRG 230—without CC/MCC7093.7633,216

We then performed additional analysis consisting of the base DRG report for MS-DRGs 228, 229 and 230. As shown in the table below, the average costs between the “with CC” and the “without CC/MCC” subgroups no longer meet the criterion that there be at least a 20-percent difference in average costs between subgroups. These data findings support collapsing MS-DRGs 228, 229, and 230 from a 3-way severity level split into a 2-way severity level split (with MCC and without MCC) based on 2 years (FY 2014 and FY 2015) of MedPAR data. This option would involve the deletion of an MS-DRG.

Other Cardiothoracic Procedures

MS-DRGNumber of cases FY 2015Average length of stay FY 2015Average costs FY 2015Number of cases FY 2014Average length of stay FY 2014Average costs FY 2014
MS-DRG 228—with MCC1,50912.73$51,9601,48612.75$50,688
MS-DRG 229—with CC1,8357.1633,7861,9007.4633,277
MS-DRG 230—without CC/MCC4994.5230,6974434.8431,053

In the additional analysis, we evaluated if reassignment of cases reporting ICD-9-CM procedure code 35.97 to this proposed 2-way severity split was supported. We confirmed that the reassignment of ICD-9-CM procedure code 35.97 could be replicated under the ICD-9 MS-DRGs. We believe that deleting MS-DRG 230, revising MS-DRG 229, and reassigning cases with procedure code 35.97 from MS-DRGs 273 and 274 to this new structure would reflect these procedures more accurately in the ICD-10 MS-DRGs. Our clinical advisors agreed with a proposal to delete MS-DRG 230 and reassign cases involving percutaneous mitral valve repair with implant (MitraClip®) to MS-DRG 228 and revised MS-DRG 229. We believe that this approach would maintain clinical coherence for these MS-DRGs and reflect more appropriate payment for procedures involving percutaneous mitral valve repair. The proposed revisions to the MS-DRGs, which include the MitraClip® cases, are shown in the table below.

Other Cardiothoracic Procedures

Proposed revised MS-DRGsNumber of casesAverage length of stayAverage costs
MS-DRG 228—with MCC1,96611.53$51,634
MS-DRG 229—without MCC3, 0275.6934,169

In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24987 through 24988), for FY 2017, we proposed to collapse MS-DRGs 228, 229, and 230 from three severity levels to two severity levels by deleting MS-DRG 230 and revising MS-DRG 229. We also proposed to reassign ICD-9-CM procedure code 35.97 and the cases Start Printed Page 56812reporting ICD-10-PCS procedure code 02UG3JZ (Supplement mitral valve with synthetic substitute, percutaneous approach) from MS-DRGs 273 and 274 to MS-DRG 228 and proposed revised MS-DRG 229. The title of MS-DRG 229 would be modified as follows to reflect the “without MCC” designation. The title of proposed revised MS-DRG 229 would be “Other Cardiothoracic Procedures without MCC”. The title for MS-DRG 228 would remain the same: MS-DRG 228 (Other Cardiothoracic Procedures with MCC). We invited public comments on our proposals.

We also note that, as discussed earlier in this section of the proposed rule and this final rule, in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49371), ICD-10-PCS code 02UG3JZ (Supplement mitral valve with synthetic substitute, percutaneous approach) was assigned to MS-DRGs 231 and 232 (Coronary Bypass with PTCA with MCC and without MCC, respectively), in addition to new MS-DRGs 273 and 274, to fully replicate the ICD-9-CM based MS-DRG logic for ICD-9-CM procedure code 35.97. We stated that if our proposal in the FY 2017 proposed rule to reassign ICD-10-PCS code 02UG3JZ to MS-DRG 228 and proposed revised MS-DRG 229 was finalized in this FY 2017 IPPS/LTCH PPS final rule, it would eliminate the need to continue having ICD-10-PCS code 02UG3JZ and ICD-9-CM code 35.97 group to MS-DRGs 231 and 232. This is due to the fact that, currently, MS-DRGs 228, 229, and 230 are listed higher than MS-DRGs 231 through 236 in the surgical hierarchy, as shown in the ICD-9 and ICD-10 MS-DRGs Definitions Manual Files in Appendix D—MS-DRG Surgical Hierarchy by MDC and MS-DRG, which is available via the Internet on the CMS Web site at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​FY2016-IPPS-Final-Rule-Home-Page-Items/​FY2016-IPPS-Final-Rule-Data-Files.html?​DLPage=​1&​DLEntries=​10&​DLSort=​0&​DLSortDir=​ascending. Therefore, we stated in the proposed rule that if the proposal is finalized for FY 2017, cases reporting ICD-10-PCS procedure code 02UG3JZ will group to MS-DRG 228 and revised MS-DRG 229 versus MS-DRGs 231 and 232 because of the surgical hierarchy GROUPER logic.

As a result, in the FY 2017 IPPS/LTCH PPS proposed rule, we proposed to remove ICD-10-PCS procedure code 02UG3JZ and ICD-9-CM procedure code 35.97 from the PTCA list in MS-DRGs 231 and 232 (Coronary Bypass with PTCA with MCC and without MCC, respectively) for FY 2017 if the proposal to reassign ICD-9-CM procedure code 35.97 and the cases reporting ICD-10-PCS procedure codes 02UG3JZ from MS-DRGs 273 and 274 to MS-DRG 228 and proposed revised MS-DRG 229 is finalized. We invited public comments on our proposals.

Comment: A large number of commenters supported the proposal to reassign ICD-9-CM procedure code 35.97 and ICD-10-PCS procedure code 02UG3JZ, which describe a mitral valve repair procedure involving the MitraClip®, from MS-DRGs 273 and 274 to MS-DRG 228 and proposed revised MS-DRG 229. Commenters stated that patient access to the procedure has been very restricted at their institutions due to the financial hardship that results from the current payment inadequacies. Several commenters noted that mitral valve interventions are an integral part of their organizations structural heart disease programs and stated that, with the expiration of the new technology add-on payment effective September 30, 2016, the insufficient payment amount and issues with patient access would only increase.

Other commenters reported that these high-risk degenerative mitral valve patients have no alternative options, are not surgical candidates for open procedures, are generally older, more complex to treat and require greater resources by a multidisciplinary heart team; therefore, the commenters urged CMS to finalize the proposal. According to the commenters, the procedure is labor and time intensive with a higher complexity than traditional percutaneous procedures. Commenters also stated the proposed modifications to the MS-DRG structure will enable more patients to have an improved quality of life. These commenters stated that, for the patients who actually receive a mitral valve repair procedure with the MitraClip®, they have witnessed improved clinical outcomes, such as improvements in their NYHA class designation and walk distances. Other commenters described how patients' families shared the impact of what it meant for their family member to have a new outlook on life after having undergone the procedure. A number of commenters also pointed out the cost savings to Medicare with the procedure, which they stated were evidenced by reduced lengths of stay and decreased heart failure readmissions.

Conversely, a few commenters opposed the proposal to modify the structure of MS-DRGs 228, 229, and 230. These commenters recommended that the only changes made should be for replication of the ICD-9-CM MS-DRG logic. These commenters suggested that, because FY 2016 is the first year of implementation in which CMS will have ICD-10 claims data, CMS allow the data to stabilize prior to evaluating for any proposed changes. The commenters stated that replication is important because both the logic for the proposed MS-DRGs and the data source used to calculate and develop the proposed relative payment weights are based on the same ICD-9-CM MedPAR claims data.

Response: We appreciate the commenters' support of our proposal. With regard to the commenters who opposed the proposal to modify the structure of MS-DRGs 228, 229, and 230 and recommended that the only changes made should be for replication of the ICD-9-CM MS-DRG logic as noted and illustrated in the tables above, the proposal to revise the structure of MS-DRGs 228, 229, and 230 was based on the analysis of claims data from the December 2015 update of the FY 2015 MedPAR file on reported cases of percutaneous mitral valve repair with implant (ICD-9-CM procedure code 35.97) in the ICD-9 based MS-DRGs 273 and 274. The ICD-9-CM data and our clinical advisors supported the reassignment of ICD-9-CM procedure code 35.97 from ICD-9-CM MS-DRGs 273 and 274 to restructured ICD-9-CM MS-DRGs 228 and 229. Therefore, the proposal for restructuring the ICD-10 MS-DRGs is in fact replicating the ICD-9-CM MS-DRG logic that was finalized.

Consistent with how the current FY 2016 relative payment weights are based on the ICD-9-CM diagnosis and procedure codes from the FY 2014 MedPAR claims data that were grouped through the ICD-9-CM version of the FY 2016 GROUPER Version 33, the FY 2017 relative payment weights are based on the ICD-9-CM diagnosis and procedure codes from the FY 2015 MedPAR claims data that were grouped through the ICD-9-CM version of the FY 2017 GROUPER Version 34. We note that we have made the MS-DRG GROUPER and MCE ICD-9-CM Software Version 34 available to the public for use in analyzing ICD-9-CM data to create relative payment weights using ICD-9-CM data on our CMS Web site at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​FY2016-IPPS-Final-Rule-Home-Page.html?​DLSort=​0&​DLEntries=​10&​DLPage=​1&​DLSortDir=​ascending.

After consideration of the public comments we received, we are finalizing our proposal to collapse MS-DRGs 228, 229, and 230 from three severity levels to two severity levels by Start Printed Page 56813deleting MS-DRG 230 and revising MS-DRG 229. We also are finalizing our proposal to reassign ICD-9-CM procedure code 35.97 and the cases reporting ICD-10-PCS procedure code 02UG3JZ (Supplement mitral valve with synthetic substitute, percutaneous approach) from MS-DRGs 273 and 274 to MS-DRG 228 and revised MS-DRG 229. The title of revised MS-DRG 229 is finalized as follows to reflect the “without MCC” designation, “Other Cardiothoracic Procedures without MCC”. The title for MS-DRG 228 is finalized as “MS-DRG 228 (Other Cardiothoracic Procedures with MCC)”. In addition, we are finalizing our proposal to remove ICD-10-PCS procedure code 02UG3JZ and ICD-9-CM procedure code 35.97 from the PTCA list in MS-DRGs 231 and 232 (Coronary Bypass with PTCA with MCC and without MCC, respectively) for FY 2017. All of these finalized modifications are effective October 1, 2016.

e. MS-DRG 245 (AICD Generator Procedures)

In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49369), we stated that we would continue to monitor MS-DRG 245 (AICD Generator Procedures) to determine if the data supported subdividing this base MS-DRG into severity levels. As displayed in the table below, the results of the FY 2015 data analysis showed there were a total of 1,464 cases, with an average length of stay of 5.5 days and average costs of $34,564 for MS-DRG 245.

AICD Generator Procedures

MS-DRGNumber of casesAverage length of stayAverage costs
MS-DRG 2451,4645.5$34,564

We applied the five criteria established in the FY 2008 IPPS final rule (72 FR 47169), as described in section II.F.1.b. of the preamble of the proposed rule and this final rule to determine if it was appropriate to subdivide MS-DRG 245 into severity levels. The table below illustrates our findings.

AICD Generator Procedures

MS-DRG by suggested severity levelNumber of casesAverage length of stayAverage costs
MS-DRG 245—with MCC4498.37$40,175
MS-DRG 245—with CC8614.5932,518
MS-DRG 245—without CC/MCC1542.8629,646

As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24988 through 24989), based on our analysis of claims data from the December 2015 update of the FY 2015 MedPAR file, the data findings did not support creating new severity levels. The findings showed that the data do not meet the criteria for a 3-way severity level split as the criterion that there be at least a 20-percent difference in average costs between subgroups is not met for the “with CC” and “without CC/MCC” severity levels. We also looked at the prospect of a 2-way severity level split.

AICD Generator Procedures

MS-DRG by suggested severity levelNumber of casesAverage length of stayAverage costs
MS-DRG 245—with MCC4498.37$40,175
MS-DRG 245—without MCC1,0154.3332,081

The findings did show that the data are close to meeting the criteria for a 2-way severity level split of “with MCC and without MCC.” However, the required criterion that there must be at least 500 cases in the MCC group is not met.

Therefore, for FY 2017, we did not propose to subdivide MS-DRG 245 into severity levels. We invited public comments on our proposal to maintain the current structure for MS-DRG 245.

Comment: Commenters supported the proposal not to subdivide MS-DRG 245 into severity levels. One commenter agreed that volumes were not sufficient to justify a three-way split in the AICD generator procedures, but neared meeting the levels required for a two-way split (with MCC and without MCC). The commenter requested that we examine the issue for a two-way split again next year.

Response: We appreciate the commenters' support. We agree that the criteria were not met to support the subdivision of MS-DRG 245 into severity levels for FY 2017. We will continue to monitor MS-DRG 245 claim data as we analyze issues for the FY 2018 IPPS/LTCH PPS proposed rule.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current structure of MS-DRG 245 (AICD Generator Procedures) for FY 2017.

6. MDC 6 (Diseases and Disorders of the Digestive System): Excision of Ileum

We received a request to analyze an MS-DRG replication issue from the ICD-9-CM based MS-DRGs to the ICD-10 based MS-DRGs for excision procedures performed on the ileum. Under ICD-9-CM, procedure code 45.62 (Other partial resection of small intestine) was assigned to MS-DRGs 329, 330 and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively). Under the current ICD-10 MS-DRGs Start Printed Page 56814Version 33, ICD-10-PCS procedure code 0DBB0ZZ (Excision of ileum, open approach) is assigned to MS-DRGs 347, 348, and 349 (Anal and Stomal Procedures with MCC, with CC, and without CC/MCC, respectively). The requestor indicated that, despite the variation in terms for “excision” and “resection” between the two code sets, the surgical procedure to remove a portion of the small intestine, whether it is the ileum, duodenum, or jejunum, has not changed and should not result in different MS-DRG assignments when translated from ICD-9-CM to ICD-10.

We agree that this is a replication error. In addition to ICD-10-PCS code 0DBB0ZZ, we also reviewed the MS-DRG assignments for ICD-10-PCS code 0DBA0ZZ (Excision of jejunum, open approach) and determined the MS-DRG assignment for this code resulted in the same replication error. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24989), we proposed to reassign ICD-10-PCS codes 0DBB0ZZ and 0DBA0ZZ from MS-DRGs 347, 348, and 349 to MS-DRGs 329, 330, and 331, effective with the ICD-10 MS-DRGs Version 34 on October 1, 2016.

We invited public comments on our proposal.

Comment: Many commenters supported our proposal to reassign two ICD-10-PCS procedure codes that identify excision procedures performed on the ileum and jejunum. The commenters believed that the proposal was reasonable, given the data, the ICD-10-PCS codes, and the information provided. One commenter recommended that CMS reassign ICD-10-PCS procedure code 0DB90ZZ (Excision of duodenum, open approach) to ICD-10 MS-DRGs 329, 330, and 331, noting that, as stated in the proposed rule, the requester indicated the surgical procedure to remove a portion of the small intestine, whether it is the ileum, duodenum, or jejunum, has not changed and should not result in different MS-DRG assignments when translated from ICD-9-CM to ICD-10.

Response: We appreciate the commenters' support of our proposal. In response to the commenter's recommendation that we also reassign ICD-10-PCS procedure code 0DB90ZZ to ICD-10 MS-DRGs 329, 330, and 331, we note that, under ICD-9-CM, procedure code 45.31 (Other local excision of lesion of duodenum) is the comparable translation and was assigned to ICD-9 based MS-DRGs 326, 327, and 328 (Stomach, Esophageal and Duodenal Procedures with MCC, with CC and without CC/MCC, respectively). We did not include ICD-10-PCS procedure code 0DB90ZZ in our proposal because, upon review, we determined that this code is currently assigned to ICD-10 MS-DRGs 326, 327, and 328 (Stomach, Esophageal and Duodenal Procedures with MCC, with CC and without CC/MCC, respectively), and therefore, is accurately replicating the ICD-9 based MS-DRG logic.

After consideration of the public comments we received, we are finalizing our proposal to reassign ICD-10-PCS procedure codes 0DBB0ZZ (Excision of ileum, open approach) and 0DBA0ZZ (Excision of jejunum, open approach) from MS-DRGs 347, 348, and 349 (Anal and Stomal Procedures with MCC, with CC, and without CC/MCC, respectively) to MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively) effective with the ICD-10 MS-DRGs Version 34 on October 1, 2016.

7. MDC 7 (Diseases and Disorders of the Hepatobiliary System and Pancreas): Bypass Procedures of the Veins

We received a request to assign ICD-10-PCS code 06183DY (Bypass portal vein to lower vein with intraluminal device, percutaneous approach) to MDC 7 (Diseases and Disorders of the Hepatobiliary System and Pancreas) under MS-DRGs 405, 406, and 407 (Pancreas Liver and Shunt Procedures with MCC, with CC, and without CC/MCC, respectively). The requestor described this code as capturing a transjugular intrahepatic portosystem shunt procedure. The requestor stated that, under ICD-9-CM, when a procedure for cirrhosis of the liver was performed, the procedure was assigned to ICD-9-CM code 39.1 (Intra-abdominal venous shunt). The requestor noted that when ICD-9-CM procedure code 39.1 is reported with a principal diagnosis of cirrhosis of the liver, the procedure was assigned to MS-DRG 405, 406, or 407 in the ICD-9-CM MS-DRGs.

Currently, ICD-10-PCS procedure code 06183DY is assigned to only MDC 5 (Diseases and Disorders of the Circulatory System) and MS-DRGs 270, 271, and 272 (Other Major Cardiovascular Procedures with MCC, with CC, and without CC/MCC, respectively) under ICD-10 MS-DRGs Version 33. The requestor stated that ICD-10-PCS procedure code 06183DY should also be assigned to MDC 7 and MS-DRGs 405, 406, and 407 to be consistent with the ICD-9-CM MS-DRGs Version 32.

We analyzed this issue and agreed that the ICD-10 MS-DRGs do not fully replicate the ICD-9-CM MS-DRGs. We agree that ICD-10-PCS procedure code 06183DY should be assigned to MDC 7 and MS-DRGs 405, 406, and 407 to replicate the ICD-9-CM MS-DRGs. Our clinical advisors reviewed this issue and also agreed that ICD-10-PCS procedure code 06183DY should be assigned to MDC 7 and MS-DRGs 405, 406, and 407. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24989), we proposed to assign ICD-10-PCS procedure code 06183DY to MDC 7 and MS-DRGs 405, 406, and 407 for FY 2017.

We invited public comments on our proposal.

Comment: Commenters supported the proposal to assign ICD-10-PCS procedure code 06183DY to MDC 7 under MS-DRGs 405, 406, and 407. One commenter stated that the proposed change to MDC 7 and MS-DRGs 405, 406, and 407 is a more appropriate fit for ICD-10-PCS procedure code 06183DY.

Response: We appreciate the commenters' support of our proposal.

After consideration of the public comments we received, we are finalizing our proposal to assign ICD-10-PCS code 06183DY (Bypass portal vein to lower vein with intraluminal device, percutaneous approach) to MDC 7 (Diseases and Disorders of the Hepatobiliary System and Pancreas) under MS-DRGs 405, 406, and 407 (Pancreas Liver and Shunt Procedures with MCC, with CC, and without CC/MCC, respectively).

8. MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue)

a. Updates to MS-DRGs 469 and 470 (Major Joint Replacement or Reattachment of Lower Extremity With and Without MCC, Respectively)

(1) Total Ankle Replacement (TAR) Procedures

We received a request to create a new MS-DRG for total ankle replacement (TAR) procedures, which are currently assigned to MS-DRGs 469 and 470 (Major Joint Replacement or Reattachment of Lower Extremity with and without MCC, respectively). We previously discussed requested changes to the MS-DRG assignment for TAR procedures in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28013 through 28015) and in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49896 through 49899). For FY 2015, we did not change the MS-DRG assignment for total ankle replacements. The requestor stated that reassigning total ankle replacement procedures from MS-DRGs 469 and 470 to a new MS-DRG would have an important benefit for the new Start Printed Page 56815Medicare Comprehensive Care for Joint Replacement (CJR) model. The commenter noted that because total ankle replacement cases currently are assigned to MS-DRGs 469 and 470, they are included in the model.

Ankle replacement procedures were captured by ICD-9-CM code 81.56 (Total ankle replacement). As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24989 through 24990), we examined claims data for total ankle procedures using the December 2015 update of the FY 2015 MedPAR file. Our findings are displayed in the table below.

Total Ankle Replacement Cases Reported in MS-DRGs 469 and 470

MS-DRGNumber of casesAverage length of stayAverage costs
MS-DRG 469—All cases25,7296.92$22,358
MS-DRG 469—Total ankle replacement cases305.4034,889
MS-DRG 470—All cases421,1492.9214,834
MS-DRG 470—Total ankle replacement cases1,6261.9420,019

As the total ankle replacement claims data analysis showed, these procedures represent a small fraction of the total number of cases reported in MS-DRGs 469 and 470. There were 30 total ankle replacement cases reported in MS-DRG 469 and 1,626 total ankle replacement cases in MS-DRG 470, compared to 25,729 total cases reported in MS-DRG 469 and 421,149 total cases reported in MS-DRG 470. The average length of stay for total ankle replacement cases was 5.40 days and average costs for total ankle replacement cases were $34,889 reported in MS-DRG 469, compared to average length of stay of 6.92 days and average costs of $22,358 for all cases reported in MS-DRG 469. The average length of stay for total ankle replacement cases was 1.94 days and average costs of total ankle replacement cases were $20,019 reported in MS-DRG 470, compared to an average length of stay of 2.92 days and average costs of $14,834 for all cases reported in MS-DRG 470.

Given the low volume of cases, we stated in the proposed rule that we believe these cost data may not be a complete measure of actual differences in inpatient resource utilization for beneficiaries receiving total ankle replacements. In addition, these total ankle replacement cases may have been impacted by other factors such as complication or comorbidities. Several expensive cases could impact the average costs for a very small number of patients. The average cost of total ankle replacement cases reported in MS-DRG 469 was $12,531 higher than all cases reported in MS-DRG 469 ($34,889 compared to $22,358 for all reported cases), but there were only 30 cases compared to a total of 25,729 cases reported in MS-DRG 469. The average cost of total ankle replacement cases reported in MS-DRG 470 was $5,185 higher than all cases reported in MS-DRG 470. There were 1,626 total ankle replacement cases out of a total of 421,149 cases reported in MS-DRG 470. The average costs of the total ankle replacement cases were higher than those for all cases reported in MS-DRG 469 and 470. However, some cases have higher and some cases have lower average costs within any MS-DRG. MS-DRGs are groups of clinically similar cases that have similar overall costs. Within a group of cases, one would expect that some cases have costs that are higher than the overall average and some cases have costs that are lower than the overall average.

The data did not support creating a new total ankle replacement MS-DRG for this small number of cases. Also, our clinical advisors pointed out that creating a new MS-DRG for total ankle replacements would result in combining cases reporting an MCC with an average length of stay of 5.40 days and cases not reporting an MCC with an average length of stay of 1.94 days. Our clinical advisors did not recommend the creation of a new MS-DRG for this single procedure with such a small number of cases. They also stated that patients undergoing total ankle replacement have similar clinical features compared to other patients undergoing procedures included in MS-DRGs 469 and 470. Furthermore, we believe that the volume of total ankle replacement procedures performed relative to hip and knee replacement procedures minimizes the benefit that a new MS-DRG would have on the Medicare CJR model. Our clinical advisors determined that the cases involving total ankle replacements are more appropriately assigned to MS-DRGs 469 and 470 with the two severity levels.

Based on the findings from our data analysis and the recommendations from our clinical advisors, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24989 through 24990), we did not propose to create a new MS-DRG for total ankle replacement procedures. We proposed to maintain the current MS-DRG structure for MS-DRGs 469 and 470.

We invited public comments on this proposal.

Comment: Some commenters supported the proposal to maintain the current MS-DRG structure for revision of total ankle replacement procedures within MS-DRGs 469 and 470 and not create a new MS-DRG for total ankle replacements. Several of the commenters stated that the proposal was reasonable, given the data, the ICD-10-PCS codes, and the information provided.

Response: We appreciate the commenters' support for our proposal.

Comment: Several commenters disagreed with the proposal not to create a new MS-DRG for total ankle replacement procedures and to maintain the current MS-DRG structure for MS-DRGs 469 and 470 for total ankle replacement procedures. The commenters stated that the current MS-DRG assignment for TAR procedures was inadequate to reflect the actual cost and complexity of these procedures. The commenters stated that the combined total ankle replacement cases in MS-DRGs 469 and 470 exceeds the minimum number of cases (500) in the criterion which CMS established for consideration of a distinct MS-DRG group. Therefore, the commenters believed that CMS should create a new MS-DRG for total ankle replacements.

The commenters stated that the MS-DRG assignment was impacting Medicare beneficiary access to total ankle replacement as an alternative to an arthrodesis (fusion) of the ankle joint. The commenters further stated that there were significant dissimilarities in the inpatient hospital costs and length of stay, and different postoperative and postdischarge care and rehabilitation protocols for total ankle replacement procedures.Start Printed Page 56816

One commenter objected to CMS' comparison of the volume of total ankle replacement cases to total hip and knee cases within MS-DRG 469 and 470 and the statement that, within the inpatient prospective payment system framework, some cases have higher and some cases have lower average costs within any MS-DRG. The commenter stated that CMS' statements about possible explanations for the higher costs of total ankle replacement cases within MS-DRGs 469 and 470 does not change the fact that the total ankle replacement cases have higher costs than all cases within MS-DRGs 469 and 470. The commenter stated that total ankle replacement cases have a greater clinical complexity compared to other procedures within MS-DRGs 469 and 470. The commenter stated that a total ankle replacement procedure was a complicated surgery that involved the replacement of the damaged parts of the three bones that make up the ankle joint, as compared to two bones in hip and knee replacement procedures. Furthermore, as the smallest weight-bearing large joint in the body, the commenter stated that total ankle replacement demanded a complexity of implant device design, engineering, and manufacture to exacting functional specifications that is vastly different from that of total hip and total knee replacement devices. In addition, the commenter stated that the unique anatomical characteristics and function of the ankle joint requires a specialized surgical skill set, operative technique, and level of operating room resource utilization that is vastly dissimilar from that of total hip and total ankle replacement procedures.

Another commenter stated that accurate representation of patients within each MS-DRG is an important step for fair payment and analysis. The commenter believed that reassigning fractures and ankle procedures from MS-DRGs 469 and 470 would help to accomplish that purpose. Another commenter asked that CMS reexamine the appropriate MS-DRG assignment for total ankle replacement procedures once ICD-10 claims data are available.

Response: We disagree with the commenters' statement that the number of total ankle replacement cases in MS-DRGs 469 and 470 justifies the creation of a new MS-DRG based on the criterion of there being more than 500 cases. The criterion the commenters mentioned is part of criteria established in FY 2008 (72 FR 47169) to determine if the creation of a new CC or MCC subgroup within a base MS-DRG was warranted (which was discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24971)), but is not determinative of whether a new MS-DRG should be created.

As stated earlier, the data showed that the average costs of total ankle replacement cases were higher than the average costs for all cases reported in MS-DRG 469 and 470. We found that the average costs of total ankle replacement procedures were higher in MS-DRG 469 ($34,889 compared to $22,358 for all cases) and in MS-DRG 470 ($20,019 compared to $14,834 for all cases). However, there were only 30 total ankle replacement cases in MS-DRG 469 out of 25,729 total cases. There were only 1,626 cases in MS-DRG 470 out of 421,149 cases.

As we explained in the proposed rule, given the low volume of cases, we believe that these cost data may not be a complete measure of actual differences in inpatient resource utilization for beneficiaries receiving total ankle replacements. Several expensive cases could impact the average costs for a very small number of patients. MS-DRGs are groups of clinically similar cases that have similar overall costs. Within a group of cases, one would expect that some cases have costs that are higher than the overall average and some cases have costs that are lower than the overall average. While the commenters disagreed with this approach to classifying similar procedures within a set of MS-DRGs, our clinical advisors reviewed the procedures assigned within MS-DRGs 469 and 470 and determined that patients undergoing total ankle replacement have similar clinical features compared to other patients undergoing procedures included in MS-DRGs 469 and 470. The clinical differences are not great enough to justify the creation of a new MS-DRG. While the ankle may be the smallest weight-bearing joint in the body and the devices used may be more costly, the joint repairs of the lower extremity are clinically similar. The clinical expertise used by surgeons performing ankle procedures versus the clinical expertise required to perform other lower joint procedures does not justify creating a new MS-DRG. Our clinical advisors determined that the cases involving total ankle replacements are appropriately assigned to MS-DRGs 469 and 470 with the two severity levels.

In response to the commenter's request that CMS reexamine the appropriate MS-DRG assignment for total ankle replacement procedures once ICD-10 claims data are available, we encourage requests for MS-DRG updates to be submitted by December 7 of each year via the new CMS MS-DRG Classification Change Requests Mailbox located at: MSDRGClassificationChange@cms.hhs.gov. Once ICD-10 claims dara are received, we will use these data to evaluate MS-DRG assignments.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current MS-DRG assignment for total ankle replacements in MS-DRGs 469 and 470 and not create a new MS-DRG for total ankle replacements.

(2) Hip Replacement Procedures With Principal Diagnosis of Hip Fracture

We received several requests to remove hip replacement procedures with a principal diagnosis of hip fracture from MS-DRGs 469 and 470 (Major Joint Replacement or Reattachment of Lower Extremity with and without MCC, respectively) and to create a new MS-DRG for assignment of these hip replacement procedures. One requestor suggested that if such a new MS-DRG could not be created, CMS consider reassigning all hip replacement procedures with a principal diagnosis of hip fracture only to MS-DRG 469, even if there were no reported MCC.

The requestors stated that hip replacement procedures performed on patients with hip fractures involve a more fragile population of patients than the typical patient population who undergo elective hip or knee replacement and that these more fragile patient cases also are assigned to MS-DRGs 469 and 470. The requestors stated that cases of patients who have hip replacements with hip fractures may have significant comorbidities not present in patients who undergo elective hip replacements. One requestor stated that the absolute number of hospitalizations for hip fractures in the United States is currently more than 350,000 and the number is rising. The requestor stated that 90 percent of hip fractures result from a simple fall, and that hip fracture rates increase with age. According to the requestor, the 1-year mortality rate for patients who undergo hip replacement procedures after a hip fracture was approximately 20 percent, and the 3-year mortality rate was up to 50 percent. The requestor also stated that one out of three adults who lived independently before their hip fracture remains in a nursing home for at least a year after the hip fracture. In contrast, the requestor noted that patients under elective hip replacement procedures for arthritis have fewer comorbidities, improved health after the procedure, low rates of readmission, and less postacute needs. The requestor believed that there are Start Printed Page 56817many factors that impact the outcome of hip replacements for hip fractures, including patient factors, fracture type, surgeon and hospital factors, treatment decisions, complication rates, and rehabilitation factors/access. The requestor added that, despite the commitment to standardization, the use of protocol-driven care, early surgery (< 24 hours) after surgical optimization, prevention of recurrent fractures, and comanagement with medical/surgical teams, many patients who undergo hip replacement procedures for hip fractures have serious renal, cardiovascular, and liver disease, as well as multiple medical comorbidities. The rates of postoperative infections, readmissions, and postacute care for the patients who undergo hip replacements for hip fractures are higher than for patients who undergo elective hip replacement. Some requestors referenced the Bundled Payments for Care Improvement Initiative (BPCI) and believed that their requested changes to MS-DRGs 469 and 470 would support this effort. The requestors stated that the MS-DRG assignment for the hip replacement procedures with hip fractures has tremendous implications for successful participation in the BPCI because the BPCI's clinical episodes track to MS-DRG assignment, and the Major Joint Replacement of the Lower Extremity Clinical Episode encompasses procedures assigned to MS-DRGs 469 and 470. Alternatively, the requestors suggested that CMS reassign all cases of hip replacement procedures with a principal diagnosis of hip fracture to MS-DRG 469 to recognize the more significant adverse health profile of these types of cases.

As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24990 through 24992), we examined claims data for cases reporting hip replacement procedures for patients admitted with hip fractures under MS-DRGs 469 and 470 in the December 2015 update of the FY 2015 MedPAR file. We used the following list of ICD-9-CM diagnosis codes to identify cases representing hip replacements for hip fractures:

ICD-9-CM Diagnosis Codes Reviewed for Cases Representing Hip Replacement for Hip Fractures

ICD-9-CM diagnosis codeDescriptions
733.14Pathological fracture of neck of femur.
733.15Pathological fracture of other specified part of femur.
733.81Malunion of fracture.
733.82Nonunion of fracture.
733.96Stress fracture of femoral neck.
808.0Closed fracture of acetabulum.
808.1Open fracture of acetabulum.
820.8Fracture of unspecified part of neck of femur closed.
820.9Fracture of unspecified part of neck of femur open.
820.00Fracture of unspecified intracapsular section of neck of femur closed.
820.01Fracture of epiphysis (separation) (upper) of neck of femur closed.
820.02Fracture of midcervical section of femur closed.
820.03Fracture of base of neck of femur closed.
820.09Other transcervical fracture of femur closed.
820.10Fracture of unspecified intracapsular section of neck of femur open.
820.11Fracture of epiphysis (separation) (upper) of neck of femur open.
820.12Fracture of midcervical section of femur open.
820.13Fracture of base of neck of femur open.
820.19Other transcervical fracture of femur open.
820.20Fracture of unspecified trochanteric section of femur closed.
820.21Fracture of intertrochanteric section of femur closed.
820.22Fracture of subtrochanteric section of femur closed.
820.30Fracture of unspecified trochanteric section of femur open.
820.31Fracture of intertrochanteric section of femur open.
820.32Fracture of subtrochanteric section of femur open.

Our findings from our examination of the data are shown in the table below.

Cases of Hip Replacements With and without Principal Diagnosis of Hip Fracture

MS-DRGNumber of casesAverage length of stayAverage costs
MS-DRG 469—All cases25,7296.9$22,358
MS-DRG 469—Hip replacement cases with hip fractures14,4597.922,852
MS-DRG 469—Hip replacement cases without hip fractures4,7145.722,430
MS-DRG 470—All cases421,1492.914,834
MS-DRG 470—Hip replacement cases with hip fractures49,7034.715,795
MS-DRG 470—Hip replacement cases without hip fractures125,6072.614,870

For MS-DRG 469, the average costs of all 25,729 reported cases were $22,358 and the average length of stay was 6.9 days. Within MS-DRG 469, there were 14,459 cases of hip replacements with hip fractures reported, with average costs of $22,852 and an average length of stay of 7.9 days. Within MS-DRG 469, there were 4,714 cases of hip replacements without hip fractures reported, with average costs of $22,430 and an average length of stay of 5.7 Start Printed Page 56818days. The average costs of reported cases of hip replacements with hip fractures are similar to the average costs of all cases reported within MS-DRG 469 ($22,852 compared to $22,358), and to the average costs of reported cases of hip replacements without hip fractures ($22,852 compared to $22,430). However, the average length of stay for cases of hip replacements with hip fractures reported in MS-DRG 469 is higher than the average length of stay for all cases reported in MS-DRG 469 and for cases of hip replacements without hip fractures reported in MS-DRG 469 (7.9 days compared to 6.9 days and 5.7 days, respectively.)

For MS-DRG 470, the average costs of all 421,149 cases reported were $14,834 and the average length of stay was 2.9 days. Within MS-DRG 470, there were 49,703 reported cases of hip replacements with hip fractures, with average costs $15,795 and an average length of stay of 4.7 days. Within MS-DRG 470, there were 125,607 cases of hip replacements without hip fractures reported, with average costs of $14,870 and an average length of stay of 2.6 days. However, the average length of stay for cases of hip replacements with hip fractures reported in MS-DRG 470 was higher than the average length of stay for all cases and for cases of hip replacements without hip fractures reported in MS-DRG 470 (4.7 days compared to 2.9 days and 2.6 days, respectively). Therefore, the average costs of cases of hip replacements with hip fractures were similar for both MS-DRG 469 and MS-DRG 470 ($22,852 compared to $22,358 and $15,795 compared to $14,834, respectively). However, the average lengths of stay are longer for cases of hip replacements with hip fractures compared to all cases reported in both MS-DRGs 469 and 470 (7.9 days compared to 6.9 days and 4.7 days compared to 2.9 days, respectively).

The claims data did not support creating a new MS-DRG for the assignment of cases of hip replacements with hip fractures. As discussed earlier, the average costs for cases of hip replacements with hip fractures reported in MS-DRG 469 and MS-DRG 470 are similar to the average costs for all cases reported in MS-DRG 469 and MS-DRG 470. While the average length of stay is longer for cases of hip replacements with hip fractures than for cases of hip replacements without hip fractures reported within MS-DRGs 469 and 470, the increased length of stay did not impact the average costs of reported cases in either MS-DRG 469 or 470. The data showed that cases of hip replacement procedures are clearly influenced by the presence of an MCC. The average costs of all cases reported in MS-DRG 469, which identifies an MCC, were $22,358, compared to average costs of $14,834 for all cases reported in MS-DRG 470, which did not identify an MCC. The data showed that the presence of a principal diagnosis of a hip fracture did not impact the average costs of cases reported in either MS-DRG 469 or MS-DRG 470.

We also examined the data in relation to the request to reassign all procedures of hip replacement with hip fractures from MS-DRG 470 to MS-DRG 469, even if there is no MCC present. The data showed that the 49,703 cases of hip replacements with hip fractures reported in MS-DRG 470 have average costs of $15,795 and an average length of stay of 4.7 days. The 25,729 total cases of hip replacements reported in MS-DRG 469 have average costs of $22,358 and an average length of stays of 6.9 days. Therefore, the data for average costs and average length of stay for all cases involving hip replacement procedures with hip fractures reported in MS-DRG 470 do not support reassigning all cases of hip replacement procedures with hip fractures to MS-DRG 469, even if there is no MCC present.

Our clinical advisors reviewed this issue and agreed that the hip replacement procedures performed for patients with hip fractures are appropriately assigned to MS-DRGs 469 and 470. They did not support reassigning these procedures from MS-DRGs 469 and 470 to a new MS-DRG or reassigning all cases of hip replacement procedures with hip fractures to MS-DRG 469, even if the case does not have an MCC. Our clinical advisors stated that the surgical techniques used for hip replacements are similar for all patients. They advised that the fact that some patients also had a hip fracture would not justify creating a new MS-DRG or reassigning all cases of hip replacement procedures with hip fractures to MS-DRG 469. Our clinical advisors noted that the costs of cases of hip replacements are more directly impacted by the presence or absence of an MCC than the presence or absence of a hip fracture.

Based on the findings from our data analyses and the recommendations from our clinical advisors, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24990 through 24992), we did not propose to create a new MS-DRG for the assignment of procedures involving hip replacement in patients who have hip fractures or to reassign all procedures involving hip replacements with hip fractures to MS-DRG 469 even if there is no MCC present. We proposed to maintain the current MS-DRG structure for MS-DRGs 469 and 470.

We invited public comments on our proposals.

Comment: Several commenters supported the proposal to maintain the current MS-DRG structure for hip replacement procedures with a principal diagnosis of hip fractures within MS-DRGs 469 and 470. They did not support the creation of a new MS-DRG for hip replacement procedures with a principal diagnosis of hip fractures. The commenters stated that the proposal was reasonable, given the data, the ICD-10-CM and ICD-10-PCS codes, and the information provided.

Response: We appreciate the commenters' support for the proposal.

Comment: Several commenters expressed concern with the current MS-DRG assignment for hip replacement procedures with a principal diagnosis of hip fractures. One commenter recommended that CMS consider creating an MS-DRG or reassigning all hip replacement procedures with a principal diagnosis of hip fracture only to MS-DRG 469, even if there were no reported MCC. The commenter recognized that the claims data presented in the proposed rule did not show significantly different average costs for hip replacement procedures with a principal diagnosis of hip fractures. However, the commenter stated that the average length of stay and the patient profile are different for hip replacement procedures with a principal diagnosis of hip fractures.

Response: We agree with the commenter that the claims data do not show significant differences between the average costs for hip replacement procedures with a principal diagnosis of hip fractures and those without a hip fracture. For this reason and the reasons stated in the proposed rule, the claims data did not support creating a new MS-DRG for the assignment of cases of hip replacements with hip fractures. As discussed in the proposed rule and earlier in this final rule, the average costs for cases of hip replacements with hip fractures reported in MS-DRG 469 and MS-DRG 470 are similar to the average costs for all cases reported in MS-DRG 469 and MS-DRG 470. While the average length of stay is longer for cases of hip replacements with hip fractures than for cases of hip replacements without hip fractures reported within MS-DRGs 469 and 470, the increased length of stay did not impact the average costs of reported cases in either MS-DRG 469 or 470. In response to the commenter's recommendation that CMS consider Start Printed Page 56819reassigning all hip replacement procedures with a principal diagnosis of hip fracture only to MS-DRG 469, even if there is no reported MCC, we also examined the data in relation to the request to reassign all procedures of hip replacement with hip fracture to MS-DRG 469, even if there is no reported MCC. As discussed in the proposed rule and earlier in this final rule, the data for average costs and average length of stay for all cases involving hip replacement procedures with hip fractures reported in MS-DRG 470 do not support reassigning all cases of hip replacement procedures with hip fractures to MS-DRG 469, even if there is no MCC present.

After consideration of the public comments we received, we are finalizing our proposal to maintain the MS-DRG assignment for hip replacements with a principal diagnosis of hip fractures in MS-DRGs 469 and 470 and not create a new MS-DRG for hip replacements with a principal diagnosis of hip fractures.

b. Revision of Total Ankle Replacement Procedures

(1) Revision of Total Ankle Replacement Procedures

We received a request to modify the MS-DRG assignment for revision of total ankle replacement procedures. Currently, these procedures are assigned to MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue O.R. Procedures with MCC, with CC and without CC/MCC, respectively). This topic was discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28013 through 28015) and the FY 2015 IPPS/LTCH PPS final rule (79 FR 49896 through 49899). However, at that time, we did not change the MS-DRG assignment for revisions of total ankle replacement procedures.

The requestor presented two options for consideration for modifying the MS-DRG assignment for the revisions of total ankle replacement procedures. The requestor's first option was to create a new MS-DRG for the assignment of revision of total ankle replacement procedures. The requestor believed that a new MS-DRG would be justified based on the distinct costs, resources, and utilization associated with ankle joint revision cases. The requestor's second option was to reassign revision of total ankle replacement procedures to MS-DRGs 466, 467, and 468 (Revision of Hip or Knee Replacement with MCC, with CC, and without CC/MCC, respectively) and rename MS-DRGs 466, 467, and 468 as “Revision of Hip, Knee, or Ankle with MCC, with CC, and without CC/MCC”, respectively. The requestor believed that this second option would be justified because it is a reasonable, temporary approach until CMS has sufficient utilization and cost data for revision of total ankle replacement procedures based on the reporting of the new and more specific ICD-10-PCS procedure codes. The requestor pointed out that the following more specific ICD-10-PCS procedure codes were implemented effective October 1, 2015, with the implementation of ICD-10. The requestor stated that these new codes will provide improved data on these procedures that can be analyzed for future MS-DRG updates.

ICD-10-PCS procedure codeDescription
0SWF0JZRevision of synthetic substitute in right ankle joint, open approach.
0SWF3JZRevision of synthetic substitute in right ankle joint, percutaneous. approach.
0SWF4JZRevision of synthetic substitute in right ankle joint, percutaneous endoscopic approach.
0SWFXJZRevision of synthetic substitute in right ankle joint, external approach.
0SWG0JZRevision of synthetic substitute in left ankle joint, open approach.
0SWG3JZRevision of synthetic substitute in left ankle joint, percutaneous approach.
0SWG4JZRevision of synthetic substitute in left ankle joint, percutaneous endoscopic approach.
0SWGXJZRevision of synthetic substitute in left ankle joint, external approach.

We agree with the requestor that the previous code used to identify revisions of total ankle replacement procedures, ICD-9-CM procedure code 81.59 (Revision of joint replacement of lower extremity, not elsewhere classified), is not as precise as the new ICD-10-PCS procedure codes that were implemented on October 1, 2015. As discussed in the FY 2015 IPPS/LTCH PPS proposed rule and final rule, ICD-9-CM procedure code 81.59 included procedures involving revisions of joint replacements of a variety of lower extremity joints, including the ankle, foot, and toe. Therefore, the ICD-9-CM procedure code does not provide precise information on the number of revisions of total ankle replacement procedures as do the ICD-10-PCS procedure codes listed above. We also agree that the ICD-10-PCS procedure codes will provide more precise data on revisions of ankle replacements.

As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24992 through 24993), we examined claims data from the December 2015 update of the FY 2015 MedPAR file on cases reporting procedure code 81.59 in MS-DRGs 515, 516, and 517. The table below shows our findings.

Revisions of Joint Replacements Procedures

MS-DRGNumber of casesAverage length of stayAverage costs
MS-DRG 515—All cases3,8528.54$21,900
MS-DRG 515—Cases reporting procedure code 81.5927.0036,983
MS-DRG 516—All cases8,5675.2414,839
MS-DRG 516—Cases reporting procedure code 81.59193.7414,957
MS-DRG 517—All cases5,6643.2012,979
MS-DRG 517—Cases reporting procedure code 81.59471.8916,524
Start Printed Page 56820

As can be seen from the data in the above table, there were only 68 total cases reported with procedure code 81.59 among MS-DRGs 515, 516, and 517: 2 cases in MS-DRG 515; 19 cases in MS-DRG 516; and 47 in MS-DRG 517. We point out that while there were 68 total cases reported with procedure code 81.59 in MS-DRGs 515, 516, and 517, we are unable to determine how many of these cases were actually revisions of ankle replacements versus other revisions of joint replacement of lower extremities such as those of the foot or toe. This small number of cases does not justify creating a new MS-DRG as suggested by the requestor in its first option.

While the average costs of cases reporting procedure code 81.59 in MS-DRG 515 were $36,983, compared to $21,900 for all cases reported in MS-DRG 515, there were only 2 cases reporting procedure code 81.59 in MS-DRG 515, of the 3,852 total cases reported in MS-DRG 515. In MS-DRG 516, the average costs of the 19 cases reporting procedure code 81.59 were $14,957, which is very close to the average costs of $14,839 for all 8,567 cases reported in MS-DRG 516. The average costs for cases reporting procedure code 81.59 in MS-DRG 517 were higher than the average costs for all cases reported in MS-DRG 517 ($16,524 for cases reporting procedure code 81.59 compared to $12,979 for all cases reported in MS-DRG 517). While the average costs for cases reporting procedure code 81.59 were $3,545 higher than all cases reported in MS-DRG 517, we point out that there were only 47 cases that reported procedure code 81.59 out of the 5,664 total cases reported in MS-DRG 517. The relatively small number of cases may have been impacted by other factors. Several expensive cases could impact the average costs for a very small number of patients.

As stated by the requestor, we do not yet have data using the more precise ICD-10-PCS revisions of total ankle replacement procedure codes that were implemented on October 1, 2015. These new codes will more precisely identify the number of patients who had a revision of total ankle replacement procedure and the number of patients who had revisions of other lower joint replacement procedures such as the foot or toe. The available clinical data from the December 2015 update of the FY 2015 MedPAR file do not support the creation of a new MS-DRG for the assignment of revisions of total ankle replacement procedures or the reassignment of these cases to other MS-DRGs, such as MS-DRGs 466, 467, and 468, because there were so few cases and because we could not determine how many of these cases were revisions of ankle replacements. Claims data on the ICD-10-PCS codes will not be available until 2 years after the implementation of the codes, which was October 1, 2015.

Our clinical advisors reviewed this issue and determined that the revision of total ankle replacement procedures are appropriately classified within MS-DRGs 515, 516, and 517 along with other orthopedic procedures captured by nonspecific codes. They did not support reassignment of the procedures to MS-DRGs 466, 467, and 468 until such time as detailed data for ICD-10-PCS claims are available to evaluate revision of total ankle replacement procedures. Therefore, based on the findings of our analysis of claims data and the advice of our clinical advisors, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24992 through 24993), we proposed to maintain the current MS-DRG assignment for revision of total ankle replacement procedures for FY 2017.

We invited public comments on our proposal.

Comment: Commenters supported the proposal to maintain the current MS-DRG structure for revision of total ankle replacement procedures within MS-DRGs 515, 516, and 517. The commenters stated that the proposal was reasonable, given the data, the ICD-10-PCS codes, and the information provided.

Response: We appreciate the commenters' support for the proposal.

Comment: One commenter expressed appreciation for CMS' analysis of the MS-DRG assignment for revision of total ankle replacement procedures within MS-DRGs 515, 516, and 517. The commenter agreed that these procedures were previously assigned to code 81.59 (Revision of joint replacement of lower extremity, not elsewhere classified), which includes toe and foot joint revision procedures as well as revisions of total ankle replacements. The commenter agreed that this nonspecific ICD-9-CM code did not allow CMS to determine how many cases were actually revisions of total ankle replacements. The commenter also agreed that ICD-10-PCS provides greater detail and will provide information on revisions of total ankle replacement. The commenter acknowledged that CMS does not yet have ICD-10 claims data to analyze this issue.

The commenter urged CMS to accelerate the incorporation of ICD-10 claims data to examine the issue of revision of total ankle replacements. The commenter urged CMS to consider the following three options when these data become available:

  • Map the new ICD-10-PCS ankle revision procedure codes to MS-DRGs 466, 467, and 468 and rename these MS-DRGs Revision of Hip, Knee or Ankle with MCC, with CC, and without CC/MCC, respectively;
  • Map the new ICD-10-PCS ankle revision procedure codes to MS-DRG 469 to more appropriately recognize higher hospital procedure costs associated with revision of TAR; or
  • Establish a new MS-DRG for the new ICD-10-PCS ankle revision codes and ankle joint revision cases.

The commenter requested that CMS consider one of these three options in FY 2017 if these data were available, but if these data are not available, the commenter requested that CMS use ICD-10 claims data to revise the MS-DRG assignment for revision of total ankle replacement procedures in FY 2018.

Another commenter also recommended that CMS review this MS-DRG assignment again once ICD-10 claims data are available.

Response: We agree with the commenter that ICD-10-PCS claims data will provide more detail to evaluate the MS-DRG assignment for revision of total ankle replacement procedures. Once ICD-10 claims data become available, we will use these claims data to evaluate this and other MS-DRG updates.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current MS-DRG assignment for revision of total ankle replacement procedures.

(2) Combination Codes for Removal and Replacement of Knee Joints

We received several requests asking CMS to examine whether additional combinations of procedure codes for the removal and replacements of knee joints should be added to MS-DRGs 466, 467, and 468 (Revision of Hip or Knee Replacement with MCC, with CC, and without CC/MCC, respectively). This topic was discussed in the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24379 through 24395) and the FY 2016 IPPS/LTCH PPS final rule (80 FR 49390 through 49406). One requestor stated that the procedure codes in the following table were not included in the code pairs that group to MS-DRGs 466, 467, and 468 in the ICD-10 MS-DRGs Version 33.Start Printed Page 56821

ICD-10-PCS procedure codeDescription
0SPD08ZRemoval of spacer from left knee joint, open approach.
0SPD38ZRemoval of spacer from left knee joint, percutaneous approach.
0SPD48ZRemoval of spacer from left knee joint, percutaneous endoscopic approach.
0SPC08ZRemoval of spacer from right knee joint, open approach.
0SPC38ZRemoval of spacer from right knee joint, percutaneous approach.
0SPC48ZRemoval of spacer from right knee joint, percutaneous approach.

Other requestors stated that the procedure codes in the following table are not included in the list of combinations that group to MS-DRGs 466, 467, and 468 when reported in conjunction with an ICD-10-PCS code for the removal of synthetic substitute from the joint in the ICD-10 MS-DRGs Version 33.

ICD-10-PCS Procedure codeDescription
0SRC0J9Replacement of right knee joint with synthetic substitute, cemented, open approach.
0SRC0JAReplacement of right knee joint with synthetic substitute, uncemented, open approach.
0SRC0JZReplacement of right knee joint with synthetic substitute, open approach.
0SRC07ZReplacement of right knee joint with autologous tissue substitute, open approach.
0SRC0KZReplacement of right knee joint with nonautologous tissue substitute, open approach.

We agree that the joint revision cases involving the removal of a spacer and subsequent insertion of a new knee joint prosthesis should be assigned to MS-DRGs 466, 467, and 468. We examined knee joint revision combination codes that are not currently assigned to MS-DRGs 466, 467, and 468 in ICD-10 MS-DRGs Version 33 and identified 58 additional combinations that also should be included so that the same logic is used in the ICD-10 version of the MS-DRGs as is used in the ICD-9-CM version. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24993 through 24996), we proposed to add the following 58 new code combinations that capture the joint revisions to the Version 34 MS DRG structure for MS-DRGs 466, 467, and 468, effective October 1, 2016.

ICD-10-PCS Code Pairs Proposed To Be Added to Version 34 ICD-10 MS-DRGs 466, 467, and 468: Proposed New Knee Revision ICD-10-PCS Combinations

CodeCode descriptionCodeCode description
0SPC08ZRemoval of Spacer from Right Knee Joint, Open Approachand0SRC0J9Replacement of Right Knee Joint with Synthetic Substitute, Cemented, Open Approach.
0SPC08ZRemoval of Spacer from Right Knee Joint, Open Approachand0SRC0JAReplacement of Right Knee Joint with Synthetic Substitute, Uncemented, Open Approach.
0SPC08ZRemoval of Spacer from Right Knee Joint, Open Approachand0SRC0JZReplacement of Right Knee Joint with Synthetic Substitute, Open Approach.
0SPC08ZRemoval of Spacer from Right Knee Joint, Open Approachand0SRT0J9Replacement of Right Knee Joint, Femoral Surface with Synthetic Substitute, Cemented, Open Approach.
0SPC08ZRemoval of Spacer from Right Knee Joint, Open Approachand0SRT0JAReplacement of Right Knee Joint, Femoral Surface with Synthetic Substitute, Uncemented, Open Approach.
0SPC08ZRemoval of Spacer from Right Knee Joint, Open Approachand0SRT0JZReplacement of Right Knee Joint, Femoral Surface with Synthetic Substitute, Open Approach.
0SPC08ZRemoval of Spacer from Right Knee Joint, Open Approachand0SRV0J9Replacement of Right Knee Joint, Tibial Surface with Synthetic Substitute, Cemented, Open Approach.
0SPC08ZRemoval of Spacer from Right Knee Joint, Open Approachand0SRV0JAReplacement of Right Knee Joint, Tibial Surface with Synthetic Substitute, Uncemented, Open Approach.
0SPC08ZRemoval of Spacer from Right Knee Joint, Open Approachand0SRV0JZReplacement of Right Knee Joint, Tibial Surface with Synthetic Substitute, Open Approach.
0SPC38ZRemoval of Spacer from Right Knee Joint, Percutaneous Approachand0SRC0J9Replacement of Right Knee Joint with Synthetic Substitute, Cemented, Open Approach.
0SPC38ZRemoval of Spacer from Right Knee Joint, Percutaneous Approachand0SRC0JAReplacement of Right Knee Joint with Synthetic Substitute, Uncemented, Open Approach.
0SPC38ZRemoval of Spacer from Right Knee Joint, Percutaneous Approachand0SRC0JZReplacement of Right Knee Joint with Synthetic Substitute, Open Approach.
0SPC38ZRemoval of Spacer from Right Knee Joint, Percutaneous Approachand0SRT0J9Replacement of Right Knee Joint, Femoral Surface with Synthetic Substitute, Cemented, Open Approach.
Start Printed Page 56822
0SPC38ZRemoval of Spacer from Right Knee Joint, Percutaneous Approachand0SRT0JAReplacement of Right Knee Joint, Femoral Surface with Synthetic Substitute, Uncemented, Open Approach.
0SPC38ZRemoval of Spacer from Right Knee Joint, Percutaneous Approachand0SRT0JZReplacement of Right Knee Joint, Femoral Surface with Synthetic Substitute, Open Approach.
0SPC38ZRemoval of Spacer from Right Knee Joint, Percutaneous Approachand0SRV0J9Replacement of Right Knee Joint, Tibial Surface with Synthetic Substitute, Cemented, Open Approach.
0SPC38ZRemoval of Spacer from Right Knee Joint, Percutaneous Approachand0SRV0JAReplacement of Right Knee Joint, Tibial Surface with Synthetic Substitute, Uncemented, Open Approach.
0SPC38ZRemoval of Spacer from Right Knee Joint, Percutaneous Approachand0SRV0JZReplacement of Right Knee Joint, Tibial Surface with Synthetic Substitute, Open Approach.
0SPC48ZRemoval of Spacer from Right Knee Joint, Percutaneous Endoscopic Approachand0SRC0J9Replacement of Right Knee Joint with Synthetic Substitute, Cemented, Open Approach.
0SPC48ZRemoval of Spacer from Right Knee Joint, Percutaneous Endoscopic Approachand0SRC0JAReplacement of Right Knee Joint with Synthetic Substitute, Uncemented, Open Approach.
0SPC48ZRemoval of Spacer from Right Knee Joint, Percutaneous Endoscopic Approachand0SRC0JZReplacement of Right Knee Joint with Synthetic Substitute, Open Approach.
0SPC48ZRemoval of Spacer from Right Knee Joint, Percutaneous Endoscopic Approachand0SRT0J9Replacement of Right Knee Joint, Femoral Surface with Synthetic Substitute, Cemented, Open Approach.
0SPC48ZRemoval of Spacer from Right Knee Joint, Percutaneous Endoscopic Approachand0SRT0JAReplacement of Right Knee Joint, Femoral Surface with Synthetic Substitute, Uncemented, Open Approach.
0SPC48ZRemoval of Spacer from Right Knee Joint, Percutaneous Endoscopic Approachand0SRT0JZReplacement of Right Knee Joint, Femoral Surface with Synthetic Substitute, Open Approach.
0SPC48ZRemoval of Spacer from Right Knee Joint, Percutaneous Endoscopic Approachand0SRV0J9Replacement of Right Knee Joint, Tibial Surface with Synthetic Substitute, Cemented, Open Approach.
0SPC48ZRemoval of Spacer from Right Knee Joint, Percutaneous Endoscopic Approachand0SRV0JAReplacement of Right Knee Joint, Tibial Surface with Synthetic Substitute, Uncemented, Open Approach.
0SPC48ZRemoval of Spacer from Right Knee Joint, Percutaneous Endoscopic Approachand0SRV0JZReplacement of Right Knee Joint, Tibial Surface with Synthetic Substitute, Open Approach.
0SPC4JZRemoval of Synthetic Substitute from Right Knee Joint, Percutaneous Endoscopic Approachand0SRT0JZReplacement of Right Knee Joint, Femoral Surface with Synthetic Substitute, Open Approach.
0SPC4JZRemoval of Synthetic Substitute from Right Knee Joint, Percutaneous Endoscopic Approachand0SRV0JZReplacement of Right Knee Joint, Tibial Surface with Synthetic Substitute, Open Approach.
0SPD08ZRemoval of Spacer from Left Knee Joint, Open Approachand0SRD0J9Replacement of Left Knee Joint with Synthetic Substitute, Cemented, Open Approach.
0SPD08ZRemoval of Spacer from Left Knee Joint, Open Approachand0SRD0JAReplacement of Left Knee Joint with Synthetic Substitute, Uncemented, Open Approach.
0SPD08ZRemoval of Spacer from Left Knee Joint, Open Approachand0SRD0JZReplacement of Left Knee Joint with Synthetic Substitute, Open Approach.
0SPD08ZRemoval of Spacer from Left Knee Joint, Open Approachand0SRU0JAReplacement of Left Knee Joint, Femoral Surface with Synthetic Substitute, Cemented, Open Approach.
0SPD08ZRemoval of Spacer from Left Knee Joint, Open Approachand0SRU0JAReplacement of Left Knee Joint, Femoral Surface with Synthetic Substitute, Uncemented, Open Approach.
0SPD08ZRemoval of Spacer from Left Knee Joint, Open Approachand0SRU0JZReplacement of Left Knee Joint, Femoral Surface with Synthetic Substitute, Open Approach.
0SPD08ZRemoval of Spacer from Left Knee Joint, Open Approachand0SRW0J9Replacement of Left Knee Joint, Tibial Surface with Synthetic Substitute, Cemented, Open Approach.
0SPD08ZRemoval of Spacer from Left Knee Joint, Open Approachand0SRW0JAReplacement of Left Knee Joint, Tibial Surface with Synthetic Substitute, Uncemented, Open Approach.
0SPD08ZRemoval of Spacer from Left Knee Joint, Open Approachand0SRW0JZReplacement of Left Knee Joint, Tibial Surface with Synthetic Substitute, Open Approach.
0SPD38ZRemoval of Spacer from Left Knee Joint, Percutaneous Approachand0SRD0J9Replacement of Left Knee Joint with Synthetic Substitute, Cemented, Open Approach.
0SPD38ZRemoval of Spacer from Left Knee Joint, Percutaneous Approachand0SRD0JAReplacement of Left Knee Joint with Synthetic Substitute, Uncemented, Open Approach.
0SPD38ZRemoval of Spacer from Left Knee Joint, Percutaneous Approachand0SRD0JZReplacement of Left Knee Joint with Synthetic Substitute, Open Approach.
0SPD38ZRemoval of Spacer from Left Knee Joint, Percutaneous Approachand0SRU0JAReplacement of Left Knee Joint, Femoral Surface with Synthetic Substitute, Cemented, Open Approach.
Start Printed Page 56823
0SPD38ZRemoval of Spacer from Left Knee Joint, Percutaneous Approachand0SRU0JAReplacement of Left Knee Joint, Femoral Surface with Synthetic Substitute, Uncemented, Open Approach.
0SPD38ZRemoval of Spacer from Left Knee Joint, Percutaneous Approachand0SRU0JZReplacement of Left Knee Joint, Femoral Surface with Synthetic Substitute, Open Approach.
0SPD38ZRemoval of Spacer from Left Knee Joint, Percutaneous Approachand0SRW0J9Replacement of Left Knee Joint, Tibial Surface with Synthetic Substitute, Cemented, Open Approach.
0SPD38ZRemoval of Spacer from Left Knee Joint, Percutaneous Approachand0SRW0JAReplacement of Left Knee Joint, Tibial Surface with Synthetic Substitute, Uncemented, Open Approach.
0SPD38ZRemoval of Spacer from Left Knee Joint, Percutaneous Approachand0SRW0JZReplacement of Left Knee Joint, Tibial Surface with Synthetic Substitute, Open Approach.
0SPD48ZRemoval of Spacer from Left Knee Joint, Percutaneous Endoscopic Approachand0SRD0J9Replacement of Left Knee Joint with Synthetic Substitute, Cemented, Open Approach.
0SPD48ZRemoval of Spacer from Left Knee Joint, Percutaneous Endoscopic Approachand0SRD0JAReplacement of Left Knee Joint with Synthetic Substitute, Uncemented, Open Approach.
0SPD48ZRemoval of Spacer from Left Knee Joint, Percutaneous Endoscopic Approachand0SRD0JZReplacement of Left Knee Joint with Synthetic Substitute, Open Approach.
0SPD48ZRemoval of Spacer from Left Knee Joint, Percutaneous Endoscopic Approachand0SRU0JAReplacement of Left Knee Joint, Femoral Surface with Synthetic Substitute, Cemented, Open Approach.
0SPD48ZRemoval of Spacer from Left Knee Joint, Percutaneous Endoscopic Approachand0SRU0JAReplacement of Left Knee Joint, Femoral Surface with Synthetic Substitute, Uncemented, Open Approach.
0SPD48ZRemoval of Spacer from Left Knee Joint, Percutaneous Endoscopic Approachand0SRU0JZReplacement of Left Knee Joint, Femoral Surface with Synthetic Substitute, Open Approach.
0SPD48ZRemoval of Spacer from Left Knee Joint, Percutaneous Endoscopic Approachand0SRW0J9Replacement of Left Knee Joint, Tibial Surface with Synthetic Substitute, Cemented, Open Approach.
0SPD48ZRemoval of Spacer from Left Knee Joint, Percutaneous Endoscopic Approachand0SRW0JAReplacement of Left Knee Joint, Tibial Surface with Synthetic Substitute, Uncemented, Open Approach.
0SPD48ZRemoval of Spacer from Left Knee Joint, Percutaneous Endoscopic Approachand0SRW0JZReplacement of Left Knee Joint, Tibial Surface with Synthetic Substitute, Open Approach.
0SPD4JZRemoval of Synthetic Substitute from Left Knee Joint, Percutaneous Endoscopic Approachand0SRU0JZReplacement of Left Knee Joint, Femoral Surface with Synthetic Substitute, Open Approach.

We invited public comments on our proposal to add the joint revision code combinations listed above to the ICD-10 Version 34 MS-DRGs 466, 467, and 468.

Comment: A number of commenters supported the proposal to add the joint revision code combinations listed in the table in the proposed rule to the ICD-10 Version 34 MS-DRGs 466, 467, and 468. Several commenters stated that these proposed updates better replicate the logic of the prior ICD-9-CM version of the MS-DRGs. Another commenter stated that adding the 58 new combinations of procedure codes for the removal and replacement of knee joints to MS-DRGs 466, 467, and 468 improves the alignment of these cases under the ICD-10 MS-DRGs. One commenter stated that it appreciated CMS' proposed updates to MS-DRGs 466, 467, and 468. Several of the commenters requested that the update be made retroactive to FY 2016 because this was a replication error of the ICD-9-CM MS-DRGs.

Response: We appreciate the commenters' support for our proposal. We agree that this addition better replicates the prior ICD-9-CM MS-DRGs. The FY 2016 MS-DRGs were subject to review and comment by the public as part of the FY 2016 IPPS/LTCH PPS rulemaking. As stated earlier, this topic was discussed in the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24379 through 24395) and the FY 2016 IPPS/LTCH PPS final rule (80 FR 49390 through 49406). We proposed to add the 58 new combinations of procedure codes for the removal and replacement of knee joints to MS-DRGs 466, 467, and 468 in the FY 2017 IPPS/LTCH PPS proposed rule for the FY 2017 MS-DRGs, effective October 1, 2016. Therefore, consistent with our general approach for implementing updates to the MS-DRGs, these updates apply beginning with the FY 2017 MS-DRGs.

After consideration of the public comments we received, we are finalizing our proposal to add the 58 new code combinations listed above that capture the joint revisions to the Version 34 MS DRG structure for MS-DRGs 466, 467, and 468, effective October 1, 2016.

c. Decompression Laminectomy

Currently, under ICD-10-PCS, the procedure describing a decompression laminectomy is coded for the “release” of a specified area of the spinal cord. These decompression codes are assigned to MS-DRGs 028, 029, and 030 (Spinal Procedures with MCC, with CC or Spinal Neurostimulators, or without CC/MCC, respectively) and to MS-DRGs 518, 519, and 520 (Back and Neck Procedures Except Spinal Fusion with MCC or Disc Device or Neurostimulator, with CC, or without CC/MCC, respectively) in the ICD-10 MS-DRGs Version 33. A commenter brought to our attention that codes describing release of specific peripheral nerve are assigned to MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). The commenter suggested that a subset of these codes also be assigned to MS-DRGs 028 through 030 and MS-DRGs 518 through 520 for clinical coherence purposes. The commenter stated, for example, that ICD-10-PCS procedure code 00NY0ZZ (Release lumbar spinal Start Printed Page 56824cord, open approach) is assigned to MS-DRGs 028 through 030 and MS-DRGs 518 through 520. However, ICD-10-PCS procedure code 01NB0ZZ (Release lumbar nerve, open approach) is assigned to MS-DRGs 515 through 517.

We stated in the FY 2017 IPPS/LTCH PPS proposed rule that we agreed with the commenter's suggestion. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24996), for FY 2017, we proposed to reassign the ICD-10-PCS procedure codes listed in the following table from MS-DRGs 515 through 517 to MS-DRGs 028 through 030 and MS-DRGs 518 through 520 under the ICD-10 MS-DRGs Version 34.

ICD-10-PCS procedure codeDescription
01N00ZZRelease cervical plexus, open approach.
01N03ZZRelease cervical plexus, percutaneous approach.
01N04ZZRelease cervical plexus, percutaneous endoscopic approach.
01N10ZZRelease cervical nerve, open approach.
01N13ZZRelease cervical nerve, percutaneous approach.
01N14ZZRelease cervical nerve, percutaneous endoscopic approach.
01N80ZZRelease thoracic nerve, open approach.
01N83ZZRelease thoracic nerve, percutaneous approach.
01N84ZZRelease thoracic nerve, percutaneous endoscopic approach.
01N90ZZRelease lumbar plexus, open approach.
01N93ZZRelease lumbar plexus, percutaneous approach.
01N94ZZRelease lumbar plexus, percutaneous endoscopic approach.
01NA0ZZRelease lumbosacral plexus, open approach.
01NA3ZZRelease lumbosacral plexus, percutaneous approach.
01NA4ZZRelease lumbosacral plexus, percutaneous approach.
01NB0ZZRelease lumbar nerve, open approach.
01NB3ZZRelease lumbar nerve, percutaneous approach.
01NB4ZZRelease lumbar nerve, percutaneous endoscopic approach.

We invited public comments on our proposal.

Comment: Several commenters supported the proposal to reassign the ICD-10-PCS procedure codes listed in the table in the proposed rule from MS-DRGs 515, 516 and 517 to MS-DRGs 028, 029, 030 and MS-DRGs 518, 519 and 520 under the ICD-10 MS-DRGs Version 34.

One commenter recommended that CMS delay reassigning the codes listed in the table in the proposed rule from MS-DRGs 515, 516 and 517 to MS-DRGs 028, 029, 030 and MS-DRGs 518, 519 and 520 until the FY 2016 MedPAR data are available, which would include ICD-10 coded claims. According to the commenter, it was difficult to assess the impact of the proposal in the absence of ICD-10 claims data. The commenter conducted its own data analysis of ICD-9-CM procedure code 04.49 (Other peripheral nerve or ganglion decompression or lysis of adhesions), which is a comparable translation of the ICD-10-PCS codes listed in the table in the proposed rule. The commenter stated that under Version 32 of the ICD-9-CM MS-DRGs, procedure code 04.49 grouped to MS-DRGs 515, 516, and 517. Based on its analysis, the commenter suggested that if CMS were to proceed with this proposal without ICD-10 claims data, CMS consider reassigning the entire list of ICD-10-PCS codes in the 01N (Release/Peripheral Nervous System) category to ICD-10 MS-DRGs 028, 029, and 030 for length of stay and average cost alignment purposes. The commenter did not make any recommendation for reassignment of the listed ICD-10-PCS procedure codes to MS-DRGs 518, 519, and 520.

Response: We appreciate the commenters' support of our proposal. With regard to the commenter who did not support the proposal and recommended we not finalize it in the absence of ICD-10 claims data, we acknowledge that it can be somewhat challenging to fully assess the impact of a proposal without the coded data to analyze. We note that the proposal was based on clinical coherence of the listed ICD-10-PCS codes with other codes describing procedures on the neck and spine currently assigned to MS-DRGs 028, 029, 030 in MDC 1 (Diseases and Disorders of the Nervous System) and MS-DRGs 518, 519, and 520 in MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue). We also note that the ICD-9-CM code 04.49 lacks the detail and specificity of the corresponding ICD-10-PCS codes proposed for reassignment. For example, the ICD-9-CM code does not specify which peripheral nerve is being treated or what approach was utilized. Therefore, we cannot fully evaluate and rely upon the commenter's analysis results for the ICD-9-CM data to accurately determine the impact of reassigning all the cited ICD-10-PCS codes, which do specify the nerve being treated, and the approach that was used to MS-DRGs 028, 029, and 030. In addition, it is not clear which list of ICD-10-PCS codes the commenter was requesting us to consider for reassignment to MS-DRGs 028, 029, and 030 based on its submitted comment. It is unclear if the commenter was suggesting that we reassign the entire list of ICD-10-PCS codes that appeared in the proposed rule or if the commenter was suggesting that we reassign the entire list of available code options in Table 01N (Release/Peripheral Nervous System) of the ICD-10-PCS classification because the commenter's languge referred to the 01N “category” and that is not a standard term used in ICD-10-PCS.

Therefore, we agree that we should delay this proposed change until the ICD-10 claims data are available, because we will have the ability to better analyze the impact of reassigning the specified codes according to their anatomic location, as well as receive clarification regarding which specific codes should be taken under consideration for reassignment. Our clinical advisors reviewed this issue and recommended maintaining the current structure of MS-DRGs 515, 516, and 517 for FY 2017. They agreed that we should not finalize our proposal to reassign the ICD-10-PCS codes discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24996 through 24997) to MS-DRGs 028, 029, and 030 and MS-DRGs 518, 519, and 520 until ICD-10-PCS data are available for analysis because we will have the opportunity to examine the detailed ICD-10-PCS codes and assess their impact on MS-DRGs 028, 029, and 030 and determine the specific codes Start Printed Page 56825that were suggested for reassignment (the list of ICD-10-PCS codes displayed in the proposed rule and this final rule above or the entire list of codes available from Table 01N of the ICD-10-PCS classification). We also will have the coded claims data to assess the impact for MS-DRGs 518, 519, and 520 to better evaluate if that reassignment is supported.

After consideration of the public comments we received and based on the recommendations from our clinical advisors, we are not finalizing our proposal to reassign the ICD-10-PCS procedure codes listed in the table in the proposed rule and above from MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue O.R. Procedures with MCC, with CC and without CC/MCC) to MS-DRGs 028, 029, 030 (Spinal Procedures with MCC, with CC or Spinal Neurostimulators and without CC/MCC, respectively) and MS-DRGs 518, 519, and 520 (Back and Neck Procedures Except Spinal Fusion with MCC or Disc Device or Neurostimulator, with CC and without CC/MCC, respectively) under the ICD-10 MS-DRGs Version 34. The ICD-10-PCS codes that were listed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24996 through 24997) will remain in their current assignment to MS-DRGs 515, 516, and 517.

d. Lordosis

An ICD-10 replication issue involving four diagnosis codes related to lordosis (excessive curvature of the lower spine) was discovered in MS-DRGs 456, 457, and 458 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions with MCC, with CC, and without CC/MCC). These MS-DRGs contain specific logic that requires a principal diagnosis describing a spinal curvature, a malignancy, or infection or a secondary diagnosis that describes a spinal curvature disorder related to another condition.

Under the ICD-10 MS-DRGs Version 33, the following diagnosis codes were listed on the principal diagnosis list and the secondary diagnosis list for MS-DRGs 456, 457, and 458:

  • M40.50 (Lordosis, unspecified, site unspecified);
  • M40.55 (Lordosis, unspecified, thoracolumbar region);
  • M40.56 (Lordosis, unspecified, lumbar region); and
  • M40.57 (Lordosis, unspecified, lumbosacral region).

In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24997), we proposed to remove the above four diagnosis codes from the secondary diagnosis list. We also proposed to maintain these same four codes in the logic for the principal diagnosis list. We proposed that this proposed change for MS-DRGs 456, 457, and 458 would be effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.

We invited public comments on our proposals.

Comment: Commenters supported the proposal to remove diagnoses codes M40.50, M40.55, M40.56, and M40.57 from the secondary diagnosis list for MS DRGs 456, 457, and 458. Commenters also supported the proposal to maintain these same four codes in the logic for the principal diagnosis list for MS-DRGs 456, 457, and 458.

Response: We appreciate the commenters' support of our proposal to remove the above four diagnosis codes from the secondary diagnosis list and to maintain these same four codes in the logic for the principal diagnosis list for MS DRGs 456, 457, and 458.

After consideration of the public comments we received, we are finalizing our proposal to remove diagnoses codes M40.50 (Lordosis, unspecified, site unspecified); M40.55 (Lordosis, unspecified, thoracolumbar region); M40.56 (Lordosis, unspecified, lumbar region); and M40.57 (Lordosis, unspecified, lumbosacral region) from the secondary diagnosis list for MS DRGs 456, 457, and 458. These four codes are retained in the logic for the principal diagnosis list. This change for MS-DRGs 456, 457, and 458 (Spinal fusion except cervical with spinal curvature or malignancy or infection or extensive fusions with MCC, with CC and without CC/MCC) is effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.

9. MDC 13 (Diseases and Disorders of the Female Reproductive System): Pelvic Evisceration

In the ICD-10 MS-DRG Definitions Manual Version 33, the GROUPER logic for ICD-10 MS-DRGs 332, 333, and 334 (Rectal Resection with MCC, with CC and without CC/MCC, respectively) under MDC 6 (Diseases and Disorders of the Digestive System) and the GROUPER logic for MS-DRGs 734 and 735 (Pelvic Evisceration, Radical Hysterectomy and Radical Vulvectomy with CC/MCC and without CC/MCC, respectively) under MDC 13 (Diseases and Disorders of the Female Reproductive System) include a “cluster” of ICD-10-PCS procedure codes that describe pelvic evisceration. A “cluster” is the term used to describe a circumstance when a combination of ICD-10-PCS procedure codes is needed to fully satisfy the equivalent meaning of an ICD-9-CM procedure code for it to be considered a plausible code translation. The code cluster in MS-DRGs 332, 333, and 334 and MS-DRGs 734 and 735 is shown in the table below.

ICD-10-PCS procedure code in clusterDescription
0TTB0ZZResection of bladder, open approach.
0TTD0ZZResection of urethra, open approach.
0UT20ZZResection of bilateral ovaries, open approach.
0UT70ZZResection of bilateral fallopian tubes, open approach.
0UT90ZZResection of uterus, open approach.
0UTC0ZZResection of cervix, open approach.
0UTG0ZZResection of vagina, open approach.

Pelvic evisceration (or exenteration) is a procedure performed to treat gynecologic cancers (cervical, uterine, vulvar, and vaginal, among others) and involves resection of pelvic structures such as the procedures described by the cluster of procedure codes listed above.

Under the ICD-9-CM MS-DRGs Version 32, procedure code 68.8 (Pelvic evisceration) was used to report pelvic evisceration. ICD-9-CM procedure code 68.8 also was assigned to ICD-9-CM MS-DRGs 332, 333, and 334 and MS-DRGs 734 and 735 in MDCs 6 and 13, respectively. The inclusion term in the ICD-9-CM Tabular List of Diseases for pelvic evisceration (procedure code 68.8) was “Removal of ovaries, tubes, uterus, vagina, bladder, and urethra (with removal of sigmoid colon and rectum).” In the ICD-9-CM Tabular List, the terms shown in parentheses are called a “non-essential modifier”. A “non-essential modifier” is used in the classification to identify a supplementary word that may, or may not, be present in the statement of a disease or procedure. In other words, the terms in parentheses do not have to be documented to report the code.

Because the removal of sigmoid colon and the removal of rectum were classified as non-essential modifiers under ICD-9-CM, documentation that identified that removal of those body sites occurred was not required to report the procedure code describing pelvic evisceration (procedure code 68.8). In other words, when a pelvic evisceration procedure was performed and included removal of other body sites (ovaries and tubes, among others) listed in the inclusion term, absent the terms in parentheses, procedure code 68.8 could Start Printed Page 56826be reported and grouped appropriately to MDC 13 under MS-DRGs 734 and 735. When a pelvic evisceration procedure was performed and removal of the body sites listed in the inclusion term occurred, including the terms in parentheses, procedure code 68.8 could be reported and grouped appropriately to MDC 6 under MS-DRGs 332 through 334.

Under ICD-10-PCS, users are instructed to code separately the organs or structures that are actually removed and for which there is a distinctly defined body part. Therefore, the case of a patient who undergoes a pelvic evisceration (exenteration) that involves the removal of the sigmoid colon and rectum would have each of those procedure sites (sigmoid colon and rectum) coded and reported separately (in addition to the procedure codes displayed in the cluster). In this scenario, if the principal diagnosis is a condition from the MDC 6 diagnosis list, the case would group to MS-DRGs 332, 333, and 334, regardless of the code cluster. In other words, it would not be necessary to retain the code cluster describing procedures performed on female pelvic organs in MDC 6.

Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24997 through 24998), for FY 2017, we proposed to remove the procedure code cluster for pelvic evisceration procedures from MDC 6 under the ICD-10 MS-DRGs Version 34. The cluster would remain in ICD-10 MDC 13 under MS-DRGs 734 and 735 only. We invited public comments on our proposal.

Comment: Commenters supported the proposal to remove the procedure code cluster for pelvic evisceration procedures currently under MDC 6 in ICD-10 MS-DRGs 332, 333, and 334 for the ICD-10 MS-DRGs Version 34. The commenters stated the proposal was reasonable, given the data, the ICD-10-PCS codes, and the information provided.

Response: We appreciate the commenters' support of our proposal.

After consideration of the public comments we received, we are finalizing our proposal to remove the following procedure codes currently listed as a “cluster” in MDC 6 under MS-DRGs 332, 333, and 334 effective October 1, 2016 under the ICD-10 MS-DRGs Version 34. The codes will remain as a cluster in MDC 13 under MS-DRGs 734 and 735 (Pelvic Evisceration, Radical Hysterectomy and Radical Vulvectomy with CC/MCC and without CC/MCC, respectively)

ICD-10-PCS procedure code in clusterDescription
0TTB0ZZResection of bladder, open approach.
0TTD0ZZResection of urethra, open approach.
0UT20ZZResection of bilateral ovaries, open approach.
0UT70ZZResection of bilateral fallopian tubes, open approach.
0UT90ZZResection of uterus, open approach.
0UTC0ZZResection of cervix, open approach.
0UTG0ZZResection of vagina, open approach.

10. MDC 19 (Mental Diseases and Disorders): Proposed Modification of Title of MS-DRG 884 (Organic Disturbances and Mental Retardation)

We received a request to change the title of MS-DRG 884 (Organic Disturbances and Mental Retardation) under MDC 19 (Mental Diseases and Disorders) to “MS-DRG 884 (Organic Disturbances and Intellectual Disability)” to reflect more recent terminology used to appropriately describe the latter medical condition in the MDC.

We agree with the requestor that the reference to the phrase “Mental Retardation” should be changed to “Intellectual Disability”, to reflect the current terminology used to describe the condition. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24988), we proposed to change the title of MS-DRG 884 as requested by the requestor.

We invited public comments on our proposal to change the title of MS-DRG 884 from “Organic Disturbances and Mental Retardation” to “Organic Disturbances and Intellectual Disability”, effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.

Comment: Commenters supported the proposal to modify the title for ICD-10 MS-DRG 884. The commenters stated that the proposal was reasonable, given the data and information provided.

Response: We appreciate the commenters' support of our proposal.

After consideration of the public comments we received, we are finalizing our proposal to modify the title for ICD-10 MS-DRG 884. The finalized title for MS-DRG 884 for the FY 2017 ICD-10 MS-DRGs Version 34 is “MS-DRG 884 (Organic Disturbances and Intellectual Disability),” effective October 1, 2016.

11. MDC 23 (Factors Influencing Health Status and Other Contacts With Health Services): Logic of MS-DRGs 945 and 946 (Rehabilitation With and Without CC/MCC, Respectively)

As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24998 through 25000), we received several requests to examine the MS-DRG logic for MS-DRGs 945 and 946 (Rehabilitation with CC/MCC and without CC/MCC, respectively). The requestors were concerned that ICD-9-CM codes that clearly identify an encounter for rehabilitation services such as diagnosis codes V57.89 (Care involving other specified rehabilitation procedure) and V57.9 (Care involving unspecified rehabilitation procedure) were not included in ICD-10-CM Version 33. In addition, the requestors pointed out that ICD-10-CM has significantly changed the guidelines for coding of admissions/encounters for rehabilitation. The requestors pointed out that under ICD-9-CM, Section I.B.15. of the Official Guidelines for Coding and Reporting indicates that “when the purpose for the admission/encounter is rehabilitation, sequence the appropriate V code from category V57, Care involving use of rehabilitation procedures, as the principal/first listed diagnosis.” The requestors stated that the concept of the ICD-9-CM category V57 codes is no longer valid in ICD-10-CM and the guidelines have been revised to provide greater specificity. Instead, the requestors added, the ICD-10-CM guidelines state in Section II.K., “When the purpose for the admission/encounter is rehabilitation, sequence first the code for the condition for which the service is being performed. For example, for an admission/encounter for rehabilitation for right-sided dominant hemiplegia following a cerebrovascular infarction, report code I69.351, Hemiplegia and hemiparesis following cerebral infarction affecting right dominant side, as the first-listed or principal diagnosis.”

Given this lack of ICD-10-CM codes to indicate that the reason for the encounter was for rehabilitation, some requesters asked that CMS review ICD-10-CM codes for conditions requiring rehabilitation (such as codes from category I69) and add them to MS-DRGs 945 and 946 when rehabilitation services are provided in order to replicate the logic found in the ICD-9-CM MS-DRG GROUPER. The requestors did not suggest any specific ICD-10-CM codes to add to MS-DRGs 945 and 946.

One requestor made a specific recommendation for updating MS-DRGs 945 and 946. The requestor previously Start Printed Page 56827recommended that CMS review diagnosis codes in ICD-10-CM category I69 for possible addition to MS-DRGs 945 and 946. The requestor stated that, upon further review, it believed that a great number of diagnosis codes beyond sequelae of stroke (ICD-10-CM category I69) would need to be added in order to replicate the logic of the ICD-9-CM MS-DRGs. Therefore, the requestor modified its recommendation as follows:

  • Designate MS-DRGs 945 and 946 as pre-major diagnostic categories (Pre-MDC) MS-DRGs so that cases are grouped to these MS-DRGs on the basis of the procedure code rather than the principal diagnosis. The requestor stated that the ICD-10-PCS rehabilitation codes (Section F, Physical Rehabilitation and Diagnostic Audiology, Body system 0, Rehabilitation) should be used to group cases to MS-DRGs 945 and 946 similar to how the MS-DRG GROUPER logic currently treats lung transplants and tracheostomies. This would ensure that the rehabilitation procedure codes drive the MS-DRG assignment.
  • Revise ICD-10-PCS Official Guidelines for Coding and Reporting and designate that the ICD-10-PCS rehabilitation codes be used only for admissions for rehabilitation therapy.

We acknowledge that ICD-10-CM does not have clear diagnosis codes that indicate the reason for the encounter was for rehabilitation services. For that reason, CMS had to modify the MS-DRG logic using ICD-10-PCS procedure codes to assign these cases to MS-DRGs 945 and 946. The logic used in MS-DRGs 945 and 946 is shown in the Definitions Manual Version 33, which is posted on the CMS Web site at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​FY2016-IPPS-Final-Rule-Home-Page-Items/​FY2016-IPPS-Final-Rule-Data-Files.html?​DLPage=​1&​DLEntries=​10&​DLSort=​0&​DLSortDir=​ascending. We also posted a Frequently Asked Question section to explain how inpatient admissions are assigned to MS-DRGs 945 and 946, which is posted on the CMS Web site at: https://questions.cms.gov/​faq.php?​id=​5005&​faqId=​12548. As indicated in the Frequently Asked Question section, the ICD-10-CM codes required a different approach to make sure the same cases captured with ICD-9-CM codes would be captured with ICD-10-CM codes. As stated earlier, ICD-10-CM does not contain specific codes for encounters for rehabilitation such as ICD-9-CM procedure codes V57.89 and V57.9. In order to replicate the ICD-9-CM MS-DRG logic using ICD-10-CM and ICD-10-PCS codes, CMS developed the new logic included in the MS-DRG Version 33 Definitions Manual.

The Frequently Asked Question section explains that, in order to be assigned to ICD-10 MS-DRG 945 or 946, a case must first have a principal diagnosis from MDC 23 (Factors Influencing Health Status and Other Contacts with Health Services), where MS-DRGs 945 and 946 are assigned. This is currently the logic with the ICD-9-CM MS-DRGs Version 33 where one would first have to have a MDC 23 principal diagnosis. A complete list of ICD-10-CM principal diagnoses for MDC 23 can be found in the ICD-10 MS-DRGs Version 33 Definitions Manual which is posted on the FY 2016 IPPS Final Rule Home Page under the link for the FY 2016 Final Rule Data Files at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​FY2016-IPPS-Final-Rule-Home-Page-Items/​FY2016-IPPS-Final-Rule-Data-Files.html. Look under the Related Links section and select the ICD-10-CM/PCS MS-DRG v33 Definitions Manual Table of Contents Full Titles HTML Version file. Open this file and the Table of Contents page will appear. Click on the link for MDC 23 (Factors Influencing Health Status and Other Contacts with Health Services). On the next page that opens (MDC 23), click on the link titled “MDC 23 Assignment of Diagnosis Codes” on the upper left side of the screen. By using the navigation arrows at the top right hand side of the page, users can review the 24 pages listing all of the principal diagnosis codes assigned to MDC 23, including many injury codes for subsequent encounters.

Under the GROUPER Logic, cases are assigned to MS-DRGs 945 and 946 in one of two ways as described in the Definitions Manual as follows:

  • The encounter has a principal diagnosis code Z44.8 (Encounter for fitting and adjustment of other external prosthetic devices) or Z44.9 (Encounter for fitting and adjustment of unspecified external prosthetic device). Both of these codes are included in the list of principal diagnosis codes assigned to MDC 23.
  • The encounter has an MDC 23 principal diagnosis code and one of the rehabilitation procedure codes listed under MS-DRGs 945 and 946.

If the case does not have a principal diagnosis code from the MDC 23 list, but does have a procedure code from the list included under the Rehabilitation Procedures for MS-DRGs 945 and 946, the case will not be assigned to MS-DRGs 945 or 946. The case will instead be assigned to a MS-DRG within the MDC where the principal diagnosis code is found.

Example: The encounter has a principal diagnosis code of S02119D (Unspecified fracture of occiput, subsequent encounter for fracture with routine healing). This code is included in MDC 8. Therefore, diagnosis code S02119D and a procedure code from the MS-DRG 945 and 946 Rehabilitation Procedure list, such as procedure code F0706GZ (Therapeutic Exercise Treatment of Neurological System—Head and Neck using Aerobic Endurance and Conditioning Equipment) would not lead to assignment of the case to MS-DRGs 945 and 946 because the principal diagnosis code is not included in MDC 23.

Diagnosis code S02119D is included in MDC 8 as was the ICD-9-CM predecessor code, V54.19 (Aftercare for healing traumatic fracture of other bone). Therefore, these cases would be assigned to MS-DRGs 559, 560, and 561 (Aftercare, Musculoskeletal System and Connective Tissue with MCC, with CC, and without MCC/CC, respectively) within MDC 8.

At the time of development of the proposed rule, we did not have any claims data that indicate how well this MS-DRG logic is working. We stated in the proposed rule that we were hesitant to simply add more codes from category I69 without evaluating the impact of doing so using claims data. We also did not have claims data to indicate whether or not there have been changes in the types or numbers of cases assigned to MS-DRGs 945 and 946. We welcomed specific suggestions of codes to be added to MS-DRGs 945 and 946 based on hospitals' experience in coding these cases. We stated that we would evaluate these suggestions once we have claims data to study the impact. Based on the lack of ICD-10 claims data, we proposed to maintain the current logic of MS-DRGs 945 and 946 and not make updates until these claims data become available.

Comment: A number of commenters supported the proposal to maintain the current structure of MS-DRGs 945 and 946 and reconsider the issue when ICD-10 claims data become available and prior to proposing any updates. Several commenters who agreed with this proposal stated that additional analysis should be undertaken in order to fully understand the industry impact of the current logic of MS-DRGs 945 and 946. The commenters stated that it was not clear to what extent the current logic for these MS-DRGs has created actual payment issues or what the nature of any identified problems might be.Start Printed Page 56828

One commenter suggested that if an analysis of ICD-10 claims data indicate that the current logic of MS-DRGs 945 and 946 is creating significant payment issues, CMS consider reclassifying MS-DRGs 945 and 946 as pre-MDC MS-DRGs as a possible solution.

Response: We agree with the commenters that, without ICD-10 claims data, it is not possible to evaluate the impact of the logic using ICD-10 codes within MS-DRGs 945 and 946. We agree that it is appropriate to wait for the claims data prior to proposing any MS-DRG updates.

We stated in the proposed rule that we have major concerns about the recommendation to revise the ICD-10-PCS Official Guidelines for Coding and Reporting and designate that the ICD-10-PCS rehabilitation codes be assigned and reported only for admissions for rehabilitation therapy. This would be a major and new process for developing coding and reporting guidelines based on one specific payer's payment polices, in this case Medicare inpatient acute care prospective payment system policies. Hospitals would need to know who the payer was prior to knowing whether or not they could assign a code for a rehabilitation service that they provided. If those payment policies change, the hospital coder would need to be aware of those changes in order to determine whether or not they could submit a code that captures the fact that a rehabilitation service was provided. CMS has worked with the Centers for Disease Control and Prevention (CDC), the American Hospital Association (AHA), and the American Health Information Management Association (AHIMA) to make ICD-10-PCS guidelines generic and applicable to all types of inpatient facilities and for all payer types. The current ICD-10-PCS Guidelines for Coding and Reporting do not support this recommendation that rehabilitation services could only be coded and reported if the admission was specifically for rehabilitation therapy. The ICD-10-PCS codes were created to accurately capture services provided.

We also have concerns about designating MS-DRGs 945 and 946 as pre-MDCs so that cases are grouped to these MS-DRGs on the basis of a rehabilitation procedure code rather than a principal diagnosis. Pre-MDCs were an addition to Version 8 of the Diagnosis Related Groups. This was the first departure from the use of principal diagnosis as the initial variable in DRG and subsequently MS-DRG assignment. For Pre-MDC DRGs, the initial step in DRG assignment was not the principal diagnosis, but was instead certain surgical procedures with extremely high costs such as heart transplant, liver transplant, bone marrow transplant, and tracheostomies performed on patients on long-term ventilation. These types of services were viewed as being very resource intensive. Recognizing these resource intensive services and assigning them to one of the high-cost MS-DRGs assures appropriate payment even if the patient is admitted for a variety of principal diagnoses. We believe it is inappropriate to consider rehabilitation services in the same group as high-cost procedures such as heart transplants. There is the significant potential of patients being classified out of higher paying surgical MS-DRGs in other MDCs and into the lower paying MS-DRGs 945 and 946 based on the reporting of a rehabilitation procedure code if these MS-DRGs are moved to the Pre-MDCs. We examined claims data for cases reporting a rehabilitation therapy code and found cases assigned to a wide variety of both medical and surgical MS-DRGs. The current coding and reporting of rehabilitation procedure codes for services provided suggest the potential of significant payment problems if MS-DRGs 945 and 946 were assigned to the Pre-MDC section and the reporting of cases with a rehabilitation code led to an inappropriate reassignment to the lower paying medical MS-DRGs 945 and 946.

The following are only a few examples of current claims data that showed the hospital reported a rehabilitation therapy procedure code for services provided which did not impact the MS-DRG assignment. Under the suggested approach of making MS-DRGs 945 and 946 a Pre-MDC, these cases would move from the appropriately assigned MS-DRGs which may have significantly higher average costs, to MS-DRGs 945 and 946, which have much lower average costs. Based on claims data from the December 2015 update of the FY 2015 MedPAR file, the average costs for cases reported in MS-DRGs 945 and 946 were $8,531 and $8,411, respectively.

Examples of cases reporting a rehabilitation therapy code that would move to MS-DRGs 945 and 946 based on the suggested logic change are as follows:

  • An MS-DRG 460 (Spinal Fusion Except Cervical with MCC) case with average costs of $42,390;
  • An MS-DRG 464 (Wound Debridement and Skin Graft Excluding Hand, for Musculoskeletal Tissue Disease with CC) case with average costs of $55,633;
  • An MS-DRG 579 (Other Skin, Subcutaneous Tissue and Breast Procedure with MCC) case with average costs of $63,834;
  • An MS-DRG 854 (Infectious and Parasitic Diseases with O.R. procedure with MCC) case with average costs of $62,455; and
  • An MS-DRG 021 (Intracranial Vascular Procedures with Principal Diagnosis of Hemorrhage with CC) case with average costs of $90,522.

Our clinical advisors reviewed this issue and agreed that we should wait for ICD-10 claims data to become available prior to proposing updates to MS-DRGs 945 and 946. They did not support adding MS-DRGs 945 and 946 to the Pre-MDCs because the rehabilitation services are not as resource intensive as are the other MS-DRGs in the Pre-MDC section.

Considering these ICD-10-PCS guideline concerns, the structure of the pre-MDC section, and the lack of any ICD-10 claims data for MS-DRGs 945 and 946, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24998 through 25000), we proposed to maintain the current structure of MS-DRGs 945 and 946 and reconsider the issue when ICD-10 claims data become available and prior to proposing any updates.

We invited public comments on our proposal to maintain the current structure of MS-DRGs 945 and 946.

Comment: One commenter agreed with CMS that, given there is no ICD-10-CM code describing encounters for rehabilitation, it was reasonable that identification of admissions for rehabilitation had to rely on ICD-10-PCS procedure codes. One commenter believed that it was not appropriate for the MS-DRG logic to require a principal diagnosis from MDC 23 to be assigned to MS-DRGs 945 and 946 because most admissions for rehabilitation would appropriately have any number of diagnosis codes sequenced as the principal diagnosis rather than a diagnosis code from MDC 23. The commenter did not believe it was feasible to identify all of the ICD-10-CM codes for which rehabilitation services might be provided, due to the range and number of diagnoses that could potentially be involved.

Response: We agree with the commenter that there is no ICD-10-CM code describing encounters for rehabilitation. Given this lack of an ICD-10-CM code describing encounters for rehabilitation, we used ICD-10-PCS procedure codes as a means of identifying these cases. Therefore, the ICD-10 MS-DRG logic cannot be the same as the ICD-9-CM code logic. We also agree with the commenter that it is not feasible to identify all of the ICD-10-CM codes for which rehabilitation Start Printed Page 56829services might be provided, due to the range and number of diagnoses that could potentially be involved. Therefore, it is necessary to wait for ICD-10 claims data in order to evaluate and propose MS-DRG updates.

Comment: One commenter disagreed with CMS' proposal to maintain the current structure of MS-DRGs 945 and 946 and to only reconsider the issue when ICD-10 claims data become available. The commenter stated that further research of claims data was not necessary as there was enough evidence and clinical knowledge to identify the majority of appropriate principal diagnoses that frequently require an inpatient admission for rehabilitation. The commenter advised adding the codes and code categories in the following table to MDC 23.

Code/Code Category and Description

G20 Parkinson's disease.
G21.0 Malignant neuroleptic syndrome.
G21.11 Neuroleptic induced parkinsonism.
G21.19 Other drug induced secondary parkinsonism.
G21.2 Secondary parkinsonism due to other external agents.
G21.3 Postencephalitic parkinsonism.
G21.4 Vascular parkinsonism.
G21.8 Other secondary parkinsonism.
G21.9 Secondary parkinsonism, unspecified.
G31.84 Mild cognitive impairment, so stated.
G35 Multiple sclerosis.
G37.3 Acute transverse myelitis in demyelinating disease of central nervous system.
G61.0 Guillain-Barre syndrome.
G61.81 Chronic inflammatory demyelinating polyneuritis.
G62.81 Critical illness polyneuropathy.
G62.9 Polyneuropathy, unspecified.
G65.0 Sequelae of Guillain-Barré syndrome.
G70.00 Myasthenia gravis without (acute) exacerbation.
G70.01 Myasthenia gravis with (acute) exacerbation.
G72.81 Critical illness myopathy.
G91.0 Communicating hydrocephalus.
G91.1 Obstructive hydrocephalus.
G91.2 (Idiopathic) normal pressure hydrocephalus.
G91.3 Post-traumatic hydrocephalus, unspecified.
G91.4 Hydrocephalus in diseases classified elsewhere.
G91.8 Other hydrocephalus.
G91.9 Hydrocephalus, unspecified.
G92 Toxic encephalopathy.
G93.1 Anoxic brain damage, not elsewhere classified.
G93.40 Encephalopathy, unspecified.
G93.41 Metabolic encephalopathy.
G93.49 Other encephalopathy.
I50.22 Chronic systolic (congestive) heart failure.
I50.23 Acute on chronic systolic (congestive) heart failure.
I50.32 Chronic diastolic (congestive) heart failure.
I50.33 Acute on chronic diastolic (congestive) heart failure.
I50.42 Chronic combined systolic (congestive) and diastolic (congestive) heart failure.
I50.43 Acute on chronic combined systolic (congestive) and diastolic (congestive) heart failure.
I50.9 Heart failure, unspecified.
M62.81 Muscle weakness (generalized).
M62.82 Rhabdomyolysis.
R26.0 Ataxic gait.
R26.1 Paralytic gait.
R26.2 Difficulty in walking, not elsewhere classified.
R26.81 Unsteadiness on feet.
R26.89 Other abnormalities of gait and mobility.
R26.9 Unspecified abnormalities of gait and mobility.
R27.0 Ataxia, unspecified.
R27.8 Other lack of coordination.
R27.9 Unspecified lack of coordination.
R41.84 Cognitive communication deficit.
R41.842 Visuospatial deficit.
R41.843 Psychomotor deficit.
R41.844 Frontal lobe and executive function deficit.
R41.89 Other symptoms and signs involving cognitive functions and awareness.
Z47.1 Aftercare following joint replacement surgery.
Z47.81 Encounter for orthopedic aftercare following surgical amputation.
Z47.89 Encounter for other orthopedic aftercare.
Z48.21 Encounter for aftercare following heart transplant.
Z48.22 Encounter for aftercare following kidney transplant.
Z48.23 Encounter for aftercare following liver transplant.
Z48.24 Encounter for aftercare following lung transplant.
Z48.280 Encounter for aftercare following heart-lung transplant.
Z48.288 Encounter for aftercare following multiple organ transplant.
Start Printed Page 56830
Z48.290 Encounter for aftercare following bone marrow transplant.
Z48.298 Encounter for aftercare following other organ transplant.
Z48.3 Aftercare following surgery for neoplasm.
Code categories G81, G82, and G83.
Code Category I69.
Code Category M84.3-M84.6 with 7th digit “D”.
Code Categories S32.4-S32.9 with 7th digit “D”.
Code Categories S72.0-S72.3 with 7th digit “D”, “E”, or “F”.

Response: We disagree with the recommendation to add the list of ICD-10-CM codes shown in the table above to MS-DRGs 945 and 946. As stated previously, we do not have claims data to evaluate how this suggested update would impact MS-DRG assignments. We agree with the other commenters who recommended that CMS wait for claims data in order to evaluate updates to MS-DRGs 945 and 946. While this commenter took the position that further research of claims data was not necessary because there is enough evidence and clinical knowledge to identify the majority of principal diagnoses that frequently require an inpatient admission for rehabilitation, and, as noted, submitted the above list of ICD-10-CM codes and code categories to add to MDC 23, we believe that ICD-10 claims data are necessary to evaluate this recommended change; without claims data, we cannot determine the number of cases that might be reassigned and if this reassignment was appropriate.

Comment: Commenters who agreed with waiting until claims data become available to evaluate MS-DRG updates stated that they understood that the current pre-MDC structure is limited to resource-intensive surgical procedures. However, they believed that there are some similarities between the existing pre-MDCs and MS-DRGs 945 and 946. The commenters stated that, similar to the existing pre-MDCs, the driver for the rehabilitation MS-DRGs is a specific type of service, and this service may be provided for a wide variety of principal diagnoses. Therefore, the commenters suggested the creation of a guideline that limits the use of the ICD-10-PCS rehabilitation codes to rehabilitation admissions would address the potential for patient cases to be reassigned from higher paying surgical MS-DRGs in other MDCs to the lower paying MS-DRGs 945 and 946 based on the reporting of a rehabilitation procedure code if these MS-DRGs were reassigned to the pre-MDCs. One commenter stated that, after the establishment of a new ICD-10-PCS coding guideline, the reporting of ICD-10-PCS rehabilitation codes for nonrehabilitation hospitalizations would be considered coding errors and, as with any coding error, could lead to inappropriate MS-DRG assignment. However, the commenter recommended that edits and reminders would likely be needed to minimize this type of coding error.

Response: We agree with the commenters that the issue of any updates to ICD-10-PCS guidelines should be considered along with any proposed MS-DRG updates because updated guidelines may impact code reporting.

We welcome any suggestions on how to update the ICD-10-PCS guidelines. These suggestions should be sent to ICDProcedureCodeRequest@cms.hhs.gov. We plan to take any proposed ICD-10-PCS rehabilitation guideline updates to a future meeting of the ICD-10 Coordination and Maintenance Committee so that the public can provide input on any new rehabilitation guideline. We continue to be concerned about creating a new ICD-10-PCS guideline whose purpose is to restrict assignment to certain MS-DRGs. Over time, the MS-DRGs are updated as part of the annual IPPS rulemaking. To create a guideline on a current MS-DRG structure as opposed to a means of capturing national data for all payers is not consistent with past guideline development. However, we look forward to working with the public on examining the need to improve the ICD-10-PCS guidelines for rehabilitation services reporting.

Comment: Other commenters who agreed with CMS' proposal to maintain the current structure of MS-DRGs 945 and 946 until such time as ICD-10 claims data become available recommended that the ICD-10 Coordination and Maintenance Committee address the creation of a single, new ICD-10-CM diagnosis code in Section Z of ICD-10-CM to replicate the ICD-9-CM code category V57 (Care involving use of rehabilitation procedures). The commenters recommended that if the CDC created this new code, the new ICD-10-CM code be added to MS-DRGs 945 and 946 when reported as a secondary diagnosis. The commenters urged CMS to obtain industry input from experts in rehabilitation on possible coding and MS-DRG updates.

Several commenters recommended that the existing ICD-10-CM Official Guidelines for Coding and Reporting be maintained to allow the sequencing of the diagnosis code for the condition for which the service is being performed as the principal diagnosis when the purpose for the admission/encounter is rehabilitation. Several commenters recommended a revision of the ICD-10-CM Official Guidelines for Coding and Reporting if a new ICD-10-CM code for care involving use of rehabilitation procedures were created. Some of the commenters recommended that the new diagnosis code be reported as a secondary diagnosis when the purpose for the admission/encounter was rehabilitation while others recommended that the new code be reported as the principal diagnosis.

One commenter objected to the development of coding guidelines based on Medicare payment policies. However, the commenter stated that any such guideline should be applied to all payers. The commenter stated that creating such a guideline that would restrict the use of these procedure codes such that they could only be used to identify rehabilitation admissions for the purpose of appropriately assigning MS-DRGs 945 and 946 merited serious consideration.

Response: We have referred the requests for a new ICD-10-CM code for care involving the use of rehabilitation procedures to the CDC for consideration at a future ICD-10 Coordination and Maintenance Committee meeting. Requests for ICD-10-CM code updates should be sent to the CDC at nchsicd10CM@cdc.gov. Information on submitting proposals for new diagnosis codes can be found on CDC's Web site at http://www.cdc.gov/​nchs/​icd/​icd10_​maintenance.htm. Should such a new diagnosis code be created, CMS would examine the possibility of using this new diagnosis code in the MS-DRGs 945 and 946 logic, as was the case in the ICD-9-CM version of the MS-DRGs. The public is also encouraged to send any specific recommendations for Start Printed Page 56831updates to the ICD-10-CM coding guidelines to CDC at: nchsicd10CM@cdc.gov. Updates that are made to ICD-10-CM, ICD-10-PCS, and the relevant coding guidelines will be considered along with claims data in evaluating any proposed updates to MS-DRGs 945 and 946.

After consideration of the public comments we received, we are finalizing our proposal to maintain the current structure of MS-DRGs 945 and 946. We look forward to working with the public on updates to the ICD-10-PCS guidelines or updates to ICD-10-CM to better capture these services. Once we receive ICD-10 claims data, we will again examine this issue.

12. Medicare Code Editor (MCE) Changes

The Medicare Code Editor (MCE) is a software program that detects and reports errors in the coding of Medicare claims data. Patient diagnoses, procedure(s), and demographic information are entered into the Medicare claims processing systems and are subjected to a series of automated screens. The MCE screens are designed to identify cases that require further review before classification into an MS-DRG.

In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49409 through 49412), we finalized the ICD-10 Definitions of Medicare Code Edits (ICD-10 MCE) Version 33. ICD-10 MCE Version 33 was based on the FY 2015 ICD-9-CM MCE Version 32 and the draft ICD-10 MCE Version 32 that had been made publicly available for comments in November 2014 on the ICD-10 MS-DRG Conversion Project Web site at: https://www.cms.gov/​Medicare/​Coding/​ICD10/​ICD-10-MS-DRG-Conversion-Project.html. In August 2015, we posted the finalized FY 2016 ICD-10 MCE Version 33 manual file and an ICD-9-CM MCE Version 33.0A manual file (for analysis purposes only). The links to these MCE manual files, along with the links to purchase the mainframe and computer software for the MCE Version 33 (and ICD-10 MS-DRGs) were posted on the CMS Web site through the FY 2016 IPPS Final Rule Home Page at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​FY2016-IPPS-Final-Rule-Home-Page.html?​DLSort=​0&​DLEntries=​10&​DLPage=​1&​DLSortDir=​ascending.

After implementation of the ICD-10 MCE Version 33, we received several requests to examine specific code edit lists that the requestors believed were incorrect and that affected claims processing functions. We received requests to review the MCE relating specifically to the Age conflict edit, the Sex conflict edit, the Non-covered procedure edit, and the Unacceptable principal diagnosis code edit. We discuss these code edit issues below. In addition, as a result of new and modified code updates approved after the annual spring ICD-10 Coordination and Maintenance Committee meeting, we routinely make changes to the MCE. In the past, in both the IPPS proposed and final rules, we only provided the list of changes to the MCE that were brought to our attention after the prior year's final rule. We historically have not listed the changes we have made to the MCE as a result of the new and modified codes approved after the annual spring ICD-10 Coordination and Maintenance Committee meeting. These changes are approved too late in the rulemaking schedule for inclusion in the proposed rule. Furthermore, although our MCE policies have been described in our proposed and final rules, we have not provided the detail of each new or modified diagnosis and procedure code edit in the final rule. However, we make available the finalized Definitions of Medicare Code Edits (MCE) file. Therefore, we have made available the FY 2017 ICD-10 MCE Version 34 manual file and an ICD-9-CM MCE Version 34.0A manual file (for analysis purposes only). The links to these MCE manual files, along with the links to purchase the mainframe and computer software for the MCE Version 34 (and ICD-10 MS-DRGs) are posted on the CMS Web site at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html through the FY 2017 IPPS Final Rule Home Page.

a. Age Conflict Edit

In the MCE, the Age conflict edit exists to detect inconsistencies between a patient's age and any diagnosis on the patient's record; for example, a 5-year-old patient with benign prostatic hypertrophy or a 78-year-old patient coded with a delivery. In these cases, the diagnosis is clinically and virtually impossible for a patient of the stated age. Therefore, either the diagnosis or the age is presumed to be incorrect. Currently, in the MCE, the following four age diagnosis categories appear under the Age conflict edit and are listed in the manual and written in the software program:

  • Newborn—Age of 0 years; a subset of diagnoses intended only for newborns and neonates (for example, fetal distress, perinatal jaundice).
  • Pediatric—Age is 0-17 years inclusive (for example, Reye's syndrome, routine child health exam).
  • Maternity—Age range is 12-55 years inclusive (for example, diabetes in pregnancy, antepartum pulmonary complication).
  • Adult—Age range is 15-124 years inclusive (for example, senile delirium, mature cataract).

(1) Newborn Diagnosis Category

Under the ICD-10-CM Official Guidelines for Coding and Reporting (available on the Web site at: https://www.cms.gov/​Medicare/​Coding/​ICD10/​2016-ICD-10-CM-and-GEMs.html), there are general guidelines and chapter-specific coding guidelines. The chapter-specific guidelines state that diagnosis codes from Chapter 16 (Certain Conditions Originating in the Perinatal Period) may be reported throughout the life of the patient if the condition is still present. The requestors noted that several codes from this Chapter 16 appear on the ICD-10 MCE Version 33 Age conflict edit for the newborn diagnosis category. Codes from this chapter are included in the P00 through P96 code range. Therefore, the requestors believed that because the chapter-specific guidelines state that codes within this chapter may be reported throughout the life of a patient, all codes within this range (P00 through P96) should be removed from the newborn diagnosis category on the Age conflict edit code list.

As we discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25000 through 25001), we examined the newborn diagnosis category on the age conflict edit list in the ICD-9-CM MCE Version 32 in comparison to the ICD-9-CM chapter-specific guidelines. Under ICD-9-CM, Chapter 15 (Certain Conditions Originating in the Perinatal Period) includes codes within the 760 through 779 range. We found that the same chapter-specific guideline under ICD-10 exists under ICD-9-CM: Diagnosis codes from Chapter 15 may be reported throughout the life of the patient if the condition is still present. Similar to the ICD-10 MCE Version 33 newborn diagnosis category in the Age conflict edit code list, we noted that several codes from this Chapter 15 appear on the ICD-9-CM MCE Version 32 Age conflict edit for the newborn diagnosis category.

Because the full definition of the chapter-specific guideline for “Certain Conditions Originating in the Perinatal Period” clearly states the codes within the chapter may be reported throughout the life of the patient if the condition is still present, we believe that, Start Printed Page 56832historically, under ICD-9-CM, this was the rationale for inclusion of the diagnosis codes that were finalized for the newborn diagnosis category under the Age conflict edit (in code range 760 through 779). For example, under ICD-9-CM, there are four diagnosis codes in the 760.6x series that specifically include the term “newborn” in the title. These diagnosis codes are:

  • 760.61 (Newborn affected by amniocentesis);
  • 760.62 (Newborn affected by other in utero procedure);
  • 760.63 (Newborn affected by other surgical operations on mother during pregnancy); and
  • 760.64 (Newborn affected by previous surgical procedure on mother not associated with pregnancy).

Under the ICD-9-CM classification, the chapter-specific guidelines in Chapter 15 (Certain Conditions Originating in the Perinatal Period) state that, for coding and reporting purposes, the perinatal period is defined as before birth through the 28th day following birth. As such, for coding and reporting purposes, a patient that is beyond the 28th day of life is no longer considered a newborn. Therefore, we believe that the diagnosis codes listed on the newborn diagnosis category in the Age conflict edit code list are, in fact, appropriate because they identify what the title of Chapter 15 describes (certain conditions specific to beginning in the perinatal period); that is, a newborn. The intent of the diagnosis codes included on the Age conflict edit code list is to identify claims where any one of the listed diagnoses is reported for a patient who is beyond the 28th day of life. If that definition is met according to the patient's date of birth, the edit is correctly triggered in those cases.

Transitioning to the ICD-10 MCE was based on replication of the ICD-9-CM based MCE (in parallel with the transition to the ICD-10 MS-DRGs, which was based on replication of the ICD-9-CM MS-DRGs). Therefore, the diagnosis codes included in the newborn diagnosis category on the Age conflict edit code list in the ICD-10 MCE are a replication of the diagnosis code descriptions included on the newborn diagnosis category on the Age conflict edit code list under the ICD-9-CM MCE. However, the chapter-specific guideline in ICD-10-CM Chapter 16, section C.16.e. (Low birth weight and immaturity status), specifies that codes within category P07 (Disorders of newborn related to short gestation and low birth weight, not elsewhere classified) are for use for a child or adult who was premature or had a low birth weight as a newborn and this condition is affecting the patient's current health status. Therefore, we agree that codes within the range of P07.00 through P07.39 should not be listed under newborn diagnosis category on the Age conflict edit code list in the ICD-10 MCE. It is unclear why this range of codes within category P07 is distinguished separately when under the General Perinatal Rules for Chapter 16 (Certain Conditions Originating in the Perinatal Period), section I.C.16.a.1. states that diagnosis codes from Chapter 16 may be reported throughout the life of the patient if the condition is still present. In addition, the guideline at section I.C.16.a.4. states that “should a condition originate in the perinatal period, and continue throughout the life of the patient, the perinatal code should continue to be used regardless of the patient's age.” According to these general guidelines, we could assume that potentially all codes within Chapter 16 in the code range of P00 through P96 should be considered for removal from the newborn diagnosis category on the Age conflict edit code list. However, a subsequent section of Chapter 16, section 1.C.16.c.2. (Codes for conditions specified as having implication for future health care needs), instructs users to assign codes for conditions that have been specified by the provider as having implications for future health care needs. Immediately below that instruction is a note which states: “This guideline should not be used for adult patients.”

The ICD-10-CM Official Guidelines for Coding and Reporting are updated separately from the IPPS rulemaking process. Due to the confusion with the chapter-specific guidelines for codes in Chapter 16 and how they impact the newborn diagnosis category on the Age conflict edit code list, we believe it would be beneficial to fully evaluate the intent of these guidelines with the Centers for Disease Control's (CDC's) National Center for Health Statistics (NCHS) because NCHS has the lead responsibility for the ICD-10-CM diagnosis codes.

In the meantime, to address claims processing concerns related to the newborn diagnosis category on the Age conflict edit code list, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25001), we proposed to remove all the ICD-10-CM diagnoses in the code range of P00 through P96 from the newborn diagnosis category in the Age conflict code edit list for the ICD-10 MCE for FY 2017. We invited public comments on our proposal. We also solicited public comments on the appropriateness of the other diagnosis codes currently listed under the newborn diagnosis category in the Age conflict edit in the ICD-10 MCE Version 33. We refer readers to Table 6P.1a. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html) for review of the diagnosis codes we proposed to remove.

In addition, for FY 2017, we indicated that we were examining the need to revise the description for the newborn diagnosis category in the Age conflict edit under the MCE. The current description as written, Newborn—Age of 0 years; a subset of diagnoses intended only for newborns and neonates (e.g., fetal distress, perinatal jaundice), is not consistent with the instructions for reporting the diagnosis codes in Chapter 16. We invited public comments on our proposal to revise the description of the newborn diagnosis category in the Age conflict edit under the MCE.

Comment: Several commenters supported the proposal to remove all the ICD-10-CM diagnoses in the code range of P00 through P96 from the newborn diagnosis category in the Age conflict code edit list. The commenters did not believe the newborn guidelines were in conflict with each other or required any modifications, as the specific references noted in the proposed rule address unrelated reporting issues. However, the commenters indicated that they planned to submit recommendations directly to the CDC to revise an instructional note that appears at the beginning of Chapter 16 which they believe may be a contributing factor to confusion surrounding the proper application of codes within the chapter.

Response: We appreciate the commenters' support. We also appreciate the commenters' review of the newborn guidelines and their plan to submit a recommendation to the CDC regarding the instructional note that appears at the beginning of Chapter 16.

We wish to clarify for the commenters that the focus of our proposal was on the removal of codes from the newborn diagnosis category in the Age conflict code edit list. Our discussion involving the references to the guidelines was to simply note the confusion with the guidelines and how those guidelines impact the codes listed under newborn diagnosis category in the Age conflict code edit list. Following that discussion, we stated our belief that it would be beneficial to discuss the intent of the guidelines with CDC.

Comment: Many commenters supported the proposal for the MCE Start Printed Page 56833changes related to the Age conflict edit description.

Response: We appreciate the commenters' support and believe a revised description of the newborn edit better defines the diagnoses that are subject to it.

After consideration of the public comments we received, we are finalizing our proposal to remove all the ICD-10-CM diagnoses in the code range of P00 through P96 from the newborn diagnosis category in the Age conflict code edit list for the ICD-10 MCE for FY 2017. The procedure codes listed in Table 6P.1a. associated with this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html) are the finalized list of procedure codes that will be removed from the newborn diagnosis category in the Age conflict code edit list in the ICD-10 MCE Version 34 effective October 1, 2016.

We also are finalizing our proposal to revise the description of the newborn diagnosis category under the ICD-10 MCE from “Newborn. Age of 0 years; a subset of diagnoses intended only for newborns and neonates (e.g., fetal distress, perinatal jaundice)” to “Perinatal/Newborn. Age 0 years only; a subset of diagnoses which will only occur during the perinatal or newborn period of age 0 (e.g., tetanus neonatorum, health examination for newborn under 8 days old)” in the ICD-10 MCE Version 34, effective October 1, 2016.

(2) Pediatric Diagnosis Category

Under the ICD-10 MCE Version 33, the pediatric diagnosis category for the Age conflict edit considers the age range of 0 to 17 years inclusive. For that reason, the diagnosis codes on this Age conflict edit list would be expected to apply to conditions or disorders specific to that age group only. The code list for the pediatric diagnosis category in the Age conflict edit currently includes 12 diagnosis codes that fall within the F90 through F98 code range. These codes were included as a result of replication from the ICD-9-CM MCE Version 32 and the draft ICD-10 MCE Version 32.

We received a request to review the 12 ICD-10-CM diagnosis codes listed in the following table because they appear to conflict with guidance in the ICD-10-CM classification.

ICD-10-CM diagnosis codeDescription
F93.0Separation anxiety disorder of childhood.
F93.8Other childhood emotional disorders.
F93.9Childhood emotional disorder, unspecified.
F94.1Reactive attachment disorder of childhood.
F94.2Disinhibited attachment disorder of childhood.
F94.8Other childhood disorders of social functioning.
F94.9Childhood disorder of social functioning, unspecified.
F98.21Rumination disorder of infancy.
F98.29Other feeding disorders of infancy and early childhood.
F98.3Pica of infancy and childhood.
F98.8Other specified behavioral and emotional disorders with onset usually occurring in childhood and adolescence.
F98.9Unspecified behavioral and emotional disorders with onset usually occurring in childhood and adolescence.

Under the ICD-10-CM Tabular List of Diseases and Injuries, Chapter 5 (Mental, Behavioral and Neurodevelopmental Disorders) contains a section titled “Behavioral and emotional disorders with onset usually occurring in childhood and adolescence” which includes codes for the F90 to F98 code range. At the beginning of this tabular section is an instructional “note” that states: “Codes within categories F90-F98 may be used regardless of the age of a patient. These disorders generally have onset within the childhood or adolescent years, but may continue throughout life or not be diagnosed until adulthood.”

Because the note specifically states that these codes may be used regardless of the age of a patient, we believe they should not be included on the pediatric diagnosis category on the Age conflict edit code list. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25001 through 25002), we proposed to remove the 12 codes that fall within the F90 through F98 code range currently listed for the pediatric diagnosis category on the ICD-10 MCE age conflict edit code list, effective October 1, 2016, for FY 2017. We invited public comments on our proposal.

Comment: Several commenters supported the proposal to address the replication issue for the pediatric diagnosis category on the ICD-10 MCE Age conflict edit code list by removing the 12 ICD-10-CM diagnosis codes in the F90 through F98 code range currently listed.

Response: We appreciate the commenters' support of our proposal. We also agree that removal of the specified ICD-10-CM diagnosis codes from the edit code list will resolve the replication issue and enable proper reporting of the conditions regardless of the patient's age.

After consideration of the public comments we received, we are finalizing our proposal to remove the 12 ICD-10-CM diagnosis codes in the F90 through F98 code range displayed earlier in this section from the pediatric diagnosis category Age conflict edit code list in the ICD-10 MCE Version 34, effective October 1, 2016.

We also received a request to review whether another group of diagnosis codes is clinically incorrect for the ICD-10 MCE Version 33 pediatric diagnosis category in the Age conflict edit. The requestor stated that ICD-10-CM diagnosis codes describing infantile and juvenile cataracts, by their titles, appear to merit inclusion on the pediatric diagnosis category on the Age conflict edit code list. However, according to the requestor, the diagnosis is not constrained to a patient's age, but rather the “infantile” versus “juvenile” reference is specific to the type of cataract the patient has. These diagnosis codes that are currently listed for the pediatric diagnosis category in the ICD-10 MCE Age conflict edit code list are as follows:Start Printed Page 56834

ICD-10-CM diagnosis codeDescription
H26.001Unspecified infantile and juvenile cataract, right eye.
H26.002Unspecified infantile and juvenile cataract, left eye.
H26.003Unspecified infantile and juvenile cataract, bilateral.
H26.009Unspecified infantile and juvenile cataract, unspecified eye.
H26.011Infantile and juvenile cortical, lamellar, or zonular cataract, right eye.
H26.012Infantile and juvenile cortical, lamellar, or zonular cataract, left eye.
H26.013Infantile and juvenile cortical, lamellar, or zonular cataract, bilateral.
H26.019Infantile and juvenile cortical, lamellar, or zonular cataract, unspecified eye.
H26.031Infantile and juvenile nuclear cataract, right eye.
H26.032Infantile and juvenile nuclear cataract, left eye.
H26.033Infantile and juvenile nuclear cataract, bilateral.
H26.039Infantile and juvenile nuclear cataract, unspecified eye.
H26.041Anterior subcapsular polar infantile and juvenile cataract, right eye.
H26.042Anterior subcapsular polar infantile and juvenile cataract, left eye.
H26.043Anterior subcapsular polar infantile and juvenile cataract, bilateral.
H26.049Anterior subcapsular polar infantile and juvenile cataract, unspecified eye.
H26.051Posterior subcapsular polar infantile and juvenile cataract, right eye.
H26.052Posterior subcapsular polar infantile and juvenile cataract, left eye.
H26.053Posterior subcapsular polar infantile and juvenile cataract, bilateral.
H26.059Posterior subcapsular polar infantile and juvenile cataract, unspecified eye.
H26.061Combined forms of infantile and juvenile cataract, right eye.
H26.062Combined forms of infantile and juvenile cataract, left eye.
H26.063Combined forms of infantile and juvenile cataract, bilateral.
H26.069Combined forms of infantile and juvenile cataract, unspecified eye.
H26.09Other infantile and juvenile cataract.

Our clinical advisors reviewed the list of diagnoses presented above and confirmed that these diagnosis codes are appropriate to include in the ICD-10 MCE for the pediatric diagnosis category in the Age conflict edit because the diseases described by these codes are typically diagnosed in early childhood and treated very rapidly to prevent amblyopia. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25002), for FY 2017, we did not propose to remove these codes under the pediatric diagnosis category in the Age conflict edit. We proposed to maintain this list in the ICD-10 MCE Version 34, effective October 1, 2016. We invited public comments on our proposal.

Comment: Commenters supported the proposal to retain the list of ICD-10-CM diagnosis codes describing infantile and juvenile cataracts in the pediatric diagnosis category for the Age conflict edit.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our proposal to maintain the ICD-10-CM diagnosis codes displayed earlier in this section describing infantile and juvenile cataracts in the pediatric diagnosis category for the Age conflict edit in the ICD-10 MCE Version 34, effective October 1, 2016.

As stated earlier, for the pediatric diagnosis category in the Age conflict edit, the MCE considers the age range of 0 through 17 years inclusive. In the ICD-10 MCE Version 33, there are four diagnosis codes describing the body mass index (BMI) for pediatric patients in the pediatric diagnosis category on the Age conflict edit code list. The four ICD-10-CM diagnosis codes describing the BMI percentiles for pediatric patients are as follows:

ICD-10-CM diagnosis codeDescription
Z68.51Body mass index (BMI) pediatric, less than 5th percentile for age.
Z68.52Body mass index (BMI) pediatric, 5th percentile to less than 85th percentile for age.
Z68.53Body mass index (BMI) pediatric, 85th percentile to less than 95th percentile for age.
Z68.54Body mass index (BMI) pediatric, greater than or equal to 95th percentile for age.

Under the ICD-10-CM Tabular List of Diseases and Injuries, the BMI pediatric diagnosis codes are designated for use in persons 2 through 20 years of age. The percentiles are based on the growth charts published by the CDC. As a result of the age discrepancy between the MCE pediatric diagnosis category in the Age conflict edit (ages 0 through 17) and the Tabular reference for the BMI pediatric codes (ages 2 through 20), in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25003), we proposed to remove ICD-10-CM diagnosis codes Z68.51, Z68.52, Z68.53, and Z68.54 from the ICD-10 MCE pediatric diagnosis category on the Age conflict edit code list for Version 34, effective FY 2017. We invited public comments on our proposal.

Comment: Commenters supported the proposal to remove the four ICD-10-CM diagnosis codes describing body mass index (BMI) for pediatric patients from the pediatric diagnosis category on the Age conflict edit code list in the MCE. The commenters stated that this proposal would enable proper reporting of these codes.

Response: We appreciate the commenters' support. We agree that removal of the specified ICD-10-CM diagnosis codes discussed previously from the edit code list will resolve any age discrepancy issues in the reporting of the conditions regardless of the patient's age.

After consideration of the public comments we received, we are finalizing our proposal to remove the four ICD-10-CM diagnosis codes displayed earlier in this section that identify the body mass index for pediatric patients from the pediatric diagnosis category on the Age conflict Start Printed Page 56835edit code list in the ICD-10 MCE Version 34, effective October 1, 2016.

One requestor also asked that CMS review the ICD-10-CM diagnosis codes currently included in ICD-10-CM category R62 (Lack of expected normal physiological development in childhood and adults) series. Specifically, the requestor noted that there are adult patients diagnosed with the conditions in subcategory R62.5 (Other and unspecified lack of expected normal physiological development in childhood) and that three of these conditions also were listed in the ICD-10 MCE Version 33 pediatric diagnosis category on the Age conflict edit code list. These three diagnosis codes are:

  • R62.50 (Unspecified lack of expected normal physiological development in childhood);
  • R62.52 (Short stature (child)); and
  • R62.59 (Other lack of expected normal physiological development in childhood).

We acknowledge that subcategory R62.5 can be confusing with regard to how to appropriately report a condition diagnosed for an adult when the titles reference the terms “child” or “childhood”. Therefore, we consulted with the ICD-10-CM classification staff at the NCHS to determine the intended use and reporting of the diagnosis codes R62.50, R62.52, and R62.59. The NCHS staff agreed that the three diagnosis codes should not be restricted to the pediatric ages as defined by the MCE. The NCHS staff stated the codes are appropriate to report for adult patients, noting that if a patient is diagnosed with short stature as a child, the patient could very well carry over that diagnosis into adulthood.

During our review of the issue relating to the subcategory R62.5 pediatric diagnosis category on the Age conflict edit code list, we identified another diagnosis code that also appeared appropriate to report for an adult patient. ICD-10-CM diagnosis code Y93.6A (Activity, physical games generally associated with school recess, summer camp and children) is one of several activity codes included in ICD-10-CM Chapter 20 (External Causes of Morbidity). This diagnosis code includes games such as dodge ball and capture the flag, which one can reasonably expect an adult to be engaged in for physical activity.

We discussed this diagnosis code with the NCHS staff to receive their input on the intent for coding and reporting the code. They agreed that ICD-10-CM diagnosis code Y93.6A is applicable for adults as well as children. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25003), for FY 2017, we proposed to remove ICD-10-CM diagnosis codes R62.50, R62.52, and R62.59 in subcategory R62.5 and ICD-10-CM diagnosis code Y93.6A from the ICD-10 MCE pediatric diagnosis category on the Age conflict edit code list. We invited public comment on our proposal.

Comment: Commenters supported the proposal to remove ICD-10-CM diagnosis codes R62.50, R62.52, and R62.59 in subcategory R62.5 and to also remove ICD-10-CM diagnosis code Y93.6A from the ICD-10 MCE pediatric diagnosis category on the Age conflict edit code list.

Response: We appreciate the commenters' support of our proposal.

After consideration of the public comments we received, we are finalizing our proposal to remove the following four ICD-10-CM diagnosis codes from the pediatric diagnosis category on the Age conflict edit code list in the ICD-10 MCE Version 34, effective October 1, 2016.

  • R62.50 (Unspecified lack of expected normal physiological development in childhood);
  • R62.52 (Short stature (child));
  • R62.59 (Other lack of expected normal physiological development in childhood); and
  • Y93.6A (Activity, physical games generally associated with school recess, summer camp and children).

b. Sex Conflict Edit

In the MCE, the Sex conflict edit detects inconsistencies between a patient's sex and any diagnosis or procedure on the patient's record; for example, a male patient with cervical cancer (diagnosis) or a female patient with a prostatectomy (procedure). In both instances, the indicated diagnosis or the procedure conflicts with the stated sex of the patient. Therefore, the patient's diagnosis, procedure, or sex is presumed to be incorrect.

We received a request to review ICD-10-CM diagnosis code Z79.890 (Hormone replacement therapy (postmenopausal)). This code is listed on the Diagnoses for females only edit code list. Therefore, when the diagnosis is reported for a male patient, the edit will be triggered. However, the requester noted that the term “postmenopausal” is enclosed in parentheses and is a “non-essential modifier.” A “non-essential modifier” is used in the ICD-10-CM classification to identify a supplementary word that may, or may not be present in the statement of a disease or procedure. In other words, the term in parentheses does not have to be documented to report the code. If the medical record documentation states a female patient is undergoing hormone replacement therapy, the documentation supports assignment of the case to ICD-10-CM diagnosis code Z79.890 (Hormone replacement therapy (postmenopausal)). There does not need to be a diagnostic statement that the patient is postmenopausal to assign the code. The requester asked that CMS review why this diagnosis code is being classified as applicable to females only because, in the absence of the non-essential modifier (postmenopausal), the code could also apply to males.

We note that the ICD-9-CM equivalent code, V07.4 Hormone replacement therapy (postmenopausal) has been on the female only edit since October 1, 1992 in the ICD-9-CM MCE. We consulted with the ICD-10-CM classification staff at the NCHS to determine the intended use and reporting of this diagnosis code. The staff at NCHS acknowledged that, historically, the intent of the ICD-9-CM diagnosis code was for females only. However, they agreed that, under ICD-10-CM, the diagnosis code Z79.890 can be reported for both men and women. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25003), we proposed to remove this diagnosis code from the Diagnoses for females only edit code list effective October 1, 2016. We invited public comments on our proposal.

Comment: Commenters supported the proposal to remove the ICD-10-CM diagnosis code describing hormone replacement therapy from the Diagnosis for females only edit code list in the ICD-10 MCE.

Response: We appreciate the commenters' support for our proposal. We agree it is appropriate to allow the reporting of the ICD-10-CM diagnosis code describing hormone replacement therapy for both male and female patients.

After consideration of the public comments we received, we are finalizing our proposal to remove ICD-10-CM diagnosis code Z79.890 (Hormone replacement therapy (postmenopausal)) from the Diagnosis for females only edit code list from the ICD-10 MCE Version 34, effective October 1, 2016.

We also considered the ICD-10-CM diagnosis codes listed in the table below that are included on the Diagnoses for females only edit code list.Start Printed Page 56836

ICD-10-CM diagnosis codeDescription
Z44.30Encounter for fitting and adjustment of external breast prosthesis, unspecified breast.
Z44.31Encounter for fitting and adjustment of external right breast prosthesis.
Z44.32Encounter for fitting and adjustment of external left breast prosthesis.
Z45.811Encounter for adjustment or removal of right breast implant.
Z45.812Encounter for adjustment or removal of left breast implant.
Z45.819Encounter for adjustment or removal of unspecified breast implant.

These codes describe encounters for breast implants or prostheses. Our clinical advisors and the NCHS staff agree that diagnosis codes Z44.30, Z44.31, Z44.32, Z45.811, Z45.812, and Z45.819 are clinically appropriate to report for male patients and should not be restricted to females. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25004), we proposed to remove these diagnosis codes from the Diagnoses for females only edit code list in the ICD-10 MCE, effective October 1, 2016. We invited public comments on our proposal.

Comment: Commenters agreed that the ICD-10-CM diagnosis codes describing encounters for breast implants or prostheses are appropriate to report for male patients and should not be limited to females.

Response: We appreciate the commenters' support of our proposal.

After consideration of the public comments we received, we are finalizing our proposal to remove the six ICD-10-CM diagnosis codes displayed earlier in this section that identify an encounter for fitting or adjustment of a breast implant or prosthesis from the Diagnoses for females only edit code list in the ICD-10 MCE Version 34, effective October 1, 2016.

c. Non-Covered Procedure Edit

In the MCE, the Non-covered procedure edit identifies procedures for which Medicare does not provide payment. Payment is not provided due to specific criteria that are established in the National Coverage Determination (NCD) process. We refer readers to the Web site at: https://www.cms.gov/​Medicare/​Coverage/​DeterminationProcess/​howtorequestanNCD.html for additional information on this process. In addition, there are procedures that would normally not be paid by Medicare but, due to the presence of certain diagnoses, are paid.

(1) Endovascular Mechanical Thrombectomy

We received several requests to review ICD-10-PCS procedure code 03CG3ZZ (Extirpation of matter from intracranial artery, percutaneous approach) which is currently listed as a non-covered procedure in the ICD-10 MCE Non-covered procedure edit code list. The comparable ICD-9-CM code translations for ICD-10-PCS code 03CG3ZZ are ICD-9-CM codes 17.54 (Percutaneous atherectomy of intracranial vessel(s)) and 39.74 (Endovascular removal of obstruction from head and neck vessel(s)).

The requestors noted that, under ICD-9-CM, endovascular mechanical thrombectomy of a cerebral artery to remove a clot that is causing an ischemic stroke was reported with procedure code 39.74 (Endovascular removal of obstruction from head and neck vessel(s)) and is a well-recognized procedure that has been covered by Medicare. After implementation of ICD-10 on October 1, 2015, claims that were correctly submitted for endovascular mechanical thrombectomy procedures with ICD-10-PCS procedure code 03CG3ZZ were triggering the Non-covered procedure edit. The requestors sought clarification as to whether there was a change in coverage or if there was a replication issue.

Under the ICD-9-CM MCE Version 32, procedure code 00.62 is listed on the Non-covered procedure edit code list. Percutaneous angioplasty of an intracranial vessel procedure (with and without stent) may be reported under ICD-10 with the ICD-10-PCS procedure codes listed in the following table:

ICD-10-PCS procedure codeDescription
037G34ZDilation of intracranial artery with drug-eluting intraluminal device, percutaneous approach.
037G3DZDilation of intracranial artery with intraluminal device, percutaneous approach.
037G3ZZDilation of intracranial artery, percutaneous approach.
037G44ZDilation of intracranial artery with drug-eluting intraluminal device, percutaneous endoscopic approach.
037G4DZDilation of intracranial artery with intraluminal device, percutaneous endoscopic approach.
037G4ZZDilation of intracranial artery, percutaneous endoscopic approach.
057L3DZDilation of intracranial vein with intraluminal device, percutaneous approach.
057L4DZDilation of intracranial vein with intraluminal device, percutaneous endoscopic approach.

We discovered that a replication error occurred due to an outdated ICD-9-CM entry for procedure code 00.62. This error led to ICD-10-PCS procedure codes 03CG3ZZ (Extirpation of matter from intracranial artery, percutaneous approach) and 05CL3ZZ (Extirpation of matter from intracranial vein, percutaneous approach) being listed as comparable translations for ICD-9-CM code 00.62. As a result, ICD-10-PCS procedure code 03CG3ZZ was included on the ICD-10 MCE Version 33 Non-covered procedure edit code list.

In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25004), for FY 2017, we proposed to remove the ICD-10-PCS procedure codes listed in the following table from the ICD-10 MCE Version 34.0 Non-covered procedure edit code list.

ICD-10-PCS procedure codeDescription
03CG3ZZExtirpation of matter from intracranial artery, percutaneous approach.
03CG4ZZExtirpation of matter from intracranial artery, percutaneous endoscopic approach.
Start Printed Page 56837
05CL3ZZExtirpation of matter from intracranial vein, percutaneous approach.
05CL4ZZExtirpation of matter from intracranial vein, percutaneous endoscopic approach.

We invited public comments on our proposal.

Comment: Many commenters supported the proposal to remove the four ICD-10-PCS procedure codes describing mechanical thrombectomy from the Non-covered procedure edit code list in the ICD-10 MCE to prevent further claims processing issues. Some commenters also recommended that CMS instruct the MACs to reprocess claims that were denied as a result of the codes being listed in the MCE. Other commenters suggested changes to the National Coverage Determination (NCD) for Intracranial Percutaneous Transluminal Angioplasty (PTA) with Stenting (20.7).

Response: We appreciate the commenters' support for our proposal. We agree that removal of the four ICD-10-PCS procedure codes that describe mechanical thrombectomy procedures from the non-covered procedure edit code list in the ICD-10 MCE will help resolve future claims processing and denial issues associated with the reporting of these codes.

In response to the comment that we instruct the MACs to reprocess any affected claims, we note that contractors began reprocessing affected claims at providers' request in March 2016. We recommend that providers who have experienced claims processing issues work with their local MACs to resolve any outstanding claims.

With regard to the commenters who suggested that changes be made to the NCD for Intracranial PTA with Stenting, we note that we issued instructions with updated changes on June 3, 2016 as a One-Time Notification, Pub. No. 100-20, Transmittal 1672, Change Request 9631, effective October 1, 2016.

After consideration of the public comments we received, we are finalizing our proposal to remove the four ICD-10-PCS procedure codes displayed earlier in this section from the non-covered procedure edit code list in the ICD-10 MCE Version 34, effective October 1, 2016.

(2) Radical Prostatectomy

We received a request to review ICD-10-PCS procedure codes related to a radical prostatectomy. Specifically, the requestor noted that when coding cases where the removal of the vas deferens is also performed, a Non-covered procedure edit is triggered. The requestor suggested that the edit for this procedure may be intended for cases where the removal of the vas deferens is being performed for sterilization (vasectomy) purposes. According to the requester, removal of the vas deferens also may be involved with removing the prostate in the radical prostatectomy procedure. The requestor suggested that CMS address this issue by revising the ICD-10 MCE Non-covered procedure edit code list to reflect noncoverage of the procedure codes when the removal of vas deferens procedure is being performed solely for sterilization (vasectomy) purposes.

Because radical procedures can have different meanings, depending on the procedure, the term “radical” is not always reliable information for coding and reporting the procedure. Under ICD-10-PCS, users are instructed to code separately the organs or structures that were actually removed and for which there is a distinctly defined body part. A radical prostatectomy is coded as a “cluster” under ICD-10-PCS. A “cluster” is the term used to describe the circumstance when a combination of ICD-10-PCS procedure codes are needed to fully satisfy the equivalent meaning of an ICD-9-CM procedure code for it to be considered a plausible translation.

The cluster definition for a radical prostatectomy in ICD-10-PCS currently consists of one of the following codes:

  • 0VT00ZZ (Resection of prostate, open approach);
  • 0VT04ZZ (Resection of prostate, percutaneous endoscopic approach);
  • 0VT07ZZ (Resection of prostate, via natural or artificial opening); or
  • 0VT08ZZ Resection of prostate, via natural or artificial opening endoscopic; in combination with one of the following codes:
  • 0VT30ZZ (Resection of bilateral seminal vesicles, open approach); or
  • 0VT34ZZ (Resection of bilateral seminal vesicles, percutaneous endoscopic approach).

As stated earlier, under ICD-10-PCS, users are instructed to code separately the organs or structures that were actually removed and for which there is a distinctly defined body part. Therefore, a patient who undergoes a radical prostatectomy that involves removal of the vas deferens would have this procedure reported separately, in addition to the options displayed in the “cluster.”

The ICD-10-PCS procedure codes that may be reported for sterilization and involve the bilateral vas deferens include the following:

ICD-10-PCS procedure codeDescription
0V5Q0ZZDestruction of bilateral vas deferens, open approach.
0V5Q3ZZDestruction of bilateral vas deferens, percutaneous approach.
0V5Q4ZZDestruction of bilateral vas deferens, percutaneous endoscopic approach.
0VBQ0ZZExcision of bilateral vas deferens, open approach.
0VBQ3ZZExcision of bilateral vas deferens, percutaneous approach.
0VBQ4ZZExcision of bilateral vas deferens, percutaneous endoscopic approach.
0VTQ0ZZResection of bilateral vas deferens, open approach.
0VTQ4ZZResection of bilateral vas deferens, percutaneous endoscopic approach.

The eight procedure codes listed above describing various methods to remove the bilateral vas deferens are currently listed on the ICD-10 MCE Version 33 Non-covered procedure edit code list.

The requester is correct in stating that the codes related to removal of the bilateral vas deferens are included on the ICD-10 MCE Version 33 Non-covered procedure edit code list to reflect a sterilization procedure. While the vast majority of sterilization procedures will involve reporting the Start Printed Page 56838bilateral procedure codes, there are instances where one vas deferens may have been previously removed for other reasons and the remaining vas deferens requires sterilization. Therefore, the procedure codes describing removal of a unilateral vas deferens are also included on the ICD-10 MCE Version 33 Non-covered procedure edit code list to reflect a sterilization procedure. We agree that revising the language in the edit will resolve the issue of covered procedures being inappropriately subject to the edit.

In addition, while reviewing the Non-covered procedure edit list of codes that may be reported to identify sterilization procedures for males, we considered the procedure codes that may be reported to identify sterilization procedures for females. We examined the list of ICD-10-PCS procedure codes included on the ICD-10 MCE Version 33 Non-covered procedure edit code list that could reflect female sterilization (removal of fallopian tubes) and determined those codes also could be reported for other conditions and could be inappropriately subject to the current edit as well.

Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25005), for FY 2017, we proposed to create a new ICD-10 MCE Version 34 Non-covered procedure edit to reflect that procedures performed on males involving the unilateral or bilateral vas deferens and procedures performed on females involving the fallopian tubes are not covered procedures for sterilization purposes. The proposed new ICD-10 MCE Version 34 Non-covered procedure edit would be displayed as follows: “G. Non-covered procedure. The procedure codes shown below are identified as non-covered procedures only when ICD-10-CM diagnosis code Z30.2 (Encounter for sterilization) is listed as the principal diagnosis.”

We referred readers to Table 6P.1b. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html) to review the proposed list of noncovered procedure codes describing sterilization procedures for males and females for this proposed Non-covered procedure edit. We invited public comments on our proposal to create this new Non-covered procedure edit and also invited public comments on the proposed list of codes to describe sterilization procedures for the proposed edit.

Comment: Commenters supported the proposal to create a new ICD-10 MCE Version 34 Non-covered procedure edit to reflect that procedures performed on males involving the unilateral or bilateral vas deferens and procedures performed on females involving the fallopian tubes are not covered procedures for sterilization purposes. One commenter noted that there could be situations in which a patient is admitted for another condition and a sterilization procedure is performed during that episode of care. For example, the commenter stated a female may be admitted for a cesarean section and have a tubal ligation procedure during that same hospitalization. The commenter suggested that the proposed list of procedure codes be considered as non-covered when ICD-10-CM diagnosis code Z30.2 is reported as a principal or secondary diagnosis on the claim.

Response: We appreciate the commenters' support for our proposal. We also agree with the commenter that it is appropriate to list ICD-10-CM diagnosis code Z30.2 (Encounter for sterilization) as a principal or secondary diagnosis for purposes of the non-covered procedure edit.

After consideration of the public comments we received, we are finalizing our proposal to create a new ICD-10 MCE Version 34 Non-covered procedure edit. The new edit will be defined as follows: “G. Non-covered procedure. The procedure codes shown below are identified as non-covered procedures only when ICD-10-CM diagnosis code Z30.2 (Encounter for sterilization) is listed as the principal diagnosis or secondary diagnosis.” The procedure codes listed in Table 6P.1b. associated with this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html) are the finalized list of non-covered procedure codes describing sterilization procedures for males and females for this finalized Non-covered procedure edit in the ICD-10 MCE Version 34, effective October 1, 2016.

d. Unacceptable Principal Diagnosis Edit

In the MCE, there are select codes that describe a circumstance which influences an individual's health status but does not actually describe a current illness or injury. There also are codes that are not specific manifestations but may be due to an underlying cause. These codes are considered unacceptable as a principal diagnosis. In limited situations, there are a few codes on the MCE Unacceptable principal diagnosis edit code list that are considered “acceptable” when a specified secondary diagnosis is also coded and reported on the claim.

(1) Liveborn Infant

We received a request to examine ICD-10-CM diagnosis codes Z38.1 (Single liveborn infant, born outside hospital), Z38.4 (Twin liveborn infant, born outside hospital), and Z38.7 (Other multiple liveborn infant, born outside hospital), all of which are currently listed on the Unacceptable principal diagnosis edit code list for the ICD-10 MCE Version 33. The requestor believed that these codes are listed in error and suggested their removal.

The ICD-10-CM diagnosis code descriptions for liveborn infants differ from the ICD-9-CM diagnosis code descriptions for liveborn infants. The ICD-9-CM codes differentiate between a liveborn infant that was born prior to admission and hospitalized versus a liveborn infant that was born prior to admission and not hospitalized. The following codes in the ICD-9-CM MCE Version 32 included on the Unacceptable principal diagnosis edit code list are those that describe a liveborn infant that was born outside the hospital and not hospitalized:

ICD-9-CM diagnosis codeDescription
V30.2Single liveborn, born outside hospital and not hospitalized.
V31.2Twin birth, mate liveborn, born outside hospital and not hospitalized.
V32.2Twin birth, mate stillborn, born outside hospital and not hospitalized.
V33.2Twin birth, unspecified whether mate liveborn or stillborn, born outside hospital and not hospitalized.
V34.2Other multiple birth (three or more), mates all liveborn, born outside hospital and not hospitalized.
V35.2Other multiple birth (three or more), mates all stillborn, born outside of hospital and not hospitalized.
V36.2Other multiple birth (three or more), mates liveborn and stillborn, born outside hospital and not hospitalized.
V37.2Other multiple birth (three or more), unspecified whether mates liveborn or stillborn, born outside of hospital.
V39.1Liveborn, unspecified whether single, twin or multiple, born before admission to hospital.
Start Printed Page 56839
V39.2Liveborn, unspecified whether single, twin or multiple, born outside hospital and not hospitalized.

For replication purposes, the comparable ICD-10-CM diagnosis codes for the above listed codes are: Z38.1 (Single liveborn infant, born outside hospital); Z38.4 (Twin liveborn infant, born outside hospital); and Z38.7 (Other multiple liveborn infant, born outside hospital). There are no other ICD-10-CM diagnosis codes that describe a liveborn infant born outside a hospital.

The liveborn infant codes are an example of where a particular concept involving the place of birth is not the same between the ICD-9-CM and ICD-10-CM classification systems. Because the ICD-10-CM diagnosis codes do not include the same concept as the ICD-9-CM diagnosis codes regarding whether the liveborn infant was hospitalized or not, we agree it would not be appropriate to continue to include the ICD-10-CM diagnosis codes on the Unacceptable principal diagnosis list.

In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25006), for FY 2017, we proposed to remove ICD-10-CM diagnosis codes Z38.1, Z38.4, and Z38.7 from the Unacceptable principal diagnosis edit in the ICD-10 MCE Version 34. We invited public comments on our proposal.

Comment: Several commenters supported the proposal to remove the three ICD-10-CM diagnosis codes describing a liveborn infant born outside of the hospital from the Unacceptable principal diagnosis edit code list in the ICD-10 MCE.

Response: We appreciate the commenters' support of our proposal.

After consideration of the public comments we received, we are finalizing our proposal to remove codes Z38.1 (Single liveborn infant, born outside hospital); Z38.4 (Twin liveborn infant, born outside hospital); and Z38.7 (Other multiple liveborn infant, born outside hospital) from the Unacceptable principal diagnosis edit code list in the ICD-10 MCE Version 34, effective October 1, 2016.

(2) Multiple Gestation

As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25006 through 25007), we received a request to review the ICD-10-CM diagnosis codes related to multiple gestation that are currently listed on the ICD-10 MCE Version 33 Unacceptable principal diagnosis edit code list. The requestor expressed concern that these codes were included in the edit and suggested that CMS evaluate further to determine if they were appropriate.

In the ICD-10-CM classification, a single diagnosis code describes a multiple gestation and contains information pertaining to the placenta. This differs from the ICD-9-CM classification, where two diagnosis codes are required to separately report (1) multiple gestation with a delivery or complication and (2) multiple gestation with the status of the placenta.

In the ICD-9-CM MCE Version 32, only the ICD-9-CM diagnosis codes describing the status of the placenta are listed on the Unacceptable principal diagnosis edit code list. These ICD-9-CM diagnosis codes are:

ICD-9-CM diagnosis codeDescription
V91.00Twin gestation, unspecified number of placenta, unspecified number of amniotic sacs.
V91.01Twin gestation, monochorionic/monoamniotic (one placenta, one amniotic sac).
V91.02Twin gestation, monochorionic/diamniotic (one placenta, two amniotic sacs).
V91.03Twin gestation, dichorionic/diamniotic (two placentae, two amniotic sacs).
V91.09Twin gestation, unable to determine number of placenta and number of amniotic sacs.
V91.10Triplet gestation, unspecified number of placenta and unspecified number of amniotic sacs.
V91.11Triplet gestation, with two or more monochorionic fetuses.
V91.12Triplet gestation, with two or more monoamniotic fetuses.
V91.19Triplet gestation, unable to determine number of placenta and number of amniotic sacs.
V91.20(Quadruplet gestation, unspecified number of placenta and unspecified number of amniotic sacs.
V91.21Quadruplet gestation, with two or more monochorionic fetuses.
V91.22Quadruplet gestation, with two or more monoamniotic fetuses.
V91.29Quadruplet gestation, unable to determine number of placenta and number of amniotic sacs.
V91.90Other specified multiple gestation, unspecified number of placenta and unspecified number of amniotic sacs.
V91.91Other specified multiple gestation, with two or more monochorionic fetuses.
V91.92Other specified multiple gestation, with two or more monoamniotic fetuses.
V91.99Other specified multiple gestation, unable to determine number of placenta and number of amniotic sacs.