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Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Organ Procurement Organization Reporting and Communication; Transplant Outcome Measures and Documentation Requirements; Electronic Health Record (EHR) Incentive Programs; Payment to Nonexcepted Off-Campus Provider-Based Department of a Hospital; Hospital Value-Based Purchasing (VBP) Program; Establishment of Payment Rates Under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by an Off-Campus Provider-Based Department of a Hospital

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Start Preamble Start Printed Page 79562

AGENCY:

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

ACTION:

Final rule with comment period and interim final rule with comment period.

SUMMARY:

This final rule with comment period revises the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2017 to implement applicable statutory requirements and changes arising from our continuing experience with these systems. In this final rule with comment period, we describe the changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment system. In addition, this final rule with comment period updates and refines the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program.

Further, in this final rule with comment period, we are making changes to tolerance thresholds for clinical outcomes for solid organ transplant programs; to Organ Procurement Organizations (OPOs) definitions, outcome measures, and organ transport documentation; and to the Medicare and Medicaid Electronic Health Record Incentive Programs. We also are removing the HCAHPS Pain Management dimension from the Hospital Value-Based Purchasing (VBP) Program.

In addition, we are implementing section 603 of the Bipartisan Budget Act of 2015 relating to payment for certain items and services furnished by certain off-campus provider-based departments of a provider. In this document, we also are issuing an interim final rule with comment period to establish the Medicare Physician Fee Schedule payment rates for the nonexcepted items and services billed by a nonexcepted off-campus provider-based department of a hospital in accordance with the provisions of section 603.

DATES:

Effective date: This final rule with comment period and the interim final rule with comment period are effective on January 1, 2017.

Comment period: To be assured consideration, comments on: (1) The payment classifications assigned to new Level II HCPCS codes and recognition of new and revised Category I and III CPT codes in this final rule with comment period; (2) the 20-hour a week minimum requirement for partial hospitalization services in this final rule with comment period; (3) the potential limitation on clinical service line expansion or volume of services by nonexcepted off-campus PBDs in this final rule with comment period; and (4) the Medicare Physician Fee Schedule (MPFS) payment rates for nonexcepted items and services furnished and billed by nonexcepted off-campus provider-based departments of hospitals in the interim final rule with comment period must be received at one of the addresses provided in the ADDRESSES section no later than 5 p.m. EST on December 31, 2016.

ADDRESSES:

In commenting, please refer to file code CMS-1656-FC when commenting on the issues in the final rule with comment period and CMS-1656-IFC when commenting on issues in the interim final rule with comment period. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

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

1. Electronically. You may (and we encourage you to) submit electronic comments on this regulation to http://www.regulations.gov. Follow the instructions under the “submit a comment” tab.

2. By regular mail. You may mail written comments to the following address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1656-FC or CMS-1656-IFC (as appropriate), P.O. Box 8013, Baltimore, MD 21244-1850.

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

3. By express or overnight mail. You may send written comments via express or overnight mail to the following address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1656-FC or CMS-1656-IFC (as appropriate), Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

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

a. For delivery in Washington, DC—

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201.

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

b. For delivery in Baltimore, MD—

Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address, please call the telephone number (410) 786-7195 in advance to schedule your arrival with one of our staff members.

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

For information on viewing public comments, we refer readers to the beginning of the SUPPLEMENTARY INFORMATION section.

Start Further Info

FOR FURTHER INFORMATION CONTACT:

Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact Katherine Eastridge at (410) 786-4474.

Ambulatory Surgical Center (ASC) Payment System, contact Elisabeth Daniel at (410) 786-0237.Start Printed Page 79563

Ambulatory Surgical Center Quality Reporting (ASCQR) Program Administration, Validation, and Reconsideration Issues, contact Anita Bhatia at (410) 786-7236.

Ambulatory Surgical Center Quality Reporting (ASCQR) Program Measures, contact Vinitha Meyyur at (410) 786-8819.

Blood and Blood Products, contact Lela Strong at (410) 786-3213.

Cancer Hospital Payments, contact David Rice at (410) 786-6004.

Chronic Care Management (CCM) Hospital Services, contact Twi Jackson at (410) 786-1159.

CPT and Level II Alphanumeric HCPCS Codes—Process for Requesting Comments, contact Marjorie Baldo at (410) 786-4617.

CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck Braver at (410) 786-9379.

Composite APCs (Low Dose Brachytherapy and Multiple Imaging), contact Twi Jackson at (410) 786-1159.

Comprehensive APCs, contact Lela Strong at (410) 786-3213.

Hospital Observation Services, contact Twi Jackson at (410) 786-1159.

Hospital Outpatient Quality Reporting (OQR) Program Administration, Validation, and Reconsideration Issues, contact Elizabeth Bainger at (410) 786-0529.

Hospital Outpatient Quality Reporting (OQR) Program Measures, contact Vinitha Meyyur at (410) 786-8819.

Hospital Outpatient Visits (Emergency Department Visits and Critical Care Visits), contact Twi Jackson at (410) 786-1159.

Hospital Value-Based Purchasing (VBP) Program, contact Grace Im at (410) 786-0700.

Inpatient Only Procedures List, contact Lela Strong at (410) 786-3213.

Medicare Electronic Health Record (EHR) Incentive Program, contact Kathleen Johnson at (410) 786-3295 or Steven Johnson at (410) 786-3332.

New Technology Intraocular Lenses (NTIOLs), contact Elisabeth Daniel at (410) 786-0237.

No Cost/Full Credit and Partial Credit Devices, contact Twi Jackson at (410) 786-1159.

OPPS Brachytherapy, contact Elisabeth Daniel at (410) 786-0237.

OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-Charge Ratios (CCRs), Data Claims, Geometric Mean Calculation, Outlier Payments, and Wage Index), contact David Rice at (410) 786-6004.

OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar Products, contact Twi Jackson at (410) 786-1159.

OPPS Exceptions to the 2 Times Rule, contact Marjorie Baldo at (410) 786-4617.

OPPS Packaged Items/Services, contact Lela Strong at (410) 786-3213.

OPPS Pass-Through Devices and New Technology Procedures/Services, contact Lela Strong at (410) 786-3213.

OPPS Status Indicators (SI) and Comment Indicators (CI), contact Marina Kushnirova at (410) 786-2682.

Organ Procurement Organization (OPO) Reporting and Communication, contact Peggye Wilkerson at (410) 786-4857 or Melissa Rice at (410) 786-3270.

Partial Hospitalization Program (PHP) and Community Mental Health Center (CMHC) Issues, contact Marissa Kellam at (410) 786-3012 or Katherine Lucas at (410) 786-7723.

Rural Hospital Payments, contact David Rice at (410) 786-6004.

Section 603 of the Bipartisan Budget Act of 2015—Items and Services Furnished by Off-Campus Departments of a Provider, contact David Rice at (410) 786-6004 or Elisabeth Daniel at (410) 786-0237.

Section 603 of the Bipartisan Budget Act of 2015—MPFS Payment Rates for Nonexcepted Off-Campus Provider-Based Departments of Hospitals, contact Geri Mondowney at (410) 786-1172, Patrick Sartini at (410) 786-9252, or Isadora Gil at (410) 786-4532.

Transplant Enforcement, contact Paula DiStabile at (410) 786-3039 or Caecilia Blondiaux at (410) 786-2190.

All Other Issues Related to Hospital Outpatient and Ambulatory Surgical Center Payments Not Previously Identified, contact Lela Strong at (410) 786-3213.

End Further Info End Preamble Start Supplemental Information

SUPPLEMENTARY INFORMATION:

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

Comments received timely will also be available for public inspection, generally beginning approximately 3 weeks after publication of the rule, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244, on Monday through Friday of each week from 8:30 a.m. to 4:00 p.m. EST. To schedule an appointment to view public comments, phone 1-800-743-3951.

Electronic Access

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

Addenda Available Only Through the Internet on the CMS Web Site

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

Alphabetical List of Acronyms Appearing in This Federal Register Document

ACOT Advisory Committee on Organ Transplantation

AHA American Hospital Association

AMA American Medical Association

AMI Acute myocardial infarction

APC Ambulatory Payment Classification

API Application programming interface

APU Annual payment update

ASC Ambulatory surgical center

ASCQR Ambulatory Surgical Center Quality Reporting

ASP Average sales price

AUC Appropriate use criteria

AWP Average wholesale price

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

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

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

BLS Bureau of Labor Statistics

CAH Critical access hospital

CAHPS Consumer Assessment of Healthcare Providers and Systems

CAP Competitive Acquisition Program

C-APC Comprehensive Ambulatory Payment ClassificationStart Printed Page 79564

CASPER Certification and Survey Provider Enhanced Reporting

CAUTI Catheter-associated urinary tract infection

CBSA Core-Based Statistical Area

CCM Chronic care management

CCN CMS Certification Number

CCR Cost-to-charge ratio

CDC Centers for Disease Control and Prevention

CED Coverage with Evidence Development

CERT Comprehensive Error Rate Testing

CfC Conditions of coverage

CFR Code of Federal Regulations

CI Comment indicator

CLABSI Central Line [Catheter] Associated Blood Stream Infection

CLFS Clinical Laboratory Fee Schedule

CMHC Community mental health center

CMS Centers for Medicare & Medicaid Services

CoP Condition of participation

CPI-U Consumer Price Index for All Urban Consumers

CPT Current Procedural Terminology (copyrighted by the American Medical Association)

CR Change request

CRC Colorectal cancer

CSAC Consensus Standards Approval Committee

CT Computed tomography

CV Coefficient of variation

CY Calendar year

DFO Designated Federal Official

DIR Direct or indirect remuneration

DME Durable medical equipment

DMEPOS Durable Medical Equipment, Prosthetic, Orthotics, and Supplies

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

DSH Disproportionate share hospital

EACH Essential access community hospital

EAM Extended assessment and management

ECD Expanded criteria donor

EBRT External beam radiotherapy

ECG Electrocardiogram

ED Emergency department

EDTC Emergency department transfer communication

EHR Electronic health record

E/M Evaluation and management

ESRD End-stage renal disease

ESRD QIP End-Stage Renal Disease Quality Improvement Program

FACA Federal Advisory Committee Act, Public Law 92-463

FDA Food and Drug Administration

FFS [Medicare] Fee-for-service

FTE Full-time equivalent

FY Fiscal year

GAO Government Accountability Office

GI Gastrointestinal

GME Graduate medical education

HAI Healthcare-associated infection

HCAHPS Hospital Consumer Assessment of Healthcare Providers and Systems

HCERA Health Care and Education Reconciliation Act of 2010, Public Law 111-152

HCP Health care personnel

HCPCS Healthcare Common Procedure Coding System

HCRIS Healthcare Cost Report Information System

HCUP Healthcare Cost and Utilization Project

HEU Highly enriched uranium

HH QRP Home Health Quality Reporting Program

HHS Department of Health and Human Services

HIE Health information exchange

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

HOP Hospital Outpatient Payment [Panel]

HOPD Hospital outpatient department

HOP QDRP Hospital Outpatient Quality Data Reporting Program

HPMS Health Plan Management System

IBD Inflammatory bowel disease

ICC Interclass correlation coefficient

ICD Implantable cardioverter defibrillator

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

ICD-10 International Classification of Diseases, Tenth Revision

ICH In-center hemodialysis

ICR Information collection requirement

IME Indirect medical education

IDTF Independent diagnostic testing facility

IGI IHS Global Insight, Inc.

IHS Indian Health Service

I/OCE Integrated Outpatient Code Editor

IOL Intraocular lens

IORT Intraoperative radiation treatment

IPFQR Inpatient Psychiatric Facility Quality Reporting

IPPS [Hospital] Inpatient Prospective Payment System

IQR [Hospital] Inpatient Quality Reporting

IRF Inpatient rehabilitation facility

IRF QRP Inpatient Rehabilitation Facility Quality Reporting Program

IT Information technology

LCD Local coverage determination

LDR Low dose rate

LTCH Long-term care hospital

LTCHQR Long-Term Care Hospital Quality Reporting

MAC Medicare Administrative Contractor

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

MAP Measure Application Partnership

MDH Medicare-dependent, small rural hospital

MedPAC Medicare Payment Advisory Commission

MEG Magnetoencephalography

MFP Multifactor productivity

MGCRB Medicare Geographic Classification Review Board

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

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

MLR Medical loss ratio

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

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

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

MPFS Medicare Physician Fee Schedule

MR Medical review

MRA Magnetic resonance angiography

MRgFUS Magnetic Resonance Image Guided Focused Ultrasound

MRI Magnetic resonance imaging

MRSA Methicillin-Resistant Staphylococcus Aures

MS-DRG Medicare severity diagnosis-related group

MSIS Medicaid Statistical Information System

MUC Measure under consideration

NCCI National Correct Coding Initiative

NEMA National Electrical Manufacturers Association

NHSN National Healthcare Safety Network

NOTA National Organ and Transplantation Act

NOS Not otherwise specified

NPI National Provider Identifier

NPWT Negative Pressure Wound Therapy

NQF National Quality Forum

NQS National Quality Strategy

NTIOL New technology intraocular lens

NUBC National Uniform Billing Committee

OACT [CMS] Office of the Actuary

OBRA Omnibus Budget Reconciliation Act of 1996, Public Law 99-509

O/E Observed to expected event

OIG [HHS] Office of the Inspector General

OMB Office of Management and Budget

ONC Office of the National Coordinator for Health Information Technology

OPD [Hospital] Outpatient Department

OPO Organ Procurement Organization

OPPS [Hospital] Outpatient Prospective Payment System

OPSF Outpatient Provider-Specific File

OPTN Organ Procurement and Transplantation Network

OQR [Hospital] Outpatient Quality Reporting

OT Occupational therapy

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

PBD Provider-based department

PCHQR PPS-Exempt Cancer Hospital Quality Reporting

PCR Payment-to-cost ratio

PDC Per day cost

PDE Prescription Drug Event

PE Practice expense

PEPPER Program Evaluation Payment Patterns Electronic Report

PHP Partial hospitalization program

PHSA Public Health Service Act, Public Law 96-88

PN Pneumonia

POS Place of service

PPI Producer Price Index

PPS Prospective payment system

PQRI Physician Quality Reporting Initiative

PQRS Physician Quality Reporting System

QDC Quality data code

QIO Quality Improvement Organization

RFA Regulatory Flexibility Act

RHQDAPU Reporting Hospital Quality Data for Annual Payment Update

RTI Research Triangle Institute, International

RVU Relative value unit

SAD Self-administered drug

SAMS Secure Access Management Services

SCH Sole community hospital

SCOD Specified covered outpatient drugs

SES Socioeconomic statusStart Printed Page 79565

SI Status indicator

SIA Systems Improvement Agreement

SIR Standardized infection ratio

SNF Skilled nursing facility

SRS Stereotactic radiosurgery

SRTR Scientific Registry of Transplant Recipients

SSA Social Security Administration

SSI Surgical site infection

TEP Technical Expert Panel

TIP Transprostatic implant procedure

TOPs Transitional Outpatient Payments

USPSTF United States Preventive Services Task Force

VBP Value-based purchasing

WAC Wholesale acquisition cost

Table of Contents

I. Summary and Background

A. Executive Summary of This Document

1. Purpose

2. Summary of the Major Provisions

3. Summary of Costs and Benefits

B. Legislative and Regulatory Authority for the Hospital OPPS

C. Excluded OPPS Services and Hospitals

D. Prior Rulemaking

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

1. Authority of the Panel

2. Establishment of the Panel

3. Panel Meetings and Organizational Structure

F. Public Comments Received in Response to CY 2016 OPPS/ASC Final Rule With Comment Period

II. Updates Affecting OPPS Payments

A. Recalibration of APC Relative Payment Weights

1. Database Construction

a. Database Source and Methodology

b. Calculation and Use of Cost-to-Charge Ratios (CCRs)

2. Data Development Process and Calculation of Costs Used for Ratesetting

a. Recommendations of the Advisory Panel on Hospital Outpatient Payment (the Panel) Regarding Data Development

b. Calculation of Single Procedure APC Criteria-Based Costs

(1) Blood and Blood Products

(a) Methodology

(b) Solicitation of Public Comments

(c) Rapid Bacterial Testing for Platelets

(2) Brachytherapy Sources

c. Comprehensive APCs (C-APCs) for CY 2017

(1) Background

(2) C-APCs for CY 2017

(a) Additional C-APCs for CY 2017

(b) New Allogeneic Hematopoietic Stem Cell Transplantation (HSCT) C-APC

d. Calculation of Composite APC Criteria-Based Costs

(1) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC

(2) Mental Health Services Composite APC

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

3. Changes to Packaged Items and Services

a. Background and Rationale for Packaging in the OPPS

b. Clinical Diagnostic Laboratory Test Packaging Policy

(1) Background

(2) “Unrelated” Laboratory Test Exception

(3) Molecular Pathology Test Exception

c. Conditional Packaging Status Indicators “Q1” and “Q2”

(1) Background

(2) Change in Conditional Packaging Status Indicators Logic

4. Calculation of OPPS Scaled Payment Weights

B. Conversion Factor Update

C. Wage Index Changes

D. Statewide Average Default CCRs

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

1. Background

2. Proposed and Finalized Policy for CY 2017

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

1. Background

2. Payment Adjustment for Certain Cancer Hospitals for CY 2017

G. Hospital Outpatient Outlier Payments

1. Background

2. Outlier Calculation

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

I. Beneficiary Copayments

1. Background

2. OPPS Copayment Policy

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

III. OPPS Ambulatory Payment Classification (APC) Group Policies

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

1. Treatment of New Level II HCPCS Codes Effective April 1, 2016 for Which We Solicited Public Comments in the CY 2017 OPPS/ASC Proposed Rule

2. Treatment of New CPT and Level II HCPCS Codes Effective July 1, 2016 for Which We Solicited Public Comments in the CY 2017 OPPS/ASC Proposed Rule

3. Process for New Level II HCPCS Codes That Became Effective October 1, 2016 and New Level II HCPCS Codes That Will Be Effective January 1, 2017 for Which Are Soliciting Public Comments in This CY 2017 OPPS/ASC Final Rule With Comment Period

4. Treatment of New and Revised CY 2017 Category I and III CPT Codes That Will Be Effective January 1, 2017 for Which We Solicited Public Comments in the CY 2017 OPPS/ASC Proposed Rule

B. OPPS Changes—Variations Within APCs

1. Background

2. Application of the 2 Times Rule

3. APC Exceptions to the 2 Times Rule

C. New Technology APCs

1. Background

2. Additional New Technology APC Groups

3. Procedures Assigned to New Technology APC Groups for CY 2017

a. Overall Proposal

b. Retinal Prosthesis Implant Procedure

D. OPPS APC-Specific Policies

1. Cardiovascular Procedures and Services

a. Cardiac Event Recorder (APC 5071)

b. Cardiac Telemetry

2. Eye-Related Services

3. Gastrointestinal Procedures and Services

a. Esophageal Sphincter Augmentation (APC 5362)

b. Esophagogastroduodenoscopy: Transmural Drainage of Pseudocyst (APC 5303)

4. Musculoskeletal Procedures/Services

a. Auditory Osseointegrated Implants/Bone Anchored Hearing Systems (APCs 5114, 5115, 1nd 5116)

b. Bunion Correction/Foot Fusion (APC 5114)

c. Intervertebral Biomechanical Devices

d. Percutaneous Vertebral Augmentation/Kyphoplasty (APC 5114)

e. Strapping and Casting Applications (APCs 5101 and 5102)

5. Nervous System Procedures/Services

a. Transcranial Magnetic Stimulation Therapy (TMS) (APCs 5721 and 5722)

b. Percutaneous Epidural Adhesiolysis (APC 5443)

c. Neurostimulator (APC 5463)

6. Radiologic Procedures and Services

a. Imaging APCs

b. Radiation Oncology (APCs 5092, 5611, and 5627)

7. Skin Substitutes (APCs 5053 Through 5055)

8. Urology System Procedures and Services

a. Chemodenervation of the Bladder (APC 5373)

b. Temporary Prostatic Urethral Stent (APC 5372)

c. Transprostatic Urethral Implant Procedure (TUIP) (APCs 5375 and 5376)

9. Other Procedures and Services

a. Cryoablation Procedures (APCs 5114, 5361, 5362, and 5432)

b. Comprehensive Dialysis Circuit Procedures (APCs 5181, 5192, and 5193)

c. Blood Product Exchange and Related Services (APCs 5241 and 5242)

d. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APCs 1537, 5114, and 5414)

e. Neulasta® On-Body Injector

f. Smoking and Tobacco Use Cessation Counseling (APC 5821)

g. Radiofrequency Ablation of Uterine Fibroids (APC 5362)

h. Intrapulmonary Surfactant Administration (APC 5791)

i. Non-Contact Low Frequency Ultrasound (NLFU) Therapy (APC 5051)

j. Pulmonary Rehabilitation Services

IV. OPPS Payment for Devices

A. Pass-Through Payments for Devices

1. Expiration of Transitional Pass-Through for Certain Devices

a. Background

b. CY 2017 Pass-Through Devices

2. New Device Pass-Through Applications

a. Background

b. Applications Received for Device Pass-Through Payment for CY 2017

(1) BioBag® (Larval Debridement Therapy in a Contained Dressing)

(2) ENCORETM Suspension System

(3) Endophys Pressure Sensing System (Endophys PSS) or Endophys Pressure Sensing Kit

3. Beginning Eligibility Date for Device Pass-Through Payment Status

4. Policy To Make the Transitional Pass-Through Payment Period 3 Years for All Pass-Through Devices and Expire Pass-Through Status on a Quarterly Rather Than Annual BasisStart Printed Page 79566

a. Background

b. CY 2017 Policy

5. Changes to Cost-to-Charge Ratios (CCRs) That Are Used To Determine Device Pass-Through Payment

a. Background

b. CY 2017 Policy

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

a. Background

b. CY 2017 Policy

B. Device-Intensive Procedures

1. Background

2. HCPCS Code-Level Device-Intensive Determination

3. Changes to the Device Edit Policy

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

a. Background

b. Policy for CY 2017

5. Payment Policy for Low-Volume Device-Intensive Procedures

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

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

1. Background

2. Policy To Make the Transitional Pass-Through Payment Period 3 Years for All Pass-Through Drugs, Biologicals, and Radiopharmaceuticals and Expire Pass-Through Status on a Quarterly Rather Than Annual Basis

3. Drugs and Biologicals With Expiring Pass-Through Payment Status in CY 2016

4. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing Pass-Through Status in CY 2017

5. Provisions for Reducing Transitional Pass-Through Payments for Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals To Offset Costs Packaged Into APC Groups

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

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

a. Packaging Threshold

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

c. Policy Packaged Drugs, Biologicals, and Radiopharmaceuticals

d. High Cost/Low Cost Threshold for Packaged Skin Substitutes

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

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

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

b. CY 2017 Payment Policy

c. Biosimilar Biological Products

3. Payment Policy for Therapeutic Radiopharmaceuticals

4. Payment Adjustment Policy for Radioisotopes Derived From Non-Highly Enriched Uranium Sources

5. Payment for Blood Clotting Factors

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

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

A. Background

B. Estimate of Pass-Through Spending

VII. OPPS Payment for Hospital Outpatient Visits and Critical Care Services

VIII. Payment for Partial Hospitalization Services

A. Background

B. PHP APC Update for CY 2017

1. PHP APC Changes and Effects on Geometric Mean Per Diem Costs

a. Changes to PHP APCs

b. Rationale for Changes in PHP APCs

c. Alternatives Considered

2. Development of the PHP APC Geometric Mean Per Diem Costs and Payment Rates

a. CMHC Data Preparation: Data Trims, Exclusions, and CCR Adjustments

b. Hospital-Based PHP Data Preparation: Data Trims and Exclusions

3. PHP Ratesetting Process

C. Outlier Policy for CMHCs

1. Estimated Outlier Threshold

2. CMHC Outlier Cap

a. Summary of Proposal

b. CY 2017 Final Rule Update and Policy

3. Implementation Strategy for the 8-Percent Cap on CMHC Outlier Payments

4. Summary of Policies

IX. Procedures That Will Be Paid Only as Inpatient Procedures

A. Background

B. Changes to the Inpatient Only (IPO) List

C. Response to Solicitation of Public Comments on the Possible Removal of Total Knee Arthroplasty (TKA) Procedures From the IPO List

1. Background

2. Discussion of TKA and the IPO List

3. Topics and Questions for Public Comment

X. Nonrecurring Policy Changes

A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Off-Campus Provider-Based Departments of a Hospital

1. Background

2. Defining Applicable Items and Services and Off-Campus Outpatient Department of a Provider as Set Forth in Sections 1833(t)(21)(A) and (B) of the Act

a. Background on the Provider-Based Status Rules

b. Exemption of Items and Services Furnished in a Dedicated Emergency Department or an On-Campus PBD as Defined at Sections 1833(t)(21)(B)(i)(I) and (II) of the Act (Excepted Off-Campus PBD)

(1) Dedicated Emergency Departments (EDs)

(2) On-Campus Locations

(3) Within the Distance From Remote Locations

c. Applicability of Exception at Section 1833(t)(21)(B)(ii) of the Act

(1) Relocation of Off-Campus PBDs Excepted Under Section 1833(t)(21)(B)(ii) of the Act

(2) Expansion of Clinical Family of Services at an Off-Campus PBD Excepted Under Section 1833(t)(21)(B)(ii) of the Act

d. Change of Ownership and Excepted Status

e. Public Comments Received in Response to Solicitation on Data Collection Under Section 1833(t)(21)(D) of the Act

3. Payment for Items and Services Furnished in Off-Campus PBDs to Which Sections 1833(t)(1)(B)(v) and 1833(t)(21) of the Act Apply (Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus PBDs)

a. Background on Medicare Payment for Services Furnished in an Off-Campus PBD

b. Payment for Items and Services Furnished in Off-Campus PBD That Are Subject to Sections 1833(t)(1)(B)(v) and (t)(21)(C) of the Act

(1) Definition of “Applicable Payment System” for Nonexcepted Items and Services

(2) Definition of Applicable Items and Services and Section 603 Amendments to Section 1833(t)(1)(B) of the Act and Payment for Nonexcepted Items and Services for CY 2017

(3) Public Comments Received in Response to Solicitation on Allowing Direct Billing and Payment for Nonexcepted Items and Services in CY 2018

4. Beneficiary Cost-Sharing

5. Summary of Proposals

6. Final Changes to Regulations

B. Interim Final Rule With Comment Period: Establishment of Payment Rates Under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by an Off-Campus Provider-Based Department of a Hospital

1. Background

2. Payment Mechanisms

a. Relevance of the MPFS for Payment for Nonexcepted Items and Services

b. Operational Considerations

c. General MPFS Coding and Billing Mechanisms

3. Establishment of Payment Rates

a. Methodology

b. MPFS Relativity Adjuster

c. Geographic Adjustments

d. Coding Consistency

4. OPPS Payment Adjustments

5. Partial Hospitalization Services

6. Supervision Rules

7. Beneficiary Cost-Sharing

8. CY 2018, CY 2019, and Future Years

9. Waiver of Proposed Rulemaking

10. Collection of Information Requirements

11. Response to Comments

12. Regulatory Impact Statement

C. Changes for Payment for Film X-Ray

D. Changes to Certain Scope of Service Elements for Chronic Care Management (CCM) ServicesStart Printed Page 79567

E. Appropriate Use Criteria for Advanced Diagnostic Imaging Services

XI. CY 2017 OPPS Payment Status and Comment Indicators

A. CY 2017 OPPS Payment Status Indicator Definitions

B. CY 2017 Comment Indicator Definitions

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

A. Background

1. Legislative History, Statutory Authority, and Prior Rulemaking for the ASC Payment System

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

B. Treatment of New and Revised Codes

1. Background on Current Process for Recognizing New and Revised Category I and Category III CPT Codes and Level II HCPCS Codes

2. Treatment of New and Revised Level II HCPCS Codes and Category III CPT Codes Implemented in April 2016 and July 2016 for Which We Solicited Public Comments in the CY 2017 OPPS/ASC Proposed Rule

3. Process for Recognizing New and Revised Category I and Category III CPT Codes That Will Be Effective January 1, 2017 for Which We Are Responding to Public Comments in This CY 2017 OPPS/ASC Final Rule With Comment Period

4. Process for New and Revised Level II HCPCS Codes That Will Be Effective October 1, 2016 and January 1, 2017 for Which We Are Soliciting Public Comments in This CY 2017 OPPS/ASC Final Rule with Comment Period

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

1. Covered Surgical Procedures

a. Covered Surgical Procedures Designated as Office-Based

(1) Background

(2) Changes for CY 2017 to Covered Surgical Procedures Designated as Office-Based

b. ASC Covered Surgical Procedures Designated as Device-Intensive—Finalized Policy for CY 2016 and Final Policy for CY 2017

(1) Background

(2) ASC Device-Intensive Designation by HCPCS Code

(3) Changes to List of ASC Covered Surgical Procedures Designated as Device-Intensive for CY 2017

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

d. Additions to the List of ASC Covered Surgical Procedures

2. Covered Ancillary Services

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

1. ASC Payment for Covered Surgical Procedures

a. Background

b. Update to ASC Covered Surgical Procedure Payment Rates for CY 2017

2. Payment for Covered Ancillary Services

a. Background

b. Payment for Covered Ancillary Services for CY 2017

E. New Technology Intraocular Lenses (NTIOLs)

1. NTIOL Application Cycle

2. Requests To Establish New NTIOL Classes for CY 2017

3. Payment Adjustment

F. ASC Payment and Comment Indicators

1. Background

2. ASC Payment and Comment Indicators

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

1. Background

2. Calculation of the ASC Payment Rates

a. Updating the ASC Relative Payment Weights for CY 2017 and Future Years

b. Updating the ASC Conversion Factor

3. Display of CY 2017 ASC Payment Rates

XIII. Requirements for the Hospital Outpatient Quality Reporting (OQR) Program

A. Background

1. Overview

2. Statutory History of the Hospital OQR Program

B. Hospital OQR Program Quality Measures

1. Considerations in the Selection of Hospital OQR Program Quality Measures

2. Retention of Hospital OQR Program Measures Adopted in Previous Payment Determinations

3. Removal of Quality Measures From the Hospital OQR Program Measure Set

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

b. Criteria for Removal of “Topped-Out” Measures

4. Hospital OQR Program Quality Measures Adopted in Previous Rulemaking

5. New Hospital OQR Program Quality Measures for the CY 2020 Payment Determinations and Subsequent Years

a. OP-35: Admissions and Emergency Department (ED) Visits for Patients Receiving Outpatient Chemotherapy Measure

(1) Background

(2) Overview of Measure

(3) Data Sources

(4) Measure Calculation

(5) Cohort

(6) Risk Adjustment

b. OP-36: Hospital Visits After Hospital Outpatient Surgery Measure (NQF #2687)

(1) Background

(2) Overview of Measure

(3) Data Sources

(4) Measure Calculation

(5) Cohort

(6) Risk Adjustment

c. OP-37a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey Measures

(1) Background

(2) Overview of Measures

(3) Data Sources

(4) Measure Calculations

(5) Cohort

(6) Exemption

(7) Risk Adjustment

(8) Public Reporting

d. Summary of Previously Adopted and Newly Adopted Hospital OQR Program Measures for the CY 2020 Payment Determinations and Subsequent Years

6. Hospital OQR Program Measures and Topics for Future Consideration

a. Future Measure Topics

b. Electronic Clinical Quality Measures

c. Possible Future eCQM: Safe Use of Opioids-Concurrent Prescribing

7. Maintenance of Technical Specifications for Quality Measures

8. Public Display of Quality Measures

C. Administrative Requirements

1. QualityNet Account and Security Administrator

2. Requirements Regarding Participation Status

D. Form, Manner, and Timing of Data Submitted for the Hospital OQR Program

1. Hospital OQR Program Annual Payment Determinations

2. Requirements for Chart-Abstracted Measures Where Patient-Level Data Are Submitted Directly to CMS for the CY 2019 Payment Determination and Subsequent Years

3. Claims-Based Measure Data Requirements for the CY 2019 Payment Determination and Subsequent Years and CY 2020 Payment Determination and Subsequent Years

4. Data Submission Requirements for the OP-37a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-Based Measures for the CY 2020 Payment Determination and Subsequent Years

a. Survey Requirements

b. Vendor Requirements

5. Data Submission Requirements for Previously Finalized Measures for Data Submitted via a Web-Based Tool for the CY 2019 Payment Determination and Subsequent Years

6. Population and Sampling Data Requirements for the CY 2019 Payment Determination and Subsequent Years

7. Hospital OQR Program Validation Requirements for Chart-Abstracted Measure Data Submitted Directly to CMS for the CY 2019 Payment Determination and Subsequent Years

8. Extension or Exemption Process for the CY 2019 Payment Determination and Subsequent Years

9. Hospital OQR Program Reconsideration and Appeals Procedures for the CY 2019 Payment Determination and Subsequent Years—Clarification

E. Payment Reduction for Hospitals That Fail To Meet the Hospital OQR Program Requirements for the CY 2017 Payment Determination

1. Background

2. Reporting Ratio Application and Associated Adjustment Policy for CY 2017

XIV. Requirements for the Ambulatory Surgical Center Quality Reporting (ASCQR) Program

A. Background

1. Overview

2. Statutory History of the ASCQR ProgramStart Printed Page 79568

3. Regulatory History of the ASCQR Program

B. ASCQR Program Quality Measures

1. Considerations in the Selection of ASCQR Program Quality Measures

2. Policies for Retention and Removal of Quality Measures From the ASCQR Program

3. ASCQR Program Quality Measures Adopted in Previous Rulemaking

4. ASCQR Program Quality Measures for the CY 2020 Payment Determination and Subsequent Years

a. ASC-13: Normothermia Outcome

(1) Background

(2) Overview of Measure

(3) Data Sources

(4) Measure Calculation

(5) Cohort

(6) Risk Adjustment

b. ASC-14: Unplanned Anterior Vitrectomy

(1) Background

(2) Overview of Measure

(3) Data Sources

(4) Measure Calculation

(5) Cohort

(6) Risk Adjustment

c. ASC-15a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey Measures

(1) Background

(2) Overview of Measures

(3) Data Sources

(4) Measure Calculations

(5) Cohort

(6) Exemption

(7) Risk Adjustment

(8) Public Reporting

5. ASCQR Program Measure for Future Consideration

6. Maintenance of Technical Specifications for Quality Measures

7. Public Reporting of ASCQR Program Data

C. Administrative Requirements

1. Requirements Regarding QualityNet Account and Security Administrator

2. Requirements Regarding Participation Status

D. Form, Manner, and Timing of Data Submitted for the ASCQR Program

1. Requirements Regarding Data Processing and Collection Periods for Claims-Based Measures Using Quality Data Codes (QDCs)

2. Minimum Threshold, Minimum Case Volume, and Data Completeness for Claims-Based Measures Using QDCs

3. Requirements for Data Submitted via an Online Data Submission Tool

a. Requirements for Data Submitted via a Non-CMS Online Data Submission Tool

b. Requirements for Data Submitted via a CMS Online Data Submission Tool

4. Claims-Based Measure Data Requirements for the CY 2019 Payment Determination and Subsequent Years

5. Data Submission Requirements for ASC-15a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-Based Measures for the CY 2020 Payment Determination and Subsequent Years

a. Survey Requirements

b. Vendor Requirements

6. Extraordinary Circumstances Extensions or Exemptions for the CY 2019 Payment Determination and Subsequent Years

7. ASCQR Program Reconsideration Procedures

E. Payment Reduction for ASCs That Fail To Meet the ASCQR Program Requirements

1. Statutory Background

2. Reduction to the ASC Payment Rates for ASCs That Fail To Meet the ASCQR Program Requirements for a Payment Determination Year

XV. Transplant Outcomes: Restoring the Tolerance Range for Patient and Graft Survival

A. Background

B. Revisions to Performance Thresholds

XVI. Organ Procurement Organizations (OPOs): Changes to Definitions; Outcome Measures; and Documentation Requirements

A. Background

1. Organ Procurement Organizations (OPOs)

2. Statutory Provisions

3. HHS Initiatives Related to OPO Services

4. Requirements for OPOs

B. Proposed and Finalized Provisions

1. Definition of “Eligible Death”

2. Aggregate Donor Yield for OPO Outcome Performance Measures

3. Organ Preparation and Transport-Documentation With the Organ

XVII. Transplant Enforcement Technical Corrections and Other Revisions to 42 CFR 488.61

A. Technical Correction to Transplant Enforcement Regulatory References

B. Other Revisions to 42 CFR 488.61

XVIII. Changes to the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs

A. Background

B. Summary of Final Policies Included in This Final Rule With Comment Period

C. Revisions to Objectives and Measures for Eligible Hospitals and CAHs

1. Removal of the Clinical Decision Support (CDS) and Computerized Provider Order Entry (CPOE) Objectives and Measures for Eligible Hospitals and CAHs

2. Reduction of Measure Thresholds for Eligible Hospitals and CAHs for 2017 and 2018

a. Changes to the Objectives and Measures for Modified Stage 2 (42 CFR 495.22) in 2017

b. Changes to the Objectives and Measures for Stage 3 (42 CFR 495.24) in 2017 and 2018

(1) Objective: Patient Electronic Access to Health Information (42 CFR 495.24(c)(5))

(2) Objective: Coordination of Care Through Patient Engagement (42 CFR 495.24(c)(6))

(3) Objective: Health Information Exchange (HIE) (42 CFR 495.24(c)(7))

(4) Objective: Public Health and Clinical Data Registry Reporting (42 CFR 495.24(c)(8))

D. Revisions to the EHR Reporting Period in 2016 for EPs, Eligible Hospitals and CAHs

1. Definition of “EHR Reporting Period” and “EHR Reporting Period for a Payment Adjustment Year”

2. Clinical Quality Measurement

E. Policy To Require Modified Stage 2 for New Participants in 2017

F. Significant Hardship Exception for New Participants Transitioning to MIPS in 2017

G. Modifications To Measure Calculations for Actions Outside the EHR Reporting Period

XIX. Additional Hospital Value-Based Purchasing (VBP) Program Policies

A. Background

B. Removal of the HCAHPS Pain Management Dimension From the Hospital VBP Program

1. Background of the HCAHPS Survey in the Hospital VBP Program

2. Background of the Patient- and Caregiver-Centered Experience of Care/Care Coordination Domain Performance Scoring Methodology

3. Removal of the HCAHPS Pain Management Dimension From the Hospital VBP Program Beginning With the FY 2018 Program Year

XX. Files Available to the Public via the Internet

XXI. Collection of Information Requirements

A. Statutory Requirement for Solicitation of Comments

B. ICRs for the Hospital OQR Program

C. ICRs for the ASCQR Program

D. ICRs Relating to Changes in Transplant Enforcement Performance Thresholds

E. ICRs for Changes Relating to Organ Procurement Organizations (OPOs)

F. ICRs Relating to Changes to the Electronic Health Record (EHR) Incentive Program

G. ICRs Relating to Additional Hospital VBP Program Policies

H. ICRs for Payment for Off-Campus Provider-Based Departments Policy Changes for CY 2017

XXII. Waiver of Proposed Rulemaking and Response to Comments

A. Waiver of Proposed Rulemaking

B. Response to Comments

XXIII. Economic Analyses

A. Regulatory Impact Analysis

1. Introduction

2. Statement of Need

3. Overall Impacts for the OPPS and ASC Payment Provisions

4. Detailed Economic Analyses

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

(1) Limitations of Our Analysis

(2) Estimated Effects of OPPS Changes on Hospitals

(3) Estimated Effects of OPPS Changes on CMHCs

(4) Estimated Effects of OPPS Changes on Beneficiaries

(5) Estimated Effects of OPPS Changes on Other Providers

(6) Estimated Effects of OPPS Changes on the Medicare and Medicaid Programs

(7) Alternative OPPS Policies Considered

b. Estimated Effects of CY 2017 ASC Payment System Policies

(1) Limitations of Our Analysis

(2) Estimated Effects of CY 2017 ASC Payment System Policies on ASCsStart Printed Page 79569

(3) Estimated Effects of ASC Payment System Policies on Beneficiaries

(4) Alternative ASC Payment Policies Considered

c. Accounting Statements and Tables

d. Effects of Requirements for the Hospital OQR Program

e. Effects of Requirements for the ASCQR Program

f. Effects of the Changes to Transplant Performance Thresholds

g. Effects of the Changes Relating to Organ Procurement Organizations (OPOs)

h. Effects of the Changes to the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs

i. Effects of Requirements for the Hospital VBP Program

j. Effects of Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Departments of a Provider

B. Regulatory Flexibility Act (RFA) Analysis

C. Unfunded Mandates Reform Act Analysis

D. Conclusion

XXIV. Federalism Analysis

Regulation Text

I. Summary and Background

A. Executive Summary of This Document

1. Purpose

In this document, we are updating the payment policies and payment rates for services furnished to Medicare beneficiaries in hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs) beginning January 1, 2017. Section 1833(t) of the Social Security Act (the Act) requires us to annually review and update the payment rates for services payable under the Hospital Outpatient Prospective Payment System (OPPS). Specifically, section 1833(t)(9)(A) of the Act requires the Secretary to review certain components of the OPPS not less often than annually, and to revise the groups, relative payment weights, and other adjustments that take into account changes in medical practices, changes in technologies, and the addition of new services, new cost data, and other relevant information and factors. In addition, under section 1833(i) of the Act, we annually review and update the ASC payment rates. We describe these and various other statutory authorities in the relevant sections of this final rule with comment period. In addition, this final rule with comment period updates and refines the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program.

In addition, we are making changes to the conditions for coverage (CfCs) for organ procurement organizations (OPOs); revisions to the outcome requirements for solid organ transplant programs, transplant enforcement, and for transplant documentation requirements; a technical correction to enforcement provisions for organ transplant centers; modifications to the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs to reduce hospital administrative burden and to allow hospitals to focus more on patient care; and the removal of the HCAHPS Pain Management dimension from the Hospital Value-Based Purchasing (VBP) Program.

Further, we are implementing section 603 of the Bipartisan Budget Act of 2015 relating to payment for nonexcepted items and services furnished by nonexcepted off-campus provider-based departments (PBDs) of a hospital. In conjunction with implementation of section 603 in this final rule with comment period, we are issuing in this Federal Register document an interim final rule with comment period that establishes payment rates under the MPFS for nonexcepted items and services furnished by nonexcepted off-campus PBDs of hospitals.

2. Summary of the Major Provisions

OPPS Update: For CY 2017, we are increasing the payment rates under the OPPS by an Outpatient Department (OPD) fee schedule increase factor of 1.65 percent. This increase factor is based on the hospital inpatient market basket percentage increase of 2.7 percent for inpatient services paid under the hospital inpatient prospective payment system (IPPS), minus the multifactor productivity (MFP) adjustment of 0.3 percentage point, and minus a 0.75 percentage point adjustment required by the Affordable Care Act. Based on this update, we estimate that total payments to OPPS providers (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix), for CY 2017 will be approximately $773 million, an increase of approximately $5.0 billion compared to estimated CY 2016 OPPS payments.

We are continuing to implement the statutory 2.0 percentage point reduction in payments for hospitals failing to meet the hospital outpatient quality reporting requirements, by applying a reporting factor of 0.980 to the OPPS payments and copayments for all applicable services.

  • Rural Adjustment: We are continuing the adjustment of 7.1 percent to the OPPS payments to certain rural sole community hospitals (SCHs), including essential access community hospitals (EACHs). This adjustment applies to all services paid under the OPPS, excluding separately payable drugs and biologicals, devices paid under the pass-through payment policy, and items paid at charges reduced to cost.
  • Cancer Hospital Payment Adjustment: For CY 2017, we are continuing to provide additional payments to cancer hospitals so that the cancer hospital's payment-to-cost ratio (PCR) after the additional payments is equal to the weighted average PCR for the other OPPS hospitals using the most recently submitted or settled cost report data. Based on those data, a target PCR of 0.91 will be used to determine the CY 2017 cancer hospital payment adjustment to be paid at cost report settlement. That is, the payment adjustments will be the additional payments needed to result in a PCR equal to 0.91 for each cancer hospital.
  • Comprehensive APCs: For CY 2017, we are not making extensive changes to the already established methodology used for C-APCs. However, we are creating 25 new C-APCs that meet the previously established criteria, which, when combined with the existing 37 C-APCs, will bring the total number to 62 C-APCs as of January 1, 2017.
  • Chronic Care Management (CCM): For CY 2017, we are making some minor changes to certain CCM scope-of-service elements. We refer readers to the CY 2017 MPFS final rule with comment period for a detailed discussion of these changes to the scope of service elements for CCM. We are applying these changes to CCM furnished to hospital outpatients.
  • Device-Intensive Procedures: For CY 2017, we are finalizing our policy of determining the payment rate for any device-intensive procedure that is assigned to an APC with fewer than 100 total claims for all procedures in the APC to be based on the median cost instead of the geometric mean cost. We believe that this approach will mitigate significant year-to-year payment rate fluctuations while preserving accurate claims-data-based payment rates for low volume device-intensive procedures. In addition, we are revising the device intensive calculation methodology and calculating the device offset amount at the HCPCS code level rather than at the APC level to ensure that device intensive status is properly assigned to all device-intensive procedures.
  • Outpatient Laboratory Tests: For CY 2017, we are discontinuing the use of the “L1” modifier to identify unrelated laboratory tests on claims. In addition, we are expanding the laboratory packaging exclusion that currently Start Printed Page 79570applies to Molecular Pathology tests to all laboratory tests designated as advanced diagnostic laboratory tests (ADLTs) that meet the criteria of section 1834A(d)(5)(A) of the Act.
  • Packaging Policies: The OPPS currently packages many categories of items and services that are typically provided as part of the outpatient hospital service (for example, operating and recovery room, anesthesia, among others). Packaging encourages hospital efficiency, flexibility, and long-term cost containment, and it also promotes the stability of payment for services over time. In CY 2014 and 2015, we added several new categories of packaged items and services. Among these were laboratory tests, ancillary services, services described by add-on codes, and drugs used in a diagnostic test or surgical procedure. For CY 2017, we are aligning the packaging logic for all of the conditional packaging status indicators so that packaging would occur at the claim level (instead of based on the date of service) to promote consistency and ensure that items and services that are provided during a hospital stay that may span more than one day are appropriately packaged according to OPPS packaging policies.
  • Payment Modifier for X-Ray Films: Section 502(b) of Division O, Title V of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113) amended section 1833(t)(16) of the Act by adding new subparagraph (F). New section 1833(t)(16)(F)(i) of the Act provides that, effective for services furnished during 2017 or any subsequent year, the payment under the OPPS for imaging services that are X-rays taken using film (including the X-ray component of a packaged service) that would otherwise be made under the OPPS (without application of this paragraph and before application of any other adjustment) shall be reduced by 20 percent. We are requiring that, effective for services furnished on or after January 1, 2017, hospitals are required to use a modifier on claims for X-rays that are taken using film. The use of this modifier will result in a 20-percent payment reduction for the X-ray service, as specified under section 1833(t)(16)(F)(i) of the Act, of the determined OPPS payment amount (without application of paragraph (F) and before any other adjustments under section 1833(t)).
  • Payment for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Departments of a Provider: We are implementing section 603 of the Bipartisan Budget Act of 2015 (Pub. L. 114-74). This provision requires that certain items and services furnished in certain off-campus PBDs shall not be considered covered OPD services for purposes of OPPS payment and those nonexcepted items and services will instead be paid “under the applicable payment system” beginning January 1, 2017. We are finalizing, with modification, the policies we proposed relating to which off-campus PBDs and which items and services furnished by such off-campus PBDs may be excepted from application of payment changes under this provision.

In addition, we are establishing that the Medicare Physician Fee Schedule (MPFS) will be the “applicable payment system” for the majority of the nonexcepted items and services furnished by nonexcepted off-campus PBDs. We are establishing new site-of-service payment rates under the MPFS to pay nonexcepted off-campus PBDs for the furnishing of nonexcepted items and services. These nonexcepted items and services must be reported on the institutional claim form and identified with a newly established claims processing modifier.

  • Ambulatory Surgical Center Payment Update: For CY 2017, we are increasing payment rates under the ASC payment system by 1.9 percent for ASCs that meet the quality reporting requirements under the ASCQR Program. This increase is based on a projected CPI-U update of 2.2 percent minus a multifactor productivity adjustment required by the Affordable Care Act of 0.3 percentage point. Based on this update, we estimate that total payments to ASCs (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix), for CY 2017 will be approximately $4,478 million, an increase of approximately $177 million compared to estimated CY 2016 Medicare payments.
  • Hospital Outpatient Quality Reporting (OQR) Program: For the Hospital OQR Program, we are establishing measures and policies for the CY 2018 payment determination, the CY 2019 payment determination and the CY 2020 payment determination and subsequent years. For the CY 2018 payment determination and subsequent years, we are finalizing, as proposed, that we will publicly display data on the Hospital Compare Web site, or other CMS Web site, as soon as possible after measure data have been submitted to CMS. In addition, we are finalizing, as proposed, that hospitals will generally have approximately 30 days to preview their data. Lastly, we are finalizing, as proposed, that we also will announce the timeframes for the preview period on a CMS Web site and/or on our applicable listservs. For the CY 2019 payment determination and subsequent years, we are finalizing, as proposed, an extension of the time for filing extraordinary circumstances extensions or exemptions (ECE) requests from 45 days to 90 days from the date that the extraordinary circumstance occurred. For the CY 2020 payment determination and subsequent years, we are finalizing, as proposed, a total of seven measures: Two claims-based measures and five Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-based measures. The two claims-based measures are: (1) OP-35: Admissions and Emergency Department Visits for Patients Receiving Outpatient Chemotherapy and (2) OP-36: Hospital Visits after Hospital Outpatient Surgery (NQF #2687). The five survey-based measures are: (1) OP-37a: OAS CAHPS—About Facilities and Staff; (2) OP-37b: OAS CAHPS—Communication About Procedure; (3) OP-37c: OAS CAHPS—Preparation for Discharge and Recovery; (4) OP-37d: OAS CAHPS—Overall Rating of Facility; and (5) OP-37e: OAS CAHPS—Recommendation of Facility.
  • Ambulatory Surgical Center Quality Reporting (ASCQR) Program: For the ASCQR Program, we are finalizing our proposals for the CY 2018 payment determination, the CY 2019 payment determination, and the CY 2020 payment determination and subsequent years. For the CY 2018 payment determination and subsequent years, we are finalizing, as proposed, that we will publicly display data on the Hospital Compare Web site, or other CMS Web site, as soon as possible after measure data have been submitted to CMS. In addition, we are finalizing, as proposed, that ASCs will generally have approximately 30 days to preview their data. Lastly, we are finalizing, as proposed, that we will announce the timeframes for the preview period on a CMS Web site and/or on our applicable listservs. For the CY 2019 payment determination and subsequent years, we are finalizing our proposal to change the submission deadline to May 15 for all data submitted via a CMS Web-based tool. We also are finalizing, as proposed, the extension of the submission deadline for filing extraordinary circumstances extensions or exemptions (ECE) requests from 45 days to 90 days. For the CY 2020 payment determination and subsequent years, we are finalizing, as proposed, a total of seven measures: Two measures collected via a CMS Web-based tool and five Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Start Printed Page 79571Systems (OAS CAHPS) Survey-based measures. The two measures that require data to be submitted directly to CMS via a CMS Web-based tool are: (1) ASC-13: Normothermia Outcome and (2) ASC-14: Unplanned Anterior Vitrectomy. The five survey-based measures are: (1) ASC-15a: OAS CAHPS—About Facilities and Staff; (2) ASC-15b: OAS CAHPS—Communication About Procedure; (3) ASC-15c: OAS CAHPS—Preparation for Discharge and Recovery; (4) ASC-15d: OAS CAHPS—Overall Rating of Facility; and (5) ASC-15e: OAS CAHPS—Recommendation of Facility.
  • Hospital Value-Based Purchasing (VBP) Program Update: 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 with comment period, we are removing the HCAHPS Pain Management dimension from the Hospital VBP Program, beginning with the FY 2018 program year.
  • Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs: In this final rule, we are making changes to the objectives and measures of meaningful use for Modified Stage 2 and Stage 3 starting with the EHR reporting periods in CY 2017. Under both Modified Stage 2 in 2017 and Stage 3 in 2017 and 2018, for eligible hospitals and CAHs attesting to CMS, we are eliminating the Clinical Decision Support (CDS) and Computerized Provider Order Entry (CPOE) objectives and measures, and lowering the reporting thresholds for a subset of the remaining objectives and measures, generally to the Modified Stage 2 thresholds. The reduction of measure thresholds is intended to respond to input we have received from hospitals, hospital associations, health systems, and vendors expressing concerns about the established measures. The revised requirements focus on reducing hospital administrative burden, allowing eligible hospitals and CAHs attesting to CMS to focus more on providing quality patient care, as well as focus on updating and optimizing CEHRT functionalities to sufficiently meet the requirements of the EHR Incentive Program and prepare for Stage 3 of meaningful use. Based on the public comments we received, we are finalizing a policy that these changes to the objectives and measures apply for all eligible hospitals and CAHs that attest to CMS, including eligible hospitals and CAHs that are eligible to participate in both the Medicare and Medicaid EHR Incentive Programs.

In addition, we are changing the EHR reporting period in CY 2016 and 2017 for eligible professionals, eligible hospitals, and CAHs; reporting requirements for eligible professionals, eligible hospitals, and CAHs that are new participants in 2017; and the policy on measure calculations for actions outside the EHR reporting period. Finally, we are making a one-time significant hardship exception from the 2018 payment adjustment for certain eligible professionals who are new participants in the EHR Incentive Program in 2017 and are transitioning to the Merit-Based Incentive Payment System in 2017. We believe these changes are responsive to additional stakeholder feedback received through both correspondence and in-person meetings and will result in continued advancement of certified EHR technology utilization, particularly among those eligible professionals, eligible hospitals and CAHs that have not previously achieved meaningful use, and result in a program more focused on supporting interoperability and data sharing for all participants under the Medicare and Medicaid EHR Incentive Programs.

  • Transplant Performance Thresholds: With respect to solid organ transplant programs, we are restoring the effective tolerance range for clinical outcomes that was allowed in our original 2007 rule. These outcome requirements in the Medicare Conditions of Participation (CoPs) have been affected by the nationwide improvement in transplant outcomes, making it now more difficult for transplant programs to maintain compliance with, in effect, increasingly stringent Medicare standards for patient and graft survival. We expect that our policies will increase access to organ transplants while continuing to protect Medicare beneficiaries.
  • Organ Procurement Organizations (OPOs) Changes: In this final rule with comment period, we are: Changing the current “eligible death” definition to be consistent with the OPTN definition; modifying CMS current outcome measures to be consistent with yield calculations currently utilized by the SRTR; and modifying current requirements for documentation of donor information which is sent to the transplant center along with the organ.

3. Summary of Costs and Benefits

In sections XXIII. and XXIV. of this final rule with comment period, we set forth a detailed analysis of the regulatory and Federalism impacts that these changes will have on affected entities and beneficiaries. Key estimated impacts are described below.

a. Impacts of the OPPS Update

(1) Impacts of All OPPS Changes

Table 52 in section XXIII. of this final rule with comment period displays the distributional impact of all the OPPS changes on various groups of hospitals and CMHCs for CY 2017 compared to all estimated OPPS payments in CY 2016. We estimate that the policies in this final rule with comment period will result in a 1.7 percent overall increase in OPPS payments to providers. We estimate that total OPPS payments for CY 2017, including beneficiary cost-sharing, to the approximate 3,906 facilities paid under the OPPS (including general acute care hospitals, children's hospitals, cancer hospitals, and CMHCs) will increase by approximately $773 million compared to CY 2016 payments, excluding our estimated changes in enrollment, utilization, and case-mix.

We estimated the isolated impact of our OPPS policies on CMHCs because CMHCs are only paid for partial hospitalization services under the OPPS. Continuing the provider-specific structure that we adopted beginning in CY 2011 and basing payment fully on the type of provider furnishing the service, we estimate a 15.0 percent decrease in CY 2017 payments to CMHCs relative to their CY 2016 payments.

(2) Impacts of the Updated Wage Indexes

We estimate that our update of the wage indexes based on the FY 2017 IPPS final rule wage indexes results in no change for urban hospitals and a 0.3 percent increase for rural hospitals under the OPPS. These wage indexes include the continued implementation of the OMB labor market area delineations based on 2010 Decennial Census data.

(3) Impacts of the Rural Adjustment and the Cancer Hospital Payment Adjustment

There are no significant impacts of our CY 2017 payment policies for hospitals that are eligible for the rural adjustment or for the cancer hospital payment adjustment. We are not making any change in policies for determining the rural and cancer hospital payment adjustments, and the adjustment amounts do not significantly impact the budget neutrality adjustments for these policies.Start Printed Page 79572

(4) Impacts of the Proposed OPD Fee Schedule Increase Factor

We estimate that, for most hospitals, the application of the OPD fee schedule increase factor of 1.65 percent to the conversion factor for CY 2017 will mitigate the impacts of the budget neutrality adjustments. As a result of the OPD fee schedule increase factor and other budget neutrality adjustments, we estimate that rural and urban hospitals will experience increases of approximately 1.7 percent for urban hospitals and 2.2 percent for rural hospitals. Classifying hospitals by teaching status or type of ownership suggests that these hospitals will receive similar increases.

b. Impacts of the ASC Payment Update

For impact purposes, the surgical procedures on the ASC list of covered procedures are aggregated into surgical specialty groups using CPT and HCPCS code range definitions. The percentage change in estimated total payments by specialty groups under the CY 2017 payment rates compared to estimated CY 2016 payment rates ranges between 12 percent for cardiovascular system procedures and −15 percent for hemic and lymphatic system procedures.

c. Impacts of the Hospital OQR Program

We do not expect our CY 2017 policies to significantly affect the number of hospitals that do not receive a full annual payment update.

d. Impacts of the ASCQR Program

We do not expect our CY 2017 policies to significantly affect the number of ASCs that do not receive a full annual payment update.

e. Impacts for Implementation of Section 603 of the Bipartisan Budget Act of 2015

We estimate that implementation of section 603 of Public Law 114-74 in this interim final rule with comment period will reduce Medicare Part B expenditures by approximately $50 million in CY 2017, relative to a baseline where section 603 was not implemented in CY 2017. This estimate is a significantly lower impact than the $330 million reduction estimated for the CY 2017 OPPS proposed rule. This lower impact estimate is primarily a result of changes in technical assumptions regarding the impact of this provision, not a result of the change in payment policy.

B. Legislative and Regulatory Authority for the Hospital OPPS

When Title XVIII of the Social Security Act was enacted, Medicare payment for hospital outpatient services was based on hospital-specific costs. In an effort to ensure that Medicare and its beneficiaries pay appropriately for services and to encourage more efficient delivery of care, the Congress mandated replacement of the reasonable cost-based payment methodology with a prospective payment system (PPS). The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section 1833(t) to the Act authorizing implementation of a PPS for hospital outpatient services. The OPPS was first implemented for services furnished on or after August 1, 2000. Implementing regulations for the OPPS are located at 42 CFR parts 410 and 419.

The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS. The following Acts made additional changes to the OPPS: The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8, 2006; the Medicare Improvements and Extension Act under Division B of Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) (Pub. L. 109-432), enacted on December 20, 2006; the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), enacted on December 29, 2007; the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July 15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-148), enacted on March 23, 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on March 30, 2010 (these two public laws are collectively known as the Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010 (MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L. 112-96), enacted on February 22, 2012; the American Taxpayer Relief Act of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93), enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2, 2015; and the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), enacted on December 18, 2015.

Under the OPPS, we pay for hospital Part B services on a rate-per-service basis that varies according to the APC group to which the service is assigned. We use the Healthcare Common Procedure Coding System (HCPCS) (which includes certain Current Procedural Terminology (CPT) codes) to identify and group the services within each APC. The OPPS includes payment for most hospital outpatient services, except those identified in section I.C. of this final rule with comment period. Section 1833(t)(1)(B) of the Act provides for payment under the OPPS for hospital outpatient services designated by the Secretary (which includes partial hospitalization services furnished by CMHCs), and certain inpatient hospital services that are paid under Medicare Part B.

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

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

For new technology items and services, special payments under the OPPS may be made in one of two ways. Section 1833(t)(6) of the Act provides for temporary additional payments, which we refer to as “transitional pass-through payments,” for at least 2 but not more than 3 years for certain drugs, biological agents, brachytherapy devices used for the treatment of cancer, and categories of other medical devices. For new technology services that are not Start Printed Page 79573eligible for transitional pass-through payments, and for which we lack sufficient clinical information and cost data to appropriately assign them to a clinical APC group, we have established special APC groups based on costs, which we refer to as New Technology APCs. These New Technology APCs are designated by cost bands which allow us to provide appropriate and consistent payment for designated new procedures that are not yet reflected in our claims data. Similar to pass-through payments, an assignment to a New Technology APC is temporary; that is, we retain a service within a New Technology APC until we acquire sufficient data to assign it to a clinically appropriate APC group.

C. Excluded OPPS Services and Hospitals

Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to designate the hospital outpatient services that are paid under the OPPS. While most hospital outpatient services are payable under the OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for ambulance, physical and occupational therapy, and speech-language pathology services, for which payment is made under a fee schedule. It also excludes screening mammography, diagnostic mammography, and effective January 1, 2011, an annual wellness visit providing personalized prevention plan services. The Secretary exercises the authority granted under the statute to also exclude from the OPPS certain services that are paid under fee schedules or other payment systems. Such excluded services include, for example, the professional services of physicians and nonphysician practitioners paid under the Medicare Physician Fee Schedule (MPFS); certain laboratory services paid under the Clinical Laboratory Fee Schedule (CLFS); services for beneficiaries with end-stage renal disease (ESRD) that are paid under the ESRD prospective payment system; and services and procedures that require an inpatient stay that are paid under the hospital IPPS. In addition, section 1833(t)(1)(B)(v) of the Act authorizes that applicable items and services furnished by nonexcepted off-campus provider-based departments of a hospital on or after January 1, 2017, will not be considered covered outpatient department services as defined under section 1833(t)(1)(B) of the Act for purposes of payment under the OPPS. We set forth the services that are excluded from payment under the OPPS in regulations at 42 CFR 419.22, which was amended by adding paragraph (v) to implement exclusion of items and services furnished by nonexcepted off-campus provider-based departments from the definition of covered outpatient department services.

Under § 419.20(b) of the regulations, we specify the types of hospitals that are excluded from payment under the OPPS. These excluded hospitals include: Critical access hospitals (CAHs); hospitals located in Maryland and paid under the Maryland All-Payer Model; hospitals located outside of the 50 States, the District of Columbia, and Puerto Rico; and Indian Health Service (IHS) hospitals.

D. Prior Rulemaking

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

Since initially implementing the OPPS, we have published final rules in the Federal Register annually to implement statutory requirements and changes arising from our continuing experience with this system. These rules can be viewed on the CMS Web site at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html.

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

1. Authority of the Panel

Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of Public Law 106-113, and redesignated by section 202(a)(2) of Public Law 106-113, requires that we consult with an external advisory panel of experts to annually review the clinical integrity of the payment groups and their weights under the OPPS. In CY 2000, based on section 1833(t)(9)(A) of the Act, the Secretary established the Advisory Panel on Ambulatory Payment Classification Groups (APC Panel) to fulfill this requirement. In CY 2011, based on section 222 of the PHS Act which gives discretionary authority to the Secretary to convene advisory councils and committees, the Secretary expanded the panel's scope to include the supervision of hospital outpatient therapeutic services in addition to the APC groups and weights. To reflect this new role of the panel, the Secretary changed the panel's name to the Advisory Panel on Hospital Outpatient Payment (the HOP Panel, or the Panel). The Panel is not restricted to using data compiled by CMS, and in conducting its review, it may use data collected or developed by organizations outside the Department.

2. Establishment of the Panel

On November 21, 2000, the Secretary signed the initial charter establishing the HOP Panel, and at that time named the APC Panel. This expert panel is composed of appropriate representatives of providers (currently employed full-time, not as consultants, in their respective areas of expertise), reviews clinical data, and advises CMS about the clinical integrity of the APC groups and their payment weights. Since CY 2012, the Panel also is charged with advising the Secretary on the appropriate level of supervision for individual hospital outpatient therapeutic services. The Panel is technical in nature, and it is governed by the provisions of the Federal Advisory Committee Act (FACA). The current charter specifies, among other requirements, that: The Panel continues to be technical in nature; is governed by the provisions of the FACA; may convene up to three meetings per year; has a Designated Federal Official (DFO); and is chaired by a Federal Official designated by the Secretary. The Panel's charter was amended on November 15, 2011, renaming the Panel and expanding the Panel's authority to include supervision of hospital outpatient therapeutic services and to add Critical Access Hospital (CAH) representation to its membership. The current charter was renewed on November 6, 2014 (80 FR 23009) and the number of panel members was revised from up to 19 to up to 15 members.

The current Panel membership and other information pertaining to the Panel, including its charter, Federal Register notices, membership, meeting dates, agenda topics, and meeting reports, can be viewed on the CMS Web site at: https://www.cms.gov/​Regulations-and-Guidance/​Guidance/​FACA/​AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html.

3. Panel Meetings and Organizational Structure

The Panel has held multiple meetings, with the last meeting taking place on August 22, 2016. Prior to each meeting, Start Printed Page 79574we publish a notice in the Federal Register to announce the meeting and, when necessary, to solicit nominations for Panel membership, to announce new members and to announce any other changes that the public should be aware of. Beginning in CY 2017, we will transition to one meeting per year, which will be scheduled in the summer (81 FR 31941).

The Panel has established an operational structure that, in part, currently includes the use of three subcommittees to facilitate its required review process. The three current subcommittees are the Data Subcommittee, the Visits and Observation Subcommittee, and the Subcommittee for APC Groups and Status Indicator (SI) Assignments. The Data Subcommittee is responsible for studying the data issues confronting the Panel and for recommending options for resolving them. The Visits and Observation Subcommittee reviews and makes recommendations to the Panel on all technical issues pertaining to observation services and hospital outpatient visits paid under the OPPS (for example, APC configurations and APC relative payment weights). The Subcommittee for APC Groups and SI Assignments advises the Panel on the following issues: The appropriate status indicators to be assigned to HCPCS codes, including but not limited to whether a HCPCS code or a category of codes should be packaged or separately paid; and the appropriate APC assignment of HCPCS codes regarding services for which separate payment is made.

Each of these subcommittees was established by a majority vote from the full Panel during a scheduled Panel meeting, and the Panel recommended at the August 22, 2016 meeting that the subcommittees continue. We accepted this recommendation.

Discussions of the other recommendations made by the Panel at the March 14, 2016 and August 22, 2016 Panel meetings are included in the sections of this final rule with comment period that are specific to each recommendation. For discussions of earlier Panel meetings and recommendations, we refer readers to previously published OPPS/ASC proposed and final rules, the CMS Web site mentioned earlier in this section, and the FACA database at: http://facadatabase.gov/​.

F. Public Comments Received on the CY 2016 OPPS/ASC Final Rule With Comment Period

We received 25 timely pieces of correspondence on the CY 2016 OPPS/ASC final rule with comment period that appeared in the Federal Register on November 13, 2015 (80 FR 70298), some of which contained comments on the interim APC assignments and/or status indicators of new or replacement Level II HCPCS codes (identified with comment indicator “NI” in OPPS Addendum B, ASC Addendum AA, and ASC Addendum BB to that final rule). Summaries of the public comments on new or replacement Level II HCPCS codes are set forth in this CY 2017 final rule with comment period under the appropriate subject matter headings.

II. Updates Affecting OPPS Payments

A. Recalibration of APC Relative Payment Weights

1. Database Construction

a. Database Source and Methodology

Section 1833(t)(9)(A) of the Act requires that the Secretary review not less often than annually and revise the relative payment weights for APCs. In the April 7, 2000 OPPS final rule with comment period (65 FR 18482), we explained in detail how we calculated the relative payment weights that were implemented on August 1, 2000 for each APC group.

In the CY 2017 OPPS/ASC proposed rule (81 FR 45615), for CY 2017, we proposed to recalibrate the APC relative payment weights for services furnished on or after January 1, 2017, and before January 1, 2018 (CY 2017), using the same basic methodology that we described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70309 through 70321). That is, we proposed to recalibrate the relative payment weights for each APC based on claims and cost report data for hospital outpatient department (HOPD) services, using the most recent available data to construct a database for calculating APC group weights.

For the purpose of recalibrating the proposed APC relative payment weights for CY 2017, we used approximately 163 million final action claims (claims for which all disputes and adjustments have been resolved and payment has been made) for HOPD services furnished on or after January 1, 2015, and before January 1, 2016.

Addendum N to the proposed rule included the proposed list of bypass codes for CY 2017. The proposed list of bypass codes contains codes that were reported on claims for services in CY 2015 and, therefore, includes codes that were in effect in CY 2015 and used for billing, but were deleted for CY 2016. We retained these deleted bypass codes on the proposed CY 2017 bypass list because these codes existed in CY 2015 and were covered OPD services in that period, and CY 2015 claims data are used to calculate CY 2017 payment rates. Keeping these deleted bypass codes on the bypass list potentially allows us to create more “pseudo” single procedure claims for ratesetting purposes. “Overlap bypass codes” that are members of the proposed multiple imaging composite APCs were identified by asterisks (*) in the third column of Addendum N to the proposed rule. HCPCS codes that we proposed to add for CY 2017 were identified by asterisks (*) in the fourth column of Addendum N.

We did not receive any public comments on our general proposal to recalibrate the relative payment weights for each APC based on claims and cost report data for HOPD services or on our proposed bypass code process. Therefore, we are adopting as final the proposed “pseudo” single claims process and the final CY 2017 bypass list of 194 HCPCS codes, as displayed in Addendum N to this final rule with comment period (which is available via the Internet on the CMS Web site). For this final rule with comment period, for the purpose of recalibrating the final APC relative payment weights for CY 2017, we used approximately 86 million final action claims (claims for which all disputes and adjustments have been resolved and payment has been made) for HOPD services furnished on or after January 1, 2015, and before January 1, 2016. For exact numbers of claims used and additional details on the claims accounting process, we refer readers to the claims accounting narrative under supporting documentation for this CY 2017 OPPS/ASC final rule with comment period on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html.

Table 1 below contains the list of codes that we are removing from the CY 2017 bypass list.

Table 1—HCPCS Codes Removed From the CY 2017 Bypass List

HCPCS codeHCPCS short descriptor
95925Somatosensory testing.
95808Polysom any age 1-3> param.
90845Psychoanalysis.
96151Assess hlth/behave subseq.
31505Diagnostic laryngoscopy.
95872Muscle test one fiber.

b. Calculation and Use of Cost-to-Charge Ratios (CCRs)

For CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45616), we Start Printed Page 79575proposed to continue to use the hospital-specific overall ancillary and departmental cost-to-charge ratios (CCRs) to convert charges to estimated costs through application of a revenue code-to-cost center crosswalk. To calculate the APC costs on which the CY 2017 APC payment rates are based, we calculated hospital-specific overall ancillary CCRs and hospital-specific departmental CCRs for each hospital for which we had CY 2015 claims data by comparing these claims data to the most recently available hospital cost reports, which, in most cases, are from CY 2014. For the proposed CY 2017 OPPS payment rates, we used the set of claims processed during CY 2015. We applied the hospital-specific CCR to the hospital's charges at the most detailed level possible, based on a revenue code-to-cost center crosswalk that contains a hierarchy of CCRs used to estimate costs from charges for each revenue code. That crosswalk is available for review and continuous comment on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html.

To ensure the completeness of the revenue code-to-cost center crosswalk, we reviewed changes to the list of revenue codes for CY 2015 (the year of claims data we used to calculate the proposed CY 2017 OPPS payment rates) and found that the National Uniform Billing Committee (NUBC) did not add any new revenue codes to the NUBC 2015 Data Specifications Manual.

In accordance with our longstanding policy, we calculated CCRs for the standard and nonstandard cost centers accepted by the electronic cost report database. In general, the most detailed level at which we calculated CCRs was the hospital-specific departmental level. For a discussion of the hospital-specific overall ancillary CCR calculation, we refer readers to the CY 2007 OPPS/ASC final rule with comment period (71 FR 67983 through 67985). The calculation of blood costs is a longstanding exception (since the CY 2005 OPPS) to this general methodology for calculation of CCRs used for converting charges to costs on each claim. This exception is discussed in detail in the CY 2007 OPPS/ASC final rule with comment period and discussed further in section II.A.2.b.(1) of the proposed rule (81 FR 45617) and of this final rule with comment period.

Comment: One commenter supported the CY 2014 final rule transitional policy of excluding providers that use a “square foot” methodology to calculate CCRs used to estimate costs associated with the CT and MRI APCs for CYs 2014-2017, as discussed in the CY 2017 OPPS proposed rule claims accounting narrative on pages 33 through 37, that was made available under supporting documentation for the CY 2017 OPPS/ASC proposed rule on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html. However, the commenter opposed the provision of the CY 2014 final rule policy that was discussed in the CY 2017 OPPS proposed rule claims accounting narrative that sunsets this transitional policy after CY 2017.

Response: We thank the commenter for its support of our proposed CY 2017 policy. In response to the commenter's concern about the sunset of the transitional policy after CY 2017, while CY 2018 payment policies will be addressed in the CY 2018 OPPS/ASC proposed rule, we note that the sunset of this transitional policy for CY 2018 was discussed in the CY 2014 OPPS/ASC final rule with comment period. We believe that 4 years is sufficient time for hospitals that have not done so to transition to a more accurate cost allocation method and for the related data to be available for ratesetting purposes. After consideration of the public comment we received on the general CCR process, we are finalizing using the hospital-specific overall ancillary and departmental CCRs to convert charges to estimated costs through application of a revenue code-to-cost center crosswalk and the established methodology for CY 2017.

2. Data Development Process and Calculation of Costs Used for Ratesetting

In this section of this final rule with comment period, we discuss the use of claims to calculate the OPPS payment rates for CY 2017. The Hospital OPPS page on the CMS Web site on which this final rule with comment period is posted (http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html) provides an accounting of claims used in the development of the final payment rates. That accounting provides additional detail regarding the number of claims derived at each stage of the process. In addition, below in this section we discuss the file of claims that comprises the data set that is available for purchase under a CMS data use agreement. The CMS Web site, http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html, includes information about purchasing the “OPPS Limited Data Set,” which now includes the additional variables previously available only in the OPPS Identifiable Data Set, including ICD-9-CM diagnosis codes and revenue code payment amounts. This file is derived from the CY 2015 claims that were used to calculate the payment rates for the CY 2017 OPPS.

In the history of the OPPS, we have traditionally established the scaled relative weights on which payments are based using APC median costs, which is a process described in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74188). However, as discussed in more detail in section II.A.2.f. of the CY 2013 OPPS/ASC final rule with comment period (77 FR 68259 through 68271), we finalized the use of geometric mean costs to calculate the relative weights on which the CY 2013 OPPS payment rates were based. While this policy changed the cost metric on which the relative payments are based, the data process in general remained the same, under the methodologies that we used to obtain appropriate claims data and accurate cost information in determining estimated service cost. For CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45616), we proposed to continue to use geometric mean costs to calculate the relative weights on which the CY 2017 OPPS payment rates are based.

We did not receive any public comments on this proposed process and are finalizing our proposed methodology for calculating geometric mean costs for purposes of creating relative payment weights and subsequent APC payment rates for the CY 2017 OPPS. We used the methodology described in sections II.A.2.a. through II.A.2.d. of this final rule with comment period to calculate the costs we used to establish the relative payment weights used in calculating the final OPPS payment rates for CY 2017 shown in Addenda A and B to this final rule with comment period (which are available via the Internet on the CMS Web site). We refer readers to section II.A.4. of this final rule with comment period for a discussion of the conversion of APC costs to scaled payment weights.

For details of the claims process used in this final rule with comment period, we refer readers to the claims accounting narrative under supporting documentation for this CY 2017 OPPS/ASC final rule with comment period on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html. Start Printed Page 79576

a. Recommendations of the Advisory Panel on Hospital Outpatient Payment (the Panel) Regarding Data Development

As we discussed in the CY 2017 OPPS/ASC proposed rule (81 FR 45616 through 45617), at the March 14, 2016 meeting of the Panel, we presented our standard analysis of APCs, specifically those APCs for which geometric mean costs in the CY 2015 claims data through September 2015 varied significantly from the CY 2014 claims data used for the CY 2016 OPPS/ASC final rule with comment period. At the March 14, 2016 Panel meeting, the Panel made three recommendations related to the data process. The Panel's data-related recommendations and our responses follow.

Recommendation: The Panel recommends that CMS provide the Data Subcommittee a list of APCs fluctuating significantly in costs prior to each Panel meeting.

CMS Response: We accepted this recommendation.

Recommendation: The Panel recommends that the work of the Data Subcommittee continue.

CMS Response: We accepted this recommendation.

Recommendation: The Panel recommends that Michael Schroyer continue serving as subcommittee Chair for the August 2016 HOP Panel.

CMS Response: We accepted this recommendation.

At the August 22, 2016 meeting of the Panel, we provided the Data Committee a list of APCs for CY 2017 for which geometric mean costs in the CY 2015 claims data varied significantly from the CY 2014 claims data used for the CY 2016 OPPS/ASC final rule with comment period. At the August 22, 2016 Panel meeting, the Panel made four recommendations related to the data process. The Panel's data-related recommendations and our responses follow.

Recommendation: The Panel recommends that CMS provide the Data Subcommittee a list of APCs fluctuating significantly in costs prior to each Panel meeting.

CMS Response: We are accepting this recommendation.

Recommendation: The Panel recommends that CMS provide the Data Subcommittee a presentation on the claims accounting process prior to each HOP Panel meeting.

CMS Response: We are accepting this recommendation.

Recommendation: The Panel recommends that the work of the data subcommittee continue.

CMS Response: We are accepting this recommendation.

Recommendation: The Panel recommends that Michael Schroyer continue serving as Chair of the Data Subcommittee.

CMS Response: We are accepting this recommendation.

b. Calculation of Single Procedure APC Criteria-Based Costs

(1) Blood and Blood Products

(a) Methodology

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

For CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45617), we proposed to continue to establish payment rates for blood and blood products using our blood-specific CCR methodology, which utilizes actual or simulated CCRs from the most recently available hospital cost reports to convert hospital charges for blood and blood products to costs. This methodology has been our standard ratesetting methodology for blood and blood products since CY 2005. It was developed in response to data analysis indicating that there was a significant difference in CCRs for those hospitals with and without blood-specific cost centers, and past public comments indicating that the former OPPS policy of defaulting to the overall hospital CCR for hospitals not reporting a blood-specific cost center often resulted in an underestimation of the true hospital costs for blood and blood products. Specifically, in order to address the differences in CCRs and to better reflect hospitals' costs, we proposed to continue to simulate blood CCRs for each hospital that does not report a blood cost center by calculating the ratio of the blood-specific CCRs to hospitals' overall CCRs for those hospitals that do report costs and charges for blood cost centers. We also proposed to apply this mean ratio to the overall CCRs of hospitals not reporting costs and charges for blood cost centers on their cost reports in order to simulate blood-specific CCRs for those hospitals. We proposed to calculate the costs upon which the CY 2017 payment rates for blood and blood products are based using the actual blood-specific CCR for hospitals that reported costs and charges for a blood cost center and a hospital-specific, simulated blood-specific CCR for hospitals that did not report costs and charges for a blood cost center.

We continue to believe that the hospital-specific, simulated blood-specific CCR methodology better responds to the absence of a blood-specific CCR for a hospital than alternative methodologies, such as defaulting to the overall hospital CCR or applying an average blood-specific CCR across hospitals. Because this methodology takes into account the unique charging and cost accounting structure of each hospital, we believe that it yields more accurate estimated costs for these products. We continue to believe that this methodology in CY 2017 would result in costs for blood and blood products that appropriately reflect the relative estimated costs of these products for hospitals without blood cost centers and, therefore, for these blood products in general.

We note that, as discussed in section II.A.2.e. of the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 through 74910), the CY 2015 OPPS/ASC final rule with comment period (79 FR 66798 through 66810), and the CY 2016 OPPS/ASC final rule with comment period (80 FR 70325 through 70339), we defined a comprehensive APC (C-APC) as a classification for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service. Under this policy, we include the costs of blood and blood products when calculating the overall costs of these C-APCs. We proposed to continue to apply the blood-specific CCR methodology described in this section when calculating the costs of the blood and blood products that appear on claims with services assigned to the C-APCs. Because the costs of blood and blood products will be reflected in the overall costs of the C-APCs (and, as a result, in the payment rates of the C-APCs), we proposed to not make separate payments for blood and blood products when they appear on the same claims as services assigned to the C-APCs (we refer readers to the CY 2015 OPPS/ASC final rule with comment period (79 FR 66796)).

We invited public comments on these proposals. We also referred readers to Addendum B to the proposed rule (which was available via the Internet on the CMS Web site) for the proposed CY 2017 payment rates for blood and blood products (which were identified with status indicator “R”). For a more detailed discussion of the blood-specific CCR methodology, we refer readers to the CY 2005 OPPS proposed rule (69 FR Start Printed Page 7957750524 through 50525). For a full history of OPPS payment for blood and blood products, we refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66807 through 66810).

Comment: Commenters supported the proposal to continue to separately pay for blood and blood products using a blood-specific CCR methodology.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our CY 2017 proposal to continue to establish payment rates for blood and blood products using our blood-specific CCR methodology. The final CY 2017 payment rates for blood and blood products (which are identified with status indicator “R”) are reflective of the use of the hospital-specific simulated blood-specific CCR methodology and can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site).

(b) Solicitation of Public Comments

As discussed in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323), we are in the process of examining the current set of HCPCS P-codes for blood products, which became effective many years ago. Because these HCPCS P-codes were created many years ago, we are considering whether this code set could benefit from some code descriptor revisions, updating, and/or consolidation to make these codes properly reflect current product descriptions and utilization while minimizing redundancy and potentially outdated descriptors. In the CY 2017 OPPS/ASC proposed rule (81 FR 45617 through 45618), we requested public comments regarding the adequacy and necessity (in terms of the existing granularity) of the current descriptors for the HCPCS P-codes describing blood products. Specifically, there are three main categories of blood products: Red blood cells; platelets; and plasma. In each of these categories, there are terms that describe various treatments or preparations of the blood products, with each, in several cases, represented individually and in combination. For example, for pheresis platelets, there are codes for “leukocyte reduced,” “irradiated,” “leukocyte reduced + irradiated,” and “leukocyte reduced + irradiated + CMV-negative,” among others. We asked the blood product stakeholder community whether the current blood product HCPCS P-code descriptors with the associated granularity best describe the state of the current technology for blood products that hospitals currently provide to hospital outpatients. In several cases, the hospital costs as calculated from the CMS claims data are similar for blood products of the same type (for example, pheresis platelets) that have different code descriptors, which indicates to us that there is not a significant difference in the resources needed to produce the similar products. Again, we invited public comments on the current set of active HCPCS P-codes that describe blood products regarding how the code descriptors could be revised and updated (if necessary) to reflect the current blood products provided to hospital outpatients. The current set of active HCPCS P-codes that describe blood products can be found in Addendum B to the proposed rule and this final rule with comment period (which is available via the Internet on the CMS Web site).

Comment: Several commenters responded to the solicitation for public comments and supported a thorough examination of the current set of HCPCS P-codes for blood products as a necessary undertaking because the HCPCS P-codes were created several years ago. Several commenters recommended that CMS convene a stakeholder group that includes representatives of hospitals, blood banks, the American Red Cross, and others to discuss a framework to systematically review and revise the HCPCS P-codes for blood products. Commenters also encouraged CMS to retain individual HCPCS P-codes for unique blood products with significant therapeutic distinctions, as opposed to creating modifiers to be applied to the existing HCPCS P-codes. Commenters also suggested that CMS establish a “not otherwise classified (NOC)” code for blood products, which would allow hospitals to begin immediately billing for a new blood product that is not described by a specific HCPCS P-code. One commenter supported the use of broader descriptions for HCPCS P-codes when more granular language is no longer meaningful for differentiating between different types of blood and blood products, and where the costs and volume of the HCPCS P-codes are similar. Other commenters suggested specific modifications to the order, classification, and code descriptors of the blood and blood product HCPCS P-codes.

Response: We appreciate the commenters' detailed responses. These comments will be taken into consideration in the development of proposals to update the HCPCS P-codes that describe blood products.

(c) Rapid Bacterial Testing for Platelets

In March 2016, the Food and Drug Administration (FDA) issued draft guidance for the health care industry entitled, “Bacterial Risk Control Strategies for Blood Collection Establishments and Transfusion Services to Enhance the Safety and Availability of Platelets for Transfusion” (available at: http://www.fda.gov/​BiologicsBloodVaccines/​GuidanceComplianceRegulatoryInformation/​Guidances/​default.htm). This guidance encourages the use of rapid bacterial testing devices or pathogen-reduction technology for platelets to adequately control the risk of bacterial contamination of platelets.

In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70322), CMS established three HCPCS P-codes for pathogen-reduced blood products, which became effective January 1, 2016. These codes included: HCPCS code P9070 (Plasma, pooled multiple donor, pathogen reduced, frozen, each unit); HCPCS code P9071 (Plasma (single donor), pathogen reduced, frozen, each unit); and HCPCS code P9072 (Platelets, pheresis, pathogen reduced, each unit).

The HCPCS Workgroup has decided to revise the HCPCS code established in CY 2016 for pathogen-reduced platelets (HCPCS code P9072) to include the use of pathogen-reduction technology or rapid bacterial testing. Specifically, the descriptor for this code will be revised, effective January 1, 2017, to read as follows: HCPCS code P9072 (Platelets, pheresis, pathogen reduced or rapid bacterial tested, each unit). The payment rate for HCPCS code P9072 is based on a crosswalk to HCPCS code P9037 (Platelets, pheresis, leukocyte reduced, irradiated, each unit). We refer readers to the CY 2016 OPPS/ASC final rule with comment period for a further discussion of crosswalks for pathogen-reduced blood products (80 FR 70323). When claims data become available for HCPCS code P9072, we will establish a payment rate for this code using that data and our blood-specific CCR methodology. The revised HCPCS code descriptor and final payment rate for this service can be found in Addendum B of this final rule with comment period (which is available via the Internet on the CMS Web site).

(2) Brachytherapy Sources

Section 1833(t)(2)(H) of the Act mandates the creation of additional groups of covered OPD services that classify devices of brachytherapy consisting of a seed or seeds (or radioactive source) (“brachytherapy sources”) separately from other services Start Printed Page 79578or groups of services. The statute provides certain criteria for the additional groups. For the history of OPPS payment for brachytherapy sources, we refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC final rule with comment period (77 FR 68240 through 68241). As we have stated in prior OPPS updates, we believe that adopting the general OPPS prospective payment methodology for brachytherapy sources is appropriate for a number of reasons (77 FR 68240). The general OPPS methodology uses costs based on claims data to set the relative payment weights for hospital outpatient services. This payment methodology results in more consistent, predictable, and equitable payment amounts per source across hospitals by averaging the extremely high and low values, in contrast to payment based on hospitals' charges adjusted to costs. We believe that the OPPS methodology, as opposed to payment based on hospitals' charges adjusted to cost, also would provide hospitals with incentives for efficiency in the provision of brachytherapy services to Medicare beneficiaries. Moreover, this approach is consistent with our payment methodology for the vast majority of items and services paid under the OPPS. We refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323 through 70325) for further discussion of the history of OPPS payment for brachytherapy sources.

In the CY 2017 OPPS/ASC proposed rule (81 FR 45618), for CY 2017, we proposed to use the costs derived from CY 2015 claims data to set the CY 2017 payment rates for brachytherapy sources because CY 2015 is the same year of data we proposed to use to set the proposed payment rates for most other items and services that would be paid under the CY 2017 OPPS. We proposed to base the payment rates for brachytherapy sources on the geometric mean unit costs for each source, consistent with the methodology that we proposed for other items and services paid under the OPPS, as discussed in section II.A.2. of the proposed rule. We also proposed to continue the other payment policies for brachytherapy sources that we finalized and first implemented in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60537). We proposed to pay for the stranded and nonstranded not otherwise specified (NOS) codes, HCPCS codes C2698 and C2699, at a rate equal to the lowest stranded or nonstranded prospective payment rate for such sources, respectively, on a per source basis (as opposed to, for example, a per mCi), which is based on the policy we established in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66785). For CY 2017 and subsequent years, we also proposed to continue the policy we first implemented in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60537) regarding payment for new brachytherapy sources for which we have no claims data, based on the same reasons we discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66786; which was delayed until January 1, 2010 by section 142 of Pub. L. 110-275). Specifically, this policy is intended to enable us to assign new HCPCS codes for new brachytherapy sources to their own APCs, with prospective payment rates set based on our consideration of external data and other relevant information regarding the expected costs of the sources to hospitals.

The proposed CY 2017 payment rates for brachytherapy sources were included in Addendum B to the proposed rule (which is available via the Internet on the CMS Web site) and were identified with status indicator “U”. We note that, for CY 2017, we proposed to assign new proposed status indicator “E2” (Items and Services for Which Pricing Information and Claims Data Are Not Available) to HCPCS code C2644 (Brachytherapy cesium-131 chloride) because this code was not reported on CY 2015 claims. Therefore, we are unable to calculate a payment rate based on the general OPPS ratesetting methodology described earlier. Although HCPCS code C2644 became effective July 1, 2014, and although we would expect that if a hospital furnished a brachytherapy source described by this code in CY 2015, HCPCS code C2644 should appear on the CY 2015 claims, there are no CY 2015 claims reporting this code. In addition, unlike new brachytherapy sources HCPCS codes, we will not consider external data to determine a proposed payment rate for HCPCS code C2644 for CY 2017.

Therefore, we proposed to assign new proposed status indicator “E2” to HCPCS code C2644.

We invited public comments on this proposed policy. We also requested recommendations for new HCPCS codes to describe new brachytherapy sources consisting of a radioactive isotope, including a detailed rationale to support recommended new sources.

Comment: One commenter requested that CMS establish a new HCPCS code to specifically describe the use of CivaString®, a linear, low dose rate polymer encapsulated palladium-103 brachytherapy source. The commenter stated that CivaString® became commercially available in CY 2013, and providers began reporting charges for the brachytherapy source using HCPCS code C2636 (Brachytherapy linear, non-stranded, palladium-103). However, the commenter believed that providers experienced confusion regarding the appropriate reporting of HCPCS code C2636. The commenter stated that six hospitals reported charges using HCPCS code C2636 over the past 6 years, without purchasing a linear, non-stranded palladium-103 brachytherapy source. Moreover, the commenter believed that providers may have inappropriately reported charges using HCPCS code C2636, including instances where providers reported charges for the use of HCPCS code 2636 although acquisition of CivaString® had not been obtained when it became commercially available in CY 2013. In addition, the commenter stated that the National Correct Coding Initiative (NCCI) established a medically unlikely edit (MUE) for HCPCS code C2636 in the outpatient hospital setting for 150 mm, effective April 1, 2010. Subsequently, in November 2015, the manufacturer of CivaString® requested that the MUE be increased to 900 mm based on the recommended clinical usage of CivaString®. In response to that request, the NCCI increased the MUE to 600 mm, effective April 1, 2016. However, the commenter further stated that claims for the use of CivaString® with the appropriate number of units continued to be denied based on the MUE. Because of these concerns, the commenter requested that CMS establish a new HCPCS code to specifically describe the use of CivaString®, as well as an increase in the payment rate proposed to adequately pay for the costs of this brachytherapy source.

Response: Section 1833(t)(2)(h) of the Act requires that the Secretary create additional groups of covered outpatient department services that classify brachytherapy sources separately from other services in a manner reflecting the number, isotope, and radioactive intensity of such sources. As such, we believe that HCPCS code C2636 adequately describes the clinical properties of CivaString®. Therefore, it is not necessary and would be duplicative to create a separate group for another linear, non-stranded palladium-103 source.

HCPCS code C2636 has been active since January 1, 2005. In response to the commenter's concerns regarding hospitals that may have inappropriately reported charges using HCPCS code C2636 although acquisition of Start Printed Page 79579CivaString® had not been obtained, as a matter of general policy, we rely on hospitals to report all HCPCS codes on claims accurately in accordance with their code descriptors and CPT and CMS instructions, as applicable, and to report charges on claims and charges and costs on their Medicare hospital cost reports appropriately. We stated in the CY 2011 OPPS/ASC final rule with comment period (75 FR 71838) that the quality and accuracy of reported units and charges significantly influence the geometric mean costs that are the basis for our payment rates, especially for low-volume items and services. Beyond our standard OPPS trimming methodology that we apply to those claims that have passed various types of claims processing edits, it is not our general policy to judge the accuracy of hospital coding and charging for purposes of ratesetting.

With regard to the MUE value, we note that the MUE for HCPCS code C2636 is a date-of-service edit. This means if billed units of service (UOS) for HCPCS code C2636 are denied based on the MUE value, the provider may appeal the denial. Medicare Administrative Contractors (MACs) may pay UOS in excess of the MUE value if medical record documentation supports medically reasonable and necessary UOS in excess of the MUE value. Therefore, we are not establishing a new HCPCS code for the use of CivaString® because we believe that HCPCS code C2636 adequately describes the clinical properties of CivaString®. We refer readers to the facility outpatient services MUE table, which is available on the CMS Web site at: https://www.cms.gov/​Medicare/​Coding/​NationalCorrectCodInitEd/​MUE.html.

Comment: One commenter acknowledged the proposed increased CY 2017 payment rate for brachytherapy sources described by HCPCS code C2616 (Brachytx, non-str, yttrium-90) in comparison to the CY 2016 payment rate, but continued to believe that the proposed CY 2017 payment rate would not adequately pay a hospital's true cost for purchasing the device. The commenter supported the proposed CY 2017 increase in the payment rate for HCPCS code C2616, but remained concerned that the limited increase in payment would not adequately pay for all costs incurred by the hospital such as storage, handling, and disposal costs. In addition, based on the commenter's analysis of Medicare Provider Analysis and Review (MedPAR) data, which contain data from claims for services provided to beneficiaries admitted to Medicare certified inpatient hospitals and skilled nursing facilities, the commenter noted that a few hospitals inconsistently or incorrectly reported revenue code assignments with incorrect facility charge data. As a result of the erroneous and/or inaccurate coding, the commenter believed that the claims data used for CY 2017 ratesetting are adversely affected, which resulted in the inadequate proposed payment rate for HCPCS code C2616. Based on these concerns, the commenter requested that CMS eliminate outlier data that is out of range of other accurately reporting facilities. Specifically, the commenter requested that CMS eliminate claims from facilities that report a purchase price of $1.00 or other costs dramatically less than the $16,000 selling price.

Response: As previously discussed, under the OPPS, we use cost-based weights to determine relative costliness for outpatient items and services. The relativity of weights is used to set APC payment rates for brachytherapy sources, not the invoice cost or list price. Therefore, under a prospective payment system based on relative weights, items and services may not be paid at 100 percent of the reported costs.

With regard to the commenter's analysis of MedPAR data on claims that reported HCPCS code C2616, we note that MedPAR data consolidate inpatient hospital or skilled nursing facility (SNF) claims data from the National Claims History (NCH) files into stay level records. Because MedPAR data do not include OPPS claims, it is incorrect for the commenter to conclude that the CY 2017 OPPS proposed payment rate is inadequate as a result of erroneous and/or inaccurate coding on inpatient hospital or SNF claims. We have no reason to believe that prospective payment rates based on outpatient claims data from those providers furnishing a brachytherapy source described by HCPCS code C2616 do not appropriately reflect the cost of that source to hospitals. Therefore, we are not excluding or eliminating any claims with paid lines for HCPCS code C2616 in ratesetting for CY 2017.

Comment: A few commenters expressed concern regarding the outpatient hospital claims data that CMS used to set the prospective payment rates for brachytherapy sources. The commenters stated that high dose rate (HDR) brachytherapy devices are renewable because the devices have a 90-day use span and are used in the treatment of multiple patients during this 90-day span. According to the commenters, the true cost of treatment involving brachytherapy sources depends on the number of patients treated by a hospital within a 90-day period, as well as the number of treatments required and the intensity of the treatments. For this reason, the commenters believed that it is difficult to establish fair and adequate prospective payment rates for brachytherapy sources. The commenters also noted that the brachytherapy source payment data continue to show huge variation in per unit cost across hospitals.

In addition, the commenters believed that CMS' claims data contain rank order anomalies, causing the usual cost relationship between the high activity palladium-103 source (HCPCS code C2635, Brachytherapy source, non-stranded, high activity, palladium-103, greater than 2.2 mci (NIST) per source) and the low activity palladium-103 sources (HCPCS code C2640, Brachytherapy source, stranded, palladium-103, per source and HCPCS code C2641, Brachytherapy source, non-stranded, palladium-103, per source) to be reversed. The commenters noted that the proposed geometric mean costs of the brachytherapy source HCPCS codes are approximately $26, $77, and $70, respectively. The commenters stated that, based on their experience, stranded palladium-103 sources (HCPCS code C2640) always cost more than non-stranded palladium-103 sources (HCPCS code C2641), which was not reflected in the proposed rule claims data that CMS used.

In addition, the commenters expressed concern that payment for several brachytherapy sources are unstable and fluctuate significantly since CMS implemented the prospective payment methodology based on source-specific median cost in CY 2010 and geometric mean unit cost in CY 2013.

As a result of these concerns, the commenters requested that CMS adopt policies that more accurately account for the costs associated with HDR brachytherapy treatment delivery and to limit the overall fluctuation in payment for brachytherapy devices.

Response: We have received similar public comments regarding payment rates for HDR brachytherapy sources, payment rates for low and high activity palladium sources, and the year-to-year variation in payment rates for most brachytherapy sources in response to prior proposed rules and have addressed these public comments in prior final rules with comment period. We refer readers to 72 FR 66782; 74 FR 60534; 75 FR 71979; 76 FR 74161; 77 FR 68241; 78 FR 74861; 79 FR 66796; and 80 FR 70324 for our past responses to these similar comments. In these rules, we explain the characteristics of a Start Printed Page 79580prospective payment system and how low-volume services are more susceptible to payment volatility compared to high-volume services. We also describe our expectation for how hospitals should treat HDR brachytherapy sources that can be used on multiple patients during its use span. In addition, we address concerns on varied cost distributions and their impact on the observed relationship in geometric mean cost between the different types of sources.

After consideration of the public comments we received, we are finalizing our proposal to continue to set the payment rates for brachytherapy sources using our established prospective payment methodology, which is based on geometric mean costs. In addition, we are finalizing our proposal to assign new status indicator “E2” to HCPCS code C2644 because there are no CY 2015 claims reporting use of this code and, therefore, we are unable to determine a payment rate for CY 2017.

The final CY 2017 payment rates for brachytherapy sources are included in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site) and are identified with status indicator “U”.

We continue to invite hospitals and other parties to submit recommendations to us for new codes to describe new brachytherapy sources. Such recommendations should be directed to the Division of Outpatient Care, Mail Stop C4-01-26, Centers for Medicare and Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244. We will continue to add new brachytherapy source codes and descriptors to our systems for payment on a quarterly basis.

c. Comprehensive APCs (C-APCs) for CY 2017

(1) Background

In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 through 74910), we finalized a comprehensive payment policy that packages payment for adjunctive and secondary items, services, and procedures into the most costly primary procedure under the OPPS at the claim level. The policy was finalized in CY 2014, but the effective date was delayed until January 1, 2015, to allow additional time for further analysis, opportunity for public comment, and systems preparation. The comprehensive APC (C-APC) policy was implemented effective January 1, 2015, with modifications and clarifications in response to public comments received regarding specific provisions of the C-APC policy (79 FR 66798 through 66810).

A C-APC is defined as a classification for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service. We established C-APCs as a category broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015 (79 FR 66809 through 66810). In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70332), we finalized 10 additional C-APCs to be paid under the existing C-APC payment policy.

Under this policy, we designated a service described by a HCPCS code assigned to a C-APC as the primary service when the service is identified by OPPS status indicator “J1”. When such a primary service is reported on a hospital outpatient claim, taking into consideration the few exceptions that are discussed below, we make payment for all other items and services reported on the hospital outpatient claim as being integral, ancillary, supportive, dependent, and adjunctive to the primary service (hereinafter collectively referred to as “adjunctive services”) and representing components of a complete comprehensive service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services are packaged into the payments for the primary services. This results in a single prospective payment for each of the primary, comprehensive services based on the costs of all reported services at the claim level.

Services excluded from the C-APC policy include services that are not covered OPD services, services that cannot by statute be paid for under the OPPS, and services that are required by statute to be separately paid. This includes certain mammography and ambulance services that are not covered OPD services in accordance with section 1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also are required by statute to receive separate payment under section 1833(t)(2)(H) of the Act; pass-through drugs and devices, which also require separate payment under section 1833(t)(6) of the Act; self-administered drugs (SADs) that are not otherwise packaged as supplies because they are not covered under Medicare Part B under section 1861(s)(2)(B) of the Act; and certain preventive services (78 FR 74865 and 79 FR 66800 through 66801). A list of services excluded from the C-APC policy is included in Addendum J to this final rule with comment period (which is available via the Internet on the CMS Web site).

The C-APC policy payment methodology set forth in the CY 2014 OPPS/ASC final rule with comment period for the C-APCs and modified and implemented beginning in CY 2015 is summarized as follows (78 FR 74887 and 79 FR 66800):

Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule with comment period, we define the C-APC payment policy as including all covered OPD services on a hospital outpatient claim reporting a primary service that is assigned to status indicator “J1,” excluding services that are not covered OPD services or that cannot by statute be paid for under the OPPS. Services and procedures described by HCPCS codes assigned to status indicator “J1” are assigned to C-APCs based on our usual APC assignment methodology by evaluating the geometric mean costs of the primary service claims to establish resource similarity and the clinical characteristics of each procedure to establish clinical similarity within each APC. In the CY 2016 OPPS/ASC final rule with comment period, we expanded the C-APC payment methodology with the establishment of status indicator “J2”. The assignment of status indicator “J2” to a specific combination of services performed in combination with each other, as opposed to a single, primary service, allows for all other OPPS payable services and items reported on the claim (excluding services that are not covered OPD services or that cannot by statute be paid for under the OPPS) to be deemed adjunctive services representing components of a comprehensive service and resulting in a single prospective payment for the comprehensive service based on the costs of all reported services on the claim (80 FR 70333 through 70336).

Services included under the C-APC payment packaging policy, that is, services that are typically adjunctive to the primary service and provided during the delivery of the comprehensive service, include diagnostic procedures, laboratory tests, and other diagnostic tests and treatments that assist in the delivery of the primary procedure; visits and evaluations performed in association with the procedure; uncoded services and supplies used during the service; durable medical equipment as well as prosthetic and orthotic items and supplies when provided as part of the outpatient service; and any other components reported by HCPCS codes that represent services that are provided during the complete comprehensive service (78 FR 74865 and 79 FR 66800).Start Printed Page 79581

In addition, payment for outpatient department services that are similar to therapy services and delivered either by therapists or non-therapists is included as part of the payment for the packaged complete comprehensive service. These services that are provided during the perioperative period are adjunctive services and are deemed to be not therapy services as described in section 1834(k) of the Act, regardless of whether the services are delivered by therapists or other nontherapist health care workers. We have previously noted that therapy services are those provided by therapists under a plan of care in accordance with section 1835(a)(2)(C) and section 1835(a)(2)(D) of the Act and are paid for under section 1834(k) of the Act, subject to annual therapy caps as applicable (78 FR 74867 and 79 FR 66800). However, certain other services similar to therapy services are considered and paid for as outpatient department services. Payment for these non-therapy outpatient department services that are reported with therapy codes and provided with a comprehensive service is included in the payment for the packaged complete comprehensive service. We note that these services, even though they are reported with therapy codes, are outpatient department services and not therapy services.

Therefore, the requirement for functional reporting under the regulations at 42 CFR 410.59(a)(4) and 42 CFR 410.60(a)(4) does not apply. We refer readers to the July 2016 OPPS Change Request 9658 (Transmittal 3523) for further instructions on reporting these services in the context of a C-APC service.

Items included in the packaged payment provided in conjunction with the primary service also include all drugs, biologicals, and radiopharmaceuticals, regardless of cost, except those drugs with pass-through payment status and SADs, unless they function as packaged supplies (78 FR 74868 through 74869 and 74909 and 79 FR 66800). We refer readers to Section 50.2M, Chapter 15, of the Medicare Benefit Policy Manual for a description of our policy on SADs treated as hospital outpatient supplies, including lists of SADs that function as supplies and those that do not function as supplies.

We define each hospital outpatient claim reporting a single unit of a single primary service assigned to status indicator “J1” as a single “J1” unit procedure claim (78 FR 74871 and 79 FR 66801). We sum all line item charges for services included on the C-APC claim, convert the charges to costs, and calculate the comprehensive geometric mean cost of one unit of each service assigned to status indicator “J1.” (We note that we use the term “comprehensive” to describe the geometric mean cost of a claim reporting “J1” service(s) or the geometric mean cost of a C-APC, inclusive of all of the items and services included in the C-APC service payment bundle.) Charges for services that would otherwise be separately payable are added to the charges for the primary service. This process differs from our traditional cost accounting methodology only in that all such services on the claim are packaged (except certain services as described above). We apply our standard data trims, excluding claims with extremely high primary units or extreme costs.

The comprehensive geometric mean costs are used to establish resource similarity and, along with clinical similarity, dictate the assignment of the primary services to the C-APCs. We establish a ranking of each primary service (single unit only) to be assigned to status indicator “J1” according to their comprehensive geometric mean costs. For the minority of claims reporting more than one primary service assigned to status indicator “J1” or units thereof, we identify one “J1” service as the primary service for the claim based on our cost-based ranking of primary services. We then assign these multiple “J1” procedure claims to the C-APC to which the service designated as the primary service is assigned. If the reported “J1” services reported on a claim map to different C-APCs, we designate the “J1” service assigned to the C-APC with the highest comprehensive geometric mean cost as the primary service for that claim. If the reported multiple “J1” services on a claim map to the same C-APC, we designate the most costly service (at the HCPCS code level) as the primary service for that claim. This process results in initial assignments of claims for the primary services assigned to status indicator “J1” to the most appropriate C-APCs based on both single and multiple procedure claims reporting these services and clinical and resource homogeneity.

Complexity Adjustments. We use complexity adjustments to provide increased payment for certain comprehensive services. We apply a complexity adjustment by promoting qualifying “J1” service code combinations or code combinations of “J1” services and certain add-on codes (as described further below) from the originating C-APC (the C-APC to which the designated primary service is first assigned) to the next higher paying C-APC in the same clinical family of C-APCs. We implement this type of complexity adjustment when the code combination represents a complex, costly form or version of the primary service according to the following criteria:

  • Frequency of 25 or more claims reporting the code combination (frequency threshold); and
  • Violation of the 2 times rule in the originating C-APC (cost threshold). After designating a single primary service for a claim, we evaluate that service in combination with each of the other procedure codes reported on the claim assigned to status indicator “J1” (or certain add-on codes) to determine if they meet the complexity adjustment criteria. For new HCPCS codes, we determine initial C-APC assignments and complexity adjustments using the best available information, crosswalking the new HCPCS codes to predecessor codes when appropriate.

Once we have determined that a particular code combination of “J1” services (or combinations of “J1” services reported in conjunction with certain add-on codes) represents a complex version of the primary service because it is sufficiently costly, frequent, and a subset of the primary comprehensive service overall according to the criteria described above, we promote the complex version of the primary service as described by the code combination to the next higher cost C-APC within the clinical family unless the primary service is already assigned to the highest cost APC within the C-APC clinical family or assigned to the only C-APC in a clinical family. We do not create new APCs with a comprehensive geometric mean cost that is higher than the highest geometric mean cost (or only) C-APC in a clinical family just to accommodate potential complexity adjustments. Therefore, the highest payment for any code combination for services assigned to a C-APC would be the highest paying C-APC in the clinical family (79 FR 66802).

We package payment for all add-on codes into the payment for the C-APC. However, certain primary service-add-on combinations may qualify for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70331), all add-on codes that can be appropriately reported in combination with a base code that describes a primary “J1”service are evaluated for a complexity adjustment.

To determine which combinations of primary service codes reported in conjunction with an add-on code may Start Printed Page 79582qualify for a complexity adjustment for CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45620), we proposed to apply the frequency and cost criteria thresholds discussed above, testing claims reporting one unit of a single primary service assigned to status indicator “J1” and any number of units of a single add-on code. If the frequency and cost criteria thresholds for a complexity adjustment are met, and reassignment to the next higher cost APC in the clinical family is appropriate, we make a complexity adjustment for the code combination; that is, we reassign the primary service code reported in conjunction with the add-on code combination to a higher cost C-APC within the same clinical family of C-APCs. If any add-on code combination reported in conjunction with the primary service code does not qualify for a complexity adjustment, payment for these services is packaged within the payment for the complete comprehensive service. We listed the complexity adjustments proposed for add-on code combinations for CY 2017, along with all of the other proposed complexity adjustments, in Addendum J to the proposed rule (which is available via the Internet on the CMS Web site). For CY 2017, we proposed to discontinue the requirement that a code combination (that qualifies for a complexity adjustment by satisfying the frequency and cost criteria thresholds described earlier) also not create a 2 times rule violation in the higher level or receiving APC (80 FR 70328). We believe that this requirement is not useful because most code combinations fall below our established frequency threshold for considering 2 times rule violations, which is described in section III.B. of this final rule with comment period. Therefore, because the 2 times rule would not typically apply to complexity-adjusted code combinations, we proposed to discontinue this requirement.

We provided in Addendum J to the proposed rule a breakdown of cost statistics for each code combination that would qualify for a complexity adjustment (including primary code and add-on code combinations). Addendum J to the proposed rule also contained summary cost statistics for each of the code combinations that describe a complex code combination that would qualify for a complexity adjustment and are proposed to be reassigned to the next higher cost C-APC within the clinical family. The combined statistics for all proposed reassigned complex code combinations are represented by an alphanumeric code with the first 4 digits of the designated primary service followed by a letter. For example, the proposed geometric mean cost listed in Addendum J for the code combination described by complexity adjustment assignment 3320R, which is assigned to C-APC 5224 (Level 4 Pacemaker and Similar Procedures), includes all code combinations that are proposed to be reassigned to C-APC 5224 when CPT code 33208 is the primary code. Providing the information contained in Addendum J to the proposed rule allowed stakeholders the opportunity to better assess the impact associated with the proposed reassignment of each of the code combinations eligible for a complexity adjustment.

Comment: Commenters generally supported the proposal to no longer require that a code combination (that qualifies for a complexity adjustment by satisfying the frequency and cost criteria thresholds) be evaluated for a 2 times rule violation in the higher level or receiving APC. One commenter requested that CMS allow the complexity-adjusted pair to move up an additional level in the clinical family if the code combination creates a 2 times rule violation in the receiving APC. Several other commenters requested that CMS review and modify the established C-APC complexity adjustment criteria to allow for complexity adjustments for specific “J1” service code combinations or code combinations of “J1” services and certain add-on codes that do not qualify under the current criteria.

Response: We appreciate the commenters' support. We continue to believe that the complexity adjustment criteria, which require a frequency of 25 or more claims reporting a code combination and a violation of the 2 times rule in the originating C-APC in order to receive payment in the next higher cost C-APC within the clinical family, is adequate to determine if a combination of procedures represents a complex, costly subset of the primary service. If a code combination meets these criteria, the combination receives payment at the next higher cost C-APC. Code combinations that do not meet these criteria receive the C-APC payment rate associated with the primary “J1” service. A minimum of 25 claims is already very low for a national payment system. Lowering the minimum of 25 claims further could lead to unnecessary complexity adjustments for service combinations that are rarely performed. The complexity adjustment cost threshold compares the code combinations to the lowest cost significant procedure assigned to the APC. If the cost of the code combination does not exceed twice the cost of the lowest cost significant procedure within the APC, no complexity adjustment is made. Lowering this threshold also could remove too many claims from the accounting for the primary J1 service, which would undermine the C-APC policy. We are finalizing the policy proposal to discontinue the requirement that a code combination (that qualifies for a complexity adjustment by satisfying the frequency and cost criteria thresholds) also not create a 2 times rule violation in the higher level or receiving APC as proposed. We are not otherwise changing the complexity adjustment criteria.

Comment: Other commenters requested that CMS ensure that claims for bilateral C-APC procedures that are correctly reported with modifier “50” (a modifier used to report bilateral procedures that are performed at the same operative session as a single line item) are accounted for in the evaluation of complexity adjustments, as well as the C-APC claims accounting. The commenters believed that these claims should be recognized as reporting two units of the service in the evaluation of the frequency of the code combination and the payment of the complexity-adjusted C-APC rate.

Response: The issue of complexity adjustments for bilateral, status indicator “J1” procedures reported with modifier “50” was addressed in the April 2016 Integrated OCE Specifications Quarterly Release Files (Attachment A—Integrated OCE Specs, Appendix L: Comprehensive APC Assignment Logic). In that document, the C-APC assignment logic was updated to specify the following: Once the highest ranked comprehensive procedure is determined, if there are multiple comprehensive procedures present with status indicator “J1” or there are qualifying add-on procedure codes present (status indicator “N”), determine if there are any pairings that may qualify for a complexity adjustment. Multiple occurrences or service units of the same comprehensive procedure, or the reporting of modifier “50,” may qualify for a complexity adjustment. If there is a qualifying pair present associated with the highest ranked comprehensive procedure, assign the complexity-adjusted comprehensive APC. This change was made retroactive to January 2015. As of January 1, 2015, status indicator “J1” procedure claims with modifier “50” also will be included in the C-APC claims accounting and the complexity adjustment evaluations.Start Printed Page 79583

Comment: One commenter requested that CMS eliminate one of the criterion for assignment to status indicator “J2” and C-APC 8011 (Comprehensive Observation Services). Specifically, the commenter stated that claims that otherwise would qualify for payment through C-APC 8011, but contain a procedure described by a HCPCS code assigned to status indicator “T” that is reported with a date of service on the same day or 1 day earlier than the date of service associated with services described by HCPCS code G0378, should not be excluded from receiving payment through C-APC 8011.

Response: Services that would otherwise qualify for the observation C-APC (C-APC 8011) are not considered to be observation services when they are associated with a surgical procedure (assigned to status indicator “T”). Instead, they are considered to be perioperative recovery, which is always packaged in with the surgical procedure.

Comment: Some commenters submitted comments regarding C-APC 5627 (Level 7 Radiation Therapy) and the treatment planning and preparation services involved with stereotactic radiosurgery (SRS) treatment. Commenters urged CMS to continue the policy finalized in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70337) that pays separately for certain SRS planning and preparation services (a policy that is a temporary special exception for APC 5627 to the C-APC packaging policy that packages all adjunctive services (with a few exceptions listed in Addendum J)). Commenters believed that CMS should not package treatment planning and preparation into the C-APC payment rate for Level 7 Radiation Therapy in the future as discussed in the CY 2016 OPPS/ASC final rule with comment period because SRS claims may include other unrelated radiation therapy services.

Response: For CY 2017, we will continue the policy for the payment of SRS treatment as described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70337). This policy removes claims reporting certain planning and preparation services for SRS treatment from our geometric mean cost calculation for the CY 2017 payment rate for C-APC 5627 and pays separately for these planning and preparation services. For 2018, we will again examine the claims for cranial single session SRS patients and evaluate the services reported with modifier “CT” (Adjunctive service related to a procedure assigned to a comprehensive ambulatory payment classification [C-APC] procedure). We will consider in the future whether repackaging all adjunctive services (planning, preparation, and imaging, among others) back into cranial single session SRS is appropriate in order to preserve the integrity of the C-APC policy and the OPPS as a prospective payment system.

Comment: Commenters noted that claims that included several insertion codes for brachytherapy devices (namely CPT codes 57155, 20555, 31643, 41019, 43241, 55920, and 58346) often did not also contain a brachytherapy treatment delivery code. The commenters concluded that brachytherapy delivery charges are being underrepresented in ratesetting under the C-APC methodology because a correctly coded claim should always include an insertion and treatment delivery code combination. One commenter suggested that CMS adopt a composite APC methodology for CPT code 57155 similar to the composite methodology for LDR prostate brachytherapy services.

Response: The calculation of OPPS relative payment weights that reflect the relative resources required for HOPD services is the foundation of the OPPS. We rely on hospitals to bill all HCPCS codes accurately in accordance with their code descriptors and CPT and CMS instructions, as applicable, and to report charges on claims and charges and costs on their Medicare hospital cost reports appropriately (77 FR 68324). Moreover, we generally do not remove claims from the claims accounting when stakeholders believe that hospitals included incorrect information on some claims. Therefore, we are not excluding claims from the ratesetting calculation that include procedures described by CPT codes 57155, 20555, 31643, 41019, 43241, 55920, and 58346. In the future, we will examine the claims for these brachytherapy insertion codes and determine if any future adjustment to the methodology (or possibly code edits) would be appropriate.

(2) C-APCs for CY 2017

(a) Additional C-APCs for CY 2017

For CY 2017 and subsequent years, in the CY 2017 OPPS/ASC proposed rule (81 FR 45620), we proposed to continue to apply the C-APC payment policy methodology made effective in CY 2015, as described in detail below. We proposed to continue to define the services assigned to C-APCs as primary services or a specific combination of services performed in combination with each other. We also proposed to define a C-APC as a classification for the provision of a primary service or specific combination of services and all adjunctive services and supplies provided to support the delivery of the primary or specific combination of services. We also proposed to continue to follow the C-APC payment policy methodology of packaging all covered OPD services on a hospital outpatient claim reporting a primary service that is assigned to status indicator “J1” or reporting the specific combination of services assigned to status indicator “J2,” excluding services that are not covered OPD services or that cannot by statute be paid under the OPPS.

As a result of our annual review of the services and APC assignments under the OPPS, we proposed 25 additional C-APCs to be paid under the existing C-APC payment policy beginning in CY 2017. The proposed additional CY 2017 C-APCs were listed in Table 2 of the proposed rule. All C-APCs, including those effective in CY 2016 and those being proposed for CY 2017, also were displayed in Addendum J to this proposed rule. Addendum J to this proposed rule (which is available via the Internet on the CMS Web site) also contained all of the data related to the C-APC payment policy methodology, including the list of proposed complexity adjustments and other information.

Comment: Many commenters supported the proposal to expand the C-APC policy to include new C-APCs. However, several commenters requested that CMS delay the expansion of the C-APC policy and expressed concerns that the costs of procedures and services paid through a C-APC are not being accurately captured and C-APC payment rates do not adequately cover the costs associated with the primary and adjunctive services. Commenters also requested more information regarding the rationale for the assignment of services to a C-APC and stated that more time is needed to analyze and assess the financial impact of the proposed C-APC policy changes. One commenter expressed concerns that CMS may not be fully considering the impact of adding relatively low cost (below $2,227) procedures to C-APCs and suggested the establishment of a minimum cost threshold for a procedure to be assigned to a C-APC. Other commenters requested a delay in the assignment of new codes, including add-on codes, to C-APCs unless a crosswalk exists from the old code to the new code.

Response: We appreciate the commenters' support. With regard to the comments relating to delaying the expansion of the C-APC policy, we do Start Printed Page 79584not believe that we should delay implementation of the proposed CY 2017 C-APCs. C-APCs were introduced in 2015, and, like all of the payment polices contained in the OPPS, are reviewed annually, as provided at section 1833(t)(9)(A) of the Act. We communicate with various stakeholders on an ongoing basis as a part of our mutual efforts to further improve the OPPS. We believe that sufficient information is available for stakeholders to evaluate how C-APCs affect payment for services, and that there is sufficient time for the public to review and analyze our proposed payment policies. This is evidenced by the many stakeholders that submit public comments, including, for example, analyses of the C-APC payment policy. Regarding the comment about creating a cost threshold for assignment of a procedure to a C-APC, we do not believe that this is necessary. Procedures assigned to C-APCs are primary services (mostly major surgical procedures) that are typically the focus of the hospital outpatient stay. We do not believe that a cost threshold would help to differentiate primary from secondary or adjunctive services. Lastly, we assign new codes to APCs (including C-APCs) based on predecessor code APC assignments, comparisons to similar codes, clinical comparability, and estimates of the resource intensity, as well as other relevant information. If we failed to assign new codes to C-APCs, this could result in significant underpayment for some new codes if a C-APC is the most appropriate APC for the new procedure.

Comment: A few commenters requested that CMS not convert APCs 5153 through 5155 (Levels 3 through 5 Airway Endoscopy) into C-APCs. The commenters expressed concerns regarding reduced payments for sinus surgeries when a patient has multiple surgeries during a single operative session. The major concern focused on the loss of additional payments for multiple procedures under the C-APC methodology. Commenters stated that multiple procedures (coded either as a bilateral case or with multiple different CPT codes) are common for the treatment of sinus diseases. One commenter noted that the AMA CPT Editorial Panel is in the process of revising some of the sinus surgery codes and bundling some of these codes. Another commenter believed that payment reductions for sinus surgery could negatively affect opportunities for resident training on these procedures.

Response: The commenters concerns are not unique to sinus surgery. The C-APC methodology relies on the average cost of the range of cases included in the claims accounting for the primary service code. We believe that this approach is better suited to a prospective payment system like the OPPS that relies on average cost payments that sometimes exceed the cost of a given case and other times are less than the cost of a given case. If, as the commenters suggest, bilateral surgery and/or multiple procedures are common in sinus surgery, the costs of this approach would be reflected in the geometric mean cost of the primary procedure under the C-APC methodology. It also seems that, according to one commenter, the AMA is preparing to address what might be fragmented codes in this clinical area. We are finalizing as proposed the conversion of the three highest level airway endoscopy APCs to C-APCs as a part of our continuing effort to direct the OPPS more towards a prospective payment system and away from a per service or per code fee schedule in which every coded item or service results in additional payment. We also do not agree that this payment policy raises concerns regarding the training of otolaryngology residents in sinus surgery, but we will monitor these APCs as we do with all others as a part of our annual OPPS/ASC rulemaking.

Comment: One commenter stated that while APC 5153 (Level 3 Airway Endoscopy Procedures) is a proposed C-APC for CY 2017, one of the codes assigned to APC 5153, namely CPT code 31649 (Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when performed; with removal of bronchial valve(s), each additional lobe (List separately in addition to code for primary procedure)), is assigned a status indicator of “Q2” and not “J1.” The commenter requested that this procedure be assigned to status indicator “J1.”

Response: This procedure is assigned status indicator “Q2” because it describes the removal of a device, specifically a bronchial valve. In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74926), we finalized a proposal to conditionally package device removal procedures. This procedure is separately paid unless it is billed on the same date of service as a surgical procedure assigned to status indicator “J1” or “T” that involves repair or replacement of the device. The procedure was placed in a C-APC on the basis of resource and clinical homogeneity. For these reasons, we do not agree with the commenters, and are not assigning CPT code 31649 to status indicator “J1.”

After consideration of the public comments we received, we are finalizing the proposal for 25 additional C-APCs to be paid under the existing C-APC payment policy beginning in CY 2017.

Table 2 below lists the final additional C-APCs for CY 2017, including the C-APCs currently effective for CY 2016. All C-APCs, including those effective in CY 2016 and those finalized for CY 2017, also are displayed in Addendum J to this final rule with comment period. Addendum J to this final rule with comment period (which is available via the Internet on the CMS Web site) also contains all of the data related to the C-APC payment policy methodology, including the list of complexity adjustments and other information.

Table 1—CY 2017 C-APCs

C-APCCY 2017 APC titleClinical familyNew C-APC
5072Level 2 Excision/Biopsy/Incision and DrainageEBIDX*
5073Level 3 Excision/Biopsy/Incision and DrainageEBIDX*
5091Level 1 Breast/Lymphatic Surgery and Related ProceduresBREAS*
5092Level 2 Breast/Lymphatic Surgery and Related ProceduresBREAS*
5093Level 3 Breast/Lymphatic Surgery & Related ProceduresBREAS
5094Level 4 Breast/Lymphatic Surgery & Related ProceduresBREAS
5112Level 2 Musculoskeletal ProceduresORTHO*
5113Level 3 Musculoskeletal ProceduresORTHO*
5114Level 4 Musculoskeletal ProceduresORTHO
5115Level 5 Musculoskeletal ProceduresORTHO
5116Level 6 Musculoskeletal ProceduresORTHO
Start Printed Page 79585
5153Level 3 Airway EndoscopyAENDO*
5154Level 4 Airway EndoscopyAENDO*
5155Level 5 Airway EndoscopyAENDO*
5164Level 4 ENT ProceduresENTXX*
5165Level 5 ENT ProceduresENTXX
5166Cochlear Implant ProcedureCOCHL
5191Level 1 Endovascular ProceduresVASCX*
5192Level 2 Endovascular ProceduresVASCX
5193Level 3 Endovascular ProceduresVASCX
5194Level 4 Endovascular ProceduresVASCX
5200Implantation Wireless PA Pressure MonitorWPMXX*
5211Level 1 Electrophysiologic ProceduresEPHYS
5212Level 2 Electrophysiologic ProceduresEPHYS
5213Level 3 Electrophysiologic ProceduresEPHYS
5222Level 2 Pacemaker and Similar ProceduresAICDP
5223Level 3 Pacemaker and Similar ProceduresAICDP
5224Level 4 Pacemaker and Similar ProceduresAICDP
5231Level 1 ICD and Similar ProceduresAICDP
5232Level 2 ICD and Similar ProceduresAICDP
5244Level 4 Blood Product Exchange and Related ServicesSCTXX*
5302Level 2 Upper GI ProceduresGIXXX*
5303Level 3 Upper GI ProceduresGIXXX*
5313Level 3 Lower GI ProceduresGIXXX*
5331Complex GI ProceduresGIXXX
5341Abdominal/Peritoneal/Biliary and Related ProceduresGIXXX*
5361Level 1 Laparoscopy & Related ServicesLAPXX
5362Level 2 Laparoscopy & Related ServicesLAPXX
5373Level 3 Urology & Related ServicesUROXX*
5374Level 4 Urology & Related ServicesUROXX*
5375Level 5 Urology & Related ServicesUROXX
5376Level 6 Urology & Related ServicesUROXX
5377Level 7 Urology & Related ServicesUROXX
5414Level 4 Gynecologic ProceduresGYNXX*
5415Level 5 Gynecologic ProceduresGYNXX
5416Level 6 Gynecologic ProceduresGYNXX
5431Level 1 Nerve ProceduresNERVE*
5432Level 2 Nerve ProceduresNERVE*
5462Level 2 Neurostimulator & Related ProceduresNSTIM
5463Level 3 Neurostimulator & Related ProceduresNSTIM
5464Level 4 Neurostimulator & Related ProceduresNSTIM
5471Implantation of Drug Infusion DevicePUMPS
5491Level 1 Intraocular ProceduresINEYE*
5492Level 2 Intraocular ProceduresINEYE
5493Level 3 Intraocular ProceduresINEYE
5494Level 4 Intraocular ProceduresINEYE
5495Level 5 Intraocular ProceduresINEYE
5503Level 3 Extraocular, Repair, and Plastic Eye ProceduresEXEYE*
5504Level 4 Extraocular, Repair, and Plastic Eye ProceduresEXEYE*
5627Level 7 Radiation TherapyRADTX
5881Ancillary Outpatient Services When Patient DiesN/A
8011Comprehensive Observation ServicesN/A
* New C-APC for CY 2017.
C-APC Clinical Family Descriptor Key: AENDO = Airway Endoscopy; AICDP = Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related Devices; BREAS = Breast Surgery; COCHL = Cochlear Implant; EBIDX = Excision/Biopsy/Incision and Drainage; ENTXX = ENT Procedures; EPHYS = Cardiac Electrophysiology; EXEYE = Extraocular Ophthalmic Surgery; GIXXX = Gastrointestinal Procedures; GYNXX = Gynecologic Procedures; INEYE = Intraocular Surgery; LAPXX = Laparoscopic Procedures; NERVE = Nerve Procedures; NSTIM = Neurostimulators; ORTHO = Orthopedic Surgery; PUMPS = Implantable Drug Delivery Systems; RADTX = Radiation Oncology; SCTXX = Stem Cell Transplant; UROXX = Urologic Procedures; VASCX = Vascular Procedures; WPMXX = Wireless PA Pressure Monitor.

(b) New Allogeneic Hematopoietic Stem Cell Transplantation (HSCT) C-APC

Allogeneic hematopoietic stem cell transplantation (HSCT) involves the intravenous infusion of hematopoietic stem cells derived from the bone marrow, umbilical cord blood, or peripheral blood of a donor to a recipient. Allogeneic hematopoietic stem cell collection procedures, which are performed not on the beneficiary but on a donor, cannot be paid separately under the OPPS because hospitals may bill and receive payment only for services provided to a Medicare beneficiary who is the recipient of the HSCT and whose illness is being treated with the transplant. Currently, under the OPPS, payment for these acquisition services is packaged into the APC payment for the allogeneic HSCT when the transplant occurs in the hospital outpatient setting (74 FR 60575). In the CY 2016 OPPS/ASC final rule with comment period, we assigned allogeneic HSCT to APC 5281 (Apheresis and Stem Start Printed Page 79586Cell Procedures), which has a CY 2016 OPPS payment rate of $3,015.

As provided in the Medicare Claims Processing Manual, Pub. 100-04, Chapter 4, section 231.11, donor acquisition charges for allogeneic HSCT may include, but are not limited to, charges for the costs of several services. These services include, but are not necessarily limited to, National Marrow Donor Program fees, if applicable, tissue typing of donor and recipient, donor evaluation, physician pre-procedure donor evaluation services, costs associated with the collection procedure (for example, general routine and special care services, procedure/operating room and other ancillary services, apheresis services, among others), post-operative/post-procedure evaluation of donor, and the preparation and processing of stem cells.

When the allogeneic stem cell transplant occurs in the hospital outpatient setting, providers are instructed to report stem cell donor acquisition charges for allogeneic HSCT separately in Field 42 on Form CMS-1450 (or UB-04) by using revenue code 0819 (Organ Acquisition: Other Donor). Revenue code 0819 charges should include all services required to acquire hematopoietic stem cells from a donor, as defined earlier, and should be reported on the same date of service as the transplant procedure in order to be appropriately packaged for payment purposes. Revenue code 0819 maps to cost center code 086XX (Other organ acquisition where XX is “00” through “19”) and is reported on line 112 (or applicable subscripts of line 112) of the Medicare cost report.

In recent years, we have received comments from stakeholders detailing concerns about the accuracy of ratesetting for allogeneic HSCT (79 FR 40950 through 40951; 79 FR 66809; and 80 FR 70414 through 70415). Stakeholders have presented several issues that could result in an inappropriate estimation of provider costs for these procedures, including outpatient allogeneic HCST reported on claims being identified as multiple procedure claims that are unusable under the standard OPPS ratesetting methodology. Stakeholders also have indicated that the requirement for the reporting of revenue code 0819 on claims reporting allogeneic HSCTs and the lack of a dedicated cost center for stem cell transplantation donor acquisition costs have led to an overly broad CCR being applied to these procedures, which comprise a very low volume of the services reported within the currently assigned cost center. In addition, commenters noted that it is likely that there are services being reported with the same revenue code (0819) and mapped to the same cost center code (086XX) as allogeneic HSCT donor acquisition charges that are unrelated to these services. Lastly, providers have commented that the donor acquisition costs of allogeneic HSCT are much higher relative to their charges when compared to the other items and services that are reported in the current cost center. Providers also have stated that hospitals have difficulty applying an appropriate markup to donor acquisition charges that will sufficiently generate a cost that approximates the total cost of donor acquisition. Through our examination of the CY 2016 claims data, we believe that the issues presented above provide a persuasive rationale for payment adjustment for donor acquisition costs for allogeneic HCST.

Stakeholders suggested that the establishment of a C-APC for stem cell transplant services would improve payment adequacy by allowing the use of multiple procedure claims, provided CMS also create a separate and distinct CCR for donor search and acquisition charges so that they are not diluted by lower cost services. In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70414 through 70415), we stated that we would not create a new C-APC for stem cell transplant procedures at that time and that we would instead continue to pay for the services through the assigned APCs while continuing to monitor the issue.

Based on our current analysis of this longstanding issue and stakeholder input, in the CY 2017 OPPS/ASC proposed rule (81 FR 45623), for CY 2017, we proposed to create a new C-APC 5244 (Level 4 Blood Product Exchange and Related Services) and to assign procedures described by CPT code 38240 (Hematopoietic progenitor cell (HPC); allogeneic transplantation per donor) to this C-APC and to assign status indicator “J1” to the code. The creation of a new C-APC for allogeneic HSCT and the assignment of status indicator “J1” to CPT code 38240 would allow for the costs for all covered OPD services, including donor acquisition services, included on the claim to be packaged into the C-APC payment rate. These costs also will be analyzed using our comprehensive cost accounting methodology to establish future C-APC payment rates. We proposed to establish a payment rate for proposed new C-APC 5244 of $15,267 for CY 2017.

In order to develop an accurate estimate of allogeneic HSCT donor acquisition costs for future ratesetting, for CY 2017 and subsequent years, we proposed to update the Medicare hospital cost report (Form CMS-2552-10) by adding a new standard cost center 112.50, “Allogeneic Stem Cell Acquisition,” to Worksheet A (and applicable worksheets) with the standard cost center code of “11250.” The proposed new cost center, line 112.50, would be used for the recording of any acquisition costs related to allogeneic stem cell transplants as defined in Section 231.11, Chapter 4, of the Medicare Claims Processing Manual (Pub. 100-04). Acquisition charges for allogeneic stem cell transplants apply only to allogeneic transplants for which stem cells are obtained from a donor (rather than from the recipient). Acquisition charges do not apply to autologous transplants (transplanted stem cells are obtained from the recipient) because autologous transplants involve services provided to a beneficiary only (and not to a donor), for which the hospital may bill and receive payment. Acquisition costs for allogeneic stem cells are included in the prospective payment. This cost center flows through cost finding and accumulates any appropriate overhead costs.

In conjunction with our proposed addition of the new “Allogeneic Stem Cell Acquisition” standard cost center, we proposed to use the newly created revenue code 0815 (Allogeneic Stem Cell Acquisition Services) to identify hospital charges for stem cell acquisition for allogeneic bone marrow/stem cell transplants. Specifically, for CY 2017 and subsequent years, we proposed to require hospitals to identify stem cell acquisition charges for allogeneic bone marrow/stem cell transplants separately in Field 42 on Form CMS-1450 (or UB-04), when an allogeneic stem cell transplant occurs. Revenue code 0815 charges should include all services required to acquire stem cells from a donor, as defined above, and should be reported on the same date of service as the transplant procedure in order to be appropriately packaged for payment purposes. The proposed new revenue code 0815 would map to the proposed new line 112.50 (with the cost center code of “11250”) on the Form CMS-2552-10 cost report. In addition, for CY 2017 and subsequent years, we proposed to no longer use revenue code 0819 for the identification of stem cell acquisition charges for allogeneic bone marrow/stem cell transplants. We invited public comments on these proposals.

Comment: Several commenters supported the proposal to create a new C-APC for allogeneic HSCT (C-APC 5244) and the assignment of status Start Printed Page 79587indicator “J1” to CPT code 38240. However, many commenters believed that the proposed payment for C-APC 5244 continued to be significantly less than the overall cost of the service. Some commenters stated that CMS used claims to calculate the proposed payment rate for this service that were incomplete and did not adhere to CMS billing instructions for providers for allogeneic bone marrow/stem cell transplants. Specifically, the commenters stated that there were claims included in the geometric mean cost calculation for allogeneic HSCT (CPT code 38240) that did not include donor acquisition costs reported with revenue code 0819 on the same date of service as the transplant. According to the commenters, this resulted in an inaccurate and low estimation of the total cost of this service. The commenters requested that CMS exclude these claims from ratesetting for allogeneic HSCT. Commenters also suggested that CMS institute an edit beginning in CY 2017 that requires both the donor acquisition revenue code and the stem cell transplant CPT code on the claim to ensure that Medicare receives correctly coded claims for this relatively costly service.

Lastly, commenters stated that the new cost center and revenue code should be utilized for both inpatient and outpatient donor acquisition cost reporting, requested instructions from CMS on how to reclassify expenses into the new cost center from ancillary departments, and also suggested that CMS reconsider the use of cost center line 112.50 because this line is designated for solid organ acquisition costs, which are paid at cost. According to these commenters, these costs do not carry to Worksheet C and, for calculation of CCR, are dropped from cost report after accumulation of overhead. The commenter suggested the use of a cost center in the range of lines 50 through 76.99.

Response: We are persuaded by the commenters and note that at the summer 2016 meeting of the Advisory Panel on Hospital Outpatient Payment (HOP Panel), the panel also recommended that CMS use only the claims that include both CPT code 38240 and revenue code 0819 in calculating the CY 2017 payment rates for allogeneic HSCT. Therefore, we believe it is preferable to use only the claims with both the CPT code for the transplant (CPT code 38240) and the revenue code for the donor acquisition costs (revenue code 0819) to calculate the payment rate for this service under the new C-APC. We agree, in this case, to use only the subset of claims that include both codes because hospitals were specifically instructed in the CMS Internet Only Manual and in prior final rule preamble language to use revenue code 0819 to report donor acquisition costs. This instruction is different from our general instructions regarding correct coding in that this instruction is very specific and was issued to address problems associated with the reporting of donor acquisition costs. We also agree with the commenters' that implementing a code edit beginning in CY 2017 that will require revenue code 0815 to be on a claim with CPT code 38240 is appropriate because this practice will help to ensure that donor acquisition costs for allogeneic HSCT are reported with the appropriate revenue code and that these costs are accurately recorded in the Medicare hospital cost report. This edit will become effective January 1, 2017, and will return claims to the provider if CPT code 38240 is present for the transplant procedure without a separate line on the claim reporting revenue code 0815 for donor acquisition services. Again, we emphasize that this is an exceptional circumstance. We do not anticipate taking any similar actions for any other existing or future APCs or C-APCs. The combination of forming a new C-APC, providing unusually specific instructions in the CMS Internet Only Manual, needing to create a new cost center on the hospital cost report, and the clear recommendation from the HOP Panel—following both its and our thorough analysis of the issue—make this case particularly unique.

Regarding the comment related to the use of cost center line 112.50 to report allogeneic HSCT donor acquisition costs, we agree with the commenter that cost report lines 105 through 117 are designated for solid organ acquisition costs and other data for informational purposes. The commenter also indicated that the proposed line 112.50 does not carry over to Worksheet C for the calculation of a CCR and drops off after accumulation of overhead. The commenter makes a valid point regarding the proposed line 112.50, and we agree that the proposed new revenue code 0815 should be mapped to a different cost center. The commenters recommended the use of a cost center in the range of lines 50 through 76.99. However these cost centers have standard cost center descriptions that do not have a logical subscript for the proposed new line “Allogeneic Stem Cell Acquisition”. Also, line 76 is used for too many variables and would not provide the needed isolation of costs or charges. However, the Medicare hospital cost report contains an available expansion in the range of lines 77 through 87. We are revising our proposal to update the Medicare hospital cost report (Form CMS-2552- 10) by adding proposed new line 112.50 (with the cost center code of “11250”) and are instead adding a new standard cost center 77, “Allogeneic Stem Cell Acquisition,” to Worksheet A (and applicable worksheets) with the standard cost center code of “07700.” The new cost center, line 77, will be used for the recording of any acquisition costs related to allogeneic stem cell transplants as defined in Section 231.11, Chapter 4, of the Medicare Claims Processing Manual (Pub. 100-04).

After consideration of the public comments we received, we are finalizing the proposal for C-APC 5244 (Level 4 Blood Product Exchange and Related Services), with the modification to exclude claims that do not include donor acquisition costs reported with revenue code 0819 from ratesetting. In addition, for CY 2017 and subsequent years, we are finalizing the proposal to no longer use revenue code 0819 for the identification of stem cell acquisition charges for allogeneic bone marrow/stem cell transplants. We are establishing a final payment rate for new C-APC 5244 of $27,752 for CY 2017.

d. Calculation of Composite APC Criteria-Based Costs

As discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66613), we believe it is important that the OPPS enhance incentives for hospitals to provide necessary, high quality care as efficiently as possible. For CY 2008, we developed composite APCs to provide a single payment for groups of services that are typically performed together during a single clinical encounter and that result in the provision of a complete service. Combining payment for multiple, independent services into a single OPPS payment in this way enables hospitals to manage their resources with maximum flexibility by monitoring and adjusting the volume and efficiency of services themselves. An additional advantage to the composite APC model is that we can use data from correctly coded multiple procedure claims to calculate payment rates for the specified combinations of services, rather than relying upon single procedure claims which may be low in volume and/or incorrectly coded. Under the OPPS, we currently have composite policies for low dose rate (LDR) prostate brachytherapy, mental health services, and multiple imaging services. We refer Start Printed Page 79588readers to the CY 2008 OPPS/ASC final rule with comment period for a full discussion of the development of the composite APC methodology (72 FR 66611 through 66614 and 66650 through 66652) and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74163) for more recent background. In the CY 2017 OPPS/ASC proposed rule (81 FR 45623), for CY 2017 and subsequent years, we proposed to continue our composite APC payment policies for LDR prostate brachytherapy services, mental health services, and multiple imaging services, as discussed below.

At its August 22, 2016 meeting the HOP Panel recommended that CMS develop a composite APC for pathology services when multiple pathology services are reported on a claim with no other payable services.

Comment: Several commenters supported the HOP Panel's recommendation to develop a composite APC for pathology services when multiple pathology services are reported on a claim with no other payable services and urged CMS to propose and finalize a policy to create such a composite APC. Some commenters also requested that CMS create additional composite APCs for X-ray services, respiratory services, cardiology services, and allergy testing services.

Response: We appreciate the HOP Panel's recommendation, as well as the commenters' request to create new composite APCs for additional services. However, we did not propose to create any new composite APCs for CY 2017. Therefore, we are not accepting the HOP Panel's recommendation at this time. We may consider this HOP Panel recommendation in conjunction with the commenters' request for the creation of new additional composite APCs for future rulemaking.

(1) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC

LDR prostate brachytherapy is a treatment for prostate cancer in which hollow needles or catheters are inserted into the prostate, followed by permanent implantation of radioactive sources into the prostate through the needles/catheters. At least two CPT codes are used to report the composite treatment service because there are separate codes that describe placement of the needles/catheters and the application of the brachytherapy sources: CPT code 55875 (Transperineal placement of needles or catheters into prostate for interstitial radioelement application, with or without cystoscopy) and CPT code 77778 (Interstitial radiation source application; complex), which are generally present together on claims for the same date of service in the same operative session. In order to base payment on claims for the most common clinical scenario, and to further our goal of providing payment under the OPPS for a larger bundle of component services provided in a single hospital encounter, beginning in CY 2008, we began providing a single payment for LDR prostate brachytherapy when the composite service, reported as CPT codes 55875 and 77778, is furnished in a single hospital encounter. We base the payment for composite APC 8001 (LDR Prostate Brachytherapy Composite) on the geometric mean cost derived from claims for the same date of service that contain both CPT codes 55875 and 77778 and that do not contain other separately paid codes that are not on the bypass list. We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66652 through 66655) for a full history of OPPS payment for LDR prostate brachytherapy services and a detailed description of how we developed the LDR prostate brachytherapy composite APC.

In the CY 2017 OPPS/ASC proposed rule (81 FR 45623 through 45624), we proposed to continue to pay for LDR prostate brachytherapy services using the composite APC payment methodology proposed and implemented for CY 2008 through CY 2016. That is, we proposed to use CY 2015 claims reporting charges for both CPT codes 55875 and 77778 on the same date of service with no other separately paid procedure codes (other than those on the bypass list) to calculate the proposed payment rate for composite APC 8001. Consistent with our CY 2008 through CY 2016 practice, in the CY 2017 OPPS/ASC proposed rule, we proposed not to use the claims that meet these criteria in the calculation of the geometric mean costs of procedures or services assigned to APC 5375 (Level IV Cystourethroscopy and Other Genitourinary Procedures) and APC 5641 (Complex Interstitial Radiation Source Application), the APCs to which CPT codes 55875 and 77778 are assigned, respectively. We proposed to continue to calculate the proposed geometric mean costs of procedures or services assigned to APCs 5375 and 5641 using single and “pseudo” single procedure claims. We continue to believe that composite APC 8001 contributes to our goal of creating hospital incentives for efficiency and cost containment, while providing hospitals with the most flexibility to manage their resources. We also continue to believe that data from claims reporting both services required for LDR prostate brachytherapy provide the most accurate geometric mean cost upon which to base the proposed composite APC payment rate.

Using a partial year of CY 2015 claims data available for the CY 2017 OPPS/ASC proposed rule, we were able to use 202 claims that contained both CPT codes 55875 and 77778 to calculate the proposed geometric mean cost of approximately $3,581 for these procedures upon which the proposed CY 2017 payment rate for composite APC 8001 was based.

We did not receive any public comments on this proposal. Therefore, we are finalizing our proposal, without modification, to continue to use the payment rate for composite APC 8001 to pay for LDR prostate brachytherapy services for CY 2017 and to set the payment rate for this APC using our established methodology. Using the CY 2015 claims data available for this CY 2017 final rule with comment period, we were able to use 224 claims that contained both CPT codes 55875 and 77778 to calculate the geometric mean cost of approximately $3,598 for these procedures upon which the final CY 2017 payment rate for composite APC 8001 is based.

(2) Mental Health Services Composite APC

In the CY 2017 OPPS/ASC proposed rule (81 FR 45624), we proposed to continue our longstanding policy of limiting the aggregate payment for specified less resource-intensive mental health services furnished on the same date to the payment for a day of partial hospitalization services provided by a hospital, which we consider to be the most resource-intensive of all outpatient mental health services. We refer readers to the April 7, 2000 OPPS final rule with comment period (65 FR 18452 through 18455) for the initial discussion of this longstanding policy and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74168) for more recent background.

Specifically, we proposed that when the aggregate payment for specified mental health services provided by one hospital to a single beneficiary on one date of service based on the payment rates associated with the APCs for the individual services exceeds the maximum per diem payment rate for partial hospitalization services provided by a hospital, those specified mental health services would be assigned to composite APC 8010 (Mental Health Services Composite). We also proposed to continue to set the payment rate for Start Printed Page 79589composite APC 8010 at the same payment rate that we proposed to establish for APC 5862 (Level 2 Partial Hospitalization (4 or more services) for hospital-based PHPs), which is the maximum partial hospitalization per diem payment rate for a hospital, and that the hospital continue to be paid the payment rate for composite APC 8010. Under this policy, the I/OCE would continue to determine whether to pay for these specified mental health services individually, or to make a single payment at the same payment rate established for APC 5862 for all of the specified mental health services furnished by the hospital on that single date of service. We continue to believe that the costs associated with administering a partial hospitalization program at a hospital represent the most resource-intensive of all outpatient mental health services. Therefore, we do not believe that we should pay more for mental health services under the OPPS than the highest partial hospitalization per diem payment rate for hospitals.

In the CY 2017 OPPS/ASC proposed rule (81 FR 45667 through 45678), we proposed to combine the existing Level 1 and Level 2 hospital- based PHP APCs into a single hospital-based PHP APC and thereby discontinue APCs 5861 (Level 1 Partial Hospitalization (3 services) for Hospital-Based PHPs) and 5862 (Level 2 Partial Hospitalization (4 or more services) for Hospital-Based PHPs) and replace them with proposed new APC 5863 (Partial Hospitalization (3 or more services per day)). This proposal is being finalized in section VIII. of this final rule with comment period. In light of this policy, we are modifying our final policy for CY 2017, as fully discussed below.

We did not receive any public comments on this proposal. Therefore, we are finalizing our CY 2017 proposal, without modification, that when the aggregate payment for specified mental health services provided by one hospital to a single beneficiary on a single date of service, based on the payment rates associated with the APCs for the individual services, exceeds the maximum per diem payment rate for partial hospitalization services provided by a hospital, those specified mental health services will be paid through composite APC 8010 (Mental Health Services Composite) for CY 2017. In addition, we are finalizing our CY 2017 proposal, with modification, to set the payment rate for composite APC 8010 for CY 2017 at the same payment rate that we established for new APC 5863, which is the maximum partial hospitalization per diem payment rate for a hospital, and that the hospital continue to be paid the payment rate for composite APC 8010.

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

Effective January 1, 2009, we provide a single payment each time a hospital submits a claim for more than one imaging procedure within an imaging family on the same date of service, in order to reflect and promote the efficiencies hospitals can achieve when performing multiple imaging procedures during a single session (73 FR 41448 through 41450). We utilize three imaging families based on imaging modality for purposes of this methodology: (1) Ultrasound; (2) computed tomography (CT) and computed tomographic angiography (CTA); and (3) magnetic resonance imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes subject to the multiple imaging composite policy and their respective families are listed in Table 12 of the CY 2014 OPPS/ASC final rule with comment period (78 FR 74920 through 74924). While there are three imaging families, there are five multiple imaging composite APCs due to the statutory requirement under section 1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging services provided with and without contrast. While the ultrasound procedures included under the policy do not involve contrast, both CT/CTA and MRI/MRA scans can be provided either with or without contrast. The five multiple imaging composite APCs established in CY 2009 are:

  • APC 8004 (Ultrasound Composite);
  • APC 8005 (CT and CTA without Contrast Composite);
  • APC 8006 (CT and CTA with Contrast Composite);
  • APC 8007 (MRI and MRA without Contrast Composite); and
  • APC 8008 (MRI and MRA with Contrast Composite).

We define the single imaging session for the “with contrast” composite APCs as having at least one or more imaging procedures from the same family performed with contrast on the same date of service. For example, if the hospital performs an MRI without contrast during the same session as at least one other MRI with contrast, the hospital will receive payment based on the payment rate for APC 8008, the “with contrast” composite APC.

We make a single payment for those imaging procedures that qualify for payment based on the composite APC payment rate, which includes any packaged services furnished on the same date of service. The standard (noncomposite) APC assignments continue to apply for single imaging procedures and multiple imaging procedures performed across families. For a full discussion of the development of the multiple imaging composite APC methodology, we refer readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR 68559 through 68569).

In the CY 2017 OPPS/ASC proposed rule (81 FR 45624 through 45625), we proposed to continue to pay for all multiple imaging procedures within an imaging family performed on the same date of service using the multiple imaging composite APC payment methodology. We continue to believe that this policy will reflect and promote the efficiencies hospitals can achieve when performing multiple imaging procedures during a single session.

The proposed CY 2017 payment rates for the five multiple imaging composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) were based on proposed geometric mean costs calculated from a partial year of CY 2015 claims available for the CY 2017 OPPS/ASC proposed rule that qualified for composite payment under the current policy (that is, those claims reporting more than one procedure within the same family on a single date of service). To calculate the proposed geometric mean costs, we used the same methodology that we used to calculate the final geometric mean costs for these composite APCs since CY 2014, as described in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74918). The imaging HCPCS codes referred to as “overlap bypass codes” that we removed from the bypass list for purposes of calculating the proposed multiple imaging composite APC geometric mean costs, in accordance with our established methodology as stated in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74918), were identified by asterisks in Addendum N to the CY 2017 OPPS/ASC proposed rule (which is available via the Internet on the CMS Web site) and were discussed in more detail in section II.A.1.b. of the CY 2017 OPPS/ASC proposed rule. For the CY 2017 OPPS/ASC proposed rule, we were able to identify approximately 599,294 “single session” claims out of an estimated 1.6 million potential claims for payment through composite APCs from our ratesetting claims data, which represents approximately 38 percent of all eligible claims, to calculate the proposed CY 2017 geometric mean costs for the multiple imaging composite APCs. Table 7 of the CY 2017 OPPS/Start Printed Page 79590ASC proposed rule lists the proposed HCPCS codes that would be subject to the multiple imaging composite APC policy and their respective families and approximate composite APC proposed geometric mean costs for CY 2017.

We did not receive any public comments on this proposal. Therefore, we are finalizing our proposal to continue the use of multiple imaging composite APCs to pay for services providing more than one imaging procedure from the same family on the same date, without modification. For this CY 2017 final rule with comment period, we were able to identify approximately 635,363 “single session” claims out of an estimated 1.7 million potential claims for payment through composite APCs from our ratesetting claims data, which represents approximately 37 percent of all eligible claims, to calculate the final CY 2017 geometric mean costs for the multiple imaging composite APCs. Table 3 below lists the HCPCS codes that are subject to the multiple imaging composite APC policy and their respective families and approximate composite APC geometric mean costs for CY 2017.

Table 3—Final OPPS Imaging Families and Multiple Imaging Procedure Composite APCs

Family 1—Ultrasound
CY 2017 APC 8004 (ultrasound composite)CY 2017 Approximate APC geometric mean cost = $296
76604Us exam, chest.
76700Us exam, abdom, complete.
76705Echo exam of abdomen.
76770Us exam abdo back wall, comp.
76775Us exam abdo back wall, lim.
76776Us exam k transpl w/Doppler.
76831Echo exam, uterus.
76856Us exam, pelvic, complete.
76870Us exam, scrotum.
76857Us exam, pelvic, limited.
Family 2—CT and CTA with and without contrast
CY 2017 APC 8005 (CT and CTA without contrast composite) *CY 2017 Approximate APC geometric mean cost = $325
70450Ct head/brain w/o dye.
70480Ct orbit/ear/fossa w/o dye.
70486Ct maxillofacial w/o dye.
70490Ct soft tissue neck w/o dye.
71250Ct thorax w/o dye.
72125Ct neck spine w/o dye.
72128Ct chest spine w/o dye.
72131Ct lumbar spine w/o dye.
72192Ct pelvis w/o dye.
73200Ct upper extremity w/o dye.
73700Ct lower extremity w/o dye.
74150Ct abdomen w/o dye.
74261Ct colonography, w/o dye.
74176Ct angio abd & pelvis.
CY 2017 APC 8006 (CT and CTA with contrast composite)CY 2017 Approximate APC geometric mean cost = $548
70487Ct maxillofacial w/dye.
70460Ct head/brain w/dye.
70470Ct head/brain w/o & w/dye.
70481Ct orbit/ear/fossa w/dye.
70482Ct orbit/ear/fossa w/o & w/dye.
70488Ct maxillofacial w/o & w/dye.
70491Ct soft tissue neck w/dye.
70492Ct sft tsue nck w/o & w/dye.
70496Ct angiography, head.
70498Ct angiography, neck.
71260Ct thorax w/dye.
71270Ct thorax w/o & w/dye.
71275Ct angiography, chest.
72126Ct neck spine w/dye.
72127Ct neck spine w/o & w/dye.
72129Ct chest spine w/dye.
72130Ct chest spine w/o & w/dye.
72132Ct lumbar spine w/dye.
72133Ct lumbar spine w/o & w/dye.
72191Ct angiograph pelv w/o & w/dye.
72193Ct pelvis w/dye.
72194Ct pelvis w/o & w/dye.
73201Ct upper extremity w/dye.
73202Ct uppr extremity w/o & w/dye.
Start Printed Page 79591
73206Ct angio upr extrm w/o & w/dye.
73701Ct lower extremity w/dye.
73702Ct lwr extremity w/o & w/dye.
73706Ct angio lwr extr w/o & w/dye.
74160Ct abdomen w/dye.
74170Ct abdomen w/o & w/dye.
74175Ct angio abdom w/o & w/dye.
74262Ct colonography, w/dye.
75635Ct angio abdominal arteries.
74177Ct angio abd & pelv w/contrast.
74178Ct angio abd & pelv 1+ regns.
* If a “without contrast” CT or CTA procedure is performed during the same session as a “with contrast” CT or CTA procedure, the I/OCE assigns the procedure to APC 8006 rather than APC 8005.
Family 3—MRI and MRA with and without Contrast
CY 2017 APC 8007 (MRI and MRA without contrast composite) *CY 2017 Approximate APC geometric mean cost = $631
70336Magnetic image, jaw joint.
70540Mri orbit/face/neck w/o dye.
70544Mr angiography head w/o dye.
70547Mr angiography neck w/o dye.
70551Mri brain w/o dye.
70554Fmri brain by tech.
71550Mri chest w/o dye.
72141Mri neck spine w/o dye.
72146Mri chest spine w/o dye.
72148Mri lumbar spine w/o dye.
72195Mri pelvis w/o dye.
73218Mri upper extremity w/o dye.
73221Mri joint upr extrem w/o dye.
73718Mri lower extremity w/o dye.
73721Mri jnt of lwr extre w/o dye.
74181Mri abdomen w/o dye.
75557Cardiac mri for morph.
75559Cardiac mri w/stress img.
C8901MRA w/o cont, abd.
C8904MRI w/o cont, breast, uni.
C8907MRI w/o cont, breast, bi.
C8910MRA w/o cont, chest.
C8913MRA w/o cont, lwr ext.
C8919MRA w/o cont, pelvis.
C8932MRA, w/o dye, spinal canal.
C8935MRA, w/o dye, upper extr.
CY 2017 APC 8008 (MRI and MRA with contrast composite)CY 2017 Approximate APC geometric mean cost = $945
70549Mr angiograph neck w/o & w/dye.
70542Mri orbit/face/neck w/dye.
70543Mri orbt/fac/nck w/o & w/dye.
70545Mr angiography head w/dye.
70546Mr angiograph head w/o & w/dye.
70547Mr angiography neck w/o dye.
70548Mr angiography neck w/dye.
70552Mri brain w/dye.
70553Mri brain w/o & w/dye.
71551Mri chest w/dye.
71552Mri chest w/o & w/dye.
72142Mri neck spine w/dye.
72147Mri chest spine w/dye.
72149Mri lumbar spine w/dye.
72156Mri neck spine w/o & w/dye.
72157Mri chest spine w/o & w/dye.
72158Mri lumbar spine w/o & w/dye.
72196Mri pelvis w/dye.
72197Mri pelvis w/o & w/dye.
73219Mri upper extremity w/dye.
73220Mri uppr extremity w/o & w/dye.
73222Mri joint upr extrem w/dye.
73223Mri joint upr extr w/o & w/dye.
73719Mri lower extremity w/dye.
Start Printed Page 79592
73720Mri lwr extremity w/o & w/dye.
73722Mri joint of lwr extr w/dye.
73723Mri joint lwr extr w/o & w/dye.
74182Mri abdomen w/dye.
74183Mri abdomen w/o & w/dye.
75561Cardiac mri for morph w/dye.
75563Card mri w/stress img & dye.
C8900MRA w/cont, abd.
C8902MRA w/o fol w/cont, abd.
C8903MRI w/cont, breast, uni.
C8905MRI w/o fol w/cont, brst, un.
C8906MRI w/cont, breast, bi.
C8908MRI w/o fol w/cont, breast,.
C8909MRA w/cont, chest.
C8911MRA w/o fol w/cont, chest.
C8912MRA w/cont, lwr ext.
C8914MRA w/o fol w/cont, lwr ext.
C8918MRA w/cont, pelvis.
C8920MRA w/o fol w/cont, pelvis.
C8931MRA, w/dye, spinal canal.
C8933MRA, w/o&w/dye, spinal canal.
C8934MRA, w/dye, upper extremity.
C8936MRA, w/o&w/dye, upper extr.
* If a “without contrast” MRI or MRA procedure is performed during the same session as a “with contrast” MRI or MRA procedure, the I/OCE assigns the procedure to APC 8008 rather than APC 8007.

3. Changes to Packaged Items and Services

a. Background and Rationale for Packaging in the OPPS

Like other prospective payment systems, the OPPS relies on the concept of averaging to establish a payment rate for services. The payment may be more or less than the estimated cost of providing a specific service or a bundle of specific services for a particular patient. The OPPS packages payment for multiple interrelated items and services into a single payment to create incentives for hospitals to furnish services most efficiently and to manage their resources with maximum flexibility. Our packaging policies support our strategic goal of using larger payment bundles in the OPPS to maximize hospitals' incentives to provide care in the most efficient manner. For example, where there are a variety of devices, drugs, items, and supplies that could be used to furnish a service, some of which are more costly than others, packaging encourages hospitals to use the most cost-efficient item that meets the patient's needs, rather than to routinely use a more expensive item, which often results if separate payment is provided for the item.

Packaging also encourages hospitals to effectively negotiate with manufacturers and suppliers to reduce the purchase price of items and services or to explore alternative group purchasing arrangements, thereby encouraging the most economical health care delivery. Similarly, packaging encourages hospitals to establish protocols that ensure that necessary services are furnished, while scrutinizing the services ordered by practitioners to maximize the efficient use of hospital resources. Packaging payments into larger payment bundles promotes the predictability and accuracy of payment for services over time. Finally, packaging may reduce the importance of refining service-specific payment because packaged payments include costs associated with higher cost cases requiring many ancillary items and services and lower cost cases requiring fewer ancillary items and services. Because packaging encourages efficiency and is an essential component of a prospective payment system, packaging payment for items and services that are typically integral, ancillary, supportive, dependent, or adjunctive to a primary service has been a fundamental part of the OPPS since its implementation in August 2000. For an extensive discussion of the history and background of the OPPS packaging policy, we refer readers to the CY 2000 OPPS final rule (65 FR 18434), the CY 2008 OPPS/ASC final rule with comment period (72 FR 66580), the CY 2014 OPPS/ASC final rule with comment period (78 FR 74925), the CY 2015 OPPS/ASC final rule with comment period (79 FR 66817), and the CY 2016 OPPS/ASC final rule with comment period (80 FR 70343). As we continue to develop larger payment groups that more broadly reflect services provided in an encounter or episode of care, we have expanded the OPPS packaging policies. Most, but not necessarily all, items and services currently packaged in the OPPS are listed in 42 CFR 419.2(b). Our overarching goal is to make OPPS payments for all services paid under the OPPS more consistent with those of a prospective payment system and less like those of a per service fee schedule, which pays separately for each coded item. As a part of this effort, we have continued to examine the payment for items and services provided under the OPPS to determine which OPPS services can be packaged to further achieve the objective of advancing the OPPS toward a more prospective payment system.

For CY 2017, we have examined our OPPS packaging policies, reviewing categories of integral, ancillary, supportive, dependent, or adjunctive items and services that are packaged into payment for the primary service that they support. In the CY 2017 OPPS/ASC proposed rule (81 FR 45628), we proposed some modifications to our packaging policies. The specific proposals and any applicable summations of and responses to any public comments received in response to these proposals are discussed under the sections below.

b. Clinical Diagnostic Laboratory Test Packaging Policy

(1) Background

In CY 2014, we finalized a policy to package payment for most clinical Start Printed Page 79593diagnostic laboratory tests in the OPPS (78 FR 74939 through 74942, and 42 CFR 419.2(b)(17)). In CY 2016, we made some minor modifications to this policy (80 FR 70348 through 70350). Under current policy, certain clinical diagnostic laboratory tests that are listed on the Clinical Laboratory Fee Schedule (CLFS) are packaged in the OPPS as integral, ancillary, supportive, dependent, or adjunctive to the primary service or services provided in the hospital outpatient setting. Specifically, we conditionally package laboratory tests and only pay separately for laboratory tests when (1) they are the only services provided to a beneficiary on a claim; (2) they are “unrelated” laboratory tests, meaning they are on the same claim as other hospital outpatient services, but are ordered for a different diagnosis than the other hospital outpatient services and are ordered by a different practitioner than the practitioner who ordered the other hospital outpatient services; (3) they are molecular pathology tests; or (4) the laboratory tests are considered preventive services.

(2) “Unrelated” Laboratory Test Exception

Laboratory tests are separately paid in the HOPD when they are considered “unrelated” laboratory tests. Unrelated laboratory tests are tests on the same claim as other hospital outpatient services, but are ordered for a different diagnosis than the other hospital outpatient services and are ordered by a different practitioner than the practitioner who ordered the other hospital outpatient services. Unrelated laboratory tests are designated for separate payment by hospitals with the “L1” modifier. This is the only use of the “L1” modifier.

For CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45628), we proposed to discontinue the unrelated laboratory test exception (and the “L1” modifier) for the following reasons: We believe that, in most cases, “unrelated” laboratory tests are not significantly different than most other packaged laboratory tests provided in the HOPD. Multiple hospitals have informed us that the “unrelated” laboratory test exception is not useful to them because they cannot determine when a laboratory test has been ordered by a different physician and for a different diagnosis than the other services reported on the same claim. We agree with these hospitals, and we also believe that the requirements for “unrelated” laboratory tests (different diagnosis and different ordering physician) do not necessarily correlate with the relatedness of a laboratory test to the other HOPD services that a patient receives during the same hospital stay. In the context of most hospital outpatient encounters, most laboratory tests are related in some way to other services being provided because most common laboratory tests evaluate the functioning of the human body as a physiologic system and, therefore, relate to other tests and interventions that a patient receives. Also, it is not uncommon for beneficiaries to have multiple diagnoses, and often times the various diagnoses are related in some way. Therefore, the associated diagnosis is not necessarily indicative of how related a laboratory test is to other hospital outpatient services performed during a hospital stay, especially given the granularity of ICD-10 diagnosis coding. Packaging of other ancillary services in the OPPS is not dependent upon a common diagnosis with the primary service into which an ancillary service is packaged. Therefore, we do not believe that this should be a requirement for laboratory test packaging. Furthermore, we believe that just because a laboratory test is ordered by a different physician than the physician who ordered the other hospital outpatient services furnished during a hospital outpatient stay does not necessarily mean that the laboratory test is not related to other services being provided to a beneficiary.

Therefore, because the “different physician, different diagnosis” criteria for “unrelated” laboratory tests do not clearly identify or distinguish laboratory tests that are not integral, ancillary, supportive, dependent, or adjunctive to other hospital outpatient services provided to the beneficiary during the hospital stay, we proposed to no longer permit the use of the “L1” modifier to self-designate an exception to the laboratory test packaging under these circumstances, and seek separate payment for such laboratory tests at the CLFS payment rates. Instead, we proposed to package any and all laboratory tests (except molecular pathology tests, certain ADLTs, and preventive tests) if they appear on a claim with other hospital outpatient services.

We invited public comments on this proposal.

Comment: The majority of commenters supported the proposal. Some of the commenters believed that the proposal would reduce administrative burden. Other commenters opposed the proposal and stated that, despite the burden, they would rather have the opportunity for separate payment for “unrelated” laboratory tests. Some commenters believed that the proposal would result in no separate payment for laboratory tests when laboratory tests are the only services provided.

Response: We appreciate the commenters' support. The proposal was made in response to concerns raised by hospitals about when to use modifier “L1,” and because we agreed with the commenters' concerns as noted above. We also do not believe that the discontinuation of the modifier “L1” policy is inconsistent with our policy to package items and services that are integral, ancillary, supportive, dependent, or adjunctive to other hospital outpatient services. Also, we stated in the CY 2017 OPPS/ASC proposed rule (81 FR 45628) that “[i]n the context of most hospital outpatient encounters, most laboratory tests are related in some way to other services being provided because most common laboratory tests evaluate the functioning of the human body as a physiologic system and therefore relate to other tests and interventions that a patient receives.” Therefore, we do not believe that it is necessary to attempt to identify certain laboratory tests as unrelated to other services furnished to a patient. Finally, the discontinuation of the “L1” modifier and the associated policy does not affect the separate payment for laboratory tests when these procedures are the only services that are provided to the beneficiary.

After consideration of the public comments we received, we are finalizing, as proposed, the discontinuation of the “unrelated” laboratory test exception and consequently the “L1” modifier.

(3) Molecular Pathology Test Exception

In 2014, we excluded from the laboratory packaging policy molecular pathology tests described by CPT codes in the ranges of 81200 through 81383, 81400 through 81408, and 81479 (78 FR 74939 through 74942). In 2016, we expanded this policy to include not only the original code range but also all new molecular pathology test codes. Molecular pathology laboratory tests were excluded from packaging because we believed that these relatively new tests may have a different pattern of clinical use than more conventional laboratory tests, which may make them generally less tied to a primary service in the hospital outpatient setting than the more common and routine laboratory tests that are packaged (80 FR 70348 through 70350).

In response to the CY 2016 OPPS/ASC proposed rule, commenters argued that CMS' rationale for excluding molecular Start Printed Page 79594pathology tests from the laboratory test packaging policy also applies to certain CPT codes that describe some new multianalyte assays with algorithmic analyses (MAAAs).

In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70349 through 70350), we stated that “we may consider whether additional exceptions to the OPPS laboratory test packaging policy should apply to tests other than molecular pathology tests in the future.” After further consideration, we agree with these commenters that the exception that currently applies to molecular pathology tests may be appropriately applied to other laboratory tests that, like molecular pathology tests, are relatively new and may have a different pattern of clinical use than more conventional laboratory tests, which may make them generally less tied to a primary service in the hospital outpatient setting than the more common and routine laboratory tests that are packaged. Therefore, for CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45628), we proposed an expansion of the laboratory packaging exception that currently applies to molecular pathology tests to also apply to all advanced diagnostic laboratory tests (ADLTs) that meet the criteria of section 1834A(d)(5)(A) of the Act. We believe that some of these diagnostic tests that meet these criteria will not be molecular pathology tests but will also have a different pattern of clinical use than more conventional laboratory tests, which may make them generally less tied to a primary service in the hospital outpatient setting than the more common and routine laboratory tests that are packaged. We proposed to assign status indicator “A” (Separate payment under the CLFS) to ADLTs once a laboratory test is designated an ADLT under the CLFS.

We invited public comments on this proposal.

Comment: Many commenters supported the proposal. A few commenters suggested that CMS apply the exception not just to ADLTs that meet the criteria of section 1834A(d)(5)(A) of the Act, but to all MAAAs.

Response: We appreciate the commenters' support. Regarding the suggestion that we exempt all MAAAs from OPPS packaging, we do not believe that this would be prudent, as MAAAs are a broad category of tests. We are limiting the expansion of this exception to only those ADLTs that meet the criteria of section 1834A(d)(5)(A) of the Act, which are defined as tests that provide an analysis of multiple biomarkers of DNA, RNA, or proteins combined with a unique algorithm to yield a single patient-specific result.

After consideration of the public comments we received, we are finalizing our proposal, without modification, to assign status indicator “A” (Separate payment under the CLFS) to ADLTs once a laboratory test is designated an ADLT under the CLFS.

c. Conditional Packaging Status Indicators “Q1” and “Q2”

(1) Background

Packaged payment versus separate payment of items and services in the OPPS is designated at the code level through the assignment of a status indicator to all CPT and HCPCS codes. One type of packaging in the OPPS is conditional packaging, which means that, under certain circumstances, items and services are packaged, and under other circumstances, they are paid separately. There are several different conditional packaging status indicators. Two of these status indicators indicate packaging of the services with other services furnished on the same date of service: Status indicator “Q1,” which packages items or services on the same date of service with services assigned status indicator “S” (Procedure or Service, Not Discounted When Multiple), “T” (Procedure or Service, Multiple Procedure Reduction Applies), or “V” (Clinic or Emergency Department Visit); and status indicator “Q2,” which packages items or services on the same date of service with services assigned status indicator “T.” Other conditional packaging status indicators, “Q4” (Conditionally packaged laboratory tests) and “J1”/“J2” (Hospital Part B services paid through a comprehensive APC), package services on the same claim, regardless of the date of service.

(2) Change in Conditional Packaging Status Indicators Logic

We do not believe that some conditional packaging status indicators should package based on date of service, while other conditional packaging status indicators package based on services reported on the same claim. For CY 2017, we proposed to align the packaging logic for all of the conditional packaging status indicators and change the logic for status indicators “Q1” and “Q2” so that packaging would occur at the claim level (instead of based on the date of service) to promote consistency and ensure that items and services that are provided during a hospital stay that may span more than one day are appropriately packaged according to OPPS packaging policies (81 FR 45629). We pointed out that this would increase the conditional packaging of conditionally packaged items and services because conditional packaging would occur whenever a conditionally packaged item or service is reported on the same claim as a primary service without regard to the date of service.

We invited public comments on this proposal.

Comment: The majority of commenters opposed the proposal. These commenters opposed the proposal primarily because of a general opposition to packaging in the OPPS. Other commenters supported the proposal and acknowledged CMS' efforts to promote consistency in the OPPS. Some commenters requested further information on the impacts of the proposed change.

Response: We thank the commenters who support this proposal. The commenters who opposed the proposal did not provide specifics as to why the proposed change would be inconsistent with OPPS packaging policies. We believe that conditional packaging should operate at the claim level for an entire hospital stay and not be limited to a single date of service. We refer the commenters interested in the impacts of this and other policies to section XXIII. of this final rule with comment period.

After consideration of the public comments we received, we are finalizing our proposal, without modification, to align the packaging logic for all of the conditional packaging status indicators and change the logic for status indicators “Q1” and “Q2” so that packaging occurs at the claim level (instead of based on the date of service).

4. Calculation of OPPS Scaled Payment Weights

We established a policy in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68283) of using geometric mean-based APC costs to calculate relative payment weights under the OPPS. In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70350 through 70351), we applied this policy and calculated the relative payment weights for each APC for CY 2016 that were shown in Addenda A and B to that final rule with comment period (which were made available via the Internet on the CMS Web site) using the APC costs discussed in sections II.A.1. and II.A.2. of that final rule with comment period. For CY 2017, we proposed to continue to apply the policy established in CY 2013 and calculate relative payment weights for each APC for CY 2017 using geometric mean-based APC costs (81 FR 45629).

For CY 2012 and CY 2013, outpatient clinic visits were assigned to one of five Start Printed Page 79595levels of clinic visit APCs, with APC 0606 representing a mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75036 through 75043), we finalized a policy that created alphanumeric HCPCS code G0463 (Hospital outpatient clinic visit for assessment and management of a patient), representing any and all clinic visits under the OPPS. HCPCS code G0463 was assigned to APC 0634 (Hospital Clinic Visits). We also finalized a policy to use CY 2012 claims data to develop the CY 2014 OPPS payment rates for HCPCS code G0463 based on the total geometric mean cost of the levels one through five CPT E/M codes for clinic visits previously recognized under the OPPS (CPT codes 99201 through 99205 and 99211 through 99215). In addition, we finalized a policy to no longer recognize a distinction between new and established patient clinic visits.

For CY 2016, we deleted APC 0634 and reassigned the outpatient clinic visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and Related Services) (80 FR 70351).

For CY 2017, we proposed to continue to standardize all of the relative payment weights to APC 5012 (81 FR 45629). We believe that standardizing relative payment weights to the geometric mean of the APC to which HCPCS code G0463 is assigned maintains consistency in calculating unscaled weights that represent the cost of some of the most frequently provided OPPS services. For CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45629), we proposed to assign APC 5012 a relative payment weight of 1.00 and to divide the geometric mean cost of each APC by the geometric mean cost for APC 5012 to derive the unscaled relative payment weight for each APC. The choice of the APC on which to standardize the relative payment weights does not affect payments made under the OPPS because we scale the weights for budget neutrality.

Section 1833(t)(9)(B) of the Act requires that APC reclassification and recalibration changes, wage index changes, and other adjustments be made in a budget neutral manner. Budget neutrality ensures that the estimated aggregate weight under the OPPS for CY 2017 is neither greater than nor less than the estimated aggregate weight that would have been made without the changes. To comply with this requirement concerning the APC changes, we proposed to compare the estimated aggregate weight using the CY 2016 scaled relative payment weights to the estimated aggregate weight using the proposed CY 2017 unscaled relative payment weights.

We did not receive any public comments on our proposal to use the geometric mean cost of renumbered APC 5012 to standardize relative payment weights. Therefore, we are finalizing our proposal and assigning APC 5012 the relative payment weight of 1.00, and using the relative payment weight for APC 5012 to derive the unscaled relative payment weight for each APC for CY 2017.

For CY 2016, we multiplied the CY 2016 scaled APC relative payment weight applicable to a service paid under the OPPS by the volume of that service from CY 2015 claims to calculate the total relative payment weight for each service. We then added together the total relative payment weight for each of these services in order to calculate an estimated aggregate weight for the year. For CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45629), we proposed to apply the same process using the estimated CY 2017 unscaled relative payment weights rather than scaled relative payment weights. We proposed to calculate the weight scalar by dividing the CY 2016 estimated aggregate weight by the unscaled CY 2017 estimated aggregate weight.

For a detailed discussion of the weight scalar calculation, we refer readers to the OPPS claims accounting document available on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html. Click on the CY 2017 OPPS final rule link and open the claims accounting document link at the bottom of the page.

In the CY 2017 OPPS/ASC proposed rule (81 FR 45630), we proposed to compare the estimated unscaled relative payment weights in CY 2017 to the estimated total relative payment weights in CY 2016 using CY 2015 claims data, holding all other components of the payment system constant to isolate changes in total weight. Based on this comparison, we proposed to adjust the calculated CY 2017 unscaled relative payment weights for purposes of budget neutrality. We proposed to adjust the estimated CY 2017 unscaled relative payment weights by multiplying them by a weight scaler of 1.4059 to ensure that the proposed CY 2017 relative payment weights are scaled to be budget neutral. The proposed CY 2017 relative payment weights listed in Addenda A and B to the proposed rule (which are available via the Internet on the CMS Web site) were scaled and incorporated the recalibration adjustments discussed in sections II.A.1. and II.A.2. of the proposed rule.

Section 1833(t)(14) of the Act provides the payment rates for certain SCODs. Section 1833(t)(14)(H) of the Act provides that additional expenditures resulting from this paragraph shall not be taken into account in establishing the conversion factor, weighting, and other adjustment factors for 2004 and 2005 under paragraph (9), but shall be taken into account for subsequent years. Therefore, the cost of those SCODs (as discussed in section V.B.3. of this final rule with comment period) is included in the budget neutrality calculations for the CY 2017 OPPS.

We did not receive any public comments on the proposed weight scaler calculation.

Therefore, we are finalizing our proposal to use the calculation process described in the proposed rule, without modification. Using updating final rule claims data, we are updating the estimated CY 2017 unscaled relative payment weights by multiplying them by a weight scaler of 1.4208 to ensure that the final CY 2017 relative payment weights are scaled to be budget neutral.

B. Conversion Factor Update

Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to update the conversion factor used to determine the payment rates under the OPPS on an annual basis by applying the OPD fee schedule increase factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee schedule increase factor is equal to the hospital inpatient market basket percentage increase applicable to hospital discharges under section 1886(b)(3)(B)(iii) of the Act. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56938 through 81 FR 56939), consistent with current law, based on IHS Global Insight, Inc.'s second quarter 2016 forecast of the FY 2017 market basket increase, the FY 2017 IPPS market basket update is 2.7 percent.

However, sections 1833(t)(3)(F) and 1833(t)(3)(G)(v) of the Act, as added by section 3401(i) of the Patient Protection and Affordable Care Act of 2010 (Pub. L. 111-148) and as amended by section 10319(g) of that law and further amended by section 1105(e) of the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), provide adjustments to the OPD fee schedule increase factor for CY 2017.

Specifically, section 1833(t)(3)(F)(i) of the Act requires that, for 2012 and subsequent years, the OPD fee schedule increase factor under subparagraph Start Printed Page 79596(C)(iv) be reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as equal to the 10-year moving average of changes in annual economy-wide, private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, year, cost reporting period, or other annual period) (the “MFP adjustment”). In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51689 through 51692), we finalized our methodology for calculating and applying the MFP adjustment, and then revised this methodology as discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49509). In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56938 through 81 FR 56939), we discussed the calculation of the final MFP adjustment for FY 2017, which is 0.3 percentage point.

In the CY 2017 OPPS/ASC proposed rule, we proposed that if more recent data became subsequently available after the publication of the proposed rule (for example, a more recent estimate of the market basket increase and the MFP adjustment), we would use such updated data, if appropriate, to determine the CY 2017 market basket update and the MFP adjustment, which are components in calculating the OPD fee schedule increase factor under sections 1833(t)(3)(C)(iv) and 1833(t)(3)(F) of the Act, in this CY 2017 OPPS/ASC final rule with comment period. Consistent with that proposal, and the FY 2017 IPPS/LTCH PPS final rule, we applied the updated final FY 2017 market basket percentage increase (2.7 percent) and the MFP adjustment (0.3 percent) to the OPD fee schedule increase factor for the CY 2017 OPPS.

In addition, section 1833(t)(3)(F)(ii) of the Act requires that, for each of years 2010 through 2019, the OPD fee schedule increase factor under section 1833(t)(3)(C)(iv) of the Act be reduced by the adjustment described in section 1833(t)(3)(G) of the Act. For CY 2017, section 1833(t)(3)(G)(v) of the Act provides a 0.75 percentage point reduction to the OPD fee schedule increase factor under section 1833(t)(3)(C)(iv) of the Act. Therefore, in accordance with sections 1833(t)(3)(F)(ii) and 1833(t)(3)(G)(v) of the Act, in the CY 2017 OPPS/ASC proposed rule, we proposed to apply a 0.75 percentage point reduction to the OPD fee schedule increase factor for CY 2017.

We note that section 1833(t)(3)(F) of the Act provides that application of this subparagraph may result in the OPD fee schedule increase factor under section 1833(t)(3)(C)(iv) of the Act being less than 0.0 percent for a year, and may result in OPPS payment rates being less than rates for the preceding year. As described in further detail below, we are applying an OPD fee schedule increase factor of 1.65 percent for the CY 2017 OPPS (which is 2.7 percent, the final estimate of the hospital inpatient market basket percentage increase, less the final 0.3 percentage point MFP adjustment, and less the 0.75 percentage point additional adjustment).

Hospitals that fail to meet the Hospital OQR Program reporting requirements are subject to an additional reduction of 2.0 percentage points from the OPD fee schedule increase factor adjustment to the conversion factor that would be used to calculate the OPPS payment rates for their services, as required by section 1833(t)(17) of the Act. For further discussion of the Hospital OQR Program, we refer readers to section XIII. of this final rule with comment period.

In the CY 2017 OPPS/ASC proposed rule, we proposed to amend 42 CFR 419.32(b)(1)(iv)(B) by adding a new paragraph (8) to reflect the requirement in section 1833(t)(3)(F)(i) of the Act that, for CY 2017, we reduce the OPD fee schedule increase factor by the MFP adjustment as determined by CMS, and to reflect the requirement in section 1833(t)(3)(G)(v) of the Act, as required by section 1833(t)(3)(F)(ii) of the Act, that we reduce the OPD fee schedule increase factor by an additional 0.75 percentage point for CY 2017.

We did not receive any public comments on the proposed adjustments to the OPD fee schedule increase factor or on the proposed changes to the regulations at 42 CFR 419.32(b)(1)(iv)(B). For the reasons discussed above, we are adjusting the OPD fee schedule increase factor and finalizing the changes to the regulations as proposed. To set the OPPS conversion factor for the CY 2017 proposed rule, we proposed to increase the CY 2016 conversion factor of $73.725 by 1.55 percent. In accordance with section 1833(t)(9)(B) of the Act, we proposed further to adjust the conversion factor for CY 2017 to ensure that any revisions made to the wage index and rural adjustment were made on a budget neutral basis. We proposed to calculate an overall budget neutrality factor of 1.0000 for wage index changes by comparing proposed total estimated payments from our simulation model using the proposed FY 2017 IPPS wage indexes to those payments using the FY 2016 IPPS wage indexes, as adopted on a calendar year basis for the OPPS.

For the CY 2017 proposed rule, we proposed to maintain the current rural adjustment policy, as discussed in section II.E. of this final rule with comment period. Therefore, the proposed budget neutrality factor for the rural adjustment was 1.0000.

For the CY 2017 proposed rule, we proposed to continue previously established policies for implementing the cancer hospital payment adjustment described in section 1833(t)(18) of the Act, as discussed in section II.F. of this final rule with comment period. We proposed to calculate a CY 2017 budget neutrality adjustment factor for the cancer hospital payment adjustment by comparing estimated total CY 2017 payments under section 1833(t) of the Act, including the proposed CY 2017 cancer hospital payment adjustment, to estimated CY 2017 total payments using the CY 2016 final cancer hospital payment adjustment as required under section 1833(t)(18)(B) of the Act.

The CY 2017 proposed estimated payments applying the proposed CY 2017 cancer hospital payment adjustment were identical to estimated payments applying the CY 2016 final cancer hospital payment adjustment. Therefore, we proposed to apply a budget neutrality adjustment factor of 1.0000 to the conversion factor for the cancer hospital payment adjustment.

For CY 2017, we proposed to apply a budget neutrality adjustment factor of 1.0003 to increase the conversion factor to account for our proposal to package unrelated laboratory tests into OPPS payment.

For the proposed rule, we estimated that proposed pass-through spending for drugs, biologicals, and devices for CY 2017 would equal approximately $148.3 million, which represented 0.24 percent of total projected CY 2017 OPPS spending. Therefore, the proposed conversion factor would be adjusted by the difference between the 0.26 percent estimate of pass-through spending for CY 2016 and the 0.24 percent estimate of proposed pass-through spending for CY 2017, resulting in a proposed adjustment for CY 2017 of 0.02 percent. Proposed estimated payments for outliers would remain at 1.0 percent of total OPPS payments for CY 2017. We estimated for the proposed rule that outlier payments would be 0.96 percent of total OPPS payments in CY 2016; the 1.0 percent for proposed outlier payments in CY 2017 would constitute a 0.04 percent increase in payment in CY 2017 relative to CY 2016.

Comment: One commenter requested that CMS verify the amount of dollars Start Printed Page 79597used to calculate the adjustment of the conversion factor from the policy change to include payments for unrelated laboratory services with modifier “L1” that will be packaged into OPPS services starting in CY 2017. The commenter believed that the cost of packaging those services would be approximately $40 million rather than the approximately $22 million that CMS identified using the methodology and claims data from the CY 2017 OPPS/ASC proposed rule (81 FR 45631).

Response: We appreciate the commenter's review of our analysis. We note that, while estimated cost is generally used for ratesetting purposes to establish the relative payment weights, our proposed policy of including those payments for unrelated laboratory services with the “L1” modifier that would be newly packaged would be in the context of budget neutralizing those payments into the OPPS. While the costs used from these services in establishing the relative weights would be approximately $45 million, the payments that would be used for budget neutralization would be approximately $25 million, using the same source claims dataset as in the CY 2017 OPPS/ASC final rule with comment period. We then determine how to adjust the OPPS conversion factor by comparing the CY 2015 aggregate payment of approximately $25 million to the total estimated payment for the CY 2015 OPPS, which results in a final conversion factor adjustment for this final laboratory services policy change of 1.0004.

For the proposed rule, we also proposed that hospitals that fail to meet the reporting requirements of the Hospital OQR Program would continue to be subject to a further reduction of 2.0 percentage points to the OPD fee schedule increase factor. For hospitals that fail to meet the requirements of the Hospital OQR Program, we proposed to make all other adjustments discussed above, but use a reduced OPD fee schedule update factor of −0.45 percent (that is, the proposed OPD fee schedule increase factor of 1.55 percent further reduced by 2.0 percentage points). This would result in a proposed reduced conversion factor for CY 2017 of 73.411 for hospitals that fail to meet the Hospital OQR requirements (a difference of −1.498 in the conversion factor relative to hospitals that met the requirements).

In summary, for CY 2017, we proposed to amend § 419.32(b)(1)(iv)(B) by adding a new paragraph (8) to reflect the reductions to the OPD fee schedule increase factor that are required for CY 2017 to satisfy the statutory requirements of sections 1833(t)(3)(F) and (t)(3)(G)(v) of the Act. We proposed to use a reduced conversion factor of 73.411 in the calculation of payments for hospitals that fail to meet the Hospital OQR Program requirements (a difference of −1.498 in the conversion factor relative to hospitals that met the requirements).

We invited public comments on these proposals. However, we did not receive any public comments. Therefore, we are finalizing these proposals without modification. For CY 2017, we proposed to continue previously established policies for implementing the cancer hospital payment adjustment described in section 1833(t)(18) of the Act, as discussed in section II.F. of this final rule with comment period. Based on the final rule updated data used in calculating the cancer hospital payment adjustment in section II.F. of this final rule with comment period, the target payment-to-cost ratio for the cancer hospital payment adjustment, which was 0.92 for CY 2016, is 0.91 for CY 2017. As a result, we are applying a budget neutrality adjustment factor of 1.0003 to the conversion factor for the cancer hospital payment adjustment.

As a result of these finalized policies, the OPD fee schedule increase factor for the CY 2017 OPPS is 1.65 percent (which is 2.7 percent, the estimate of the hospital inpatient market basket percentage increase, less the 0.3 percentage point MFP adjustment, and less the 0.75 percentage point additional adjustment). For CY 2017, we are using a conversion factor of $75.001 in the calculation of the national unadjusted payment rates for those items and services for which payment rates are calculated using geometric mean costs; that is, the OPD fee schedule increase factor of 1.65 percent for CY 2017, the required wage index budget neutrality adjustment of approximately 0.9999, the cancer hospital payment adjustment of 1.0003, the packaging of unrelated laboratory tests adjustment factor of 1.0004, and the adjustment of 0.02 percentage point of projected OPPS spending for the difference in the pass-through spending and outlier payments that result in a conversion factor for CY 2017 of $75.001.

C. Wage Index Changes

Section 1833(t)(2)(D) of the Act requires the Secretary to determine a wage adjustment factor to adjust the portion of payment and coinsurance attributable to labor-related costs for relative differences in labor and labor-related costs across geographic regions in a budget neutral manner (codified at 42 CFR 419.43(a)). This portion of the OPPS payment rate is called the OPPS labor-related share. Budget neutrality is discussed in section II.B. of this final rule with comment period.

The OPPS labor-related share is 60 percent of the national OPPS payment. This labor-related share is based on a regression analysis that determined that, for all hospitals, approximately 60 percent of the costs of services paid under the OPPS were attributable to wage costs. We confirmed that this labor-related share for outpatient services is appropriate during our regression analysis for the payment adjustment for rural hospitals in the CY 2006 OPPS final rule with comment period (70 FR 68553). In the CY 2017 OPPS/ASC proposed rule (81 FR 45631), we proposed to continue this policy for the CY 2017 OPPS. We refer readers to section II.H. of this final rule with comment period for a description and an example of how the wage index for a particular hospital is used to determine payment for the hospital.

As discussed in section II.A.2.c. of this final rule with comment period, for estimating APC costs, we standardize 60 percent of estimated claims costs for geographic area wage variation using the same FY 2017 pre-reclassified wage index that the IPPS uses to standardize costs. This standardization process removes the effects of differences in area wage levels from the determination of a national unadjusted OPPS payment rate and copayment amount.

Under 42 CFR 419.41(c)(1) and 419.43(c) (published in the OPPS April 7, 2000 final rule with comment period (65 FR 18495 and 18545)), the OPPS adopted the final fiscal year IPPS post-reclassified wage index as the calendar year wage index for adjusting the OPPS standard payment amounts for labor market differences. Therefore, the wage index that applies to a particular acute care, short-stay hospital under the IPPS also applies to that hospital under the OPPS. As initially explained in the September 8, 1998 OPPS proposed rule (63 FR 47576), we believe that using the IPPS wage index as the source of an adjustment factor for the OPPS is reasonable and logical, given the inseparable, subordinate status of the HOPD within the hospital overall. In accordance with section 1886(d)(3)(E) of the Act, the IPPS wage index is updated annually.

The Affordable Care Act contained several provisions affecting the wage index. These provisions were discussed in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74191). Section 10324 of the Affordable Care Act added section 1886(d)(3)(E)(iii)(II) to the Act, which defines a frontier State Start Printed Page 79598and amended section 1833(t) of the Act to add new paragraph (19), which requires a frontier State wage index floor of 1.00 in certain cases, and states that the frontier State floor shall not be applied in a budget neutral manner. We codified these requirements at § 419.43(c)(2) and (c)(3) of our regulations. For the CY 2017 OPPS, we proposed to implement this provision in the same manner as we have since CY 2011. Under this policy, the frontier State hospitals would receive a wage index of 1.00 if the otherwise applicable wage index (including reclassification, rural and imputed floors, and rural floor budget neutrality) is less than 1.00. Because the HOPD receives a wage index based on the geographic location of the specific inpatient hospital with which it is associated, the frontier State wage index adjustment applicable for the inpatient hospital also would apply for any associated HOPD. We refer readers to the following sections in the FY 2011 through FY 2017 IPPS/LTCH PPS final rules for discussions regarding this provision, including our methodology for identifying which areas meet the definition of “frontier States” as provided for in section 1886(d)(3)(E)(iii)(II) of the Act: for FY 2011, 75 FR 50160 through 50161; for FY 2012, 76 FR 51793, 51795, and 51825; for FY 2013, 77 FR 53369 through 53370; for FY 2014, 78 FR 50590 through 50591; for FY 2015, 79 FR 49971; for FY 2016, 80 FR 49498; and for FY 2017, 81 FR 56922.

In addition to the changes required by the Affordable Care Act, we note that the FY 2017 IPPS wage indexes continue to reflect a number of adjustments implemented over the past few years, including, but not limited to, reclassification of hospitals to different geographic areas, the rural floor and imputed floor provisions, an adjustment for occupational mix, and an adjustment to the wage index based on commuting patterns of employees (the out-migration adjustment). We refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56912 through 56937) for a detailed discussion of all changes to the FY 2017 IPPS wage indexes. In addition, we refer readers to the CY 2005 OPPS final rule with comment period (69 FR 65842 through 65844) and subsequent OPPS rules for a detailed discussion of the history of these wage index adjustments as applied under the OPPS.

As discussed in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through 49963), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49488 through 49489 and 49494 through 49496), and the FY 2017 IPPS/LTCH PPS final rule (81 FR 56913), the Office of Management and Budget (OMB) issued revisions to the labor market area delineations on February 28, 2013 (based on 2010 Decennial Census data), that included a number of significant changes such as new Core Based Statistical Areas (CBSAs), urban counties that became rural, rural counties that became urban, and existing CBSAs that were split apart (OMB Bulletin 13-01). This bulletin can be found at: http://www.whitehouse.gov/​sites/​default/​files/​omb/​bulletins/​2013/​b13-01.pdf. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49950 through 49985), we adopted the use of the OMB labor market area delineations that were based on the 2010 Decennial Census data, effective October 1, 2014.

Generally, OMB issues major revisions to statistical areas every 10 years, based on the results of the decennial census. However, OMB occasionally issues minor updates and revisions to statistical areas in the years between the decennial censuses. On July 15, 2015, OMB issued OMB Bulletin No. 15-01, which provides updates to and supersedes OMB Bulletin No. 13-01 that was issued on February 28, 2013. The attachment to OMB Bulletin No. 15-01 provides detailed information on the update to statistical areas since February 28, 2013. The updates provided in OMB Bulletin No. 15-01 are based on the application of the 2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas to Census Bureau population estimates for July 1, 2012 and July 1, 2013. The complete list of statistical areas incorporating these changes is provided in the attachment to OMB Bulletin No. 15-01. According to OMB, “[t]his bulletin establishes revised delineations for the Nation's Metropolitan Statistical Areas, Micropolitan Statistical Areas, and Combined Statistical Areas. The bulletin also provides delineations of Metropolitan Divisions as well as delineations of New England City and Town Areas.” A copy of this bulletin may be obtained on the Web site at: https://www.whitehouse.gov/​omb/​bulletins_​default.

OMB Bulletin No. 15-01 made the following changes that are relevant to the IPPS and OPPS wage index:

  • Garfield County, OK, with principal city Enid, OK, which was a Micropolitan (geographically rural) area, now qualifies as an urban new CBSA 21420 called Enid, OK.
  • The county of Bedford City, VA, a component of the Lynchburg, VA CBSA 31340, changed to town status and is added to Bedford County. Therefore, the county of Bedford City (SSA State county code 49088, FIPS State County Code 51515) is now part of the county of Bedford, VA (SSA State county code 49090, FIPS State County Code 51019). However, the CBSA remains Lynchburg, VA 31340.
  • The name of Macon, GA, CBSA 31420, as well as a principal city of the Macon-Warner Robins, GA combined statistical area, is now Macon-Bibb County, GA. The CBSA code remains as 31420.

In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25062), we proposed to implement these revisions, effective October 1, 2016, beginning with the FY 2017 wage indexes. In the FY 2017 IPPS/LTCH PPS proposed rule, we proposed to use these new definitions to calculate area IPPS wage indexes in a manner that is generally consistent with the CBSA-based methodologies finalized in the FY 2005 and the FY 2015 IPPS final rules. Implementation of these revisions for the IPPS/LTCH PPS was finalized in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56913). We believe that it is important for the OPPS to use the latest labor market area delineations available as soon as is reasonably possible in order to maintain a more accurate and up-to-date payment system that reflects the reality of population shifts and labor market conditions. Therefore, for purposes of the OPPS, in the CY 2017 OPPS/ASC proposed rule (81 FR 45632), we proposed to implement these revisions to the OMB statistical area delineations, effective January 1, 2017, beginning with the CY 2017 OPPS wage indexes. We invited public comments on these proposals for the CY 2017 OPPS wage indexes. We note that Tables 2 and 3 for the FY 2017 IPPS/LTCH PPS final rule and the County to CBSA Crosswalk File and Urban CBSAs and Constituent Counties for Acute Care Hospitals File posted on the CMS Web site reflect the CBSA changes. These two tables are available via the Internet on the CMS Web site.

In the CY 2017 OPPS/ASC proposed rule, we proposed to use the FY 2017 hospital IPPS post-reclassified wage index for urban and rural areas as the wage index for the OPPS to determine the wage adjustments for both the OPPS payment rate and the copayment standardized amount for CY 2017. Therefore, we stated that any adjustments that were proposed for the FY 2017 IPPS post-reclassified wage index would be reflected in the proposed CY 2017 OPPS wage index, including the revisions to the OMB labor market delineations discussed above, as set forth in OMB Bulletin No. Start Printed Page 7959915-01. (We refer readers to the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25062 through 25076) and final rule (81 FR 56912 through 56937), and the proposed and final FY 2017 hospital wage index files posted on the CMS Web site.)

Hospitals that are paid under the OPPS, but not under the IPPS, do not have an assigned hospital wage index under the IPPS. Therefore, for non-IPPS hospitals paid under the OPPS, it is our longstanding policy to assign the wage index that would be applicable if the hospital were paid under the IPPS, based on its geographic location and any applicable wage index adjustments. We proposed to continue this policy for CY 2017. The following is a brief summary of the major FY 2017 IPPS wage index policies and adjustments that we proposed to apply to these hospitals under the OPPS for CY 2017. We further refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56912 through 56937) for a detailed discussion of the final changes to the FY 2017 IPPS wage indexes.

It has been our longstanding policy to allow non-IPPS hospitals paid under the OPPS to qualify for the out-migration adjustment if they are located in a section 505 out-migration county (section 505 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)). Applying this adjustment is consistent with our policy of adopting IPPS wage index policies for hospitals paid under the OPPS. We note that, because non-IPPS hospitals cannot reclassify, they would be eligible for the out-migration wage adjustment if they are located in a section 505 out-migration county. This is the same out-migration adjustment policy that would apply if the hospital were paid under the IPPS. For CY 2017, we proposed to continue our policy of allowing non-IPPS hospitals paid under the OPPS to qualify for the out-migration adjustment if they are located in a section 505 out-migration county (section 505 of the MMA).

As stated earlier, in the FY 2015 IPPS/LTCH PPS final rule, we adopted the OMB labor market area delineations issued by OMB in OMB Bulletin No. 13-01 on February 28, 2013, based on standards published on June 28, 2010 (75 FR 37246 through 37252) and the 2010 Census data to delineate labor market areas for purposes of the IPPS wage index. For IPPS wage index purposes, for hospitals that were located in urban CBSAs in FY 2014 but were designated as rural under these revised OMB labor market area delineations, we generally assigned them the urban wage index value of the CBSA in which they were physically located for FY 2014 for a period of 3 fiscal years (79 FR 49957 through 49960). To be consistent, we applied the same policy to hospitals paid under the OPPS but not under the IPPS so that such hospitals will maintain the wage index of the CBSA in which they were physically located for FY 2014 for 3 calendar years (until December 31, 2017). Therefore, for the CY 2017 OPPS, consistent with the FY 2017 IPPS/LTCH PPS final rule (81 FR 56912 through 56937), this 3-year transition will continue for the third year in CY 2017.

In addition, for the FY 2017 IPPS, we extended the imputed floor policy (both the original methodology and alternative methodology) for another year, through September 30, 2017 (81 FR 56919 through 56922). For purposes of the CY 2017 OPPS, we proposed to apply the imputed floor policy to hospitals paid under the OPPS but not under the IPPS so long as the IPPS continues an imputed floor policy.

For CMHCs, for CY 2017, we proposed to continue to calculate the wage index by using the post-reclassification IPPS wage index based on the CBSA where the CMHC is located. As with OPPS hospitals and for the same reasons, for CMHCs previously located in urban CBSAs that were designated as rural under the revised OMB labor market area delineations in OMB Bulletin No. 13-01, we finalized a policy to maintain the urban wage index value of the CBSA in which they were physically located for CY 2014 for 3 calendar years (until December 31, 2017). Consistent with our current policy, the wage index that applies to CMHCs includes both the imputed floor adjustment and the rural floor adjustment, but does not include the out-migration adjustment because that adjustment only applies to hospitals.

We did not receive any public comments on our proposals as discussed above.

Therefore, for the reasons discussed above and in the CY 2017 OPPS/ASC proposed rule, we are finalizing our proposals, without modification, to:

  • Continue to use an OPPS labor-related share of 60 percent of the national OPPS payment for the CY 2017 OPPS;
  • Use the final FY 2017 IPPS post-reclassified wage index for urban and rural areas in its entirety, including the frontier State wage index floor, the rural floor, geographic reclassifications, and all other applicable wage index adjustments, as the final CY 2017 wage index for OPPS hospitals and CMHCs based on where the facility is located for both the OPPS payment rate and the copayment standardized amount, as discussed above and as set forth in the CY 2017 OPPS/ASC proposed rule (81 FR 45631 through 45633). (We refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56912 through 56937) and the final FY 2017 hospital wage index files posted on the CMS Web site.);
  • Implement the revisions to the OMB statistical area delineations set forth in OMB Bulletin No. 15-01 effective January 1, 2017, beginning with the CY 2017 OPPS wage indexes;
  • Implement the frontier State floor provisions in the same manner as we have since CY 2011 as discussed above;
  • For non-IPPS hospitals paid under the OPPS, continue to assign the wage index that would be applicable if the hospital were paid under the IPPS, based on its geographic location and any applicable wage index adjustments;
  • Apply the imputed floor policy to hospitals paid under the OPPS but not under the IPPS so long as the IPPS continues an imputed floor policy, which CMS has extended for an additional year under the IPPS in the FY 2017 IPPS/LTCH PPS final rule; and
  • Continue our policy of allowing non-IPPS hospitals paid under the OPPS to qualify for the out-migration adjustment if they are located in a section 505 out-migration county (section 505 of the MMA).

Table 2 associated with the FY 2017 IPPS/LTCH PPS final rule (available via the Internet on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html) identifies counties eligible for the out-migration adjustment and IPPS hospitals that will receive the adjustment for FY 2017. We are including the out-migration adjustment information from Table 2 associated with the FY 2017 IPPS/LTCH PPS final rule as Addendum L to this final rule with comment period with the addition of non-IPPS hospitals that will receive the section 505 out-migration adjustment under the CY 2017 OPPS. Addendum L is available via the Internet on the CMS Web site. We refer readers to the CMS Web site for the OPPS at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html. At this link, readers will find a link to the final FY 2017 IPPS wage index tables and Addendum L.

D. Statewide Average Default CCRs

In addition to using CCRs to estimate costs from charges on claims for ratesetting, CMS uses overall hospital-specific CCRs calculated from the Start Printed Page 79600hospital's most recent cost report to determine outlier payments, payments for pass-through devices, and monthly interim transitional corridor payments under the OPPS during the PPS year. MACs cannot calculate a CCR for some hospitals because there is no cost report available. For these hospitals, CMS uses the statewide average default CCRs to determine the payments mentioned above until a hospital's MAC is able to calculate the hospital's actual CCR from its most recently submitted Medicare cost report. These hospitals include, but are not limited to, hospitals that are new, hospitals that have not accepted assignment of an existing hospital's provider agreement, and hospitals that have not yet submitted a cost report. CMS also uses the statewide average default CCRs to determine payments for hospitals that appear to have a biased CCR (that is, the CCR falls outside the predetermined ceiling threshold for a valid CCR) or for hospitals in which the most recent cost report reflects an all-inclusive rate status (Medicare Claims Processing Manual (Pub. 100-04), Chapter 4, Section 10.11).

In the CY 2017 OPPS/ASC proposed rule (81 FR 45633), we proposed to update the default ratios for CY 2017 using the most recent cost report data. We discussed our policy for using default CCRs, including setting the ceiling threshold for a valid CCR, in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 through 68599) in the context of our adoption of an outlier reconciliation policy for cost reports beginning on or after January 1, 2009. For detail on our process for calculating the statewide average CCRs, we referred readers to the CY 2017 OPPS proposed rule Claims Accounting Narrative that was posted on the CMS Web site. Table 4 published in the proposed rule (81 FR 45634 through 45635) listed the proposed statewide average default CCRs for OPPS services furnished on or after January 1, 2017.

We did not receive any public comments on the proposed statewide average default CCR policy. Therefore, we are finalizing our proposal, without modification, to apply our standard methodology of calculating the statewide average default CCRs using the same hospital overall CCRs that we used to adjust charges to costs on claims data for setting the final CY 2017 OPPS relative payment weights. Table 4 below lists the statewide average default CCRs for OPPS services furnished on or after January 1, 2017 based on final rule data.

Table 4—CY 2017 Statewide Average CCRs

StateUrban/ruralCY 2017 default CCRPrevious default CCR (CY 2016 OPPS final rule)
ALASKARURAL0.4490.588
ALASKAURBAN0.2370.269
ALABAMARURAL0.1960.224
ALABAMAURBAN0.1580.168
ARKANSASRURAL0.1960.223
ARKANSASURBAN0.2050.218
ARIZONARURAL0.2380.246
ARIZONAURBAN0.1760.170
CALIFORNIARURAL0.1790.179
CALIFORNIAURBAN0.1880.190
COLORADORURAL0.3540.366
COLORADOURBAN0.2080.208
CONNECTICUTRURAL0.4020.366
CONNECTICUTURBAN0.2530.257
DISTRICT OF COLUMBIAURBAN0.2860.298
DELAWAREURBAN0.2880.308
FLORIDARURAL0.1690.170
FLORIDAURBAN0.1430.150
GEORGIARURAL0.2300.251
GEORGIAURBAN0.1960.199
HAWAIIRURAL0.3380.339
HAWAIIURBAN0.3190.313
IOWARURAL0.2910.305
IOWAURBAN0.2520.256
IDAHORURAL0.3410.337
IDAHOURBAN0.4010.459
ILLINOISRURAL0.2410.234
ILLINOISURBAN0.2090.208
INDIANARURAL0.2720.314
INDIANAURBAN0.2180.237
KANSASRURAL0.2690.287
KANSASURBAN0.1940.209
KENTUCKYRURAL0.1940.202
KENTUCKYURBAN0.1890.203
LOUISIANARURAL0.2170.256
LOUISIANAURBAN0.2010.202
MASSACHUSETTSRURAL0.3160.324
MASSACHUSETTSURBAN0.3450.330
MAINERURAL0.4250.470
MAINEURBAN0.4130.395
MARYLANDRURAL0.2640.277
MARYLANDURBAN0.2290.234
MICHIGANRURAL0.2950.317
MICHIGANURBAN0.3240.319
Start Printed Page 79601
MINNESOTARURAL0.3980.449
MINNESOTAURBAN0.3190.377
MISSOURIRURAL0.2220.238
MISSOURIURBAN0.2610.253
MISSISSIPPIRURAL0.2240.235
MISSISSIPPIURBAN0.1670.169
MONTANARURAL0.4500.480
MONTANAURBAN0.3680.403
NORTH CAROLINARURAL0.2160.229
NORTH CAROLINAURBAN0.2230.235
NORTH DAKOTARURAL0.4110.443
NORTH DAKOTAURBAN0.3340.355
NEBRASKARURAL0.2940.283
NEBRASKAURBAN0.2380.238
NEW HAMPSHIRERURAL0.3200.306
NEW HAMPSHIREURBAN0.2790.306
NEW JERSEYURBAN0.1950.194
NEW MEXICORURAL0.2250.280
NEW MEXICOURBAN0.2800.290
NEVADARURAL0.1960.219
NEVADAURBAN0.1230.146
NEW YORKRURAL0.3090.311
NEW YORKURBAN0.2920.298
OHIORURAL0.2920.295
OHIOURBAN0.2070.212
OKLAHOMARURAL0.2310.255
OKLAHOMAURBAN0.1800.192
OREGONRURAL0.2800.265
OREGONURBAN0.3440.341
PENNSYLVANIARURAL0.2740.277
PENNSYLVANIAURBAN0.1790.195
PUERTO RICOURBAN0.5270.590
RHODE ISLANDURBAN0.2910.290
SOUTH CAROLINARURAL0.1850.188
SOUTH CAROLINAURBAN0.1900.197
SOUTH DAKOTARURAL0.3830.367
SOUTH DAKOTAURBAN0.2290.224
TENNESSEERURAL0.1810.198
TENNESSEEURBAN0.1800.177
TEXASRURAL0.2140.238
TEXASURBAN0.1770.179
UTAHRURAL0.3490.493
UTAHURBAN0.3150.325
VIRGINIARURAL0.1910.195
VIRGINIAURBAN0.2260.233
VERMONTRURAL0.4260.434
VERMONTURBAN0.3400.336
WASHINGTONRURAL0.2710.349
WASHINGTONURBAN0.2940.308
WISCONSINRURAL0.3540.317
WISCONSINURBAN0.2900.296
WEST VIRGINIARURAL0.2660.276
WEST VIRGINIAURBAN0.2850.294
WYOMINGRURAL0.4290.433
WYOMINGURBAN0.3110.311

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

In the CY 2006 OPPS final rule with comment period (70 FR 68556), we finalized a payment increase for rural SCHs of 7.1 percent for all services and procedures paid under the OPPS, excluding drugs, biologicals, brachytherapy sources, and devices paid under the pass-through payment policy in accordance with section 1833(t)(13)(B) of the Act, as added by section 411 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). Section 1833(t)(13) of the Act provided the Secretary the authority to make an adjustment to OPPS payments for rural hospitals, effective January 1, 2006, if justified by a study of the difference in costs by APC between hospitals in rural areas and hospitals in urban areas. Our analysis showed a difference in costs for rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a payment adjustment for rural SCHs of 7.1 percent for all services and procedures paid under the OPPS, excluding separately Start Printed Page 79602payable drugs and biologicals, brachytherapy sources, and devices paid under the pass-through payment policy, in accordance with section 1833(t)(13)(B) of the Act.

In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 and 68227), for purposes of receiving this rural adjustment, we revised § 419.43(g) of the regulations to clarify that EACHs also are eligible to receive the rural SCH adjustment, assuming these entities otherwise meet the rural adjustment criteria. Currently, two hospitals are classified as EACHs, and as of CY 1998, under section 4201(c) of Public Law 105-33, a hospital can no longer become newly classified as an EACH.

This adjustment for rural SCHs is budget neutral and applied before calculating outlier payments and copayments. We stated in the CY 2006 OPPS final rule with comment period (70 FR 68560) that we would not reestablish the adjustment amount on an annual basis, but we may review the adjustment in the future and, if appropriate, would revise the adjustment. We provided the same 7.1 percent adjustment to rural SCHs, including EACHs, again in CYs 2008 through 2016. Further, in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68590), we updated the regulations at § 419.43(g)(4) to specify, in general terms, that items paid at charges adjusted to costs by application of a hospital-specific CCR are excluded from the 7.1 percent payment adjustment.

In the CY 2017 OPPS/ASC proposed rule (81 FR 45635), for the CY 2017 OPPS, we proposed to continue our policy of a 7.1 percent payment adjustment that is done in a budget neutral manner for rural SCHs, including EACHs, for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, devices paid under the pass-through payment policy, and items paid at charges reduced to costs (80 FR 39244).

Comment: Commenters supported the proposed payment adjustment for rural SCHs and EACHs, and stated that this adjustment would support access to care in rural areas.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing the proposal for CY 2017 to continue our policy of a 7.1 percent payment adjustment that is done in a budget neutral manner for rural SCHs, including EACHs, for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, devices paid under the pass-through payment policy, and items paid at charges reduced to costs.

F. Payment Adjustment for Certain Cancer Hospitals for CY 2017

1. Background

Since the inception of the OPPS, which was authorized by the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid the 11 hospitals that meet the criteria for cancer hospitals identified in section 1886(d)(1)(B)(v) of the Act under the OPPS for covered outpatient hospital services. These cancer hospitals are exempted from payment under the IPPS. With the Medicare, Medicaid and SCHIP Balanced Budget Refinement Act of 1999 (Pub. L. 106-113), Congress established section 1833(t)(7) of the Act, “Transitional Adjustment to Limit Decline in Payment,” to determine OPPS payments to cancer and children's hospitals based on their pre-BBA payment amount (often referred to as “held harmless”).

As required under section 1833(t)(7)(D)(ii) of the Act, a cancer hospital receives the full amount of the difference between payments for covered outpatient services under the OPPS and a “pre-BBA amount.” That is, cancer hospitals are permanently held harmless to their “pre-BBA amount,” and they receive transitional outpatient payments (TOPs) or hold harmless payments to ensure that they do not receive a payment that is lower in amount under the OPPS than the payment amount they would have received before implementation of the OPPS, as set forth in section 1833(t)(7)(F) of the Act. The “pre-BBA amount” is the product of the hospital's reasonable costs for covered outpatient services occurring in the current year and the base payment-to-cost ratio (PCR) for the hospital defined in section 1833(t)(7)(F)(ii) of the Act. The “pre-BBA amount” and the determination of the base PCR are defined at 42 CFR 419.70(f). TOPs are calculated on Worksheet E, Part B, of the Hospital Cost Report or the Hospital Health Care Complex Cost Report (Form CMS-2552-96 or Form CMS-2552-10, respectively) as applicable each year. Section 1833(t)(7)(I) of the Act exempts TOPs from budget neutrality calculations.

Section 3138 of the Affordable Care Act amended section 1833(t) of the Act by adding a new paragraph (18), which instructs the Secretary to conduct a study to determine if, under the OPPS, outpatient costs incurred by cancer hospitals described in section 1886(d)(1)(B)(v) of the Act with respect to APC groups exceed outpatient costs incurred by other hospitals furnishing services under section 1833(t) of the Act, as determined appropriate by the Secretary. Section 1833(t)(18)(A) of the Act requires the Secretary to take into consideration the cost of drugs and biologicals incurred by cancer hospitals and other hospitals. Section 1833(t)(18)(B) of the Act provides that, if the Secretary determines that cancer hospitals' costs, the Secretary shall provide an appropriate adjustment under section 1833(t)(2)(E) of the Act to reflect these higher costs. In 2011, after conducting the study required by section 1833(t)(18)(A) of the Act, we determined that outpatient costs incurred by the 11 specified cancer hospitals were greater than the costs incurred by other OPPS hospitals. For a complete discussion regarding the cancer hospital cost study, we refer readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74200 through 74201).

Based on these findings, we finalized a policy to provide a payment adjustment to the 11 specified cancer hospitals that reflects their higher outpatient costs as discussed in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74202 through 74206). Specifically, we adopted a policy to provide additional payments to the cancer hospitals so that each cancer hospital's final PCR for services provided in a given calendar year is equal to the weighted average PCR (which we refer to as the “target PCR”) for other hospitals paid under the OPPS. The target PCR is set in advance of the calendar year and is calculated using the most recent submitted or settled cost report data that are available at the time of final rulemaking for the calendar year. The amount of the payment adjustment is made on an aggregate basis at cost report settlement. We note that the changes made by section 1833(t)(18) of the Act do not affect the existing statutory provisions that provide for TOPs for cancer hospitals. The TOPs are assessed as usual after all payments, including the cancer hospital payment adjustment, have been made for a cost reporting period. For CYs 2012 and 2013, the target PCR for purposes of the cancer hospital payment adjustment was 0.91. For CY 2014, the target PCR for purposes of the cancer hospital payment adjustment was 0.89. For CY 2015, the target PCR was 0.90. For CY 2016, the target PCR was 0.92, as discussed in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70362 through 70363).Start Printed Page 79603

b. Proposed and Finalized Policy for CY 2017

In the CY 2017 OPPS/ASC proposed rule (81 FR 45636), for CY 2017, we proposed to continue our policy to provide additional payments to the 11 specified cancer hospitals so that each cancer hospital's final PCR is equal to the weighted average PCR (or “target PCR”) for the other OPPS hospitals using the most recent submitted or settled cost report data that are available at the time of the development of the proposed rule. To calculate the proposed CY 2017 target PCR, we used the same extract of cost report data from HCRIS, as discussed in section II.A. of the proposed rule, used to estimate costs for the CY 2017 OPPS. Using these cost report data, we included data from Worksheet E, Part B, for each hospital, using data from each hospital's most recent cost report, whether as submitted or settled.

We then limited the dataset to the hospitals with CY 2015 claims data that we used to model the impact of the proposed CY 2017 APC relative payment weights (3,716 hospitals) because it is appropriate to use the same set of hospitals that we are using to calibrate the modeled CY 2017 OPPS. The cost report data for the hospitals in this dataset were from cost report periods with fiscal year ends ranging from 2012 to 2015. We then removed the cost report data of the 50 hospitals located in Puerto Rico from our dataset because we do not believe that their cost structure reflects the costs of most hospitals paid under the OPPS and, therefore, their inclusion may bias the calculation of hospital-weighted statistics. We also removed the cost report data of 14 hospitals because these hospitals had cost report data that were not complete (missing aggregate OPPS payments, missing aggregate cost data, or missing both), so that all cost reports in the study would have both the payment and cost data necessary to calculate a PCR for each hospital, leading to a proposed analytic file of 3,652 hospitals with cost report data.

Using this smaller dataset of cost report data, we estimated that, on average, the OPPS payments to other hospitals furnishing services under the OPPS were approximately 92 percent of reasonable cost (weighted average PCR of 0.92). Therefore, we proposed that the payment amount associated with the cancer hospital payment adjustment to be determined at cost report settlement would be the additional payment needed to result in a proposed target PCR equal to 0.92 for each cancer hospital. Table 5 of the proposed rule indicated the proposed estimated percentage increase in OPPS payments to each cancer hospital for CY 2017 due to the cancer hospital payment adjustment policy.

Comment: Several commenters supported the proposed cancer hospital payment adjustment for CY 2017.

Response: We appreciate the commenters' support.

After consideration of the public comments we received, we are finalizing our cancer hospital payment adjustment methodology as proposed. For this final rule with comment period, we are using the most recent cost report data through June 30, 2016 to update the adjustment. This update yields a target PCR of 0.91. We limited the dataset to the hospitals with CY 2015 claims data that we used to model the impact of the CY 2017 APC relative payment weights (3,744 hospitals) because it is appropriate to use the same set of hospitals that we are using to calibrate the modeled CY 2017 OPPS. The cost report data for the hospitals in this dataset were from cost report periods with fiscal year ends ranging from 2012 to 2016. We then removed the cost report data of the 49 hospitals located in Puerto Rico from our dataset because we do not believe that their cost structure reflects the costs of most hospitals paid under the OPPS and, therefore, their inclusion may bias the calculation of hospital-weighted statistics. We also removed the cost report data of 13 hospitals because these hospitals had cost report data that were not complete (missing aggregate OPPS payments, missing aggregate cost data, or missing both), so that all cost reports in the study would have both the payment and cost data necessary to calculate a PCR for each hospital, leading to a proposed analytic file of 3,682 hospitals with cost report data.

Using this smaller dataset of cost report data, we estimated that, on average, the OPPS payments to other hospitals furnishing services under the OPPS are approximately 91 percent of reasonable cost (weighted average PCR of 0.91). Therefore, we are finalizing that the payment amount associated with the cancer hospital payment adjustment to be determined at cost report settlement will be the additional payment needed to result in a PCR equal to 0.91 for each cancer hospital.

Table 5 below indicates the final estimated percentage increase in OPPS payments to each cancer hospital for CY 2017 due to the finalized cancer hospital payment adjustment policy. The actual amount of the CY 2017 cancer hospital payment adjustment for each cancer hospital will be determined at cost report settlement and will depend on each hospital's CY 2017 payments and costs. We note that the requirements contained in section 1833(t)(18) of the Act do not affect the existing statutory provisions that provide for TOPs for cancer hospitals. The TOPs will be assessed as usual after all payments, including the cancer hospital payment adjustment, have been made for a cost reporting period.

Table 5—Estimated CY 2017 Hospital-Specific Payment Adjustment for Cancer Hospitals To Be Provided At Cost Report Settlement

Provider No.Hospital nameEstimated percentage increase in OPPS payments for CY 2017 due to payment adjustment (%)
050146City of Hope Comprehensive Cancer Center25.8
050660USC Norris Cancer Hospital14.0
100079Sylvester Comprehensive Cancer Center32.4
100271H. Lee Moffitt Cancer Center & Research Institute27.3
220162Dana-Farber Cancer Institute49.8
330154Memorial Sloan-Kettering Cancer Center50.4
330354Roswell Park Cancer Institute30.0
360242James Cancer Hospital & Solove Research Institute37.9
390196Fox Chase Cancer Center16.6
450076M.D. Anderson Cancer Center52.3
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500138Seattle Cancer Care Alliance58.7

G. Hospital Outpatient Outlier Payments

1. Background

The OPPS provides outlier payments to hospitals to help mitigate the financial risk associated with high-cost and complex procedures, where a very costly service could present a hospital with significant financial loss. As explained in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66832 through 66834), we set our projected target for aggregate outlier payments at 1.0 percent of the estimated aggregate total payments under the OPPS for the prospective year. Outlier payments are provided on a service-by-service basis when the cost of a service exceeds the APC payment amount multiplier threshold (the APC payment amount multiplied by a certain amount) as well as the APC payment amount plus a fixed-dollar amount threshold (the APC payment plus a certain amount of dollars). In CY 2016, the outlier threshold was met when the hospital's cost of furnishing a service exceeded 1.75 times (the multiplier threshold) the APC payment amount and exceeded the APC payment amount plus $3,250 (the fixed-dollar amount threshold) (80 FR 70365). If the cost of a service exceeds both the multiplier threshold and the fixed-dollar threshold, the outlier payment is calculated as 50 percent of the amount by which the cost of furnishing the service exceeds 1.75 times the APC payment amount. Beginning with CY 2009 payments, outlier payments are subject to a reconciliation process similar to the IPPS outlier reconciliation process for cost reports, as discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 through 68599).

It has been our policy to report the actual amount of outlier payments as a percent of total spending in the claims being used to model the OPPS. In the CY 2017 OPPS/ASC proposed rule (81 FR 45637), we indicated that our estimate of total outlier payments as a percent of total CY 2015 OPPS payment, using CY 2015 claims available for the proposed rule and the revised OPPS expenditure estimate for the FY 2016 President's Budget, was approximately 1.0 percent of the total aggregated OPPS payments. For CY 2015, we continue to estimate that we paid the outlier target of 1.0 percent of total aggregated OPPS payments.

As stated in the proposed rule, using CY 2015 claims data and CY 2016 payment rates, we estimated that the aggregate outlier payments for CY 2016 would be approximately 1.0 percent of the total CY 2016 OPPS payments. Using an updated claims dataset and OPPS ancillary CCRs, we estimate that we paid approximately 0.96 percent of the total CY 2016 OPPS payments, in OPPS outliers. We provided estimated CY 2017 outlier payments for hospitals and CMHCs with claims included in the claims data that we used to model impacts in the Hospital-Specific Impacts—Provider-Specific Data file on the CMS Web site at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html.

2. Outlier Calculation for CY 2017

In the CY 2017 OPPS/ASC proposed rule (81 FR 45637), for CY 2017, we proposed to continue our policy of estimating outlier payments to be 1.0 percent of the estimated aggregate total payments under the OPPS. We proposed that a portion of that 1.0 percent, an amount equal to less than 0.01 percent of outlier payments (or 0.0001 percent of total OPPS payments) would be allocated to CMHCs for PHP outlier payments. This is the amount of estimated outlier payments that would result from the proposed CMHC outlier threshold as a proportion of total estimated OPPS outlier payments. As discussed in section VIII.C. of the proposed rule and this final rule with comment period, we proposed to continue our longstanding policy that if a CMHC's cost for partial hospitalization services, paid under proposed APC 5853 (Partial Hospitalization for CMHCs), exceeds 3.40 times the payment rate for proposed APC 5853, the outlier payment would be calculated as 50 percent of the amount by which the cost exceeds 3.40 times the proposed APC 5853 payment rate. For further discussion of CMHC outlier payments, we refer readers to section VIII.D. of the proposed rule and this final rule with comment period.

To ensure that the estimated CY 2017 aggregate outlier payments would equal 1.0 percent of estimated aggregate total payments under the OPPS, we proposed that the hospital outlier threshold be set so that outlier payments would be triggered when a hospital's cost of furnishing a service exceeds 1.75 times the APC payment amount and exceeds the APC payment amount plus $3,825.

We calculated the proposed fixed-dollar threshold of $3,825 using the standard methodology most recently used for CY 2016 (80 FR 70364 through 70365). For purposes of estimating outlier payments for the proposed rule, we used the hospital-specific overall ancillary CCRs available in the April 2016 update to the Outpatient Provider-Specific File (OPSF). The OPSF contains provider-specific data, such as the most current CCRs, which are maintained by the MACs and used by the OPPS Pricer to pay claims. The claims that we use to model each OPPS update lag by 2 years.

In order to estimate the CY 2017 hospital outlier payments for the proposed rule, we inflated the charges on the CY 2015 claims using the same inflation factor of 1.0898 that we used to estimate the IPPS fixed-dollar outlier threshold for the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25270 through 25273). We used an inflation factor of 1.0440 to estimate CY 2016 charges from the CY 2015 charges reported on CY 2015 claims. The methodology for determining this charge inflation factor is discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57286). As we stated in the CY 2005 OPPS final rule with comment period (69 FR 65845), we believe that the use of these charge inflation factors are appropriate for the OPPS because, with the exception of the inpatient routine service cost centers, hospitals use the same ancillary and outpatient cost centers to capture costs and charges for inpatient and outpatient services.Start Printed Page 79605

As noted in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68011), we are concerned that we could systematically overestimate the OPPS hospital outlier threshold if we did not apply a CCR inflation adjustment factor. Therefore, we proposed to apply the same CCR inflation adjustment factor that we proposed to apply for the FY 2017 IPPS outlier calculation to the CCRs used to simulate the proposed CY 2017 OPPS outlier payments to determine the fixed-dollar threshold. Specifically, for CY 2017, we proposed to apply an adjustment factor of 0.9696 to the CCRs that were in the April 2016 OPSF to trend them forward from CY 2016 to CY 2017. The methodology for calculating this proposed adjustment was discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25272).

To model hospital outlier payments for the proposed rule, we applied the overall CCRs from the April 2016 OPSF after adjustment (using the proposed CCR inflation adjustment factor of 0.9696 to approximate CY 2017 CCRs) to charges on CY 2015 claims that were adjusted (using the proposed charge inflation factor of 1.0898 to approximate CY 2017 charges). We simulated aggregated CY 2017 hospital outlier payments using these costs for several different fixed-dollar thresholds, holding the 1.75 multiplier threshold constant and assuming that outlier payments would continue to be made at 50 percent of the amount by which the cost of furnishing the service would exceed 1.75 times the APC payment amount, until the total outlier payments equaled 1.0 percent of aggregated estimated total CY 2017 OPPS payments. We estimated that a proposed fixed-dollar threshold of $3,825, combined with the proposed multiplier threshold of 1.75 times the APC payment rate, would allocate 1.0 percent of aggregated total OPPS payments to outlier payments. For CMHCs, we proposed that, if a CMHC's cost for partial hospitalization services, paid under APC 5853, exceeds 3.40 times the payment rate for APC 5853, the outlier payment would be calculated as 50 percent of the amount by which the cost exceeds 3.40 times the APC 5853 payment rate.

Section 1833(t)(17)(A) of the Act, which applies to hospitals as defined under section 1886(d)(1)(B) of the Act, requires that hospitals that fail to report data required for the quality measures selected by the Secretary, in the form and manner required by the Secretary under section 1833(t)(17)(B) of the Act, incur a 2.0 percentage point reduction to their OPD fee schedule increase factor; that is, the annual payment update factor. The application of a reduced OPD fee schedule increase factor results in reduced national unadjusted payment rates that will apply to certain outpatient items and services furnished by hospitals that are required to report outpatient quality data and that fail to meet the Hospital OQR Program requirements. For hospitals that fail to meet the Hospital OQR Program requirements, we proposed to continue the policy that we implemented in CY 2010 that the hospitals' costs will be compared to the reduced payments for purposes of outlier eligibility and payment calculation. For more information on the Hospital OQR Program, we refer readers to section XIII. of this final rule with comment period.

Comment: One commenter suggested that the OPPS outlier fixed-dollar threshold of $3,825 was too high for CMS to pay the target aggregate outlier payment amount of 1.0 percent of the estimated aggregate total payments under the OPPS for the prospective year. The commenter suggested that CMS reduce the OPPS outlier threshold to compensate for the difference between the proposed and final fixed-dollar thresholds for outlier payments under the IPPS.

Response: As indicated earlier, we introduced a fixed-dollar threshold in order to better target outlier payments to those high-cost and complex procedures where a very costly service could present a hospital with significant financial loss. We maintain the target outlier percentage of 1.0 percent of estimated aggregate total payment under the OPPS and have a fixed-dollar threshold so that OPPS outlier payments are made only when the hospital would experience a significant loss for furnishing a particular service. The methodology we use to calculate the fixed-dollar threshold for the prospective payment year factors is based on several data inputs that may change from prior payment years. For instance, updated hospital CCR data and changes to the OPPS payment methodology influence projected outlier payments in the prospective year. For this final rule with comment period, we used the same methodology for calculating the outlier fixed-dollar threshold that we used for the proposed rule but used updated data. We do not believe that incorporating the percentage difference between the proposed and final fixed-dollar loss thresholds under the IPPS would improve our methodology to meet our target outlier payment percentage of 1.0 percent.

After consideration of the public comments we received, we are finalizing our proposal to continue our policy of estimating outlier payments to be 1.0 percent of the estimated aggregate total payments under the OPPS and to use our established methodology to set the OPPS outlier fixed-dollar loss threshold for CY 2017.

3. Final Outlier Calculation

Consistent with historical practice, we used updated data for this final rule with comment period for outlier calculations. For CY 2017, we are applying the overall CCRs from the July 2016 OPSF file after adjustment (using the CCR inflation adjustment factor of 0.9688 to approximate CY 2017 CCRs) to charges on CY 2015 claims that were adjusted (using the charge inflation factor of 1.0984 to approximate CY 2017 charges). These are the same CCR adjustment and charge inflation factors that were used to set the IPPS fixed-dollar thresholds for the FY 2017 IPPS/LTCH PPS final rule (81 FR 57286). We simulated aggregated CY 2017 hospital outlier payments using these costs for several different fixed-dollar thresholds, holding the 1.75 multiple threshold constant and assuming that outlier payments will continue to be made at 50 percent of the amount by which the cost of furnishing the service would exceed 1.75 times the APC payment amount, until the total outlier payments equaled 1.0 percent of aggregated estimated total CY 2017 OPPS payments. We estimated that a fixed-dollar threshold of $3,825, combined with the multiple threshold of 1.75 times the APC payment rate, will allocate 1.0 percent of aggregated total OPPS payments to outlier payments. For CMHCs, if a CMHC's cost for partial hospitalization services, paid under APC 5853 exceeds 3.40 times the payment rate, the outlier payment will be calculated as 50 percent of the amount by which the cost exceeds 3.40 times APC 5853.

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

The basic methodology for determining prospective payment rates for HOPD services under the OPPS is set forth in existing regulations at 42 CFR part 419, subparts C and D. For this CY 2017 OPPS/ASC final rule with comment period, the payment rate for most services and procedures for which payment is made under the OPPS is the product of the conversion factor calculated in accordance with section II.B. of this final rule with comment period and the relative payment weight determined under section II.A. of this Start Printed Page 79606final rule with comment period. Therefore, the national unadjusted payment rate for most APCs contained in Addendum A to this final rule with comment period (which is available via the Internet on the CMS Web site) and for most HCPCS codes to which separate payment under the OPPS has been assigned in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site) was calculated by multiplying the CY 2017 scaled weight for the APC by the CY 2017 conversion factor.

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

In the CY 2017 OPPS/ASC proposed rule (81 FR 45638), we demonstrated the steps on how to determine the APC payments that will be made in a calendar year under the OPPS to a hospital that fulfills the Hospital OQR Program requirements and to a hospital that fails to meet the Hospital OQR Program requirements for a service that has any of the following status indicator assignments: “J1,” “J2,” “P,” “Q1,” “Q2,” “Q3,” “Q4,” “R,” “S,” “T,” “U,” or “V” (as defined in Addendum D1 to the proposed rule, which is available via the Internet on the CMS Web site), in a circumstance in which the multiple procedure discount does not apply, the procedure is not bilateral, and conditionally packaged services (status indicator of “Q1” and “Q2”) qualify for separate payment. We noted that, although blood and blood products with status indicator “R” and brachytherapy sources with status indicator “U” are not subject to wage adjustment, they are subject to reduced payments when a hospital fails to meet the Hospital OQR Program requirements.

We did not receive any public comments on these steps under the methodology that we included in the proposed rule to determine the APC payments for CY 2017. Therefore, we are using the steps in the methodology specified below, as we proposed, to demonstrate the calculation of the final CY 2017 OPPS payments using the same parameters.

Individual providers interested in calculating the payment amount that they will receive for a specific service from the national unadjusted payment rates presented in Addenda A and B to this final rule with comment period (which are available via the Internet on the CMS Web site) should follow the formulas presented in the following steps. For purposes of the payment calculations below, we refer to the national unadjusted payment rate for hospitals that meet the requirements of the Hospital OQR Program as the “full” national unadjusted payment rate. We refer to the national unadjusted payment rate for hospitals that fail to meet the requirements of the Hospital OQR Program as the “reduced” national unadjusted payment rate. The reduced national unadjusted payment rate is calculated by multiplying the reporting ratio of 0.980 times the “full” national unadjusted payment rate. The national unadjusted payment rate used in the calculations below is either the full national unadjusted payment rate or the reduced national unadjusted payment rate, depending on whether the hospital met its Hospital OQR Program requirements in order to receive the full CY 2017 OPPS fee schedule increase factor.

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

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

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

X = .60 * (national unadjusted payment rate).

Step 2. Determine the wage index area in which the hospital is located and identify the wage index level that applies to the specific hospital. We note that, under the CY 2017 OPPS policy for continuing to use the OMB labor market area delineations based on the 2010 Decennial Census data for the wage indexes used under the IPPS, a hold harmless policy for the wage index may apply, as discussed in section II.C. of this final rule with comment period. The wage index values assigned to each area reflect the geographic statistical areas (which are based upon OMB standards) to which hospitals are assigned for FY 2017 under the IPPS, reclassifications through the MGCRB, section 1886(d)(8)(B) “Lugar” hospitals, reclassifications under section 1886(d)(8)(E) of the Act, as defined in § 412.103 of the regulations, and hospitals designated as urban under section 601(g) of Public Law 98-21. For further discussion of the changes to the FY 2017 IPPS wage indexes, as applied to the CY 2017 OPPS, we refer readers to section II.C. of this final rule with comment period. As we proposed, we are continuing to apply a wage index floor of 1.00 to frontier States, in accordance with section 10324 of the Affordable Care Act of 2010.

Step 3. Adjust the wage index of hospitals located in certain qualifying counties that have a relatively high percentage of hospital employees who reside in the county, but who work in a different county with a higher wage index, in accordance with section 505 of Public Law 108-173. Addendum L to this final rule with comment period (which is available via the Internet on the CMS Web site) contains the qualifying counties and the associated wage index increase developed for the FY 2017 IPPS, which are listed in Table 2 in the FY 2017 IPPS/LTCH PPS final rule and correction notice tables and available via the Internet on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html. This step is to be followed only if the hospital is not reclassified or redesignated under section 1886(d)(8) or section 1886(d)(10) of the Act.

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

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

Start Printed Page 79607

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

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

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

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

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

Y = .40 * (national unadjusted payment rate).

Adjusted Medicare Payment = Y + Xa.

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

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

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

We are providing examples below of the calculation of both the full and reduced national unadjusted payment rates that will apply to certain outpatient items and services performed by hospitals that meet and that fail to meet the Hospital OQR Program requirements, using the steps outlined above. For purposes of this example, we used a provider that is located in Brooklyn, New York that is assigned to CBSA 35614. This provider bills one service that is assigned to APC 5071 (Level 1 Excision/Biopsy/Incision and Drainage). The CY 2017 full national unadjusted payment rate for APC 5071 is approximately $538.88. The reduced national unadjusted payment rate for APC 5071 for a hospital that fails to meet the Hospital OQR Program requirements is approximately $528.10. This reduced rate is calculated by multiplying the reporting ratio of 0.980 by the full unadjusted payment rate for APC 5071.

The FY 2017 wage index for a provider located in CBSA 35614 in New York is 1.2936. The labor-related portion of the full national unadjusted payment is approximately $418.26 (.60 * $538.88 * 1.2936). The labor-related portion of the reduced national unadjusted payment is approximately $409.89 (.60 * $528.10 * 1.2936). The nonlabor-related portion of the full national unadjusted payment is approximately $215.55 (.40 * $538.88). The nonlabor-related portion of the reduced national unadjusted payment is approximately $211.24 (.40 * $528.10). The sum of the labor-related and nonlabor-related portions of the full national adjusted payment is approximately $633.81 ($418.26 + $215.55). The sum of the portions of the reduced national adjusted payment is approximately $621.13 ($409.89 + $211.24).

I. Beneficiary Copayments

1. Background

Section 1833(t)(3)(B) of the Act requires the Secretary to set rules for determining the unadjusted copayment amounts to be paid by beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of the Act specifies that the Secretary must reduce the national unadjusted copayment amount for a covered OPD service (or group of such services) furnished in a year in a manner so that the effective copayment rate (determined on a national unadjusted basis) for that service in the year does not exceed a specified percentage. As specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective copayment rate for a covered OPD service paid under the OPPS in CY 2006, and in calendar years thereafter, shall not exceed 40 percent of the APC payment rate. Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered OPD service (or group of such services) furnished in a year, the national unadjusted copayment amount cannot be less than 20 percent of the OPD fee schedule amount. However, section 1833(t)(8)(C)(i) of the Act limits the amount of beneficiary copayment that may be collected for a procedure performed in a year to the amount of the inpatient hospital deductible for that year.

Section 4104 of the Affordable Care Act eliminated the Medicare Part B coinsurance for preventive services furnished on and after January 1, 2011, that meet certain requirements, including flexible sigmoidoscopies and screening colonoscopies, and waived the Part B deductible for screening colonoscopies that become diagnostic during the procedure. Our discussion of the changes made by the Affordable Care Act with regard to copayments for preventive services furnished on and after January 1, 2011, may be found in section XII.B. of the CY 2011 OPPS/ASC final rule with comment period (75 FR 72013).

2. OPPS Copayment Policy

In the CY 2017 OPPS/ASC proposed rule (81 FR 45640), for CY 2017, we proposed to determine copayment amounts for new and revised APCs using the same methodology that we implemented beginning in CY 2004. (We refer readers to the November 7, 2003 OPPS final rule with comment period (68 FR 63458).) In addition, we proposed to use the same standard rounding principles that we have historically used in instances where the application of our standard copayment methodology would result in a copayment amount that is less than 20 percent and cannot be rounded, under standard rounding principles, to 20 percent. (We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66687) in which we discuss our rationale for applying these rounding principles.) We included the proposed national unadjusted copayment amounts for services payable under the OPPS that would be effective January 1, 2017, in Addenda A and B to the proposed rule (which are available via the Internet on the CMS Web site).

As discussed in section XIII.E. of the proposed and this final rule with comment period, for CY 2017, the Medicare beneficiary's minimum unadjusted copayment and national unadjusted copayment for a service to which a reduced national unadjusted payment rate applies will equal the product of the reporting ratio and the national unadjusted copayment, or the product of the reporting ratio and the minimum unadjusted copayment, respectively, for the service.

We note that OPPS copayments may increase or decrease each year based on changes in the calculated APC payment rates due to updated cost report and claims data, and any changes to the OPPS cost modeling process. However, as described in the CY 2004 OPPS final rule with comment period, the development of the copayment methodology generally moves beneficiary copayments closer to 20 percent of OPPS APC payments (68 FR 63458 through 63459).

In the CY 2004 OPPS final rule with comment period (68 FR 63459), we adopted a new methodology to calculate unadjusted copayment amounts in situations including reorganizing APCs, and we finalized the following rules to determine copayment amounts in CY 2004 and subsequent years.Start Printed Page 79608

  • When an APC group consists solely of HCPCS codes that were not paid under the OPPS the prior year because they were packaged or excluded or are new codes, the unadjusted copayment amount would be 20 percent of the APC payment rate.
  • If a new APC that did not exist during the prior year is created and consists of HCPCS codes previously assigned to other APCs, the copayment amount is calculated as the product of the APC payment rate and the lowest coinsurance percentage of the codes comprising the new APC.
  • If no codes are added to or removed from an APC and, after recalibration of its relative payment weight, the new payment rate is equal to or greater than the prior year's rate, the copayment amount remains constant (unless the resulting coinsurance percentage is less than 20 percent).
  • If no codes are added to or removed from an APC and, after recalibration of its relative payment weight, the new payment rate is less than the prior year's rate, the copayment amount is calculated as the product of the new payment rate and the prior year's coinsurance percentage.
  • If HCPCS codes are added to or deleted from an APC and, after recalibrating its relative payment weight, holding its unadjusted copayment amount constant results in a decrease in the coinsurance percentage for the reconfigured APC, the copayment amount would not change (unless retaining the copayment amount would result in a coinsurance rate less than 20 percent).
  • If HCPCS codes are added to an APC and, after recalibrating its relative payment weight, holding its unadjusted copayment amount constant results in an increase in the coinsurance percentage for the reconfigured APC, the copayment amount would be calculated as the product of the payment rate of the reconfigured APC and the lowest coinsurance percentage of the codes being added to the reconfigured APC.

We noted in the CY 2004 OPPS final rule with comment period that we would seek to lower the copayment percentage for a service in an APC from the prior year if the copayment percentage was greater than 20 percent. We noted that this principle was consistent with section 1833(t)(8)(C)(ii) of the Act, which accelerates the reduction in the national unadjusted coinsurance rate so that beneficiary liability will eventually equal 20 percent of the OPPS payment rate for all OPPS services to which a copayment applies, and with section 1833(t)(3)(B) of the Act, which is consistent with the Congressional goal of achieving a 20-percent copayment percentage when fully phased in and gives the Secretary the authority to set rules for determining copayment amounts for new services. We further noted that the use of this methodology would, in general, reduce the beneficiary coinsurance rate and copayment amount for APCs for which the payment rate changes as the result of the reconfiguration of APCs and/or recalibration of relative payment weights (68 FR 63459).

We did not receive any public comments on the copayment policy proposal. For the reasons set forth in this final rule with comment period, we are finalizing our proposed CY 2017 copayment policy without modification.

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

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

Step 1. Calculate the beneficiary payment percentage for the APC by dividing the APC's national unadjusted copayment by its payment rate. For example, using APC 5071, $107.78 is approximately 20 percent of the full national unadjusted payment rate of $538.88. For APCs with only a minimum unadjusted copayment in Addenda A and B to this final rule with comment period (which are available via the Internet on the CMS Web site), the beneficiary payment percentage is 20 percent.

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

B is the beneficiary payment percentage.

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

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

Step 3. Multiply the percentage calculated in Step 1 by the payment rate calculated in Step 2. The result is the wage-adjusted copayment amount for the APC. The formula below is a mathematical representation of Step 3 and applies the beneficiary payment percentage to the adjusted payment rate for a service calculated under section II.H. of this final rule with comment period, with and without the rural adjustment, to calculate the adjusted beneficiary copayment for a given service.

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

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

Step 4. For a hospital that failed to meet its Hospital OQR Program requirements, multiply the copayment calculated in Step 3 by the reporting ratio of 0.980.

The unadjusted copayments for services payable under the OPPS that will be effective January 1, 2017, are shown in Addenda A and B to this final rule with comment period (which are available via the Internet on the CMS Web site). We note that the national unadjusted payment rates and copayment rates shown in Addenda A and B to this final rule with comment period reflect the CY 2017 OPD fee schedule increase factor discussed in section II.B. of this final rule with comment period.

In addition, as noted above, section 1833(t)(8)(C)(i) of the Act limits the amount of beneficiary copayment that may be collected for a procedure performed in a year to the amount of the inpatient hospital deductible for that year.

III. OPPS Ambulatory Payment Classification (APC) Group Policies

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

CPT and Level II HCPCS codes are used to report procedures, services, items, and supplies under the hospital OPPS. Specifically, CMS recognizes the following codes on OPPS claims:

  • Category I CPT codes, which describe surgical procedures and medical services;
  • Category III CPT codes, which describe new and emerging technologies, services, and procedures; and
  • Level II HCPCS codes, which are used primarily to identify products, supplies, temporary procedures, and services not described by CPT codes.

CPT codes are established by the American Medical Association (AMA) and the Level II HCPCS codes are established by the CMS HCPCS Workgroup. These codes are updated and changed throughout the year. CPT and HCPCS code changes that affect the OPPS are published both through the annual rulemaking cycle and through Start Printed Page 79609the OPPS quarterly update Change Requests (CRs). CMS releases new Level II HCPCS codes to the public or recognizes the release of new CPT codes by the AMA and makes these codes effective (that is, the codes can be reported on Medicare claims) outside of the formal rulemaking process via OPPS quarterly update CRs. Based on our review, we assign the new CPT and Level II HCPCS codes to interim status indicator (SI) and APC assignments. These interim assignments are finalized in the OPPS/ASC final rules. This quarterly process offers hospitals access to codes that may more accurately describe items or services furnished and provides payment or more accurate payment for these items or services in a timelier manner than if we waited for the annual rulemaking process. We solicit public comments on these new codes and finalize our proposals related to these codes through our annual rulemaking process.

We note that, under the OPPS, the APC assignment determines the payment rate for an item, procedure, or service. For those items, procedures, or services not paid separately under the hospital OPPS, they are assigned to appropriate status indicators. Section XI. of this final rule with comment period provides a discussion of the various status indicators used under the OPPS. Certain payment status indicators provide separate payment while other payment status indicators do not.

In Table 6 below, we summarize our current process for updating codes through our OPPS quarterly update CRs, seeking public comments, and finalizing the treatment of these new codes under the OPPS.

Table 6—Comment Timeframe for New or Revised HCPCS Codes

OPPS quarterly update CRType of codeEffective dateComments soughtWhen finalized
April l, 2016Level II HCPCS CodesApril 1, 2016CY 2017 OPPS/ASC proposed ruleCY 2017 OPPS/ASC final rule with comment period.
July 1, 2016Level II HCPCS CodesJuly 1, 2016CY 2017 OPPS/ASC proposed ruleCY 2017 OPPS/ASC final rule with comment period.
Category I (certain vaccine codes) and III CPT codesJuly 1, 2016CY 2017 OPPS/ASC proposed ruleCY 2017 OPPS/ASC final rule with comment period.
October 1, 2016Level II HCPCS CodesOctober 1, 2016CY 2017 OPPS/ASC final rule with comment periodCY 2018 OPPS/ASC final rule with comment period.
January 1, 2017Level II HCPCS CodesJanuary 1, 2017CY 2017 OPPS/ASC final rule with comment periodCY 2018 OPPS/ASC final rule with comment period.
Category I and III CPT CodesJanuary 1, 2017CY 2017 OPPS/ASC proposed ruleCY 2017 OPPS/ASC final rule with comment period.

1. Treatment of New Level II HCPCS Codes Effective April 1, 2016 for Which We Solicited Public Comments in the CY 2017 OPPS/ASC Proposed Rule

Through the April 2016 OPPS quarterly update CR (Transmittal 3471, Change Request 9549, dated February 26, 2016) we recognized several new Level II HCPCS codes for separate payment under the OPPS. Effective April 1, 2016, we implemented 10 new HCPCS codes and also assigned them to appropriate interim OPPS status indicators and APCs. Specifically, as displayed in Table 7 of the CY 2017 OPPS/ASC proposed rule (81 FR 45642), we provided separate payment for HCPCS codes C9137, C9138, C9461, C9470, C9471, C9472, C9473, C9474, C9475, and J7503. We note that HCPCS code J7503 was initially assigned to OPPS status indicator “E” (Not paid by Medicare when submitted on outpatient claims (any outpatient bill type) when the code was established on January 1, 2016. However, we revised its OPPS status indicator from “E” to “G” (Pass-Through Drugs and Biologicals. Paid under OPPS; separate APC payment) effective April 1, 2016, when the drug associated with HCPCS code J7503 was approved for pass-through payment status under the hospital OPPS.

In the CY 2017 OPPS/ASC proposed rule, we solicited public comments on the proposed APC and status indicator assignments for the 10 HCPCS codes implemented on April 1, 2016. We indicated that the proposed payment rates for these codes, where applicable, could be found in Addendum B to the proposed rule (which is available via the Internet on the CMS Web site).

We did not receive any public comments on the proposed APC and status indicator assignments for the HCPCS codes implemented in April 2016. Therefore, we are finalizing the proposed APC assignments and status indicators for the new HCPCS codes that were implemented on April 1, 2016. The final APC and status indicator assignments are listed in Table 7 below.

We note that, for the CY 2017 update, the HCPCS Workgroup replaced the temporary drug HCPCS C-codes that were listed in Table 7 of the proposed rule with permanent HCPCS J-codes effective January 1, 2017. Because the replacement HCPCS J-codes describe the same drugs with the same dosage descriptors as their predecessor HCPCS C-codes, they will continue to receive pass-through payment status in CY 2017. Therefore, we are assigning the replacement HCPCS J-codes to the same APCs and status indicators as their predecessor HCPCS C-codes, as shown in Table 7 below. The final payment rates for these codes, where applicable, can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site).

Table 7—Final CY 2017 Status Indicator (SI) and APC Assignments for the New Level II HCPCS Codes That Were Implemented on April 1, 2016

CY 2016 HCPCS codeCY 2017 HCPCS codeCY 2017 long descriptorFinal CY 2017 SIFinal CY 2017 APC
C9137J7207Injection, factor viii, (antihemophilic factor, recombinant), PEGylated, 1 i.u.G1844
C9138J7209Injection, factor viii, (antihemophilic factor, recombinant), (Nuwiq), 1 i.u.G1846
C9461A9515Choline c-11, diagnostic, per study dose up to 20 millicuriesG9461
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C9470J1942Injection, aripiprazole lauroxil, 1 mgG9470
C9471J7322Hyaluronan or derivative, Hymovis, for intra-articular injection, 1 mgG9471
C9472J9325Injection, talimogene laherparepvec, per 1 million plaque forming unitsG9472
C9473J2182Injection, mepolizumab, 1 mgG9473
C9474J9205Injection, irinotecan liposome, 1 mgG9474
C9475J9295Injection, necitumumab, 1 mgG9475
J7503J7503Tacrolimus, extended release, (Envarsus XR), oral, 0.25 mgG1845

2. Treatment of New CPT and Level II HCPCS Codes Effective July 1, 2016 for Which We Solicited Public Comments in the CY 2017 OPPS/ASC Proposed Rule

Effective July 1, 2016, we implemented several new CPT and Level II HCPCS codes under the hospital OPPS. Through the July 2016 OPPS quarterly update CR (Transmittal 3523, Change Request 9658, dated May 13, 2016), we assigned nine new Category III CPT codes and nine Level II HCPCS codes that were made effective July 1, 2016, to interim OPPS status indicators and APCs. Specifically, as displayed in Table 8 of the CY 2017 OPPS/ASC proposed rule (81 FR 45643), we established interim OPPS status indicator and APC assignments for Category III CPT codes 0438T, 0440T, 0441T, 0442T, and 0443T, and Level II HCPCS codes C9476, C9477, C9478, C9479, C9480, Q5102, Q9981, Q9982, and Q9983. We noted that Category III CPT codes 0437T, 0439T, 0444T, and 0445T are assigned to OPPS status indicator “N” to indicate that the services described by the codes are packaged and their payment is included in the primary procedure codes reported with these codes.

Table 8 of the CY 2017 OPPS/ASC proposed rule listed the CPT and Level II HCPCS codes that were implemented on July 1, 2016, along with the proposed status indicators and proposed APC assignments, where applicable, for CY 2017. We solicited public comments on the proposed APC and status indicator assignments.

We received one comment related to the proposed APC assignment for Category III CPT codes 0440T, 0441T, and 0442T, which we address in section III.D.10. of this final rule with comment period. We did not receive any public comments on the proposed APC and status indicator assignments for the other 15 codes that were listed in Table 8 of the CY 2017 OPPS/ASC proposed rule. Therefore, in this final rule with comment period, we are adopting as final, without modification, the proposed APC and/or status indicator assignments for Category III CPT codes 0437T, 0438T, 0439T, 0444T, and 0445T and Level II HCPCS codes C9476, C9477, C9478, C9479, C9480, Q5102, Q9981, Q9982, and Q9983. However, we are modifying the OPPS status indicator for CPT code 0443T from “T” to “N” because this is an add-on code. Since January 1, 2014, payment for procedures described by add-on codes have been packaged under the hospital OPPS.

In addition, for the CY 2017 update, the HCPCS Workgroup replaced temporary HCPCS codes C9476, C9477, C9478, C9480, and Q9981 with permanent HCPCS J-codes effective January 1, 2017. Because the replacement HCPCS J-codes describe the same drugs with the same dosage descriptors as their predecessor HCPCS C-codes and Q-codes, they will continue to receive pass-through payment status in CY 2017. Consequently, we are assigning the replacement HCPCS J-codes to the same APCs and status indicators as their predecessor HCPCS C-codes and Q-codes, as shown in Table 8 below. Table 8 lists the CPT and Level II HCPCS codes that were implemented on July 1, 2016, along with the final status indicators and APC assignments for CY 2017. The final payment rates for these codes, where applicable, can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site).

Table 8—Final CY 2017 Status Indicators (SI) and APC Assignments for the New Category III CPT and Level II HCPCS Codes Implemented on July 1, 2016

CY 2016 CPT/HCPCS codeCY 2017 CPT/HCPCS codeCY 2017 long descriptorFinal CY 2017 SIFinal CY 2017 APC
C9476J9145Injection, daratumumab, 10 mgG9476
C9477J9176Injection, elotuzumab, 1 mgG9477
C9478J2840Injection, sebelipase alfa, 1 mgG9478
C9479J7342Instillation, ciprofloxacin otic suspension, 6 mgG9479
C9480J9352Injection, trabectedin, 0.1 mgG9480
Q5102Q5102Injection, Infliximab, Biosimilar, 10 mgE2N/A
Q9981J8670Rolapitant, oral, 1 mgK1761
Q9982 *Q9982Flutemetamol F18, diagnostic, per study dose, up to 5 millicuriesG9459
Q9983 **Q9983Florbetaben f18, diagnostic, per study dose, up to 8.1 millicuriesG9458
0437T0437TImplantation of non-biologic or synthetic implant (e.g., polypropylene) for fascial reinforcement of the abdominal wall (List separately in addition to primary procedure)NN/A
0438T0438T ***Transperineal placement of biodegradable material, peri-prostatic (via needle), single or multiple, includes image guidanceT5374
0439T0439TMyocardial contrast perfusion echocardiography; at rest or with stress, for assessment of myocardial ischemia or viability (List separately in addition to primary procedure)NN/A
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0440T0440TAblation, percutaneous, cryoablation, includes imaging guidance; upper extremity distal/peripheral nerveJ15432
0441T0441TAblation, percutaneous, cryoablation, includes imaging guidance; lower extremity distal/peripheral nerveJ15432
0442T0442TAblation, percutaneous, cryoablation, includes imaging guidance; nerve plexus or other truncal nerve (e.g., brachial plexus, pudendal nerve)J15432
0443T0443TReal time spectral analysis of prostate tissue by fluorescence spectroscopyNN/A
0444T0444TInitial placement of a drug-eluting ocular insert under one or more eyelids, including fitting, training, and insertion, unilateral or bilateralNN/A
0445T0445TSubsequent placement of a drug-eluting ocular insert under one or more eyelids, including re-training, and removal of existing insert, unilateral or bilateralNN/A
* HCPCS code C9459 (Flutemetamol f18, diagnostic, per study dose, up to 5 millicuries) was deleted June 30, 2016, and replaced with HCPCS code Q9982 effective July 1, 2016.
** HCPCS code C9458 (Florbetaben f18, diagnostic, per study dose, up to 8.1 millicuries) was deleted June 30, 2016, and replaced with HCPCS code Q9983 effective July 1, 2016.
*** HCPCS code C9743 (Injection/implantation of bulking or spacer material (any type) with or without image guidance (not to be used if a more specific code applies) was deleted June 30, 2016 and replaced with CPT code 0438T effective July 1, 2016.

3. Process for New Level II HCPCS Codes That Became Effective October 1, 2016 and New Level II HCPCS Codes That Will Be Effective January 1, 2017 for Which We Are Soliciting Public Comments in This CY 2017 OPPS/ASC Final Rule With Comment Period

As has been our practice in the past, we incorporate those new Level II HCPCS codes that are effective October 1 and January 1 in the final rule with comment period thereby updating the OPPS for the following calendar year. These codes are released to the public through the October and January OPPS quarterly update CRs and via the CMS HCPCS Web site (for Level II HCPCS codes). For CY 2017, we proposed to continue our established policy of assigning comment indicator “NI” to these codes to indicate that we are assigning them an interim payment status which is subject to public comment (81 FR 45643). Specifically, the status indicators and the APC assignments for codes flagged with comment indicator “NI” are open to public comment in this final rule with comment period, and we will respond to these public comments in the OPPS/ASC final rule with comment period for the next year's OPPS/ASC update. For CY 2017, we proposed to include in Addendum B to the CY 2017 OPPS/ASC final rule with comment period the following new HCPCS codes:

  • New Level II HCPCS codes effective October 1, 2016, that would be incorporated in the October 2016 OPPS quarterly update CR;
  • New Level II HCPCS codes effective January 1, 2017, that would be incorporated in the January 2017 OPPS quarterly update CR.

As stated above, the October 1, 2016 and January 1, 2017 codes are flagged with comment indicator “NI” in Addendum B to this CY 2017 OPPS/ASC final rule with comment period to indicate that we have assigned the codes an interim OPPS payment status for CY 2017. We are inviting public comments on the interim status indicator and APC assignments and payment rates for these codes, if applicable, that will be finalized in the CY 2018 OPPS/ASC final rule with comment period.

4. Treatment of New and Revised CY 2017 Category I and III CPT Codes That Will Be Effective January 1, 2017, for Which We Solicited Public Comments in the CY 2017 OPPS/ASC Proposed Rule

In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 through 66844), we finalized a revised process of assigning APC and status indicators for new and revised Category I and III CPT codes that would be effective January 1. Specifically, for the new/revised CPT codes that we receive in a timely manner from the AMA's CPT Editorial Panel, we finalized our proposal to include the codes that would be effective January 1 in the OPPS/ASC proposed rules, along with proposed APC and status indicator assignments for them, and to finalize the APC and status indicator assignments in the OPPS/ASC final rules beginning with the CY 2016 OPPS update. For those new/revised CPT codes that were received too late for inclusion in the OPPS/ASC proposed rule, we finalized our proposal to establish and use HCPCS G-codes that mirror the predecessor CPT codes and retain the current APC and status indicator assignments for a year until we can propose APC and status indicator assignments in the following year's rulemaking cycle. We noted that even if we find that we need to create HCPCS G-codes in place of certain CPT codes for the MPFS proposed rule, we do not anticipate that these HCPCS G codes will always be necessary for OPPS purposes. We will make every effort to include proposed APC and status indicator assignments for all new and revised CPT codes that the AMA makes publicly available in time for us to include them in the proposed rule, and to avoid establishing HCPCS G codes and the resulting delay in utilization of the most current CPT codes. In addition, we finalized our proposal to make interim APC and status indicator assignments for CPT codes that are not available in time for the proposed rule and that describe wholly new services (such as new technologies or new surgical procedures), solicit public comments, and finalize the specific APC and status indicator assignments for those codes in the following year's final rule.

For the CY 2017 OPPS update, we received the CY 2017 CPT codes that will be effective January 1, 2017, from the AMA in time for inclusion in the CY 2017 OPPS/ASC proposed rule. In the proposed rule (81 FR 45643 through 45644), we indicated that the new and revised CY 2017 Category I and III CPT codes could be found in OPPS Addendum B to the proposed rule and were assigned to new comment indicator “NP” to indicate that the code Start Printed Page 79612is new for the next calendar year or the code is an existing code with substantial revision to its code descriptor in the next calendar year as compared to current calendar year with a proposed APC assignment. We further stated that comments would be accepted on the proposed APC assignment and status indicator.

In addition, we reminded readers that the CPT code descriptors that appeared in OPPS Addendum B are short descriptors and do not accurately describe the complete procedure, service, or item described of the CPT code. Therefore, we included the 5-digit placeholder codes and their long descriptors in Addendum O to the proposed rule (which is available via the Internet on the CMS Web site) so that the public could adequately comment on our proposed APCs and status indicator assignments. The 5-digit placeholder codes were listed in Addendum O of the proposed rule, specifically under the column labeled “CY 2017 OPPS/ASC Proposed Rule 5-Digit Placeholder Code.” We also indicated that the final CPT code numbers would be included in this CY 2017 OPPS/ASC final rule with comment period. The final CPT code numbers, along with their corresponding 5-digit placeholder codes, can be found in Addendum O of this final rule with comment period.

We note that not every code listed in Addendum O of the proposed rule was subject to comment. For the new/revised Category I and III CPT codes, we requested public comments on only those codes that were assigned to comment indicator “NP.” We indicated that public comments would not be accepted for new Category I CPT laboratory codes that were not assigned to “NP” comment indicator in Addendum O to the proposed rule. We stated that comments to these codes must be submitted at the Clinical Laboratory Fee Schedule (CLFS) Public Meeting, which was scheduled for July 18, 2016.

We received public comments on several of the new CPT codes that were assigned to comment indicator “NP” in Addendum B of the CY 2017 OPPS/ASC proposed rule. We respond to these comments in section III.D. of this CY 2017 OPPS/ASC final rule with comment period.

The final status indicators, APC assignments, and payment rates for the new CPT codes that will be effective January 1, 2017, can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site).

B. OPPS Changes—Variations Within APCs

1. Background

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

We have packaged into the payment for each procedure or service within an APC group the costs associated with those items and services that are typically ancillary and supportive to a primary diagnostic or therapeutic modality and, in those cases, are an integral part of the primary service they support. Therefore, we do not make separate payment for these packaged items or services. In general, packaged items and services include, but are not limited to, the items and services listed in § 419.2(b) of the regulations. A further discussion of packaged services is included in section II.A.3. of this final rule with comment period.

Under the OPPS, we generally pay for covered hospital outpatient services on a rate-per-service basis, where the service may be reported with one or more HCPCS codes. Payment varies according to the APC group to which the independent service or combination of services is assigned. In the CY 2017 OPPS/ASC proposed rule (81 FR 45644), for CY 2017, we proposed that each APC relative payment weight represents the hospital cost of the services included in that APC, relative to the hospital cost of the services included in APC 5012 (Clinic Visits and Related Services). The APC relative payment weights are scaled to APC 5012 because it is the hospital clinic visit APC and clinic visits are among the most frequently furnished services in the hospital outpatient setting.

2. Application of the 2 Times Rule

Section 1833(t)(9)(A) of the Act requires the Secretary to review, not less often than annually, and revise the APC groups, the relative payment weights, and the wage and other adjustments described in paragraph (2) to take into account changes in medical practice, changes in technology, the addition of new services, new cost data, and other relevant information and factors. Section 1833(t)(9)(A) of the Act also requires the Secretary to consult with an expert outside advisory panel composed of an appropriate selection of representatives of providers to review (and advise the Secretary concerning) the clinical integrity of the APC groups and the relative payment weights. We note that the Panel recommendations for specific services for the CY 2017 OPPS and our responses to them are discussed in the relevant specific sections throughout this final rule with comment period.

In addition, section 1833(t)(2) of the Act provides that, subject to certain exceptions, the items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest cost for an item or service in the group is more than 2 times greater than the lowest cost for an item or service within the same group (referred to as the “2 times rule”). The statute authorizes the Secretary to make exceptions to the 2 times rule in unusual cases, such as low-volume items and services (but the Secretary may not make such an exception in the case of a drug or biological that has been designated as an orphan drug under section 526 of the Federal Food, Drug, and Cosmetic Act).

Therefore, in accordance with section 1833(t)(2) of the Act and § 419.31 of the regulations, we annually review the items and services within an APC group to determine if there are any APC violations of the 2 times rule and whether there are any appropriate revisions to APC assignments that may be necessary or exceptions to be made. In determining the APCs with a 2 times rule violation, we consider only those HCPCS codes that are significant based on the number of claims. We note that, for purposes of identifying significant procedure codes for examination under the 2 times rule, we consider procedure codes that have more than 1,000 single major claims or procedure codes that have both greater than 99 single major claims and contribute at least 2 percent Start Printed Page 79613of the single major claims used to establish the APC cost to be significant (75 FR 71832). This longstanding definition of when a procedure code is significant for purposes of the 2 times rule was selected because we believe that a subset of 1,000 claims (or less than 1,000 claims) is negligible within the set of approximately 100 million single procedure or single session claims we use for establishing costs. Similarly, a procedure code for which there are fewer than 99 single claims and which comprises less than 2 percent of the single major claims within an APC will have a negligible impact on the APC cost. In the CY 2017 OPPS/ASC proposed rule (81 FR 45644 through 45645), we proposed to make exceptions to this limit on the variation of costs within each APC group in unusual cases, such as low-volume items and services.

For the CY 2017 OPPS update, we identified the APCs with violations of the 2 times rule, and we proposed changes to the procedure codes assigned to these APCs in Addendum B to the CY 2017 OPPS/ASC proposed rule. We noted that Addendum B did not appear in the printed version of the Federal Register as part of the CY 2017 OPPS/ASC proposed rule. Rather, it was published and made available via the Internet on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html. In these cases, to eliminate a violation of the 2 times rule or to improve clinical and resource homogeneity, in the CY 2017 OPPS/ASC proposed rule (81 FR 45645), we proposed to reassign these procedure codes to new APCs that contain services that are similar with regard to both their clinical and resource characteristics. In many cases, the proposed procedure code reassignments and associated APC reconfigurations for CY 2017 included in the proposed rule are related to changes in costs of services that were observed in the CY 2015 claims data newly available for CY 2017 ratesetting. We also proposed changes to the status indicators for some procedure codes that were not specifically and separately discussed in the proposed rule. In these cases, we proposed to change the status indicators for these procedure codes because we believe that another status indicator would more accurately describe their payment status from an OPPS perspective based on the policies that we proposed for CY 2017. Addendum B to the CY 2017 OPPS/ASC proposed rule identified with a comment indicator “CH” those procedure codes for which we proposed a change to the APC assignment or status indicator, or both, that were initially assigned in the April 1, 2016 OPPS Addendum B Update (available via the Internet on the CMS Web site at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​Addendum-A-and-Addendum-B-Updates.html). In contrast, Addendum B to this final rule with comment period (available via the Internet on the CMS Web site) identifies with the “CH” comment indicator the final CY 2017 changes compared to the HCPCS codes' status as reflected in the October 2016 Addendum B update.

3. APC Exceptions to the 2 Times Rule

Taking into account the APC changes that we proposed for CY 2017, we reviewed all of the APCs to determine which APCs would not meet the requirements of the 2 times rule. We used the following criteria to evaluate whether to propose exceptions to the 2 times rule for affected APCs:

  • Resource homogeneity;
  • Clinical homogeneity;
  • Hospital outpatient setting utilization;
  • Frequency of service (volume); and
  • Opportunity for upcoding and code fragments.

Based on the CY 2015 claims data available for the CY 2017 proposed rule, we found 4 APCs with violations of the 2 times rule. We applied the criteria as described above to identify the APCs that we proposed to make exceptions for under the 2 times rule for CY 2017, and identified 4 APCs that met the criteria for an exception to the 2 times rule based on the CY 2015 claims data available for the proposed rule. For a detailed discussion of these criteria, we refer readers to the April 7, 2000 OPPS final rule with comment period (65 FR 18457 and 18458).

In addition, in the proposed rule, we noted that, for cases in which a recommendation by the Panel appears to result in or allow a violation of the 2 times rule, we may accept the Panel's recommendation because those recommendations are based on explicit consideration (that is, a review of the latest OPPS claims data and group discussion of the issue) of resource use, clinical homogeneity, site of service, and the quality of the claims data used to determine the APC payment rates.

Table 9 of the proposed rule listed the 4 APCs that we proposed to make exceptions for under the 2 times rule for CY 2017 based on the criteria cited above and claims data submitted between January 1, 2015, and December 31, 2015, and processed on or before December 31, 2015. We indicated that, for the final rule with comment period, we intend to use claims data for dates of service between January 1, 2015, and December 31, 2015, that were processed on or before June 30, 2016, and updated CCRs, if available.

Based on the updated final rule CY 2015 claims data, we found 7 APCs with violations of the 2 times rule for this final rule with comment period. We applied the criteria as described earlier to identify the APCs that are exceptions to the 2 times rule for CY 2015, and identified 4 additional APCs that meet the criteria for exception to the 2 times rule for this final rule with comment period, but that did not meet the criteria using proposed rule claims data. Specifically, we found that the following 4 additional APCs violated the 2 times rule using the final rule with comment period claims data:

  • APC 5181 (Level 1 Vascular Procedures)
  • APC 5732 (Level 2 Minor Procedures)
  • APC 5821 (Level 1 Health and Behavior Services)
  • APC 5823 (Level 3 Health and Behavior Services)

After considering the public comments we received on APC assignments and our analysis of the CY 2015 costs from hospital claims and cost report data available for this final rule with comment period, we are finalizing our proposals with some modifications. Specifically, we are finalizing our proposal to except 3 of the 4 proposed APCs from the 2 times rule for CY 2017 (APCs 5521, 5735, and 5771), and also excepting 4 additional APCs (APCs 5181, 5732, 5821, and 5823). APC 5841 (Psychotherapy), which appeared as one of the 4 APCs in Table 9 of the CY 2017 OPPS/ASC proposed rule, no longer met the criteria for exception to the 2 times rule in this final rule with comment period. Table 9 below lists the 7 APCs that we are excepting from the 2 times rule for CY 2017 based on the criteria described earlier and a review of updated claims data. We note that, for cases in which a recommendation by the HOP Panel appears to result in or allow a violation of the 2 times rule, we generally accept the Panel's recommendation because those recommendations are based on explicit consideration of resource use, clinical homogeneity, site of service, and the quality of the claims data used to determine the APC payment rates. The geometric mean costs for hospital outpatient services for these and all other APCs that were used in the development of this final rule with comment period can be found on the CMS Web site at: http://www.cms.gov/​Start Printed Page 79614Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​Hospital-Outpatient-Regulations-and-Notices.html.

Table 9—Final CY 2017 APC Exceptions to the 2 Times Rule

CY 2017 APCCY 2017 APC title
5181Level 1 Vascular Procedures.
5521Level 1 Imaging without Contrast.
5732Level 2 Minor Procedures.
5735Level 5 Minor Procedures.
5771Cardiac Rehabilitation.
5821Level 1 Health and Behavior Services.
5823Level 3 Health and Behavior Services.

C. New Technology APCs

1. Background

In the November 30, 2001 final rule (66 FR 59903), we finalized changes to the time period a service was eligible for payment under a New Technology APC. Beginning in CY 2002, we retain services within New Technology APC groups until we gather sufficient claims data to enable us to assign the service to an appropriate clinical APC. This policy allows us to move a service from a New Technology APC in less than 2 years if sufficient data are available. It also allows us to retain a service in a New Technology APC for more than 2 years if sufficient data upon which to base a decision for reassignment have not been collected.

For CY 2016, there are 48 New Technology APC levels, ranging from the lowest cost band assigned to APC 1491 (New Technology—Level 1A ($0-$10)) through the highest cost band assigned to APC 1599 (New Technology—Level 48 ($90,001-$100,000)). In the CY 2004 OPPS final rule with comment period (68 FR 63416), we restructured the New Technology APCs to make the cost intervals more consistent across payment levels and refined the cost bands for these APCs to retain two parallel sets of New Technology APCs, one set with a status indicator of “S” (Significant Procedures, Not Discounted when Multiple. Paid under OPPS; separate APC payment) and the other set with a status indicator of “T” (Significant Procedure, Multiple Reduction Applies. Paid under OPPS; separate APC payment). These current New Technology APC configurations allow us to price new technology services more appropriately and consistently.

We note that the cost bands for the New Technology APCs, specifically, APCs 1491 through 1599, vary with increments ranging from $10 to $9,999. These cost bands identify the APCs to which new technology procedures and services with estimated service costs that fall within those cost bands are assigned under the OPPS. Payment for each APC is made at the mid-point of the APC's assigned cost band. For example, payment for New Technology APC 1507 (New Technology—Level 7 ($501-$600)) is made at $550.50.

Every year we receive several requests for higher payment amounts under the New Technology APCs for specific procedures paid under the OPPS because they require the use of expensive equipment. We are taking this opportunity to reiterate our response in general to the issue of hospitals' capital expenditures as they relate to the OPPS and Medicare, as specified in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70374).

Under the OPPS, one of our goals is to make payments that are appropriate for the services that are necessary for the treatment of Medicare beneficiaries. The OPPS, like other Medicare payment systems, is budget neutral and increases are limited to the annual hospital inpatient market basket increase. We believe that our payment rates generally reflect the costs that are associated with providing care to Medicare beneficiaries, and we believe that our payment rates are adequate to ensure access to services (80 FR 70374).

For many emerging technologies, there is a transitional period during which utilization may be low, often because providers are first learning about the techniques and their clinical utility. Quite often, parties request that Medicare make higher payment amounts under the New Technology APCs for new procedures in that transitional phase. These requests, and their accompanying estimates for expected total patient utilization, often reflect very low rates of patient use of expensive equipment, resulting in high per use costs for which requesters believe Medicare should make full payment. Medicare does not, and we believe should not, assume responsibility for more than its share of the costs of procedures based on projected utilization for Medicare beneficiaries and does not set its payment rates based on initial projections of low utilization for services that require expensive capital equipment. For the OPPS, we rely on hospitals to make informed business decisions regarding the acquisition of high cost capital equipment, taking into consideration their knowledge about their entire patient base (Medicare beneficiaries included) and an understanding of Medicare's and other payers' payment policies. (We refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68314) for further discussion regarding this payment policy.)

We note that, in a budget neutral environment, payments may not fully cover hospitals' costs in a particular circumstance, including those for the purchase and maintenance of capital equipment. We rely on hospitals to make their decisions regarding the acquisition of high cost equipment with the understanding that the Medicare program must be careful to establish its initial payment rates, including those made through New Technology APCs, for new services that lack hospital claims data based on realistic utilization projections for all such services delivered in cost-efficient hospital outpatient settings. As the OPPS acquires claims data regarding hospital costs associated with new procedures, we regularly examine the claims data and any available new information regarding the clinical aspects of new procedures to confirm that our OPPS payments remain appropriate for procedures as they transition into mainstream medical practice (77 FR 68314).

2. Additional New Technology APC Groups

As stated above, for the CY 2017 update, there are 48 levels of New Technology APC groups with two parallel status indicators; one set with a status indicator of “S” and the other set with a status indicator of “T.” To improve our ability to pay appropriately for new technology services and procedures, in the CY 2017 OPPS/ASC proposed rule (81 FR 45646), we proposed to expand the New Technology APC groups by adding 3 more levels, specifically, adding New Technology Levels 49 through 51. We proposed this expansion to accommodate the assignment of retinal prosthesis implantation procedures to a New Technology APC, which is discussed in section III.C.3. of this final rule with comment period. Therefore, for the CY 2017 OPPS update, we proposed to establish 6 new groups of New Technology APCs, APCs 1901 through 1906 (for New Technology APC Levels 49 through 51), with procedures assigned to both OPPS status indicators “S” and “T.” These new groups of APCs have the same payment levels with one set subject to the multiple procedure payment reduction (procedures assigned to status indicator “T”) and the other set not subject to the multiple procedure Start Printed Page 79615payment reduction (procedures assigned to status indicator “S”). Each proposed set of New Technology APC groups has identical group titles, payment rates, and minimum unadjusted copayments, but a different status indicator assignment. Table 10 of the CY 2017 OPPS/ASC proposed rule included the complete list of the proposed additional 6 New Technology APC groups for CY 2017 (81 FR 45646).

We did not receive any public comments on the proposed expansion of the New Technology APC groups, specifically, adding New Technology Levels 49 through 51 for New Technology APCs 1901 through 1906. Therefore, we are finalizing our proposal, without modification. Table 10 lists the final CY 2017 New Technology APCs and the group titles for New Technology Levels 49 through 51. The payment rates for New Technology APCs 1901 through 1906 can be found in Addendum A to this final rule with comment period (which is available via the Internet on the CMS Web site).

Table 10—Final CY 2017 Additional New Technology APC Groups

New CY 2017 APCCY 2017 APC titleFinal CY 2017 SI
1901New Technology—Level 49 ($100,001-$120,000)S
1902New Technology—Level 49 ($100,001-$120,000)T
1903New Technology—Level 50 ($120,001-$140,000)S
1904New Technology—Level 50 ($120,001-$140,000)T
1905New Technology—Level 51 ($140,001-$160,000)S
1906New Technology—Level 51 ($140,001-$160,000)T

3. Procedures Assigned to New Technology APC Groups for CY 2017

a. Overall Proposal

As we explained in the CY 2002 OPPS final rule with comment period (66 FR 59902), we generally retain a procedure in the New Technology APC to which it is initially assigned until we have obtained sufficient claims data to justify reassignment of the procedure to a clinically appropriate APC. However, in cases where we find that our initial New Technology APC assignment was based on inaccurate or inadequate information (although it was the best information available at the time), or we obtain new information that was not available at the time of our initial New Technology APC assignment, or where the New Technology APCs are restructured, we may, based on more recent resource utilization information (including claims data) or the availability of refined New Technology APC cost bands, reassign the procedure or service to a different New Technology APC that more appropriately reflects its cost (66 FR 59903).

Consistent with our current policy, for CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45646), we proposed to retain services within New Technology APC groups until we obtain sufficient claims data to justify reassignment of the service to a clinically appropriate APC. The flexibility associated with this policy allows us to reassign a service from a New Technology APC in less than 2 years if sufficient claims data are available. It also allows us to retain a service in a New Technology APC for more than 2 years if sufficient claims data upon which to base a decision for reassignment have not been obtained (66 FR 59902).

For CY 2016, only two procedure codes, specifically, HCPCS codes C9740 (Cystourethroscopy, with insertion of transprostatic implant; 4 or more implants) and 0100T (Placement of a subconjunctival retinal prosthesis receiver and pulse generator, and implantation of intra-ocular retinal electrode array, with vitrectomy) received payment through a New Technology APC. In the CY 2017 OPPS/ASC proposed rule (81 FR 45646 through 45648), we proposed to reassign HCPCS code C9740 from APC 1565 (New Technology—Level 28 ($5000-$5500)) to APC 5376 (Level 6 Urology and Related Services), and to reassign CPT code 0100T from APC 1599 (New Technology—Level 48 ($90,000-$100,000)) to APC 1906 (New Technology—Level 51 ($140,001-$160,000)). We received public comments on the proposed APC assignment revisions for both procedure codes. Below in section III.C.3.b. of this final rule with comment period, we discuss the public comments we received, our responses, and our final policy for CY 2017 for CPT code 0100T on the retinal prosthesis implant procedure. In section III.D.4.a. of this final rule with comment period, we discuss the public comments we received, our responses, and our final policy for CY 2017 for HCPCS code C9740 on cystourethroscopy.

b. Retinal Prosthesis Implant Procedure

As stated above, in the CY 2017 OPPS/ASC proposed rule, we proposed to revise the APC assignment for CPT code 0100T from New Technology APC 1599 to New Technology APC 1906. CPT code 0100T describes the implantation of a retinal prosthesis, specifically, a procedure involving use of the Argus® II Retinal Prosthesis System. This first retinal prosthesis was approved by the FDA in 2013 for adult patients diagnosed with advanced retinitis pigmentosa. Pass-through payment status was granted for the Argus® II device under HCPCS code C1841 (Retinal prosthesis, includes all internal and external components) beginning October 1, 2013, and expired on December 31, 2015. We note that after pass-through payment status expires for a medical device, the payment for the device is packaged into the payment for the associated surgical procedure. Consequently, for CY 2016, the device described by HCPCS code C1841 was assigned to OPPS status indicator “N” to indicate that payment for the device is packaged and included in the payment rate for the surgical procedure described by CPT code 0100T. For CY 2016, CPT code 0100T is assigned to APC 1599 with a payment rate of $95,000. This payment includes both the surgical procedure (CPT code 0100T) and the use of the Argus® II device (HCPCS code C1841). However, stakeholders (including the device manufacturer and hospitals) believe that the CY 2016 payment rate for the procedure involving the Argus® II System is insufficient to cover the hospital cost of performing the procedure, which includes the cost of the retinal prosthesis, which has a retail price of approximately $145,000.

For the CY 2017 update, analysis of the CY 2015 OPPS claims data used for the CY 2017 proposed rule showed 5 single claims (out of 7 total claims) for CPT code 0100T, with a geometric mean Start Printed Page 79616cost of approximately $141,900 based on claims submitted between January 1, 2015, through December 31, 2015, and processed through December 31, 2015. In the proposed rule, we noted that the final payment rate in the CY 2017 OPPS/ASC final rule with comment period would be based on claims submitted between January 1, 2015, and December 31, 2015, and processed through June 30, 2016.

Based on the CY 2015 OPPS claims data available for the proposed rule and our understanding of the Argus® II procedure, we proposed to reassign CPT code 0100T from APC 1599 to APC 1906 with a proposed payment rate of approximately $150,000 for CY 2017. We stated that we believe that APC 1906 is the most appropriate APC assignment for the Argus® II procedure. We noted that this payment rate includes the cost of both the surgical procedure (CPT code 0100T) and the retinal prosthesis device (HCPCS code C1841).

Comment: Several commenters supported CMS' proposal to reassign CPT code 0100T from APC 1599 to APC 1906, which had a proposed CY 2017 payment rate of $150,000, and stated that the proposed payment better aligns with the cost of providing the service. However, one commenter stated that, while this change may benefit some hospitals, it does not help hospitals with a low wage-index value because the cost of the technology itself is not affected by the hospital's wages relative to other hospitals. The commenter further stated that the use of such new technologies as the Argus® II procedure underpays hospitals in less costly wage areas and, therefore, limit its use. Consequently, the commenter suggested that CMS consider the effect of setting new technology payments for hospitals assigned to less costly wage areas.

Response: We appreciate the commenters' support. Based on the updated CY 2015 hospital outpatient claims data used for this final rule with comment period, which is based on claims submitted between January 1, 2015, and December 31, 2015, and processed through June 30, 2016, we believe that APC 1906 remains the most appropriate APC assignment for CPT code 0100T. The latest claims data showed 9 single claims (out of 13 total claims) for CPT code 0100T, with a geometric mean cost of approximately $142,003. We believe that the payment for APC 1906 appropriately captures the cost of providing the service associated with the Argus® II procedure.

With respect to the issue of hospitals with a low wage index, we appreciate the commenter's interest in refining the methodology for new technology APCs under the OPPS. Because we did not propose a change to hospitals with a low wage index values, we will take this comment into consideration in future rulemaking.

After consideration of the public comments we received, we are finalizing our proposal, without modification, to reassign CPT code 0100T from APC 1599 (New Technology—Level 48 ($90,001-$100,000)) to APC 1906 (New Technology—Level 51 ($140,001-$160,000)), which has a final payment rate of $150,000.50 for CY 2017. We note this payment includes both the surgical procedure (CPT code 0100T) and the use of the Argus® II device (HCPCS code C1841).

D. OPPS APC-Specific Policies

1. Cardiovascular Procedures/Services

a. Cardiac Event Recorder (APC 5071)

We proposed to assign procedures described by CPT code 33284 (Removal of an implantable, patient-activated cardiac event recorder) to APC 5071 (Level 1 Excision/Biopsy/Incision and Drainage) for CY 2017. Based on the CY 2015 claims data used for the proposed rule, the geometric mean cost of procedures described by CPT code 33284 was approximately $733 (2,650 single claims), and the geometric mean cost of APC 5071 was approximately $555. In addition, CPT code 33284 is assigned to status indicator “Q2,” which indicates that the service is conditionally packaged under the OPPS. Therefore, when this procedure is performed in conjunction with a revision or replacement procedure, the payment for the procedure described by CPT code 33284 is packaged under the OPPS.

Comment: One commenter requested that CMS assign procedures described by CPT code 33284 to a higher paying APC. In particular, the commenter requested that procedures described by CPT code 33284 be assigned to APC 5211 (Level 1 Electrophysiologic Procedures) instead of APC 5071. The commenter believed that the procedure described by CPT code 33284 is more similar clinically and in terms of resource use to the services assigned to APC 5211 than to those assigned to APC 5071.

Response: We disagree with the commenter. We believe that the procedures described by CPT code 33284 are appropriately assigned to APC 5071. Based on updated claims data used for the final rule, the geometric mean cost of CPT code 33284 (approximately $715) is more comparable to the geometric mean cost of APC 5071 (approximately $554) than to the geometric mean cost of APC 5072 (approximately $1,271). Therefore, we do not believe that it would be appropriate to assign procedures described by CPT code 33284 to a higher level within the Excision/Biopsy/Incision and Drainage APC series. In addition, the procedures described by CPT code 33284 are not electrophysiology services and, therefore, do not appropriately correlate with the services assigned to APC 5211. Therefore, we are finalizing our CY 2017 proposal to assign the procedures described by CPT code 33284 to APC 5071.

b. Cardiac Telemetry (APC 5733)

As listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to reassign CPT code 93229 (External mobile cardiovascular telemetry with electrocardiographic recording, concurrent computerized real time data analysis and greater than 24 hours of accessible ecg data storage (retrievable with query) with ecg triggered and patient selected events transmitted to a remote attended surveillance center for up to 30 days; technical support for connection and patient instructions for use, attended surveillance, analysis and transmission of daily and emergent data reports as prescribed by a physician or other qualified health care professional) from APC 5722 (Level 2 Diagnostic Tests and Related Services) to APC 5734 (Level 4 Minor Procedures), with a proposed payment rate of $95.66.

Comment: One commenter disagreed with the proposed reassignment of CPT code 93229 to APC 5734, and stated that the proposed payment rate represents a 60-percent decrease from the CY 2016 payment rate of $220.35. The commenter indicated that the proposed underpayment of $95.66 does not reflect the significant costs involved in providing the service. The commenter added that the wearable device used by the beneficiary costs over $21,000. The commenter explained that because of the significant resource costs associated with performing the service described by CPT code 93229, most hospital outpatient facilities that provide this service contract the work to a remote cardiac monitoring service company because HOPDs do not have the devices, technology, or infrastructure in place to provide the service in-house. In addition, the commenter believed that hospitals are still confused about how to code for remote cardiac diagnostic tests, and indicated that the proposed payment rate of $95.66 for CPT code 93229 is the result of hospitals Start Printed Page 79617miscoding the service on claims. The commenter believed that the coding education provided in the April 2015 edition of the Coding Clinic for HCPCS will assist hospitals in coding appropriately for the service. However, until the coding education effort effectuates changes in coding practices, the commenter believed that the true cost of furnishing the service described by CPT code 93229 is more comparable to the OPPS payment rate of approximately $795 made in CY 2012, and recommended that CMS reassign this service to APC 5724 (Level 4 Diagnostic Tests and Related Services), with a proposed payment rate of $870.62. Alternatively, if CMS is unable to reassign the service to APC 5724, the commenter suggested that CMS continue the CY 2016 APC assignment for CPT code 93229 to APC 5722, with a payment rate of $220.35. The commenter further stated that when the service described by CPT code 93229 is provided under the MPFS, the payment rate for performing this service is $732.68. The commenter believed that continuing to assign CPT code 93229 to APC 5722 for CY 2017 will provide payment stability for this service while coding education efforts continue.

Response: Based on our analysis of the CY 2015 claims data used for the proposed rule, we proposed to reassign CPT code 93229 to APC 5734. Specifically, our analysis showed a geometric mean cost of approximately $77 based on 1,847 single claims (out of 3,747 total claims). Based on its clinical and resource homogeneity to the other services, we proposed to reassign the service described by CPT code 93229 to APC 5734, whose geometric mean cost was approximately $100. We did not propose to continue to assign CPT code 93229 to APC 5722 because the geometric mean cost for this APC was approximately $242, which would result in a significant overpayment for the service. However, based on our review of the updated CY 2015 claims data used for this final rule with comment period, we found the geometric mean cost for CPT code 93229 to be lower than the proposed rule geometric mean cost. We note that the proposed rule claims data were based on claims submitted from January 1, 2015, through December 31, 2015, and processed through December 31, 2015, while the final rule with comment period claims data are based on claims submitted from January 1, 2015, through December 31, 2015, and processed through June 30, 2016. Based on our analysis of the final rule with comment period claims data, we found a geometric mean cost of approximately $71 for the service described by CPT code 93229 based on 2,323 single claims (out of 4,495 total claims). The geometric mean cost for the service described by CPT code 93229 is more similar to that of APC 5733 (Level 3 Minor Procedures), which has a geometric mean cost of approximately $56, than to the geometric mean cost of approximately $103 for APC 5734. Consequently, we believe that CPT code 93229 should be reassigned to APC 5733, rather than APC 5734.

Also, as we have stated repeatedly, beyond our standard OPPS trimming methodology that we apply to those claims that have passed various types of claims processing edits, it is not our general policy to judge the accuracy of hospital coding and charging for purposes of ratesetting. (We refer readers to the CY 2011 OPPS/ASC final rule with comment period (75 FR 71838) for further discussion.) Hospitals are responsible for accurately coding the performance of procedures and services and the items furnished to beneficiaries.

In summary, after evaluating the public comment we received and our subsequent analysis of the updated claims data for this final rule with comment period, we are modifying our proposal and reassigning the service described by CPT code 93229 to APC 5733 for CY 2017. The final payment rate for this code can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site).

2. Eye-Related Services

Comment: A few commenters requested that CMS assign new CPT code 0465T (Suprachoroidal injection of a pharmacologic agent (does not include supply of medication)) to APC 5694 (Level 4 Drug Administration) instead of APC 5693 (Level 3 Drug Administration) because the commenters believed that the service is clinically similar and similar from a resource-use perspective to CPT code 67028 (Intravitreal injection of a pharmacologic agent (separate procedure), which is assigned to APC 5694.

Response: We agree with the commenters. We are modifying our proposal and assigning CPT code 0465T to APC 5694 for CY 2017. Because CPT code 0465T is new, we do not have claims data upon which to base an initial APC assignment. However, we believe that the clinical and resource similarities of the procedure described by CPT code 0465T, when compared to the procedure described by CPT code 67028, support assigning CPT code 0465T to APC 5694 at this time. When cost and claims data become available for CPT code 0465T, we will reevaluate the APC assignment.

Comment: One commenter requested that CMS pay separately for the new CPT codes 0444T (Initial placement of a drug-eluting ocular insert under one or more eyelids, including fitting, training, and insertion, unilateral or bilateral) and 0445T (Subsequent placement of a drug-eluting ocular insert under one or more eyelids, including re-training, and removal of existing insert, unilateral or bilateral) instead of unconditionally packaging the payment for these services, as proposed.

Response: We disagree with the commenters. The procedure to place one of these inserts under an eyelid (as described by these procedure codes) is a very minor service (not unlike delivering eye drops) that requires little time or effort from a nurse or technician. Any associated additional cost associated with performing these procedures are appropriately packaged with another service.

3. Gastrointestinal Procedures and Services

a. Esophageal Sphincter Augmentation (APC 5362)

For CY 2017, we proposed to assign the procedures described by new CPT code 43284 (Laparoscopy, surgical, esophageal sphincter augmentation procedure, placement of sphincter augmentation device, including cruroplasty when performed) to APC 5362 (Level 2 Laparoscopy and Related Services), with a geometric mean cost of approximately $7,183. CPT code 43284 replaces CPT code 0392T, which replaced HCPCS code C9737. HCPCS code C9737 was in effect for the first half of CY 2015, and CPT code 0392T became effective beginning in the second half of CY 2015 and will be deleted at the end of CY 2016. Based on the claims data used for the proposed rule, the geometric mean cost for the procedure described by HCPCS code C9737 was approximately $10,260 (45 single claims) and the geometric mean cost for the procedure described by CPT code 0392T was approximately $8,453 (19 single claims).

Comment: One commenter disagreed with the proposed APC assignment for procedures described by CPT code 43284 to APC 5362. The commenter stated that the proposed payment rate for APC 5362 does not accurately reflect the anticipated cost of providing the services described by CPT code 43284. The commenter suggested that CMS create a new Level 3 APC within the laparoscopy and related services APC Start Printed Page 79618series that would contain the 20 most costly procedures that are currently assigned to APC 5362. According to the commenter, the creation of this new Level 3 Laparoscopy APC would be more representative of the resource costs for services described by CPT code 43284.

Response: Based on updated claims data for the final rule, we compared the geometric mean cost for procedures described by CPT code 0392T (the predecessor code for CPT code 43284) to the geometric mean cost of APC 5362. The geometric mean cost for procedures described by CPT code 0392T is $8,715 based on 24 single claims, which is $1,551 greater than the geometric mean cost for APC 5362 of $7,164. Furthermore, since CPT code 0392T replaced HCPCS code C9737, the cost of this service has decreased from $10,388 for HCPCS code C9737 to $8,715 for CPT code 0392T. The commenter identified 9,276 single claims using data published with the proposed rule that could be used to create a new Level 3 Laparoscopy and Related Services APC. However, this subgroup of procedures from APC 5362 only contains two significant procedures, and 23 percent of the 40,035 single claims from APC 5362. The services for the suggested Level 3 Laparoscopy and Related Services APC have both sufficient clinical and resource homogeneity to the other procedures assigned to APC 5362. Therefore, we do not believe that there is a need to create another APC for these services.

After consideration of the public comment we received, we are finalizing our proposal, without modification, to assign procedures described by CPT code 43284 to APC 5362, effective January 1, 2017. The final payment rate for CPT code 43284 can be found in Addendum B to this final rule with comment period, which is available via the Internet on the CMS Web site.

b. Esophagogastroduodenoscopy: Transmural Drainage of Pseudocyst (APC 5303)

For CY 2017, we proposed to assign CPT code 43240 (Esophagogastroduodenoscopy, flexible, transoral; with transmural drainage of pseudocyst (includes placement of transmural drainage catheter(s)/stent(s), when performed, and endoscopic ultrasound, when performed)) to APC 5303 (Level 3 Upper GI Procedures), for which we proposed a CY 2017 geometric mean cost of approximately $2,598.

Comment: Commenters disagreed with CMS' proposal to assign CPT code 43240 to APC 5303. The commenters believed that CPT code 43240 would be more appropriately assigned to APC 5331 (Complex GI Procedures), for which we proposed a CY 2017 geometric mean cost of approximately, based upon the procedure's clinical similarity to other endoscopy procedures involving stent placement currently assigned to APC 5331. Additionally, commenters stated that the proposed CY 2017 geometric mean cost of $2,578 may underrepresent the true costs of the procedure because of underreporting of the C-code for stents.

Response: We disagree with the commenters' assertion that CPT code 43240 would be more appropriately assigned to APC 5331. While we acknowledge that a number of endoscopy procedures involving stent placement are currently assigned to APC 5331, we continue to believe that based on our claims data available for CY 2017 ratesetting, the proposed assignment of CPT code 43240 to APC 5303 is appropriate.

After consideration of the public comments we received, we are finalizing our proposal, without modification, to assign CPT code 43240 to APC 5303, which has a final CY 2017 APC geometric mean cost of approximately $2,581. The final payment rate for this code can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site).

Comment: One commenter requested that we create a new APC and assign the following four codes to this new APC: (1) HCPCS code G0105 (Colorectal cancer screening; colonoscopy on individual at high risk); (2) HCPCS code G0121 (Colorectal cancer screening; colonoscopy on individual not meeting criteria for high risk); (3) CPT code 44388 (Colonoscopy through stoma; diagnostic, including collection of specimen(s) by brushing or washing, when performed (separate procedure)); and (4) CPT code 45378 (Colonoscopy, flexible; diagnostic, including collection of specimen(s) by brushing or washing, when performed (separate procedure)). The commenters emphasized the clinical importance of colonoscopy in the detection and treatment of colon cancer as a motivation for the creation of this new APC.

Response: We recognize the importance of colonoscopies to Medicare beneficiaries and believe that the OPPS and ASC payment policies for colonoscopies allow full access to these services. As a part of our multi-year review, which includes restructuring and reorganization and consolidation of the OPPS APCs, we have been creating larger APCs based on simpler and more intuitive clinical groupings. We believe that APC 5311 (Level 1 Lower GI Procedures) is an appropriate APC assignment for these four codes from a clinical and resource perspective. We also fail to recognize any particular advantage of creating the suggested new APC that would contain only four codes. The geometric mean cost of CPT code 45378 drives the payment rate for APC 5311 because it represents 81 percent of the single claims in this APC. As we discuss later in the section on the imaging APCs, we are reassigning HCPCS codes G0105 and G0121 to APC 5311. We believe that all four of these codes are clinically similar (all are similar colonoscopy services) and are similar in terms of resource costs based on their geometric mean costs. We are finalizing the proposal to assign HCPCS codes G0105 and G0121, and CPT codes 44388 and 45378 to APC 5311 for CY 2017.

Comment: One commenter believed that some of the tube and catheter placement procedure codes (for example, CPT code 32561 (Installation(s), via chest tube/catheter agent for fibrinolysis (e.g., fibrinolytic agent for break up of multiloculated effusion); initial day) that were assigned to APC 5301 (Level 1 Upper GI Procedures) in the proposed rule are not clinically similar to the endoscopy procedures that have traditionally been grouped together in APC 5301 (or its predecessor APC). The commenter requested that CMS reassign the catheter and tube placement procedure codes to other APCs that would be more clinically suitable.

Response: Upon further review of the procedure codes assigned to APC 5301, we agree with the commenter. Table 11 below shows the final APC reassignments for the tube and catheter placement and removal procedure codes that were assigned to APC 5301 in the proposed rule.Start Printed Page 79619

Table 11—Tube and Catheter Codes Reassigned from APC 5301

CPT codeDescriptorFinal CY 2017 APCFinal CY 2017 SI
32552Removal of indwelling tunneled pleural catheter with cuff5181Q2
32554Thoracentesis, needle or catheter, aspiration of the pleural space; without imaging guidance5181T
32555Thoracentesis, needle or catheter, aspiration of the pleural space; with imaging guidance5181T
32560Instillation, via chest tube/catheter, agent for pleurodesis (e.g., talc for recurrent or persistent pneumothorax)5181T
32561Installation(s), via chest tube/catheter agent for fibrinolysis (e.g., fibrinolytic agent for break up of multiloculated effusion); initial day5181T
32562(Installation(s), via chest tube/catheter agent for fibrinolysis (e.g., fibrinolytic agent for break up of multiloculated effusion); subsequent day5181T
32960Pneumothorax, therapeutic, intrapleural injection of air5181T
36575Repair of tunneled or non-tunneled central venous access catheter, without subcutaneous port or pump, central or peripheral insertion site5181T
36589Removal of tunneled central venous catheter, without subcutaneous port or pump5181Q2
61070Puncture of shunt tubing or reservoir for aspiration or injection procedure5442T

We are reassigning all of the procedure codes listed in the above table to APC 5181 (Level 1 Vascular Procedures), except for CPT code 61070 which we are reassigning to APC 5442. We believe that APC 5181 is the most appropriate APC assignment because it currently contains various catheter insertion and removal codes and similar procedures that use catheters. We do not believe that the nine procedures codes that we are reassigning to APC 5181 are sufficiently unique that a new APC specifically for assignment of these nine codes is warranted. We also understand that these codes are at the low end of the cost range for the procedures assigned to APC 5181, but APC 5181 is the lowest cost APC in this series. We also understand that the lung procedures that we are proposing to reassign to APC 5181 are not vascular procedures, but we believe that they are generally sufficiently similar to vascular catheter insertion procedures such that assignment to APC 5181 is clinically appropriate, and that a dedicated lung procedures APC is not necessary. However, to acknowledge that these APCs includes services that are not strictly “vascular,” we are renaming the Vascular Procedures APCs (5181 through 5183) Levels 1 through 3 to “Vascular Procedures & Related Services.”

4. Musculoskeletal Procedures/Services

Consistent with CMS' statutory requirement under section 1833(t)(9)(A) of the Act to review and revise APC assignments annually and to construct the most appropriate APC groupings, as well as, to the extent desirable, correct any 2 times rule violations, we evaluated the resource costs and clinical coherence of the procedures associated with the Closed Treatment Fracture and Related Services (APCs 5111, 5112, and 5113) and Musculoskeletal Procedures APCs (APCs 5121, 5122, 5123, 5124, and 5125). For the CY 2017 OPPS update, we reviewed the procedures assigned to the Closed Treatment Fracture and Musculoskeletal Procedures APCs, and consolidated the two APC groups into the Musculoskeletal APC group, with six Levels, to improve the homogeneity of the procedures within these two APC groups. Based on our analysis of the CY 2015 hospital outpatient claims data used for the proposed rule, we proposed some modifications to these groups as reflected in Addendum B to the CY 2017 OPPS/ASC proposed rule. Specifically, we proposed to reassign certain procedures from one level within an APC to another; either from a lower-level paying APC to a higher-level paying APC, or from a higher-level paying APC to a lower-level paying APC, depending on the geometric mean cost for each procedure code. In addition, we proposed to revise the APC group title from “Closed Treatment Fracture and Related Services” to “Musculoskeletal Procedures,” and also proposed to establish a new level within the APC, specifically, Level 6, for the assignment of musculoskeletal procedures. We believe that the proposed restructuring and consolidation of the musculoskeletal APCs more appropriately group the musculoskeletal services according to their current resource costs, as well as their clinical characteristics.

Comment: Some commenters supported the reorganization and the increase in the number of musculoskeletal APC levels from five to six. One commenter expressed approval for the number of procedures assigned to Level 6 within the APC and stated that the methodology for assigning procedures to this level is logical, consistent with other APCs, and leads to more appropriate hospital payments. One commenter also stated that the change will help correct the problem associated with those musculoskeletal procedures that had previously shifted to the more costly inpatient setting because of inadequate payments under the hospital OPPS. Consequently, these commenters requested that CMS finalize the proposal.

Response: We appreciate the commenters' support.

Comment: One commenter requested that CMS reevaluate the procedure codes assigned to Level 4 within the Musculoskeletal Procedures APC to ensure that these services are paid appropriately. The commenter expressed concern with the range of costs for the procedures assigned to Level 4 and 5, and stated that the current proposal underpays for some of the procedures assigned to Level 4. To correct the variation of costs between Level 4 and 5, the commenter suggested reassigning some of the procedures from Level 4 to Level 5, or alternatively, establishing a new, intermediate level APC whose geometric mean cost is between Level 4 and 5.

Response: We appreciate the commenter's suggestion. However, we believe that the proposed structure of the musculoskeletal APCs with six levels, compared to last year's five levels, improves the homogeneity of the procedures within the musculoskeletal APC group. As we do annually, we will again review and evaluate the APC assignments for all items, procedures, and services paid under the hospital OPPS for the CY 2018 rulemaking.

We also received several public comments concerning the proposed reassignment of certain procedures assigned to the Musculoskeletal Procedures APCs. A summary of the Start Printed Page 79620public comments and our responses follow.

a. Auditory Osseointegrated Implants/Bone-Anchored Hearing Systems (APCs 5114, 5115, and 5116)

In Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to reassign four auditory osseointegrated implant procedures. Specifically, as listed in Table 12 below, we proposed to reassign CPT code 69714 from APC 5125 (Level 5—Musculoskeletal Procedures) to APC 5115 (Level 5—Musculoskeletal Procedures), CPT code 69715 from APC 5125 to APC 5116 (Level 6—Musculoskeletal Procedures), CPT code 69717 from APC 5123 (Level 3—Musculoskeletal Procedures) to APC 5114 (Level 4—Musculoskeletal Procedures), and CPT code 69718 from APC 5124 (Level 4—Musculoskeletal Procedures) to APC 5115.

Table 12—Proposed CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Auditory Osseointegrated Procedures

CPT codeLong descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateProposed CY 2017 OPPS SIProposed CY 2017 OPPS APCProposed CY 2017 OPPS payment rate
69714Implantation, osseointegrated implant, temporal bone, with percutaneous attachment to external speech processor/cochlear stimulator; without mastoidectomyJ15125$10,537.90J15115$9,491.00
69715Implantation, osseointegrated implant, temporal bone, with percutaneous attachment to external speech processor/cochlear stimulator; with mastoidectomyJ1512510,537.90J1511614,444.00
69717Replacement (including removal of existing device), osseointegrated implant, temporal bone, with percutaneous attachment to external speech processor/cochlear stimulator; without mastoidectomyJ151234,969.26J151145,199.03
69718Replacement (including removal of existing device), osseointegrated implant, temporal bone, with percutaneous attachment to external speech processor/cochlear stimulator; with mastoidectomyJ151247,064.07J151159,491.00

Comment: One commenter expressed appreciation for the proposed payment increase for CPT codes 69715, 69717, and 69718. However, several commenters opposed the proposed payment decrease for CPT code 69714. The commenters who disagreed with the APC reassignment indicated that the data used by CMS are flawed and do not accurately capture the cost of performing an osseointegrated implant surgery. Some commenters stated that the proposed payment rate for CPT code 69714 would be inadequate to cover the cost of the procedure. These commenters noted that the list price for a CochlearTM Baha® Implant System ranges from $6,887 to $8,435. Consequently, several commenters requested that CMS not finalize the proposed payment reduction for CPT code 69714 pending the collection of accurate claims data.

Response: As stated above, section 1833(t)(9)(A) of the Act requires the Secretary to review certain components of the OPPS, not less often than annually, and to revise the groups, relative payment weights, and other adjustments that take into account changes in medical practices, changes in technologies, and the addition of new services, new cost data, and other relevant information and factors. As such, we review on an annual basis all APC assignments for both general appropriateness and for violations of the 2 times rule, and when necessary, reassign CPT codes to more appropriate APCs. Although there was no violation of the 2 times rule within the Closed Treatment Fracture and Related Services and Musculoskeletal Procedures APCs, based on our review of the updated CY 2015 claims data used for this CY 2017 OPPS/ASC final rule with comment period, we believe that revising the Musculoskeletal Procedure APC structure is necessary to maintain the clinical homogeneity and resource characteristics of the procedures within this APC group.

In addition, review of the latest hospital outpatient claims data used for this final rule with comment period shows the geometric mean cost for CPT code 69714 is approximately $9,407 based on 703 single claims (out of 713 total claims), which is relatively similar to and slightly less than the final rule geometric mean cost of $9,828 for APC 5115. Therefore, we continue to believe that the procedure described by CPT code 69714 is appropriately placed in APC 5115 based on resource and clinical homogeneity to other procedures currently assigned to APC 5115.

Further, as we do every year, we evaluate our claims data to determine the appropriateness of the APC assignments for all payable services and items under the hospital OPPS. For the CY 2017 OPPS update, based on our review, we proposed to revise the APC assignments for four auditory osseointegrated implant procedures, specifically, CPT codes 69714, 69715, 69717, and 69718. As a result of our APC review for the CY 2017 OPPS update, we note that, based on our review of the final rule with comment period claims data, three of the four procedures, specifically, CPT codes 69715, 69717, and 69718, will receive an increase in payment for CY 2017 under the hospital OPPS.Start Printed Page 79621

Comment: Some commenters believed that the proposed payment reduction for CPT code 69714 would restrict Medicare beneficiary access to the procedure.

Response: We disagree with the commenters. We do not believe that the revised payment for CPT code 69714 will affect beneficiaries' access to reasonable and appropriate care. Moreover, we believe that providers will continue to perform this procedure when medically necessary.

After consideration of the public comments we received, we are finalizing our CY 2017 proposal, without modification, to reassign CPT codes 69714, 69715, 69717 and 69718 to APCs 5115, 5116, 5114, and 5115, respectively. Table 13 below lists the final status indicator and APC assignments, and payment rates for the four auditory osseointegrated procedures.

Table 13—Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Auditory Osseointegrated Procedures

CPT codeLong descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateFinal CY 2017 OPPS SIFinal CY 2017 OPPS APCFinal CY 2017 OPPS payment rate
69714Implantation, osseointegrated implant, temporal bone, with percutaneous attachment to external speech processor/cochlear stimulator; without mastoidectomyJ15125$10,537.90J15115$9,557.20
69715Implantation, osseointegrated implant, temporal bone, with percutaneous attachment to external speech processor/cochlear stimulator; with mastoidectomyJ1512510,537.90J1511614,697.92
69717Replacement (including removal of existing device), osseointegrated implant, temporal bone, with percutaneous attachment to external speech processor/cochlear stimulator; without mastoidectomyJ151234,969.26J151145,219.36
69718Replacement (including removal of existing device), osseointegrated implant, temporal bone, with percutaneous attachment to external speech processor/cochlear stimulator; with mastoidectomyJ151247,064.07J151159,557.20

b. Bunion Correction/Foot Fusion (APC 5114)

In Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to reassign CPT codes 28297 (Correction, hallux valgus (bunion), with or without sesamoidectoy; lapidus-type) and 28740 (Arthrodesis, midtarsal or tarsometatarsal, single joint) to APC 5114 (Level 4—Musculoskeletal Procedures) with status indicator “J1.” Both CPT codes 28297 and 28740 have a CY 2016 payment rate of approximately $7,064 and a proposed CY 2017 payment rate of approximately $5,199.

Comment: One commenter expressed concern with the reassignment of CPT codes 28297 and 28740 to C-APC 5114, and stated that the proposed payment would result in a significantly lower payment rate for these services. The commenter indicated that its invoices document the total equipment cost at approximately $7,490, which is more than the proposed payment rate for C-APC 5114. The commenter also believed that CPT codes 28297 and 28740 are inappropriately assigned to C-APC 5114 because this APC does not reflect the resource or clinical complexity of these procedures. In addition, the commenter stated that the Musculoskeletal APCs are not granular enough to account for the costs associated with the broad range of orthopedic procedures performed in the hospital outpatient setting. Finally, this same commenter recommended that CMS establish an additional APC level that is not designated as a comprehensive APC for musculoskeletal procedures whose costs are in the range of $7,000 to $7,999. The commenter requested that CMS reassign CPT codes 28297 and 28740 to this new APC level, with a payment rate of approximately $7,500. If CMS is unable to establish an additional APC, the commenter recommended that CMS retain the CY 2016 Musculoskeletal APC structure and payment levels. However, if CMS finalizes the proposal, the commenter requested that CMS ensure that all hospital costs for CPT codes 28297 and 28740 are captured appropriately and that the payment rate for C-APC 5114 is adjusted to reflect the cost of providing these services.

Response: We do not believe that it is necessary to create an additional APC level for these musculoskeletal procedures. We believe that CPT codes 28297 and 28740 are clinically similar to the other procedures assigned to C-APC 5114 with similar resource costs. As the commenter observed, the musculoskeletal APCs include various orthopedic procedures representing a range of costs from $3,774 (CPT code 27385) to $7,283 (CPT code 28740). The payment for procedures assigned to C-APC 5114 is based on the weighted average geometric mean cost for all of the procedures assigned to C-APC 5114. As with most other APCs, because the payment is based on an average of the costs of all of the procedures assigned to the APC, the payment rate can be either above or below the cost of a specific procedure. We believe that the assignment of CPT codes 28297 and 28740 to C-APC 5114 satisfies both the requirement for clinical similarity and resource similarity. There are several other similar foot surgical procedures assigned to C-APC 5114. Further, our claims data do not reveal any 2 times Start Printed Page 79622rule violations in C-APC 5114. We also note that certain complex multi-procedure cases, including cases involving the procedures described by both CPT code 28297 and 28740, receive a complexity adjustment and reassignment to C-APC 5115, which results in a significantly higher payment for these more costly cases. For CY 2017, the payment rate for C-APC 5115 is approximately $9,557. We remind hospitals that, as we do every year, we will again review the APC assignments for all services under the hospital OPPS for the CY 2018 rulemaking.

After consideration of the public comments received, we are finalizing our CY 2017 proposal, without modification, to reassign CPT codes 28297 and 28740 to C-APC 5114. Table 14 below lists the final CY 2017 OPPS status indicator and APC assignments, and payment rates for CPT codes 28297 and 28740. We refer readers to Addendum B of this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the Internet on the CMS Web site. In addition, the list of codes that qualify for complexity adjustments can be found in Addendum J to this final rule with comment period (which is available via the Internet on the CMS Web site). Addendum J to this final rule with comment period also contains the summary cost statistics for each of the code combinations that describe a complex code combination that qualify for a complexity adjustment and are reassigned to the next higher cost C-APC within the clinical family.

Table 14—Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for CPT Codes 28297 and 28740

CPT codeLong descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateFinal CY 2017 OPPS SIFinal CY 2017 OPPS APCFinal CY 2017 OPPS payment rate
28297Correction, hallux valgus (bunion), with or without sesamoidectomy; lapidus-type procedureJ15124$7,064.07J15114$5,219.36
28740Arthrodesis, midtarsal or tarsometatarsal, single jointJ151247,064.07J151145,219.36

c. Intervertebral Biomechanical Devices

For CY 2017, the AMA CPT Editorial Panel deleted CPT code 22851 and replaced it with three new codes, effective January 1, 2017. Table 15 below lists the long descriptor for the procedure described by CPT code 22851, as well as the replacement codes, specifically, CPT codes 22853, 22854, and 22859. We note that the deleted and replacement codes were listed in Addendum B and Addendum O to the CY 2017 OPPS/ASC proposed rule. Addendum B listed the proposed status indicator assignments for the replacement codes, which are assigned to comment indicator “NP” (New code for the next calendar year or existing code with substantial revision to its code descriptor in the next calendar year as compared to current calendar year, proposed APC assignment; comments will be accepted on the proposed APC assignment for the new code.), while Addendum O listed the placeholder/proposed CY 2017 CPT codes and their long descriptors.

Table 15—CY 2017 Status Indicator (SI) Assignments for the Application/Insertion of the Intervertebral Biomechanical Devices

Proposed CY 2017 CPT codeFinal CY 2017 CPT codeLong descriptorsProposed CY 2017 OPPS SIFinal CY 2017 OPPS SI
2285122851Application of intervertebral biomechanical device(s) (e.g., synthetic cage(s), methylmethacrylate) to vertebral defect or interspace (List separately in addition to code for primary procedure)DD
22X8122853Insertion of interbody biomechanical device(s) (e.g., synthetic cage, mesh) with integral anterior instrumentation for device anchoring (e.g., screws, flanges), when performed, to intervertebral disc space in conjunction with interbody arthrodesis, each interspace (List separately in addition to code for primary procedure)NN
22X8222854Insertion of intervertebral biomechanical device(s) (e.g., synthetic cage, mesh) with integral anterior instrumentation for device anchoring (e.g., screws, flanges), when performed, to vertebral corpectomy(ies) (vertebral body resection, partial or complete) defect, in conjunction with interbody arthrodesis, each contiguous defect (List separately in addition to code for primary procedure)NN
22X8322859Insertion of intervertebral biomechanical device(s) (e.g., synthetic cage, mesh, methylmethacrylate) to intervertebral disc space or vertebral body defect without interbody arthrodesis, each contiguous defect (List separately in addition to code for primary procedure)NN

Comment: One commenter suggested that CMS pay separately for the replacement CPT codes 22X81, 22X82, and 22X83 and assign the new codes to New Technology APCs to enable CMS to collect cost information and determine Start Printed Page 79623whether to pay separately or package the procedures in the future. The commenter explained that the cost of providing the procedures associated with these new spine instrumentation codes are costly and include high-cost implants. The commenter also believed that, while CMS has a policy for packaging payment for procedures described by add-on codes under the hospital OPPS, it is not required to do so because its regulation refers only to packaging of certain services described by add-on codes.

Response: We do not agree with the commenter that the spine instrumentation procedures described by proposed CPT codes 22X81, 22X82, and 22X83 (replacement CPT codes 22853, 22854, and 22859) are new technology procedures that warrant an assignment to a new technology APC. These procedures have been performed for some time now in the hospital outpatient setting, and as evidenced by the predecessor code, CPT code 22851 which was established in 1996, these procedures are not new. In addition, we do not agree with the commenter that we should pay separately for replacement CPT codes 22853, 22854, and 22859 because these codes describe add-on services. Since January 1, 2014, payment for procedures described by add-on codes have been packaged under the hospital OPPS. Because the predecessor CPT code 22851 was assigned to a packaged status indicator under the hospital OPPS, we are assigning CPT codes 22853, 22854, and 22859 to status indicator “N” to indicate that payment for these services are packaged under the hospital OPPS for CY 2017.

After consideration of the public comment we received, we are finalizing our proposal, without modification, to assign CPT codes 22853, 22854, and 22859 to status indicator “N” for CY 2017.

d. Percutaneous Vertebral Augmentation/Kyphoplasty (APC 5114)

In Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to reassign CPT codes 22513 (Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device (e.g., kyphoplasty), 1 vertebral body, unilateral or bilateral cannulation, inclusive of all imaging guidance; thoracic) and 22514 (Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device (e.g., kyphoplasty), 1 vertebral body, unilateral or bilateral cannulation, inclusive of all imaging guidance; lumbar) from APC 5124 (Level 4 Musculoskeletal Procedures) to APC 5114 (Level 4 Musculoskeletal Procedures). Both CPT codes have a CY 2016 payment rate of approximately $7,064 and a proposed CY 2017 payment rate of approximately $5,199. Because CPT code 22515 (Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device (e.g., kyphoplasty), 1 vertebral body, unilateral or bilateral cannulation, inclusive of all imaging guidance; each additional thoracic or lumbar vertebral body (list separately in addition to code for primary procedure) is an add-on code, we proposed to continue its packaged status.

Based on the CY 2015 hospital outpatient claims data available for the proposed rule, our analysis revealed a geometric mean cost of approximately $5,434 for APC 5114, while the geometric mean cost for CPT codes 22513 and 22514 is approximately $6,664 and $6,672, respectively. Because the proposed geometric mean cost for APC 5115, which is the Level 5 Musculoskeletal Procedures APC, is significantly higher at $9,920 compared to the geometric mean cost for CPT codes 22513 and 22514, we proposed to assign CPT codes 22513 and 22514 to APC 5114 for CY 2017.

At the August 22, 2016 HOP Panel meeting, a presenter requested the reassessment of the proposed revised Musculoskeletal APC groupings that result in payment reductions for CPT codes 22513 and 22514. Specifically, the commenter observed that the proposed modification to the musculoskeletal APCs reduces the payment for these procedures by 26 percent for CY 2017. During the Panel discussion, CMS indicated that, in the CY 2016 OPPS/ASC proposed rule, the Agency initially proposed to establish four levels of the musculoskeletal APCs. However, based on the comments received on the CY 2016 proposal, CMS agreed with the request to establish a new level, specifically, Level 5 Musculoskeletal Procedures APC, for the CY 2016 update. In addition, during the discussion at the August 2016 Panel meeting, CMS informed the Panel that, for the CY 2017 update, CMS proposed to establish an additional level, specifically, Level 6 Musculoskeletal Procedures APC, for the musculoskeletal procedures. At the August 2016 HOP meeting, despite the request from the presenter, the Panel made no recommendation related to this issue.

Comment: Several commenters disagreed with the proposal and stated that the proposed reassignment of these procedures to APC 5114 would result in significant underpayment for these services. Some commenters noted that the proposed CY 2017 payment rate of $5,199.03 for CPT codes 22513 and 22514 is lower than the geometric mean costs of $6,664 for CPT code 22513 and $6,672 for CPT code 22514. These commenters requested that CMS reassign CPT codes 22513 and 22514 to APC 5115 (Level 5 Musculoskeletal Procedures APC), whose proposed CY 2017 payment rate is $9,491.

Response: We do not agree with the commenters that we should reassign these procedures to APC 5115. Based on the updated CY 2015 hospital outpatient claims data used for this final rule with comment period, our analysis reveals a geometric mean cost of approximately $5,367 for APC 5114, which is lower than the geometric mean cost of approximately $6,674 for CPT code 22513 based on 8,553 single (out of 8,665 total claims), or the geometric mean cost of approximately $6,643 for CPT code 22514 based on 10,451 single claims (out of 10,609 total claims). Because the difference between the geometric mean cost for APC 5115 ($9,828) and the geometric mean costs of CPT code 22513 ($6,674) and CPT code 22514 ($6,643) is significantly greater than the difference between the geometric mean cost of CPT codes 22513 and 22514 and the geometric mean cost of APC 5114 ($5,367), we believe these procedures should be assigned to APC 5114.

In addition, we do not agree with the commenters' assertion that the current assignment of CPT codes 22513 and 22514 in APC 5114 would result in significant underpayment for these services. OPPS payments are based on the geometric mean costs of all of the services assigned to the APC. By definition the costs of some services must be below the geometric mean and others must be above the geometric mean. As we have stated in the past (72 FR 66639), in some cases, payment exceeds the average cost of the CPT code, and in other cases, payment is less than the average cost of the CPT code.

Comment: One commenter stated that procedures described by add-on codes are paid separately in physician offices. However, payment for these services are packaged under the hospital OPPS. This difference results in higher payments for percutaneous vertebral augment/kyphoplasty procedures performed in the office setting compared to the HOPD setting. The commenter further noted that this discrepancy indicates that CMS Start Printed Page 79624may be using a flawed methodology, similar to the CPT Committee and RUC, in determining payment rates for services under the hospital OPPS. Finally, the commenter requested that CMS increase the payment rate for CPT codes 22513 and 22514 to equalize payment for these procedures across all settings.

Response: The hospital OPPS and the MPFS that applies to physician's office services are fundamentally different payment systems with essential differences in their payment policies and structures. Specifically, the hospital OPPS is a prospective payment system, based on the concept of payment for groups of services that share clinical and resource characteristics. Payment is made under the hospital OPPS according to prospectively established payment rates that are related to the relative costs of hospital resources for services. The MPFS is a fee schedule based on the relative value of each individual component of services. Furthermore, physician fee schedule payments include payment for physician professional work, which is not a part of the OPPS payment to hospitals.

In addition, consistent with our general add-on code packaging policy, we package payment for certain procedures described by add-on codes under the hospital OPPS. Because CPT code 22515 is an add-on code, we have assigned this code to a packaged payment status. We believe that the procedure is a service that is always furnished in addition to another procedure (in this case, either CPT code 22513 or 22514) and cannot be performed independently. Under the MPFS approach, separate payment is made for add-on procedures provided in the physician's office, but the OPPS packages payment for add-on codes into the associated procedure code payment for the APC group. We recognize that the MPFS pays separately for CPT code 22515, as it does for other add-on codes. However, the MPFS and the OPPS are very different payment systems. Each is established under a different set of statutory and regulatory principles and the policies established under the MPFS do not have bearing on the payment policies under the OPPS. Given the fundamental difference between the MPFS payment mechanism and the OPPS payment mechanism, differences in the degrees of packaged payment and separate payment between these two systems are to be expected.

After consideration of the public comments we received, we are finalizing our proposal, without modification, to reassign CPT codes 22513 and 22514 to APC 5114. Table 16 below lists the final OPPS status indicator and APC assignments and payment rates for CPT codes 22513 and 22514 for CY 2017.

Table 16—Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Percutaneous Vertebral Augmentation/Kyphoplasty Procedures

CPT codeLong descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateFinal CY 2017 OPPS SIFinal CY 2017 OPPS APCFinal CY 2017 OPPS payment rate
22513Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device (e.g., kyphoplasty), 1 vertebral body, unilateral or bilateral cannulation, inclusive of all imaging guidance; thoracicJ15124$7,064.07J15114$5,219.36.
22514Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device (e.g., kyphoplasty), 1 vertebral body, unilateral or bilateral cannulation, inclusive of all imaging guidance; lumbarJ151247,064.07J151145,219.36.
22515Percutaneous vertebral augmentation, including cavity creation (fracture reduction and bone biopsy included when performed) using mechanical device (e.g., kyphoplasty), 1 vertebral body, unilateral or bilateral cannulation, inclusive of all imaging guidance; each additional thoracic or lumbar vertebral body (list separately in addition to code for primary procedure)NN/APackagedNN/APackaged.

e. Strapping and Casting Applications (APCs 5101 and 5102)

For the CY 2016 update, APCs 5101 (Level 1 Strapping and Cast Application) and 5102 (Level 2 Strapping and Cast Application) are assigned to OPPS status indicator “S” (Procedure or Service, Not Discounted When Multiple; Paid under OPPS; separate APC payment) to indicate that the procedures and/or services assigned to these APCs are not discounted when two or more services are billed on the same date of service.

For the CY 2017 update, based on our analysis of the procedures assigned to APCs 5101 and 5102, in the CY 2017 OPPS/ASC proposed rule (81 FR 45648), we proposed to revise the status indicator assignment for these procedures from “S” to “T” (Procedure or Service, Multiple Procedure Start Printed Page 79625Reduction Applies; Paid under OPPS; separate APC payment) to indicate that the services are paid separately under the OPPS, but a multiple procedure payment reduction applies when two or more services assigned to status indicator “T” are billed on the same date of service. Because the procedures assigned to APCs 5101 and 5102 are often associated with surgical treatments, we stated that we believe that the proposed reassignment of these procedures to status indicator “T” is appropriate and ensures adequate payment for the procedures, even when the multiple procedure discounting policy applies. Also, there is no payment reduction unless there is another status indicator “T” procedure reported on the claim describing cast/splint/strap services. Consequently, we also proposed to revise the status indicator assignment for APCs 5101 and 5102 from “S” to “T” for the CY 2017 OPPS update to appropriately categorize the procedures assigned to these two APCs.

Comment: Several commenters opposed the status indicator reassignment from “S” to “T” for APCs 5101 and 5102, and stated that CMS did not provide substantive information for the proposed change, making it difficult for stakeholders to properly analyze the effects of the proposed change. Other commenters indicated that such a change contradicts current coding guidelines.

Response: As stated above, as part of our annual review, we examine the APC assignments for all items and services under the OPPS, which include review of status indicators, for appropriate placements in the context of our proposed policies for the update year. Although not every code, status indicator, or APC revision is discussed in the preamble of the proposed rule, they are nonetheless listed in Addendum B of the proposed rule. We note that Addendum B of the proposed rule is an Excel file that is arranged in CPT/HCPCS code order and shows the proposed OPPS status indicator and APC assignments, relative payment weights, and payment rates for every procedure code reported under the hospital OPPS.

Comment: Some commenters indicated that the National Correct Coding Initiative (NCCI) guidelines prevent the reporting of casting/strapping services when performed as part of a surgical procedure. Other commenters stated that the AMA CPT code instructions indicate that CPT codes 29700 through 29799 are only reported when the service is for a replacement procedure following a period of follow-up, or when the service is performed as the primary treatment without an associated restorative treatment or procedure(s). The commenters urged CMS not to finalize the proposal.

Response: We do not believe that the commenters completely understand the NCCI or CPT coding guidelines associated with the strapping and casting services. While it is true that strapping and casting services cannot be reported separately when performed as part of a surgical procedure, there are certain circumstances when strapping and casting services can be performed separate from a surgical procedure. It should be noted that Chapter IV (Surgery: Musculoskeletal System) of the 2016 NCCI Policy Manual for Medicare Services states that hospitals paid under the OPPS should report the appropriate casting, splinting, or strapping code in certain instances. Specifically, the NCCI Policy Manual specifies that for payment under the OPPS, if a hospital treats a fracture, dislocation, or injury with a cast, splint, or strap as an initial service without any other definitive procedure or treatment, the hospital should report the appropriate casting/splinting/strapping CPT code. In addition, while it is true that the procedures described by CPT codes 29700 through 29799 are only reported when the service is for a replacement procedure following a period of follow-up, or when the service is performed as the primary treatment without an associated restorative treatment or procedure(s), the CPT guidelines also elaborate that these removal/repair codes can be reported separately if the initial application of the cast, splint, or strapping was performed by a different entity.

Comment: Some commenters stated that casting and strapping services are performed in the emergency department for Medicare patients following a fall or injury, and these patients often require an extended period of observation before they are discharged. These commenters stated that revising the status indicator assignment for APCs 5101 and 5102 from “S” to “T” would no longer qualify hospitals for comprehensive observation service APC payments.

Response: We do not anticipate that this will be a significant issue because all observation services that are less than 8 hours are packaged into the payment for the emergency department visit. We do not believe that most Medicare beneficiaries would require long periods of observation after receiving cast/splint/strap services in the emergency room. Instead, we believe that physicians would appropriately assess the patient and determine whether the patient should be discharged to home or admitted as an inpatient.

After consideration of the public comments we received, we are finalizing our proposal, without modification, to revise the status indicator assignment for APCs 5101 and 5102 from “S” to “T” for CY 2017.

5. Nervous System Procedures/Services

a. Transcranial Magnetic Stimulation Therapy (TMS) (APCs 5721 and 5722)

Currently, three CPT codes exist to describe TMS therapy, specifically, CPT codes 90867, 90868, and 90869. As shown on Table 17 below, for CY 2016, we proposed to assign these codes to APC 5722 (Level 2 Diagnostic Tests and Related Services).

Table 17—Proposed CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Transcranial Magnetic Stimulation Therapy (TMS) Codes

CPT codeLong descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateProposed CY 2017 OPPS SIProposed CY 2017 OPPS APCProposed CY 2017 OPPS payment rate
90867Therapeutic repetitive transcranial magnetic stimulation (tms) treatment; initial, including cortical mapping, motor threshold determination, delivery and managementS5722$220.35S5722$231.67
Start Printed Page 79626
90868Therapeutic repetitive transcranial magnetic stimulation (tms) treatment; subsequent delivery and management, per sessionS5722220.35S5722231.67
90869Therapeutic repetitive transcranial magnetic stimulation (tms) treatment; subsequent motor threshold re-determination with delivery and managementS5722220.35S5721127.42

As we do every year, we review the APC assignments for all services under the hospital OPPS based on the latest claims data. For CY 2017, we did not propose to make any changes to the APC assignment for CPT codes 90867 and 90868, and proposed to continue to assign the procedures described by these procedure codes to APC 5722 because the geometric mean cost for these procedures were within the range of the geometric mean costs for procedures assigned to APC 5722. Specifically, our proposed rule claims data showed a geometric mean cost of approximately $196 based on 136 single claims (out of 136 total claims) for CPT code 90867, and approximately $187 for CPT code 90868 based on 5,239 single claims (out of 5,287 total claims). Because the geometric mean cost of $196 and $187 are relatively similar to the geometric mean cost of $242 for APC 5722, we proposed to continue to assign CPT codes 90867 and 90868 to APC 5722. However, for CPT code 90869, we proposed to reassign CPT code 90869 to APC 5721 (Level 1 Diagnostic Tests and Related Services) based on the latest claims data used for the proposed rule. Specifically, our claims data showed a geometric mean cost of approximately $119 based on 47 single claims (out of 47 total claims). Because the geometric mean cost of $133 for APC 5721 is relatively similar to the geometric mean cost of $119 for CPT code 90869, we proposed to reassign the procedure code to APC 5721.

Comment: One commenter disagreed with the proposal to reassign CPT code 90869 to APC 5721, and requested that CMS continue to assign the procedure to APC 5722. The commenter believed that the proposed CY 2017 payment rate of $127.42 is the result of low-volume and incorrect revenue code reporting. The commenter noted that, based on its analysis of the claims data, one hospital's inappropriate revenue code assignment resulted in a low cost-to-charge ratio, thereby decreasing the proposed payment rate. In addition, the commenter believed that the proposed payment rate for CPT code 90869, which involves a redetermination and TMS delivery and management services, should be higher than the proposed payment rate for CPT code 90868, which involves only TMS delivery and management services.

Response: As we have stated in section 20.5 (Clarification of HCPCS Code to Revenue Code Reporting) of Chapter 4 of the Medicare Claims Processing Manual, hospitals are responsible for reporting the correct revenue code on the claim form. Specifically, we state that we do not instruct hospitals on how to report the assignment of HCPCS codes to revenue codes for services provided under OPPS because hospitals' costs vary. Where explicit instructions are not provided, providers should report their charges under the revenue code that will result in the charges being assigned to the same cost center to which the cost of those services are assigned in the cost report. We note that the Medicare cost report form allows hospitals to report in a manner that is consistent with their own financial accounting systems and, therefore, should be accurate for each individual hospital. Moreover, we believe that the cost report data and their use in the OPPS cost estimation and payment rate development process, combined with potential penalties for inaccurate reporting, provide financial incentive for hospitals to report costs accurately. Furthermore, as we have stated repeatedly, beyond our standard OPPS trimming methodology that we apply to those claims that have passed various types of claims processing edits, it is not our general policy to judge the accuracy of hospital coding and charging for purposes of ratesetting. (We refer readers to the CY 2011 OPPS/ASC final rule with comment period (75 FR 71838) for further discussion.) Therefore, we will not question the accuracy of the coding and charging practices in this case.

In addition, based on the latest hospital outpatient claims data used for the final rule with comment period, we believe that APC 5721 is the most appropriate APC assignment for CPT code 90869. Specifically, our claims data show a geometric mean cost of approximately $107 for CPT code 90869 based on 54 single claims (out of 54 total claims), which is similar to the geometric mean cost of approximately $131 for APC 5721. We do not agree with the commenter that maintaining the assignment for CPT code 90869 to APC 5722 is appropriate because its geometric mean cost of approximately $239 is significantly higher than the geometric mean cost of $107 for CPT code 90869. Compared to the geometric mean cost of approximately $239 for APC 5722, we believe that APC 5721 is the most appropriate assignment for CPT code 90869 based on clinical and resource homogeneity with other procedures and services in the APC.

After consideration of the public comment we received, we are finalizing our proposal, without modification, to assign CPT code 90869 to APC 5721 for CY 2017. In addition, we are adopting as final, without modification, the proposed APC assignments for CPT codes 90867 and 90868 for CY 2017. Table 18 below lists the final status indicator and APC assignments and payment rates for the three TMS CPT codes for CY 2017. We refer readers to Addendum B of this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the Internet on the CMS Web site.Start Printed Page 79627

Table 18—Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Transcranial Magnetic Stimulation Therapy (TMS) Codes

CPT codeLong descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateFinal CY 2017 OPPS SIFinal CY 2017 OPPS APCFinal CY 2017 OPPS payment rate
90867Therapeutic repetitive transcranial magnetic stimulation (tms) treatment; initial, including cortical mapping, motor threshold determination, delivery and managementS5722$220.35S5722$232.21
90868Therapeutic repetitive transcranial magnetic stimulation (tms) treatment; subsequent delivery and management, per sessionS5722220.35S5722232.21
90869Therapeutic repetitive transcranial magnetic stimulation (tms) treatment; subsequent motor threshold re-determination with delivery and managementS5722220.35S5721127.05

b. Percutaneous Epidural Adhesiolysis (APC 5443)

As listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to continue to assign CPT codes 62263 (Percutaneous lysis of epidural adhesions using solution injection (e.g., hypertonic saline, enzyme) or mechanical means (e.g., catheter) including radiologic localization (includes contrast when administered), multiple adhesiolysis sessions; 2 or more days) and 62264 (Percutaneous lysis of epidural adhesions using solution injection (e.g., hypertonic saline, enzyme) or mechanical means (e.g., catheter) including radiologic localization (includes contrast when administered), multiple adhesiolysis sessions; 1 day) to APC 5443 (Level 3 Nerve Injections), with a proposed CY 2017 payment rate of approximately $711.

Comment: One commenter expressed concern with the proposed payment rate for CPT codes 62263 and 62264. The commenter stated that these codes were paid for appropriately in CY 2014 and CY 2015. However, the commenter believed that the payment for these procedures has declined beginning in CY 2016. The commenter also suggested that CMS reevaluate the APC structure and consider reinstating the APC classification that was in place during CY 2014 and CY 2015 in which the percutaneous adhesiolysis and radiofrequency neurotomy procedures were combined in the same APC. The commenter stated that the payment rate for the percutaneous adhesiolysis procedures should be the same as the radiofrequency neurotomy procedures, which are assigned to APC 5431 (Level 1 Nerve Procedures), with a proposed payment rate of approximately $1,557.

Response: Based on our analysis of the claims data used for the proposed rule, APC 5443 is the most appropriate APC assignment for CPT codes 62263 and 62264 based on its clinical and resource similarity to the procedures within this APC. Specifically, our analysis revealed a geometric mean cost of approximately $1,149 for CPT code 62263 based on 97 single claims (out of 107 total claims), and a geometric mean cost of approximately $839 for CPT code 62264 based on 2,188 single claims (out of 3,726 total claims). We believe that the geometric mean costs of CPT codes 62263 and 62264 are more similar to the geometric mean cost of approximately $743 for APC 5443. We believe that APC 5431 is not a more appropriate APC for CPT codes 62263 and 62264 because the geometric mean cost for this APC is approximately $1,627.

We also note that we reviewed the updated CY 2015 claims data used for this final rule with comment period. The proposed rule claims data were based on claims submitted from January 1, 2015 through December 31, 2015 and processed through December 31, 2015, while the final rule with comment period claims data are based on claims submitted from January 1, 2015 through December 31, 2015 and processed through June 30, 2016. Based on our analysis of the final rule with comment period claims data, we found a similar pattern for CPT codes 62263 and 62264. Specifically, we found a geometric mean cost of approximately $1,138 for CPT code 62263 based on 109 single claims (out of 121 total claims), and a geometric mean cost of approximately $842 for CPT code 62264 based on 2,243 single claims (out of 3,972 total claims). We note that the geometric mean costs for the significant procedures within APC 5443 range between $603 (CPT code 62310) and $1,083 (CPT code 64640). Because the geometric mean cost for APC 5431 is approximately $1,607, which is greater than the geometric mean cost for either CPT code 62263 or 62264, we believe that APC 5443 is the more appropriate APC assignment for these procedures.

After consideration of the public comment we received, we are adopting as final, without modification, the APC assignment to APC 5443 for CPT codes 62263 and 62264 for CY 2017. The final payment rates for these codes can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site).

c. Neurostimulator (APC 5463)

For CY 2017, we proposed to assign CPT code 0268T (Implantation or replacement of a carotid sinus baroreflex activation device; pulse generator only (includes intraoperative interrogation, programming, and repositioning when performed)) to APC 5463 (Level 3 Neurostimulator and Related Procedures), for which we proposed a CY 2017 geometric mean cost of approximately $18,325.

Comment: Commenters disagreed with CMS' proposal to assign CPT code 0268T to APC 5463. The commenters believed that CPT code 0268T would be more appropriately assigned to APC 5464 (Level 4 Neurostimulator and Related Procedures), for which we proposed a CY 2017 geometric mean cost of approximately $27,907. The commenters stated that the relatively Start Printed Page 79628few claims submitted to CMS that are eligible for CY 2017 ratesetting do not accurately reflect the cost of performing this procedure.

Response: We disagree with commenters' assertion that CPT code 0268T would be more appropriately assigned to APC 5464, which has a final CY 2017 APC geometric mean cost of approximately $27,802. Based on available claims data used for CY 2017 ratesetting, the proposed assignment of CPT code 0268T, which has a final CY 2017 geometric mean cost of approximately $21,794, to APC 5463 is appropriate. After consideration of the public comments we received, we are finalizing our proposal, without modification, to assign CPT code 0268T to APC 5463, which has a final CY 2017 APC geometric mean cost of approximately$18,300. The final payment rate for CPT code 0268T can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site).

6. Radiologic Procedures and Services

a. Imaging APCs

As a part of our CY 2016 comprehensive review of the structure of the APCs and procedure code assignments, we restructured the APCs that contain imaging services (80 FR 70392). The purpose of this restructuring of the OPPS APC groupings for imaging services was to improve the clinical and resource homogeneity of the services classified within the imaging APCs. Recently some stakeholders that provide imaging services in hospitals recommended some further restructuring of the OPPS imaging APCs, again for the purpose of improving the clinical and resource homogeneity of the services classified within these APCs. After reviewing the stakeholder recommendations, we agreed that further improvements can be achieved by making further changes to the structure of the APC groupings of the imaging services classified within the imaging APCs. Therefore, in the CY 2017 OPPS/ASC proposed rule (81 FR 45647), for CY 2017, we proposed to make further changes to the structure of the imaging APCs. In Table 11 of the proposed rule, we listed the CY 2016 imaging APCs, and in Table 12 of the proposed rule we listed our proposed CY 2017 changes to the imaging APCs. This proposal would consolidate the imaging APCs from 17 APCs in CY 2016 to 8 in CY 2017. The specific APC assignments for each service grouping were listed in Addendum B to the proposed rule, which is available via the Internet on the CMS Web site. We noted in the proposed rule that some of the imaging procedures are assigned to APCs that are not listed in the tables of the proposed rule (for example, the vascular procedures APCs). Also, the nuclear medicine services APCs were not included in this proposed APC restructuring. We invited public comments on our proposal to consolidate the imaging APCs from 17 APCs in CY 2016 to 8 in CY 2017.

Comment: One of the stakeholders mentioned above who suggested further restructuring of the OPPS imaging services earlier this year expressed concern with CMS' proposed restructured imaging APCs. In particular, the stakeholder was disappointed that the proposed restructured imaging APCs differed from its specific recommendations. The stakeholder supported, in part, CMS' proposal; in particular, the reassignment of the interventional radiology procedures from imaging APCs to vascular procedure APCs and the maintenance of separate APCs for nuclear medicine procedures. In addition, several other commenters also agreed with CMS' proposal to not change the nuclear medicine APCs. Further, the stakeholder and other commenters requested that CMS provide additional explanation regarding the clinical similarity of the services assigned to the proposed restructured APCs. These commenters also were displeased that CMS assigned procedures that are primarily performed by cardiologists (for example, echocardiography) to APCs that also include imaging tests that are primarily interpreted by radiologists. They requested that CMS separate echocardiography services from other imaging tests. They also pointed out that the proposed groupings are broader than the APC title (that use the term “Diagnostic Radiology”) descriptions because the proposed APC groupings include imaging tests that are interpreted by physicians other than radiologists. They also suggested additional APC and HCPCS code-specific assignments that are addressed below. The stakeholder and other commenters asked that CMS not adopt the proposed restructuring, and instead adopt their suggested APC structure, which would consolidate the imaging APCs, but would maintain separate APCs for echocardiography services that do not include x-ray, CT, and MRI services. Other commenters also requested that CMS not adopt the restructured imaging APCs. Some of these commenters suggested alternatives, such as maintaining separate APCs for ultrasound tests, but the commenters' primary focus was the payment rates and APC assignments of specific codes, which we discuss in detail below.

Response: We appreciate the stakeholder's and the commenters' support. We agree with the stakeholder that the term “Imaging” is more accurate for the titles for this series of APCs instead of the term “Diagnostic Radiology.” Therefore, we are modifying our proposal and changing the titles of this diagnostic radiology series of APCs to “Level X Imaging” (either without contrast or with contrast). Regarding the commenters' request for further explanation on the clinical similarity of the services assigned to the imaging APCs, we remind commenters that we proposed to reassign the interventional radiology procedures to vascular procedure APCs (APCs 5181, 5182, 5183), recognizing the greater clinical similarity of the reassigned interventional services to the vascular/catheterization procedures that are currently assigned to the vascular procedure APCs. The remaining services that are assigned to the restructured imaging APCs are all diagnostic imaging services that almost all belong to one of the following four primary, well-established imaging modalities: x-ray, ultrasound, computed tomography (CT), or magnetic resonance (MR). When these services are performed in the hospital outpatient department, a technician (sometimes aided by a physician) captures the images by operating one of the types of equipment used for x-ray, ultrasound, CT, or MR. These imaging services are assigned to an APC in either the “without contrast” imaging series or the “with contrast” imaging series, as required by section 1833(t)(2)(G) of the Act. Assignment of an imaging service to a specific APC within each of these two imaging series (with or without contrast) depends upon the use (or non-use) of a contrast agent and the geometric mean cost of the service, with the range of geometric mean costs within an APC governed by the 2 times rule. It is not relevant to the structure of the APC groupings that physicians of different specialties interpret certain tests (for example, cardiologists generally interpret imaging of the heart, radiologists interpret most other imaging tests, orthopedic surgeons interpret extremity images, and neurologists interpret brain images, among others). Furthermore, APC groupings in general do not necessarily correspond to groupings of procedures that are performed by a given physician Start Printed Page 79629specialty. Some of the APC groupings resemble to some extent traditional physician specialty classifications (for example, the urology series of APCs), but many others do not. We believe that imaging services, which are diagnostic tests including x-rays, ultrasounds (including echocardiography), CT scans, and MRIs are sufficiently clinically similar for APC grouping purposes. We also believe that there is no special advantage to the current CY 2016 scheme that subdivides imaging services into subclasses for x-rays, ultrasounds, etc. The commenters believed that their suggested restructured APCs that were presented to CMS included APCs that grouped these four modalities together (except echocardiography). We believe that the proposed structure of the imaging services APCs satisfies the requirements of section 1833(t)(2)(B) of the Act with greater flexibility (versus the current structure) and without unnecessarily restrictive groupings limited to clinically insignificant traditional modality classifications (for example, CT and x-ray, among others). We see no compelling reason to separate echocardiography procedures, an imaging test of the heart, from other imaging tests in the APC groupings. Furthermore, all other nonimaging diagnostic tests are grouped in APCs (APCs 5721 through 5724) that are separate and distinct from the imaging services APCs because we believe that these nonimaging diagnostic tests are sufficiently clinically dissimilar to imaging tests to warrant separate APCs.

Comment: One commenter objected to the proposed exception to the 2 times rule for APC 5521 (Level 1 Diagnostic Radiology without Contrast), and requested that we explain the basis for the exception further. The commenter also requested that CMS reassign CPT code 75571 from APC 5521 to a higher paying APC for CY 2017.

Response: We explain the basis for the 2 times rule and the proposed exceptions in the CY 2017 OPPS/ASC of the proposed rule (81 FR 45644 through 45645). Table 9 of the CY 2017 OPPS/ASC of the proposed rule listed the proposed APC exceptions to the 2 times rule for CY 2017 (81 FR 45645). The proposal to grant an exception to the 2 times rule for APC 5521 followed from a request made prior to the proposed rule. At that time, the request was that CMS reassign CPT code 75571 from APC 5731 (Level 1 Minor Procedures) to an imaging APC based on greater clinical similarity to other CT services assigned to the imaging APCs. We agreed with the request and proposed to reassign CPT code 75571 to APC 5521, which is the lowest cost imaging APC in the series. Because CPT code 75571 has such a low geometric mean cost ($22.87), its assignment to any imaging APC, even the lowest cost imaging APC 5521 (with a geometric mean cost of $61.53), results in a 2 times rule violation. We proposed to make an exception to the 2 times rule for APC 5521 for CY 2017 because we believed that, for clinical reasons, CPT code 75571 should be assigned to an imaging APC with the other CT services. Therefore, we are finalizing our proposal, without modification, to reassign CPT code 75571 to APC 5521 as a result of the low geometric mean cost of the procedure. The payment rate for CPT code 75571 increases from $12.70 in CY 2016 to $59.84 in CY 2017.

Comment: Several commenters objected to the proposed assignment of CPT code 77080 (Dual-energy X-ray absorptiometry (DXA), bone density study, 1 or more sites; axial skeleton (e.g., hips, pelvis, spine)) to APC 5521. The proposed assignment would reduce the payment rate for this procedure from its current CY 2016 payment rate of $100.69 to $63.33 in CY 2017. The commenters believed that the payment reduction could impair access to this valuable preventive service. The commenters requested that CMS assign CPT code 77080 to a higher paying imaging APC, along with other services that have greater resource similarity to the procedure described by CPT code 77080.

Response: We agree with the commenters. Therefore, we are modifying our proposal, and assigning CPT code 77080 to APC 5522 (Level 2 Diagnostic Radiology without Contrast) for CY 2017. CPT code 77080 has a geometric mean cost of $91.08, which increases the probability of a 2 times rule violation when compared to the second lowest-cost significant procedure assigned to APC 5521, the procedure described by CPT code 71010, which has a geometric mean cost of $46.11. We note that we are not comparing the geometric mean cost of CPT code 77080 to that of CPT code 75571, which is a significant procedure assigned to APC 5521 and that has a geometric mean cost of $22.87, for a 2 times rule violation because as described above, this procedure code assignment was the basis for the exception from the 2 times rule for APC 5521 in the proposed rule. In summary, we are assigning CPT code 77080 to APC 5522, with a final payment rate of $112.69 for CY 2017.

Comment: Several commenters objected to the proposed assignment of HCPCS code G0297 (Low dose CT scan (LDCT) for lung cancer screening) to APC 5521 because it would reduce the payment rate for this procedure from $112.49 in CY 2016 to $63.33 in CY 2017. The commenters expressed concern that such a payment reduction could result in fewer Medicare beneficiaries receiving this service. The commenters also expressed concern about the APC assignment of HCPCS code G0296 (Counseling visit to discuss need for lung cancer screening (LDCT) using low dose CT scan (service is for eligibility determination and shared decision making)) to APC 5821 (Level 1 Health and Behavior Services). The commenters believed that the proposed assignment also would result in a payment reduction from $69.65 in CY 2016 to $25.09 in CY 2017, and could impair access to this cancer screening service. The commenters requested that CMS assign these services to higher paying APCs in the CY 2017 final rule with comment period.

Response: We agree, in part, with the commenters. There were no claims data for these services in CY 2016. Therefore, the CY 2016 APC assignments reflected our best estimate at an appropriate APC assignment in the absence of cost information. For CY 2017, we have cost information for each of these services from the CY 2015 claims data. For HCPCS code G0296, the final rule geometric mean cost is $130.44, but with only 21 single claims. Therefore, we believe that this service should be assigned to APC 5822 (Level 2 Health and Behavior Services), with a payment rate of $70.23. We believe that the services in APC 5822 have greater resource similarity to the procedure described by HCPCS code G0296 than the services assigned to APC 5821. We will reevaluate the APC assignment of this procedure for the CY 2018 rulemaking. For HCPCS code G0297, the CY 2017 final rule geometric mean cost is $49.38. APC 5521, to which we proposed to assign HCPCS code G0297, has a geometric mean cost of $65.16. The next higher level APC in the imaging without contrast APC series, APC 5522, has a geometric mean cost of $119.56. Because the geometric mean cost of HCPCS code G0297 is more comparable to the geometric mean cost of APC 5521 than APC 5522, we believe that resource homogeneity is better supported by the assignment of HCPCS code G0297 to APC 5521. Therefore, in summary, we are modifying our proposal and assigning HCPCS code G0296 to APC 5822. However, we are finalizing our proposal, without modification, to assign HCPCS code G0297 to APC 5521 for CY 2017.

Comment: One commenter requested that CMS not reassign CPT code 78811 Start Printed Page 79630(Positron emission tomography (PET) imaging; limited area (e.g., chest, head/neck) from APC 5594 (Level 4 Nuclear Medicine and Related Services) to APC 5593 (Level 3 Nuclear Medicine and Related Services) for CY 2017. The commenter believed that the reassignment is premature because of the lack of sufficient claims data to support the reassignment from the CY 2016 assignment to APC 5594.

Response: We disagree with the commenter. Although there are only 117 single claims for this service in the final rule data, we believe that this is a sufficient number upon which to base an APC assignment. The geometric mean cost of CPT code 78811 has been consistent for the past 2 years. In CY 2016 the geometric mean cost was $912.62 (based on 112 single claims), and the geometric mean cost for CY 2017 is $918.39 (based on 117 single claims). Furthermore, the geometric mean cost of CPT code 78811 is significantly lower than the geometric mean cost of APC 5593 ($1,170.73). Therefore, we believe that APC 5593 is the most appropriate APC assignment for CPT code 78811.

Comment: A few commenters requested that CMS maintain the CY 2016 APC assignment for CPT code 75563 (Cardiac magnetic resonance imaging for morphology and function without contrast material(s), followed by contrast material(s) and further sequences; with stress imaging) to APC 5593 (Level 3 Nuclear Medicine and Related Services), instead of its proposed assignment to APC 5573 (Level 3 Diagnostic Radiology with Contrast). The commenters expressed concern that the proposed payment reduction from $1,108 to $777 could reduce access to this imaging test. The commenters believed that CPT code 75563 has greater clinical and resource similarity to the services in APC 5593 than the services in APC 5573. In particular, the commenters asserted that CPT code 75563 is similar to CPT code 78452 (Myocardial perfusion imaging, tomographic (SPECT) (including attenuation correction, qualitative or quantitative wall motion, ejection fraction by first pass or gated technique, additional quantification, when performed); multiple studies, at rest and/or stress (exercise or pharmacologic) and/or redistribution and/or rest reinjection) because both tests are performed under a stress protocol. The commenter also requested that CMS reassign CPT code 75557 (Cardiac magnetic resonance imaging for morphology and function without contrast material) from APC 5523 (Level 3 Imaging without Contrast) to APC 5591 (Level 1 Nuclear Medicine and Related Services). The commenter believed that such a reassignment would improve clinical and resource similarity with regard to CPT code 75557. Another commenter requested that CMS not assign any non-nuclear medicine services to the nuclear medicine APC series.

Response: We agree with the commenter that requested that we not assign any of these magnetic resonance procedure codes to nuclear medicine APCs. For instance, APC 5593 contains procedures that describe nuclear medicine tests, and CPT code 75563 is a specific type of MRI and not a nuclear medicine test. Also, the geometric mean cost of CPT code 75563 is $745 and the geometric mean cost of the APC to which it is assigned, APC 5573, is $781. These geometric mean costs are very similar. However, the geometric mean cost of APC 5593 is $1,171, which is significantly higher than the geometric mean cost of CPT code 75563. Therefore, assigning CPT code 75563 to APC 5593 would assign the procedure to an APC with clinically dissimilar nuclear medicine tests and resource dissimilar tests that have a geometric mean cost of $1,171 (as compared to the $745 geometric mean cost of CPT code 75563). Therefore, we are finalizing our proposal, without modification, to assign CPT code 75563 to APC 5573. Similarly, the procedure described by CPT code 75557 is not a nuclear medicine test and, therefore, should not be assigned to a nuclear medicine APC such as APC 5591. The geometric mean cost of CPT code 75557 is $266, and the geometric mean cost of the APC to which it is assigned (APC 5523) is $223. Therefore, we believe that APC 5523 is an appropriate APC assignment for CPT code 75557 from a resource perspective. Also, there are many other MRI procedure codes, like CPT code 75557, assigned to APC 5523. In addition, we are reassigning a related code, CPT code 75559 (Cardiac magnetic resonance imaging for morphology and function without contrast material; with stress imaging), from APC 5592 (Level 2 Nuclear Medicine and Related Services) to APC 5523 (Level 3 Imaging without Contrast). The geometric mean costs of these two APCs are comparable, but because the procedure described by CPT code 75559 is not a nuclear medicine test, we believe that APC 5523 is a more appropriate APC assignment than APC 5592 for reasons of clinical similarity.

Comment: One commenter requested that CMS reassign CPT code 70559 (Magnetic resonance (e.g., proton) imaging, brain (including brain stem and skull base), during open intracranial procedure (e.g., to assess for residual tumor or residual vascular malformation); without contrast material(s), followed by contrast material(s) and further sequences) from APC 5181 (Level 1 Vascular Procedures) to an imaging APC because the commenter believed that an imaging APC would be more clinically appropriate than a vascular procedures APC.

Response: We agree with the commenter that CPT code 70559 should be assigned to an imaging APC because this service is more similar to other imaging services than to the procedures assigned to APC 5181. Therefore, we are modifying our proposal, and reassigning CPT code 70559 to APC 5571 (Level 1 Imaging with Contrast).

Comment: A few commenters requested that CMS reassign four HCPCS/CPT codes from APC 5572 (Level 2 Diagnostic Radiology with Contrast) to APC 5573 (Level 3 Diagnostic Radiology with Contrast):

  • HCPCS code C8929 (Transthoracic echocardiography, with contrast, or without contrast followed by with contrast, real-time with image documentation (2D), includes M-mode recording, when performed, complete, with spectral Doppler echocardiography, and with color flow Doppler echocardiography);
  • CPT code 73722 (Magnetic resonance (e.g., proton) imaging, any joint of lower extremity; with contrast material(s));
  • CPT code 73222 (Magnetic resonance (e.g., proton) imaging, any joint of upper extremity; with contrast material(s)); and
  • CPT code 72126 (Computed tomography, cervical spine; with contrast material).

These commenters believed that the procedures described by these four codes have greater clinical and resource similarity to the procedures assigned to APC 5573.

Response: We agree, in part, with the commenters. In particular, we believe that HCPCS code C8929 belongs in the same APC with the other echocardiography with contrast services, which is APC 5573, based on clinical and resource similarity resulting from the use of contrast. We also believe that the geometric mean costs of CPT code 73722 ($559.13) and CPT code 73222 ($606.13) support the assignment of these procedures to APC 5573, which has a geometric mean cost of $675.23. However, the final rule geometric mean cost for CPT code 72126 is $363.15. Therefore, we believe that APC 5572 is the more appropriate APC assignment for this procedure.Start Printed Page 79631

Comment: A few commenters requested that CMS reassign HCPCS codes G0105 (Colorectal cancer screening; colonoscopy on individual at high risk) and G0121 (Colorectal cancer screening; colonoscopy on individual not meeting criteria for high risk) from APC 5525 (Level 5 Diagnostic Radiology without Contrast) to a more clinically appropriate gastroenterology APC.

Response: We agree with the commenters that a gastroenterology APC would be more clinically appropriate for these colonoscopy services. Therefore, we are modifying our proposal, and reassigning HCPCS codes G0105 and G0121 to APC 5311 (Level 1 Lower GI Procedures). With the reassignment of HCPCS codes G0105 and G0121 from APC 5525 to APC 5311, only five procedures remain in APC 5525. We believe that these remaining five procedures (four of which are non-contrast echocardiography services) can be grouped into APC 5524 (Level 4 Diagnostic Radiology without Contrast), which will be renamed Level 4 Imaging without Contrast. APC 5524 contains other clinically similar non-contrast echocardiography services and the reassignment of these five procedures comports with the provision of the 2 times rule. Therefore, we also are reassigning CPT codes 75984, 93312, 93313, 93315, and 93318 from APC 5525 to APC 5524, and deleting APC 5525.

Comment: Some commenters requested that several procedures be reassigned to the next higher level imaging APC within the APC series. The commenters believed that reassignment of these procedures would improve resource homogeneity within these APCs. These procedures and our responses to this request are listed in Table 19 below.

Table 19—Services Requested To Be Reassigned to the Next Higher Level Imaging APC

CPT codeLong descriptorProposed CY 2017 SIProposed CY 2017 APCCMS response (agree or disagree with commenter)Final CY 2017 SIFinal CY 2017 APC
70545Magnetic resonance angiography, head; with contrast material(s)S5571DisagreeS5571
70548Magnetic resonance angiography, head; with contrast material(s)S5571DisagreeS5571
70557Magnetic resonance (e.g., proton) imaging, brain (including brain stem and skull base), during open intracranial procedure (e.g., to assess for residual tumor or residual vascular malformation); without contrast materialS5523DisagreeS5523
71270Computed tomography, thorax; without contrast material, followed by contrast material(s) and further sectionsQ35571DisagreeQ35571
76010Radiologic examination from nose to rectum for foreign body, single view, childQ15521DisagreeQ15521
76498Unlisted magnetic resonance procedure (e.g., diagnostic, interventional)S5521DisagreeS5521
76641Ultrasound, breast, unilateral, real time with image documentation, including axilla when performed; completeQ15521AgreeQ15522
76642Ultrasound, breast, unilateral, real time with image documentation, including axilla when performed; limitedQ15521DisagreeQ15521
76816Ultrasound, pregnant uterus, real time with image documentation, follow-up (e.g., re-evaluation of fetal size by measuring standard growth parameters and amniotic fluid volume, re-evaluation of organ system(s) suspected or confirmed to be abnormal on a previous scan), transabdominal approach, per fetusQ15521AgreeQ15522
76821Doppler velocimetry, fetal; middle cerebral arteryQ15521AgreeQ15522
76857Ultrasound, pelvic (nonobstetric), real time with image documentation; limited or follow-up (e.g., for follicles)Q35521AgreeQ35522
C8903Magnetic resonance imaging with contrast, breast; unilateralQ35571DisagreeQ35571
C8918Magnetic resonance angiography with contrast, pelvisQ35571DisagreeQ35571

Response: For the procedures in the above table that we disagreed with the commenter regarding the most appropriate APC assignment, the geometric mean cost of each of these procedure codes is very similar to the geometric mean cost of the APC to which we proposed to reassign the procedure in the proposed rule. Therefore, we are finalizing our proposal, without modification, to reassign these proposed procedures to the proposed APCs indicated. For the procedure codes in the table above that we are modifying our proposal to reassign to a different APC than that which was proposed, the geometric mean cost of the procedure is more consistent with the next higher level APC to which we agree supports a more appropriate APC assignment.Start Printed Page 79632

Comment: One commenter requested that CMS reassign several procedures to APCs other than any of the imaging APCs. The commenter believed that these procedures are not clinically similar to the other imaging services assigned to the imaging APCs. These procedure codes and our responses are listed in Table 20 below.

Response: We refer readers to the table below for the final CY 2017 APC assignments for the suggested procedure codes. We agree with the commenter that all of the suggested procedures should be reassigned to a different APC, except for the procedures described by CPT code 62303 and HCPCS code C9733. We believe that these two procedure codes describe imaging tests and, therefore, are properly assigned to an APC in the imaging APC series.

Table 20—Additional Services Requested To Be Reassigned to Non-Imaging APCS

CPT/ HCPCS codeLong descriptorProposed CY 2017 SIProposed CY 2017 APCCMS response (agree or disagree with commenter)Final CY 2017 SIFinal CY 2017 APC
36002Injection procedures (e.g., thrombin) for percutaneous treatment of extremity pseudoaneurysmS5524AgreeT5181
43752Naso- or oro-gastric tube placement, requiring physician's skill and fluoroscopic guidance (includes fluoroscopy, image documentation and report)Q35523AgreeQ15735
43756Duodenal intubation and aspiration, diagnostic, includes image guidance; single specimen (e.g., bile study for crystals or afferent loop culture)Q15524AgreeQ15301
47531Injection procedure for cholangiography, percutaneous, complete diagnostic procedure including imaging guidance (e.g., ultrasound and/or fluoroscopy) and all associated radiological supervision and interpretation; existing accessQ25524AgreeQ25341
62303Myelography via lumbar injection, including radiological supervision and interpretation; thoracicQ25524DisagreeQ25524
75801Lymphangiography, extremity only, unilateral, radiological supervision and interpretationQ25524AgreeQ25181
91200Liver elastography, mechanically induced shear wave (e.g., vibration), without imaging, with interpretation and reportQ15521AgreeQ15721
93982Noninvasive physiologic study of implanted wireless pressure sensor in aneurysmal sac following endovascular repair, complete study including recording, analysis of pressure and waveform tracings, interpretation and reportQ15521AgreeQ15721
C9733Non-ophthalmic fluorescent vascular angiographyQ25523DisagreeQ25523

Comment: One commenter requested that CMS reassign CPT code 91200 from APC 5521 to APC 5721, and modify the proposed status indicator assignment from “Q1” (conditionally packaged) to “S” (Paid under OPPS; separate APC payment.) in order to separately pay for the test under all circumstances.

Response: Although we agree with the commenter regarding the APC assignment for clinical similarity purposes, we disagree with the commenter regarding the status indicator assignment. The procedure described by CPT code 91200 is an ancillary ultrasound diagnostic test, not unlike the ultrasound tests that were packaged as a part of our ancillary services packaging policy in CY 2015. (We refer readers to the CY 2015 OPPS/ASC final rule with comment period (79 FR 66819) for a further discussion of the ancillary services packaging policy.) Therefore, we are finalizing our proposal, without modification, to assign CPT code 91200 to APC 5721, with a status indicator of assignment of “Q1” for CY 2017.

Comment: A few commenters requested that CMS modify the status indicator assignment for HCPCS code C9733 from “Q2” to a separately payable status indicator (for example, status indicator “S”). The commenters noted that status indicator “Q2” indicates that payment for the procedure described by HCPCS code C9733 is conditionally packaged when provided in conjunction with other procedures assigned to status indicator “T,” which are primarily surgical procedures.

Response: We have responded to this comment in past rules. The service described by HCPCS code C9733 is primarily an intraoperative imaging service. Therefore, it is conditionally packaged under § 419.2(b)(14), which packages intraoperative items and services. When the procedure described by HCPCS code C9733 is not furnished in conjunction with a surgical procedure, then the service is paid separately. We believe that the OPPS payments, separate or packaged, for surgical procedures in which this test is performed in conjunction with (for example, breast reconstruction) are more than adequate to cover the cost of the service described by HCPCS code C9733 for Medicare beneficiaries in need of this service.

Comment: One commenter requested that CMS assign three procedures from APC 5181 (Level 1 Vascular Procedures) to APC 5182 (Level 2 Vascular Procedures) because the geometric mean costs of these procedures are more Start Printed Page 79633comparable to the geometric mean cost of APC 5182 than that of APC 5181:

  • CPT code 75731 (Angiography, adrenal, unilateral, selective, radiological supervision and interpretation);
  • CPT code 75746 (Angiography, pulmonary, by nonselective catheter or venous injection, radiological supervision and interpretation); and
  • CPT code 75810 (Splenoportography, radiological supervision and interpretation).

Response: We disagree with the commenter. Based on the CY 2017 final rule updated claims data, CPT code 75731 only has one single claim, CPT code 75746 only has 5 single claims, and CPT code 75810 only has 2 single claims. The number of claims for these services is too low upon which to base an APC reassignment for better resource homogeneity. Therefore, we are finalizing our proposal, without modification, to assign these three procedures to APC 5181.

After consideration of the public comments we received, we are finalizing the proposals, with the modifications as described above in the responses to the comments on the restructuring and reorganization of the imaging APCs. Table 21 below lists the final seven CY 2017 imaging APCs (not including the four nuclear medicine APCs). All of these APCs are assigned to status indicator “S,” although payment for some of the procedures assigned to these APCs are conditionally packaged and are instead assigned to status indicator “Q1” or “Q2.”

Table 21—Final CY 2017 Imaging APCs

CY 2017 APCCY 2017 APC title
5521Level 1 Imaging without Contrast.
5522Level 2 Imaging without Contrast.
5523Level 3 Imaging without Contrast.
5524Level 4 Imaging without Contrast.
5571Level 1 Imaging with Contrast.
5572Level 2 Imaging with Contrast.
5573Level 3 Imaging with Contrast.

b. Radiation Oncology (APCs 5092, 5611, and 5627)

Comment: A few commenters disagreed with CMS' proposed reassignment of CPT code 19298 (Placement of radiotherapy afterloading brachytherapy catheters (multiple tube and button type) into the breast for interstitial radioelement application following (at the time of or subsequent to) partial mastectomy, includes imaging guidance) to APC 5092 (Level 2 Breast/Lymphatic Surgery and Related Procedures), with a payment rate of approximately $4,395 for CY 2017. In CY 2016, this code is assigned to APC 5093 (Level 3 Breast/Lymphatic Surgery and Related Procedures), with a payment rate of approximately $7,558. The commenters believed that the previous APC assignment to APC 5093 is appropriate and requested that CMS continue to assign CPT code 19298 to APC 5093 for CY 2017.

Response: The geometric mean cost for CPT code 19298 decreased from approximately $6,269 in CY 2016 to approximately $5,128 for CY 2017. This change prompted the proposed reassignment of this code from the Level 3 APC to Level 2. We do not believe that the CY 2017 geometric mean cost supports continued assignment to APC 5093. After consideration of the public comment we received, we are finalizing our proposal, without modification, and reassigning CPT code 19298 to APC 5092 for CY 2017.

Comment: A few commenters suggested that CMS reassign CPT codes 77424 (Intraoperative radiation treatment delivery, x-ray, single treatment session) and 77425 (Intraoperative radiation treatment delivery, electrons, single treatment session) to an APC in the radiation therapy series other than APC 5093 (Level 3 Breast/Lymphatic Surgery and Related Procedures) because these radiation treatment services are not clinically similar to the breast procedures that are assigned to APC 5093.

Response: We agree with the commenters. The assignment of these codes to APC 5093 was intended to be temporary until more claims data for these codes was available. Based on these codes being radiation treatment delivery codes and their geometric mean costs for CPT codes 77424 (approximately $8,701) and 77425 (approximately $7,172), we are reassigning these services to APC 5627 (Level 7 Radiation Therapy), with a geometric mean cost of approximately$7,664. We note that if planning and preparation and imaging services are repackaged into the single session cranial SRS codes (that are assigned to APC 5627) in the future, this could cause the geometric mean cost for the single session cranial SRS codes to increase such that it may no longer be appropriate to group CPT codes 77424 and 77425 with the single session SRS codes in the same APC. However, for CY 2017, APC 5627 is the most appropriate APC for CPT codes 77424 and 77425, both clinically and from a resource-cost perspective. The final payment rate for these codes can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site).

Comment: A few commenters requested that CMS create a fourth level in the Therapeutic Radiation Treatment Preparation APC series and assign CPT code 77301 (Intensity modulated radiotherapy plan, including dose-volume histograms for target and critical structure partial tolerance specifications) to this new APC. The commenters believed that the costs from the claims data for CPT code 77301 are lower than the actual current costs because the AMA CPT Editorial Panel bundled simulation services (that used to be separately coded) into the payment for CPT code 77301.

Response: We prefer to wait for the actual claims data before reassigning a code because the cost of a new bundled code is often difficult to predict and often the cost of the new bundled code is significantly less than the sum of the costs of the individual codes that contribute to the bundle. For CY 2017, we are finalizing our proposal to reassign CPT code 77301 to APC 5613.

Comment: A few commenters requested that CMS not reassign CPT codes 77370, 77280, and 77333 to APC 5611 (Level 1 Therapeutic Radiation Treatment Preparation) for CY 2017. These codes are currently assigned to the Level 2 Therapeutic Radiation Treatment Preparation APC (APC 5612) in CY 2016. The payment would decrease from $167 in CY 2016 to $117 in CY 2017.

Response: As we do annually, we examined the APCs in this series. We noticed that the difference in the geometric mean costs between Level 1 and 2 was not significant. Therefore, we proposed to consolidate these two APCs into a single APC and reduce the number of levels in the Therapeutic Radiation Treatment Preparation APC series from four to three. We believe that this change promotes resource homogeneity without excessive granularity with consecutive levels having almost the same mean cost. The range of geometric mean costs for significant services in the proposed CY 2017 APC 5611 (Level 1 Therapeutic Radiation Treatment Preparation) is $101 to $197, which comports with the 2 times rule. Therefore, we are finalizing this proposed APC structure and CPT codes 77370, 77280, and 77333 are assigned to APC 5611 for CY 2017.Start Printed Page 79634

7. Skin Substitutes (APCs 5053 through 5055)

For CY 2017, we proposed to assign skin substitute procedures to APCs 5053 through 5055 (Level 3 through 5 Skin Procedures). The cost of the procedures is affected by whether the skin substitute product is low cost or high cost, the surface area of the wound, and the location of the wound.

Comment: Commenters disagreed with the proposed APC assignments for procedures described by HCPCS code C5277 (Application of low cost skin substitute graft to face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple digits, total wound surface area greater than or equal to 100 cm2; First 100 cm2 wound surface area, or 1% of body area of infants and children) to APC 5053 (Level 3 Skin Procedures) and procedures described by CPT code 15277 (Application of skin substitute graft to face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple digits, total wound surface area greater than or equal to 100 cm2; First 100 cm2 wound surface area, or 1% of body area of infants and children) to APC 5054 (Level 4 Skin Procedures). The commenters stated that the proposed payment rates for APC 5053 and APC 5054 do not accurately reflect the cost of providing the services described by HCPCS code C5277 and CPT code 15277. The commenters further stated that the cost of applying a skin substitute product to a larger wound (surface area greater than or equal to 100 cm2) should be similar, irrespective of whether the product is applied to the head, genitalia, hands, or feet as compared to the trunk, legs, or arms. The commenters compared the differences between procedures described by HCPCS code C5277 and procedures described by HCPCS code C5273 (Application of low cost skin substitute graft to trunk, arms, legs, total wound surface area greater than or equal to 100 cm2; First 100 cm2 wound surface area, or 1% of body area of infants and children). Procedures described by HCPCS code C5273 are assigned to APC 5054, which has a higher geometric mean cost than APC 5053. The commenters did a similar comparison between procedures described by CPT code 15277 and procedures described by CPT code 15273 (Application of skin substitute graft to trunk, arms, legs, total wound surface area greater than or equal to 100 cm2; First 100 cm2 wound surface area, or 1% of body area of infants and children). Procedures described by CPT code 15273 are assigned to APC 5055 (Level 5 Skin Procedures), which has a higher geometric mean cost than APC 5054. One commenter believed that the low volume of single claims for procedures described by HCPCS code C5277 and CPT code 15277 may have resulted in inaccurately low geometric mean costs.

Response: We disagree with the commenters. We reviewed the services in both APC 5053 and APC 5054 and found that procedures described by HCPCS code C5277 and CPT code 15277 have both clinical and resource homogeneity to the other 11 procedures assigned to these two APCs. Therefore, there is no justification to assign these procedures to APCs with higher geometric mean costs. The final geometric mean cost of procedures described by HCPCS code C5277 is approximately $810 (based on 26 single claims), which is more comparable to the final geometric mean cost of APC 5053 ($466) than the geometric mean cost of APC 5054 ($1,468). Also, regarding the accuracy of the cost data for these codes, we again note our longstanding policy provides that, beyond our standard OPPS trimming methodology that we apply to those claims that have passed various types of claims processing edits, it is not our general policy to judge the accuracy of hospital coding and charging for purposes of ratesetting. (We refer readers to 75 FR 71838 for a detailed discussion.) Therefore, after consideration of the public comments we received, we are finalizing our proposal, without modification, to assign HCPCS code C5277 to APC 5053 and CPT code 15277 to APC 5054.

Comment: Commenters requested that APC 5053 (Level 3 Skin Procedures) be divided into two APCs in order to separate more resource intensive services using skin substitute products (procedures described by HCPCS codes C5271, C5275, and C5277) from other, less resource intensive skin procedures. The commenters believed an additional APC level within the skin procedures APC series between the current level 3 and level 4 would more closely reflect the cost of the low cost skin substitute application procedures. The commenters also believed that the current APC structure incentivizes hospitals to prefer high cost skin substitutes over low cost skin substitutes.

Response: We disagree with the commenters. We do not believe that it is necessary to expand the skin procedures APC series to six levels. We reviewed the services assigned to APC 5053 and found that all of the procedures assigned to the APC have both sufficient clinical and resource homogeneity. The highest volume low cost skin substitute application procedure, described by HCPCS code C5271 (Application of low cost skin substitute graft to trunk, arms, legs, total wound surface area up to 100 sq cm; first 25 sq cm or less wound surface area), had a final geometric mean cost of $596 (11,256 single claims), and the final geometric mean cost of APC 5053 was $466. While the geometric mean cost of procedures described by HCPCS code C5271 is higher than the geometric mean cost of APC 5053, the difference is well within the span of the two times rule.

In conclusion, we do not believe that there is justification to create another level within the skin procedures APC series by dividing APC 5053 into two APCs. Therefore, after consideration of the public comments we received, we are finalizing our proposal, without modification, to maintain the current five levels of skin procedures APCs.

8. Urology System Procedures and Services

a. Chemodenervation of the Bladder (APC 5373)

As listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 52287 (Cystourethroscopy, with injection(s) for chemodenervation of the bladder) to APC 5373 (Level 3 Urology and Related Services), with a payment rate of approximately $1,642. In addition, we proposed to reassign its status indicator from “T” (Procedure or Service, Multiple Procedure Reduction Applies. Paid under OPPS; separate APC payment.) to “J1” (Hospital Part B services paid through a comprehensive APC) to indicate that all covered Part B services on the claim are packaged with the primary “J1” service for the claim, except for services with OPPS status indicators “F,” “G,” “H,” “L,” and “U”; ambulance services; diagnostic and screening mammography; all preventive services; and certain Part B inpatient services.

We proposed to continue to assign CPT code 52287 to APC 5373 based on the claims data used for the proposed rule. Specifically, our analysis of the claims data showed a geometric mean cost of approximately $2,219 for CPT code 52287 based on 7,464 single claims (out of 7,609 total claims), which fits more appropriately in APC 5373, whose geometric mean cost is approximately $1,716. We did not propose to assign CPT code 52287 to APC 5374 (Level 4 Urology and Related Services) because we would have overpaid for the procedure because the geometric mean Start Printed Page 79635cost for this APC is approximately $2,642.

Comment: One commenter disagreed with the proposed APC assignment for CPT code 52287, and requested that CMS reassign the procedure to APC 5374. The commenter explained that CPT code 52287 describes a procedure that involves the use of the BOTOX® drug for the treatment of overactive bladder (OAB) and detrusor overactivity associated with a neurologic condition (NDO). The commenter also stated that because of the proposed revision to the code's status indicator from “T” to “J1,” the BOTOX® used in the procedure would no longer be paid separately, whereas in CY 2016 the drug is paid separately under HCPCS code J0585 (Injection, onabotulinumtoxin a, 1 unit). According to the commenter, the resource cost of performing the procedure with 200 units of the drug is significantly greater than that of furnishing 100 units. Consequently, the commenter stated that the payment rate for APC 5373 is inadequate to cover the resource costs associated with performing the procedure and furnishing the drug. The commenter recommended that CMS reconfigure APCs 5373 and 5374 so that all procedures with a geometric mean cost greater than $2,150 are assigned to APC 5374, and to reassign CPT code 52287 to APC 5374. Alternatively, if CMS does not reassign CPT code 52287 to APC 5374, the commenter suggested that CMS establish a complexity adjustment for those procedures that involve a dose of 200 units of BOTOX®.

Response: We believe that APC 5373 is the most appropriate APC assignment for CPT code 52287 based on its resource and clinical homogeneity to the other procedures within the APC. Based on updated CY 2015 claims data for this final rule with comment period, the range of geometric mean costs for significant procedures assigned to APC 5373 is between $1,175 and $2,275. The geometric mean cost of $2,196 for CPT code 52287 is within this range. We do not believe that it would be appropriate to assign CPT code 52287 to APC 5374, whose geometric mean cost is approximately $2,613.

With respect to the issue of the drug cost, the payment for the BOTOX® drug is included in the payment for the procedure described by CPT code 52287. As stated in section II.A.2.c. of this final rule with comment period, the payment for procedures assigned to a “J1” status indicator include all drugs, biologicals, and radiopharmaceuticals, regardless of cost, except those drugs with pass-through payment status and those drugs that are usually self-administered (SADs), unless they function as packaged supplies (78 FR 74868 through 74869, 74909, and 79 FR 66800).

On the issue of a complexity adjustment, as listed in Addendum J of the CY 2017 OPPS/ASC proposed rule, specifically, in the “Complexity Adjustments” tab of the Excel file, we proposed to reassign CPT code 52287 to a complexity adjustment APC. In particular, we proposed to assign CPT code 52287 to APC 5374 when the procedure is performed in conjunction with other procedures during the same hospital stay that meet the complexity adjustment criteria discussed in section II.A.2.c. of this final rule with comment period.

After consideration of the public comment we received, we are finalizing our proposal, without modification, to assign CPT code 52287 to APC 5373 for CY 2017. The final status indicator and APC assignments and payment rate for this code, where applicable, can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site). The list of the complexity adjustments for add-on code combinations for CY 2017, along with all of the other complexity adjustments, can be found in Addendum J to this final rule with comment period (which is available via the Internet on the CMS Web site). Addendum J to this final rule with comment period also contains the summary cost statistics for each of the code combinations that describe a complex code combination that will qualify for a complexity adjustment and will be reassigned to the next higher cost C-APC within the clinical family.

b. Temporary Prostatic Urethral Stent (APC 5373)

As listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 53855 (Insertion of a temporary prostatic urethral stent, including urethral measurement) to APC 5372 (Level 2 Urology and Related Services), with a payment rate of approximately $561.

Comment: One commenter disagreed with the proposed assignment of CPT code 53855 to APC 5372. The commenter believed that the proposed payment rate of approximately $561 for APC 5372 is inadequate to cover the cost of providing the service. The commenter stated that the payment rate of approximately $1,642 for APC 5373 better supports the resource costs and clinical characteristics associated with the procedure described by CPT code 53855 and recommended that CMS reassign the CPT code to this APC for CY 2017.

Response: Based on our analysis of the updated CY 2015 hospital outpatient claims used for this final rule with comment period, we agree with the commenter. Our claims data showed a geometric mean cost of approximately $1,860 for CPT code 53855 based on 31 single claims (out of 31 total claims), which is similar to the geometric mean cost of approximately $1,691 for APC 5373.

After consideration of the public comment we received, we are modifying our proposal and assigning CPT code 53855 to APC 5373 for CY 2017. The final CY 2017 payment rate for this procedure can be found in Addendum B to this CY 2017 OPPS/ASC final rule with comment period (which is available via the Internet on the CMS Web site).

c. Transprostatic Urethral Implant Procedure (TUIP) (APCs 5375 and 5376)

Currently, there are four procedure codes that describe transprostatic urethral implant procedures, specifically, HCPCS codes C9739 and C9740, and CPT codes 52441 and 52442. As shown in Table 22 below, and as listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to continue to assign HCPCS code C9739 to APC 5375 (Level 5 Urology and Related Services). We also proposed to reassign HCPCS code C9740 from New Technology APC 1565 (New Technology—Level 28 ($5001-$5500)) to APC 5376 (Level 6 Urology and Related Services), and to reassign the status indicator for HCPCS code C9740 from “T” to “J1.” In addition, we proposed to continue to assign CPT codes 52441 and 52442 to status indicator “B” to indicate that these codes are not recognized by OPPS when submitted on a hospital outpatient Part B bill type (12x and 13x). As we discussed in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66853 through 66854), we do not recognize CPT codes 52441 and 52442 because the code descriptors do not accurately capture the number of implants typically provided in a hospital outpatient or ASC setting.Start Printed Page 79636

Table 22—Proposed CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Transprostatic Urethral Implant Procedures

CPT/HCPCS codeLong descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateProposed CY 2017 OPPS SIProposed CY 2017 OPPS APCProposed CY 2017 OPPS payment rate
C9739Cystourethroscopy, with insertion of transprostatic implant; 1 to 3 implantsJ15375$3,393.73J15375$3,460.41
C9740Cystourethroscopy, with insertion of transprostatic implant; 4 or more implantsT15655,250.00J153767,389.67
52441Cystourethroscopy, with insertion of permanent adjustable transprostatic implant; single implantBN/AN/ABN/AN/A
52442Cystourethroscopy, with insertion of permanent adjustable transprostatic implant; each additional permanent adjustable transprostatic implant (list separately in addition to code for primary procedure)BN/AN/ABN/AN/A

Comment: One commenter expressed concern with the proposed reassignment of HCPCS code C9740 to APC 5376. The commenter stated that the reassignment may not be aligned with the current clinical homogeneity of other procedures assigned to APC 5376 because the procedure described by HCPCS code C9740 is performed through a natural orifice (urethra) and can be performed with local anesthesia. To ensure clinical homogeneity within APC 5376, the commenter requested that CMS reevaluate the appropriate APC assignment for HCPCS code C9740.

Response: As we do every year, we review the APC assignments for all services and items paid under the OPPS. Based on resource and clinical homogeneity, we believe that HCPCS code C9740 is more appropriately assigned to the Urology and Related Services APC series. We reviewed the procedures assigned to the Urology and Related Services APCs and, based on its resource cost and clinical homogeneity, we determined that HCPCS code C9740 most appropriately aligns with the other procedures in the Level 6 APC within the Urology and Related Services APC grouping.

For the proposed rule, our claims data showed a geometric mean cost of approximately $6,312 for HCPCS code C9740 based on 585 single claims (out of 606 total claims), which is relatively similar to the geometric mean cost of approximately $7,723 for APC 5376. We believe that neither APC 5375 (Level 5 Urology and Related Services), whose geometric mean cost is approximately $3,617 or APC 5377 (Level 7 Urology and Related Services), whose geometric mean cost is approximately $15,377, would have been appropriate APC assignments. When compared to the geometric mean cost of $6,312 for HCPCS code C9740, an APC assignment to APC 5375 would underpay for the procedure, while an APC assignment to APC 5377 would overpay for the service. For the final rule with comment period, our updated claims data showed a similar pattern. Specifically, our analysis showed a geometric mean cost of approximately $6,167 for HCPCS code C9740 based on 691 single claims (out of 701 total claims), which is comparable to the geometric mean cost of approximately $7,661 for APC 5376. We believe that an APC assignment to either APC 5375, whose geometric mean cost is approximately $3,581 or APC 5377, whose geometric mean cost is approximately $14,764, would be inappropriate. Based on the updated claims data for the final rule with comment period, we believe that APC 5376 is the most appropriate APC assignment for HCPCS code C9740 based on its clinical homogeneity and resource cost compared to the other procedures within this APC.

Comment: Several commenters agreed with CMS' proposal to continue to assign HCPCS code C9739 to APC 5375 and to reassign HCPCS code C9740 to APC 5376 for CY 2017. The commenters requested that CMS finalize the proposal.

Response: We appreciate the commenters' support. After consideration of the public comments we received, we are adopting as final, without modification, the proposed APC and status indicator assignments for HCPCS codes C9739 and C9740, and CPT codes 52441 and 52442 for CY 2017. Table 23 below lists the final status indicator and APC assignments and payment rates for the transprostatic urethral implant procedures for CY 2017. We refer readers to Addendum B of this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the Internet on the CMS Web site.

Table 23—Final CY 2017 Status Indicator (SI), APC Assignments and Payment Rates for the Transprostatic Urethral Implant Procedures

CPT/HCPCS codeLong descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateFinal CY 2017 OPPS SIFinal CY 2017 OPPS APCFinal CY 2017 OPPS payment rate
C9739Cystourethroscopy, with insertion of transprostatic implant; 1 to 3 implantsJ15375$3,393.73J15375$3,482.54
Start Printed Page 79637
C9740Cystourethroscopy, with insertion of transprostatic implant; 4 or more implantsT15655,250.00J153767,449.52
52441Cystourethroscopy, with insertion of permanent adjustable transprostatic implant; single implantBN/AN/ABN/AN/A
52442Cystourethroscopy, with insertion of permanent adjustable transprostatic implant; each additional permanent adjustable transprostatic implant (list separately in addition to code for primary procedure)BN/AN/ABN/AN/A

9. Other Procedures and Services

a. Cryoablation Procedures (APCs 5114, 5361, 5362, and 5432)

As part of our standard annual OPPS update process, we review each APC assignment for the clinical similarity and resource homogeneity of the procedures assigned to each APC. Based on our analysis of the hospital outpatient claims data used for the proposed rule, we made some modifications to the APC assignments of certain cryoablation procedures. Specifically, for the CY 2017 OPPS update, we proposed to delete APC 5352 (Level 2 Percutaneous Abdominal/Biliary Procedures and Related Procedures), and reassign the cryoablation procedures that were previously assigned to this APC to APC 5361 (Level 1 Laparoscopy and Related Services). As shown in Table 24 below, and as listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to reassign CPT codes 20983, 47383, 50593, and 0340T from APC 5352 to APC 5361. Through our continuing efforts to simplify the APCs through consolidation and to improve clinical and resource homogeneity for the APCs, we believe that these cryoablation procedures that were previously assigned to APC 5352 would be more appropriately assigned to APC 5361 based on their geometric mean costs for the CY 2017 OPPS update. Further, we believe that the proposed revision appropriately categorized these cryoablation procedures in APC 5361 based on clinical coherence and resource costs compared to the other procedures in the same APC.

Table 24—Proposed CY 2017 Status Indicators (SI), APC Assignments, and Payment Rates for Certain Cryoablation Procedures

CPT/HCPCS codeLong descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateProposed CY 2017 OPPS SIProposed CY 2017 OPPS APCProposed CY 2017 OPPS payment rate
20983Ablation therapy for reduction or eradication of 1 or more bone tumors (e.g., metastasis) including adjacent soft tissue when involved by tumor extension, percutaneous, including imaging guidance when performed; cryoablationT5352$4,118.23J15361$4,178.33
47383Ablation, 1 or more liver tumor(s), percutaneous, cryoablationT53524,118.23J153614,178.33
50593Ablation, renal tumor(s), unilateral, percutaneous, cryotherapyT53524,118.23J153614,178.33
0340TAblation, pulmonary tumor(s), including pleura or chest wall when involved by tumor extension, percutaneous, cryoablation, unilateral, includes imaging guidanceT53524,118.23J153614,178.33
0440TAblation, percutaneous, cryoablation, includes imaging guidance; upper extremity distal/peripheral nerveJ153614,001.15J153614,178.33
0441TAblation, percutaneous, cryoablation, includes imaging guidance; lower extremity distal/peripheral nerveJ153614,001.15J153614,178.33
Start Printed Page 79638
0442TAblation, percutaneous, cryoablation, includes imaging guidance; nerve plexus or other truncal nerve (e.g., brachial plexus, pudendal nerve)T53524,118.23J153614,178.33

Comment: One commenter expressed concern with the proposed assignment of the kidney, lung, liver, bone and nerve cryoablation procedures, specifically, the procedure codes listed in Table 24, to APC 5361. The commenter stated that APC 5361 does not appropriately reflect the clinical nature of the procedures and inadequately recognizes the resources needed to perform the services. The commenter further stated that reassigning the procedures previously assigned to APC 5361 results in a lack of clinical coherence because the APC would include various diagnostic and therapeutic procedures that consist of a wide range of anatomic systems with disparate costs. Consequently, the commenter urged CMS to reevaluate the APC assignments for the cryoablation procedures listed in Table 24, and suggested that CMS either create a new APC that includes both the cryoablation and radiofrequency ablation procedures, or reassign the procedures to APCs that groups the ablation procedures with other clinically similar procedures.

Response: We reviewed the updated CY 2015 hospital outpatient claims data used for this final rule with comment period. Based on our review, we agree with the commenter that some of these procedures should be reassigned to more appropriate APCs. First, although we have no claims data for CPT codes 0440T, 0441T, and 0442T because these codes are new for CY 2016, we believe that these procedures more appropriately align, based on clinical characteristics, with the procedures in APC 5432 (Level 2 Nerve Procedures). Therefore, we are reassigning CPT codes 0440T, 0441T, and 0442T to APC 5432 for CY 2017. Secondly, based on our analysis, we found a geometric mean of approximately $5,416 for CPT code 20983 based on 98 single claims (out of 100 total claims), which is similar to the geometric mean of approximately $5,367 for APC 5114. Therefore, we are reassigning CPT code 20983 to APC 5114. In addition, we found a geometric mean cost of approximately $5,944 for CPT code 50593 based on 1,811 single claims (out of 1,823 total claims). Furthermore, a high percentage of CPT code 50593 cases were complexity adjusted to APC 5362 in the proposed rule. Given that the geometric mean cost of CPT code 50593 is at the very top of the geometric mean cost range for APC 5361 and the need for a complexity adjustment for many of the cases into APC 5362, we are reassigning CPT code 50593 to APC 5362 for CY 2017. In addition, our analysis of the final rule with comment period data showed a geometric mean costs for CPT codes 0340T (approximately $5,519) and 47383 (approximately $5,178) indicates that the proposed rule assignment to APC 5361 for these cryoablation procedures is appropriate because their geometric mean costs are closer to the geometric mean cost of APC 5361 (approximately $4,316) than to the geometric mean cost of APC 5362 (approximately $7,164).

After consideration of the public comment we received, we are adopting as final, without modification, the proposal to assign CPT codes 0340T and 47383 to APC 5361. However, we are modifying our proposal and reassigning CPT codes 0440T, 0441T, 0442T, 20983, and 50593 to the final APCs listed in Table 25 below. Table 25 shows the final status indicator, APC assignments, and payment rates for the cryoablation procedures for CY 2017. We refer readers to Addendum B of this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the Internet on the CMS Web site.

Table 25—Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for Certain Cryoablation Procedures

CPT/HCPCS codeLong descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateFinal CY 2017 OPPS SIFinal CY 2017 OPPS APCFinal CY 2017 OPPS payment rate
20983Ablation therapy for reduction or eradication of 1 or more bone tumors (e.g., metastasis) including adjacent soft tissue when involved by tumor extension, percutaneous, including imaging guidance when performed; cryoablationT5352$4,118.23J15114$5,219.36
47383Ablation, 1 or more liver tumor(s), percutaneous, cryoablationT53524,118.23J153614,197.36
50593Ablation, renal tumor(s), unilateral, percutaneous, cryotherapyT53524,118.23J153626,966.89
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0340TAblation, pulmonary tumor(s), including pleura or chest wall when involved by tumor extension, percutaneous, cryoablation, unilateral, includes imaging guidanceT53524,118.23J153614,197.36
0440TAblation, percutaneous, cryoablation, includes imaging guidance; upper extremity distal/peripheral nerveJ153614,001.15J154324,150.11
0441TAblation, percutaneous, cryoablation, includes imaging guidance; lower extremity distal/peripheral nerveJ153614,001.15J154324,150.11
0442TAblation, percutaneous, cryoablation, includes imaging guidance; nerve plexus or other truncal nerve (e.g., brachial plexus, pudendal nerve)T53524,118.23J154324,150.11

b. Comprehensive Dialysis Circuit Procedures (APCs 5181, 5192, and 5193)

For CY 2017, the AMA CPT Editorial Panel deleted CPT codes 36147 and 36148 and replaced them with nine new codes, effective January 1, 2017. Table 26 below list the complete descriptors for the deleted and replacement codes. We note that the deleted and replacement codes were listed in Addendum B and Addendum O to the CY 2017 OPPS/ASC proposed rule. Addendum B listed the proposed status indicator assignments for the replacement codes and assigned them to comment indicator “NP” (New code for the next calendar year or existing code with substantial revision to its code descriptor in the next calendar year as compared to current calendar year, proposed APC assignment; comments will be accepted on the proposed APC assignment for the new code.), while Addendum O listed the placeholder/proposed CY 2017 CPT codes and their long descriptors.

Table 26—Coding Changes for the Dialysis Circuit Procedures Effective January 1, 2017

Placeholder/ proposed CY 2017 CPT codeFinal CY 2017 CPT codeLong descriptors
3614736147Introduction of needle and/or catheter, arteriovenous shunt created for dialysis (graft/fistula); initial access with complete radiological evaluation of dialysis access, including fluoroscopy, image documentation and report (includes access of shunt, injection[s] of contrast, and all necessary imaging from the arterial anastomosis and adjacent artery through entire venous outflow including the inferior or superior vena cava.
3614836148Introduction of needle and/or catheter, arteriovenous shunt created for dialysis (graft/fistula); additional access for therapeutic intervention (list separately in addition to code for primary procedure).
369X136901Introduction of needle(s) and/or catheter(s), dialysis circuit, with diagnostic angiography of the dialysis circuit, including all direct puncture(s) and catheter placement(s), injection(s) of contrast, all necessary imaging from the arterial anastomosis and adjacent artery through entire venous outflow including the inferior or superior vena cava, fluoroscopic guidance, radiological supervision and interpretation and image documentation and report.
369X236902Introduction of needle(s) and/or catheter(s), dialysis circuit, with diagnostic angiography of the dialysis circuit, including all direct puncture(s) and catheter placement(s), injection(s) of contrast, all necessary imaging from the arterial anastomosis and adjacent artery through entire venous outflow including the inferior or superior vena cava, fluoroscopic guidance, radiological supervision and interpretation and image documentation and report; with transluminal balloon angioplasty, peripheral dialysis segment, including all imaging and radiological supervision and interpretation necessary to perform the angioplasty.
369X336903Introduction of needle(s) and/or catheter(s), dialysis circuit, with diagnostic angiography of the dialysis circuit, including all direct puncture(s) and catheter placement(s), injection(s) of contrast, all necessary imaging from the arterial anastomosis and adjacent artery through entire venous outflow including the inferior or superior vena cava, fluoroscopic guidance, radiological supervision and interpretation and image documentation and report; with transcatheter placement of intravascular stent(s) peripheral dialysis segment, including all imaging and radiological supervision and interpretation necessary to perform the stenting, and all angioplasty within the peripheral dialysis segment.
369X436904Percutaneous transluminal mechanical thrombectomy and/or infusion for thrombolysis, dialysis circuit, any method, including all imaging and radiological supervision and interpretation, diagnostic angiography, fluoroscopic guidance, catheter placement(s), and intraprocedural pharmacological thrombolytic injection(s).
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369X536905Percutaneous transluminal mechanical thrombectomy and/or infusion for thrombolysis, dialysis circuit, any method, including all imaging and radiological supervision and interpretation, diagnostic angiography, fluoroscopic guidance, catheter placement(s), and intraprocedural pharmacological thrombolytic injection(s); with transluminal balloon angioplasty, peripheral dialysis segment, including all imaging and radiological supervision and interpretation necessary to perform the angioplasty.
369X636906Percutaneous transluminal mechanical thrombectomy and/or infusion for thrombolysis, dialysis circuit, any method, including all imaging and radiological supervision and interpretation, diagnostic angiography, fluoroscopic guidance, catheter placement(s), and intraprocedural pharmacological thrombolytic injection(s); with transcatheter placement of an intravascular stent(s), peripheral dialysis segment, including all imaging and radiological supervision and interpretation necessary to perform the stenting, and all angioplasty within the peripheral dialysis circuit.
369X736907Transluminal balloon angioplasty, central dialysis segment, performed through dialysis circuit, including all imaging and radiological supervision and interpretation required to perform the angioplasty (List separately in addition to code for primary procedure).
369X836908Transcatheter placement of an intravascular stent(s), central dialysis segment, performed through dialysis circuit, including all imaging radiological supervision and interpretation required to perform the stenting, and all angioplasty in the central dialysis segment (List separately in addition to code for primary procedure).
369X936909Dialysis circuit permanent vascular embolization or occlusion (including main circuit or any accessory veins), endovascular, including all imaging and radiological supervision and interpretation necessary to complete the intervention (List separately in addition to code for primary procedure).

As shown in Table 27 below, and as listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to package payment for some of these new CY 2017 CPT codes and to also assign the procedures to APC 5181 (Level 1 Vascular Procedures), 5192 (Level 2 Endovascular Procedures), 5193 (Level 3 Endovascular Procedures), or 5194 (Level 2 Endovascular Procedures). Specifically, we proposed to assign CPT code 369X1 (CY 2017 CPT code 36901) to APC 5181, CPT codes 396X2 (CY 2017 CPT code 36902) and 369X4 (CY 2017 CPT code 36904) to APC 5192, CPT codes 396X3 (CY 2017 CPT code 36903) and 369X5 (CY 2017 CPT code 36905) to APC 5193, and CPT code 369X6 (CY 2017 CPT code 36906) to APC 5194. In addition, we proposed to assign CPT codes 369X7 (CY 2017 CPT code 36907), 369X8 (CY 2017 CPT code 36908), and 369X9 (CY 2017 CPT code 36909) to status indicator “N” (Items and Services Packaged into APC Rates) to indicate that these service are paid under OPPS. However, their payment is packaged into the payment for other services.

Table 27—Proposed CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Dialysis Circuit Procedures

Proposed CY 2017 CPT codeCY 2017 CPT codeShort descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateProposed CY 2017 OPPS SIProposed CY 2017 OPPS APCProposed CY 2017 OPPS payment rate
3614736147Access av dial grft for evalT5181*$862.51DN/AN/A
3614836148Access av dial grft for procNN/AN/ADN/AN/A
369X136901Intro cath dialysis circuitN/AN/AN/AT5181$867.68
369X236902Intro cath dialysis circuitN/AN/AN/AJ151924,800.45
369X336903Intro cath dialysis circuitN/AN/AN/AJ151939,726.54
369X436904Thrmbc/nfs dialysis circuitN/AN/AN/AJ151924,800.45
369X536905Thrmbc/nfs dialysis circuitN/AN/AN/AJ151939,726.54
369X636906Thrmbc/nfs dialysis circuitN/AN/AN/AJ1519414,511.21
369X736907Balo angiop ctr dialysis segN/AN/AN/ANN/AN/A
369X836908Stent plmt ctr dialysis segN/AN/AN/ANN/AN/A
369X936909Dialysis circuit emboljN/AN/AN/ANN/AN/A

Comment: One commenter agreed with the proposed APC assignments for CPT codes 36902, 36903, 36905, and 36906, and requested that CMS finalize the proposal. However, this commenter disagreed with the proposed APC assignment for CPT code 36904 and the proposed status indicator assignment for CPT codes 36907, 36908, and 36909. In particular, the commenter believed that the proposed assignment of APC 5192 fails to reflect the clinical complexity and resource costs associated with performing the procedure described by CPT code 36904. The commenter recommended that CMS assign CPT code 36904 to APC 5193 based on its clinical and resource homogeneity to the other procedures in this APC. In addition, the commenter disagreed with the packaging of payment for services described by CPT codes 36907, 36908, and 36909 because these procedures involve substantial device costs. As an interim measure, the commenter recommended that the procedure codes be assigned to New Technology APC 1564 (New Technology—Level 27 ($4501-$5000), with a status indicator of “S” (Procedure or Service, Not Discounted When Multiple. Paid under OPPS; separate APC payment.), until sufficient claims data is available on which to base assignment of the new codes to a more appropriate clinical APC. If CMS continued to believe that Start Printed Page 79641the New Technology APC assignment is inappropriate, the commenter urged CMS to create a composite APC for the dialysis circuit CPT codes.

Response: We appreciate the commenter's support for the proposed APC assignments for CPT codes 36902, 36903, 36905, and 36906. We are finalizing our proposal for these codes. However, with respect to the proposed assignment of CPT code 36904, we believe that, based on its similarity to the other procedures in APC 5192, and a comparison to other codes in this series we believe that APC 5192 is the most appropriate APC for this procedure. In addition, because CPT codes 36907, 36908, and 36909 are add-on codes, we assigned these codes to a status indicator that indicates packaged payment status. Because of our packaging policy for add-on codes, we would not consider these codes for a composite APC. We note that since January 1, 2014, payment for services described by add-on codes have been packaged under the hospital OPPS. As we do every year for all items and services under OPPS, we will reevaluate the APC assignments for these services in the CY 2018 OPPS rulemaking.

In summary, after consideration of the public comment received, we are finalizing our proposal, without modification, to assign the dialysis circuit procedures to the APC and status indicators listed in Table 28 below. Table 28 shows the final status indicator, APC assignments, and payment rates for the dialysis circuit services for CY 2017. We refer readers to Addendum B of this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the Internet on the CMS Web site.

Table 28—Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Dialysis Circuit Procedures

Proposed CY 2017 CPT codeFinal CY 2017 CPT codeShort descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateFinal CY 2017 OPPS SIFinal CY 2017 OPPS APCFinal CY 2017 OPPS payment rate
3614736147Access av dial grft for evalT5181$862.51D
3614836148Access av dial grft for procND
369X136901Intro cath dialysis circuitT5181$683.84
369X236902Intro cath dialysis circuitJ151924,823.16
369X336903Intro cath dialysis circuitJ151939,748.31
369X436904Thrmbc/nfs dialysis circuitJ151924,823.16
369X536905Thrmbc/nfs dialysis circuitJ151939,748.31
369X636906Thrmbc/nfs dialysis circuitJ1519414,775.90
369X736907Balo angiop ctr dialysis segNN/AN/A
369X836908Stent plmt ctr dialysis segNN/AN/A
369X936909Dialysis circuit emboljNN/AN/A

c. Blood Product Exchange and Related Services (APCs 5241 and 5242)

For CY 2017, we proposed to assign CPT code 36456 (Partial exchange transfusion, blood, plasma or crystalloid necessitating the skill of a physician or other qualified health care professional, newborn) (described as code 364X1 in the proposed rule) to APC 5241 (Level 1 Blood Product Exchange and Related Services), with a proposed mean geometric mean cost of approximately $364.

Comment: One commenter disagreed with the CMS proposal to assign CPT code 36456 to APC 5241. The commenter stated that APC 5182 (Level 2 Vascular Procedures) is a more appropriate APC assignment because of the clinical similarity and similar resource intensity to other services assigned to APC 5182.

Response: We disagree with the commenter's statement. We do not believe that the procedure described by CPT code 36456 is comparable to the services in APC 5182 in terms of resource intensity or clinical similarity. We do believe that CPT code 36456 is similar to the other services assigned to APC 5241, such as CPT code 36450 (Exchange transfusion, blood; newborn). When claims data become available for this new code, we will consider if assignment to another APC is appropriate. After consideration of the public comment we received, we are finalizing our proposal to assign CPT code 36456 to APC 5241.

Comment: For CY 2017, we proposed to assign CPT codes 38230 (Bone marrow harvesting for transplantation; allogeneic), 38241 (Hematopoietic progenitor cell (HPC); autologous transplantation, 38242 (Allogeneic lymphocyte infusions) and 38243 (HPC Boost) to APC 5242 (Level 2 Blood Product Exchange and Related Services). This APC has a proposed CY 2017 geometric mean cost of approximately $1,129. One commenter stated that the proposed payment rate of approximately $1,078 for this APC was a 66 percent decrease in payment from the final CY 2016 payment rate. The commenter also noted that the services in this APC were not likely to be submitted on a single procedure claim and, as a result, the CMS ratesetting methodology may be based on incorrectly coded claims. In addition, the commenter requested that CMS consider the use of C-APCs to provide for payment for low-volume, clinically significant services.

Response: The commenter is correct that each of these services represent a low volume in the OPPS. The geometric mean cost for each of the codes is within the geometric mean cost range ($1,111 to $1,518) for significant services assigned to APC 5242. We will monitor these claims and determine if any future adjustment to the methodology (such as the C-APC methodology) would be more appropriate.

d. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APCs 1537, 5114, and 5414)

Currently, there are four CPT/HCPCS codes that describe magnetic resonance image guided high intensity focused ultrasound (MRgFUS) procedures. These codes include CPT codes 0071T, 0072T, and 0398T, and HCPCS code C9734. CPT codes 0071T and 0072T are used for the treatment of uterine fibroids, CPT code 0398T is used for the treatment of essential tremor, and HCPCS code C9734 is used for pain palliation for metastatic bone cancer.

As shown in Table 29 below, and as listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to continue to assign CPT codes 0071T and 0072T to APC 5414, with a payment Start Printed Page 79642rate of approximately $2,074. We also proposed to reassign the APC's status indicator to “J1” (Hospital Part B services paid through a comprehensive APC) to indicate that all covered Part B services on the claim are packaged with the payment for the primary “J1” service for the claim, except for services assigned to OPPS status indicator “F,” “G,” “H,” “L” and “U”; ambulance services; diagnostic and screening mammography; all preventive services; and certain Part B inpatient services. In addition, we proposed to reassign HCPCS code C9734 from APC 5122 (Level 2 Musculoskeletal Procedures) to APC 5114 (Level 4 Musculoskeletal Procedures), with a payment rate of approximately $5,199. We also proposed to reassign the HCPCS code's status indicator from “T” to “J1.”

Further, we proposed to reassign CPT code 0398T from a nonpayable status indicator, specifically, “E” (Not paid by Medicare when submitted on outpatient claims (any outpatient bill type)) to a separately payable APC, specifically, APC 5462 (Level 2 Neurostimulator and Related Procedures), with a payment rate of approximately $5,840. We note that APC 5462 is assigned to status indicator “J1.” This APC assignment was based on a comparison to a similar procedure, specifically, HCPCS code C9734, with a geometric mean cost of approximately $8,565 based on 9 single claims (out of 9 total claims). The MRgFUS equipment used in the performance of the procedure described by CPT code 0398T is very similar to the MRgFUS equipment used in the performance of the procedure described by HCPCS code C9734. Both machines are manufactured by the same manufacturer.

Table 29—Proposed CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Magnetic Resonance Image Guided High Intensity Focused Ultrasound (MRgFUS) Procedures

CPT/HCPCS codeLong descriptorCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateProposed CY 2017 OPPS SIProposed CY 2017 OPPS APCProposed CY 2017 OPPS payment rate
0071TFocused ultrasound ablation of uterine leiomyomata, including mr guidance; total leiomyomata volume less than 200 cc of tissueT5414$1,861.18J15414$2,074.22
0072TFocused ultrasound ablation of uterine leiomyomata, including mr guidance; total leiomyomata volume greater or equal to 200 cc of tissueT54141,861.18J154142,074.22
0398TMagnetic resonance image guided high intensity focused ultrasound (mrgfus), stereotactic ablation lesion, intracranial for movement disorder including stereotactic navigation and frame placement when performedEN/AN/AJ154625,839.83
C9734Focused ultrasound ablation/therapeutic intervention, other than uterine leiomyomata, with magnetic resonance (mr) guidanceT51222,395.59J151145,199.03

Comment: All of the commenters disagreed with the proposed assignment of CPT code 0398T to APC 5462 for CY 2017. The commenters stated that the proposed payment severely underestimates the resources required to provide the treatment. Some commenters indicated that compared to HCPCS code C9734, which requires only one physician and 3 hours of MRI time, the resources for CPT code 0398T is significantly greater and requires the services of a multidisciplinary staff (including a neurosurgeon and a radiologist), as well as 6 hours of MRI time. Several commenters indicated that MRgFUS for essential tremor is a better alternative to deep brain stimulation (DBS) because there is no risk of infection or implanted hardware, no need for multiple hospital outpatient visits or postoperative programming sessions, and lower cost because there is no battery to surgically remove and replace every few years. Some commenters pointed out that the cost of providing a DBS procedure is between $40,000 and $50,000, while the MRgFUS procedure costs approximately $20,000. One commenter stated that the capital equipment used in the performance of the procedure described by CPT code 0398T is more costly, at approximately $2 million, compared to the capital equipment used in the performance of the procedure described by HCPCS C9734, which is approximately $750,000. The commenter also stated that CPT code 0398T uses additional equipment (for example, stereotactic head frame) and supplies resulting in higher costs for the procedure. Several commenters expressed concern that the proposed payment for CPT code 0398T is inadequate to cover the hospital cost of providing the service and recommended that CMS reassign CPT code 0398T to either a more appropriate APC that reflects the cost of providing the treatment, or to APC 5463 (Level 3 Neurostimulator and Related Procedures). Some commenters suggested that a low reimbursement rate for the procedure could jeopardize Medicare access to this emerging technology.

Response: CPT code 0398T is a new code for CY 2016. Therefore, we do not have available claims data for the CY 2017 ratesetting. HCPCS code C9734 describes a similar service that uses the same MRgFUS technology, and as noted above, has a geometric mean cost of $8,565. However, the manufacturer has indicated that the essential tremor MRgFUS service uses a more costly version of the MRgFUS equipment, takes longer, and uses some additional supplies and equipment, which makes the procedure described by CPT code 0398T more costly than the procedure described by HCPCS code C9734. We believe that the procedure described by CPT code 0398T can also be compared Start Printed Page 79643to the procedure described by CPT code 77371 (Radiation treatment delivery, stereotactic radiosurgery (SRS), complete course of treatment of cranial lesions(s) consisting of 1 session; multi-source Cobalt-60 based). In particular, both procedures use capital equipment of approximately equal cost, both employ a stereotactic head frame to treat intracranial lesions, and both require similar staffing. CPT code 77371 is assigned to APC 5627 (Level 7 Radiation Therapy), with a final payment rate of approximately $7,453. The final geometric mean cost of CPT code 77371 is $10,105. We believe that the geometric mean cost of CPT code 77371 provides an indication of the initial payment rate for CPT code 0398T relative to the related service described by HCPCS code C9734, for which we have some claims data. Consequently, because there is no clinical APC that contains clinically similar and resource-cost similar services, we believe that the most appropriate initial assignment for CPT code 0398T is APC 1537 (New Technology—Level 37 ($9501-$10000)), which has a final payment rate of approximately $9,751. The assignment to APC 1537 will result in a 67-percent increase in the CY 2017 payment rate compared to the $5,840 proposed payment rate. It is also significantly above the payment rate of approximately $5,219 for HCPCS code C9734, to which CPT code 0398T is comparable but according to the commenters is more costly.

Finally, we remind hospitals that, as we do every year, we review the APC assignments for all services and items paid under the OPPS. We will reevaluate the APC assignment for CPT code 0398T once we have claims data for this service.

Comment: One commenter supported CMS' proposal to reassign HCPCS code C9734 to APC 5114, and requested that CMS finalize the proposal.

Response: We appreciate the commenter's support.

After consideration of the public comments we received, we are modifying our proposal and reassigning CPT code 0398T to APC 1537 for CY 2017. In addition, we are finalizing our proposal, without modification, to reassign HCPCS code C9734 to APC 5114. Because we did not receive any public comments related to CPT codes 0071T and 0072T, we are finalizing our proposal, without modification, to continue to assign these codes to APC 5414. Table 30 below shows the final status indicator and APC assignments and payment rates for the MRgFUS procedures for CY 2017. We refer readers to Addendum B of this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the Internet on the CMS Web site.

Table 30—Final CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Magnetic Resonance Image Guided High Intensity Focused Ultrasound (MRgFUS) Procedures

CPT/HCPCS codeLong descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateFinal CY 2017 OPPS SIFinal CY 2017 OPPS APCFinal CY 2017 OPPS payment rate
0071TFocused ultrasound ablation of uterine leiomyomata, including mr guidance; total leiomyomata volume less than 200 cc of tissueT5414$1,861.18J15414$2,084.59
0072TFocused ultrasound ablation of uterine leiomyomata, including mr guidance; total leiomyomata volume greater or equal to 200 cc of tissueT54141,861.18J154142,084.59
0398TMagnetic resonance image guided high intensity focused ultrasound (mrgfus), stereotactic ablation lesion, intracranial for movement disorder including stereotactic navigation and frame placement when performedEN/AN/AS15379,750.50
C9734Focused ultrasound ablation/therapeutic intervention, other than uterine leiomyomata, with magnetic resonance (mr) guidanceT51222,395.59J151145,219.36

e. Neulasta® On-Body Injector

As listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to assign new CY 2017 CPT code 96377 (Application of on-body injector (includes cannula insertion) for timed subcutaneous injection) to status indicator “N” (Items and Services Packaged into APC Rates) to indicate that the service is paid under OPPS; however, its payment is packaged into the payment for other services. We note that CPT code 93677 was listed as placeholder CPT code 963XX in both Addendum B and O of the CY 2017 OPPS/ASC proposed rule. Addendum B listed the short descriptor with the proposed status indicator of “N,” while Addendum O listed the complete long descriptor under placeholder CPT code 963XX.

Comment: Some commenters disagreed with the proposed status indicator assignment of “N” for CPT code 963XX (CY 2017 CPT code 96377), and indicated that this is a primary service, not an add-on procedure, that represents a complete and unique drug administration service that a hospital performs for the subcutaneous administration of Neulasta® with the on-body injector. The commenters stated that the service is similar to the drug administration service described by CPT code 96372 (Therapeutic, prophylactic, or diagnostic injection (specify substance or drug); subcutaneous or intramuscular), which is assigned to APC 5692 (Level 2 Drug Administration) with a proposed payment rate of about $53. The commenters indicated that the difference between the procedure described by CPT code 96372 and CPT Start Printed Page 79644code 96377 is the use of an on-body injector for CPT code 96377.

Response: We do not believe that the resources necessary to deliver the Neulasta® service warrants separate payment under the OPPS. Because payment for CPT code 96377 will be packaged, the payment for use of the on-body injector will be included in the payment for the primary service (for example, chemotherapy administration, clinic visit, among others) that is reported in conjunction with CPT code 96377. Furthermore, we believe that the packaged payment that includes payment for the use of the Neulasta® on-body injector adequately covers the costs of the service. After consideration of the public comments we received, we are adopting as final, without modification, the proposal to assign CPT code 96377 to status indicator “N” for CY 2017.

f. Smoking and Tobacco Use Cessation Counseling (APC 5821)

As shown in Table 31 below, and as listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to continue to assign CPT codes 99406 and 99407 to APC 5821 (Level 1 Health and Behavior Services), with a proposed payment rate of approximately $25. In addition, we proposed to delete HCPCS codes G0436 and G0437 because they were replaced with CPT codes 99406 and 99407. Specifically, we stated in the October 2016 Update, Change Request 9768, Transmittal 3602, dated August 26, 2016, that HCPCS codes G0436 and G0437 were deleted on September 30, 2016, because they were replaced with CPT codes 99406 and 99407, effective October 1, 2016.

Table 31—Proposed CY 2017 Status Indicator (SI), APC Assignment, and Payment Rate for the Smoking and Tobacco Use Cessation Counseling Services

CPT/HCPCS codeLong descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateProposed CY 2017 OPPS SIProposed CY 2017 OPPS APCProposed CY 2017 OPPS payment rate
99406Smoking and tobacco use cessation counseling visit; intermediate, greater than 3 minutes up to 10 minutesS5821$27.12S5821$25.09
99407Smoking and tobacco use cessation counseling visit; intensive, greater than 10 minutesS582127.12S582125.09
G0436Smoking and tobacco cessation counseling visit for the asymptomatic patient; intermediate, greater than 3 minutes, up to 10 minutesS582127.12D
G0437Smoking and tobacco cessation counseling visit for the asymptomatic patient; intensive, greater than 10 minutesS582269.65D

Comment: One commenter expressed concern that the proposed payment rate for APC 5821 did not include the costs associated with HCPCS code G0437 because it was previously assigned to APC 5822. The commenter requested that CMS reevaluate the payment rate for APC 5821 and to include the claims data associated with HCPCS code G0437 in the calculation of the geometric mean cost for APC 5821. In addition, because the predecessor HCPCS code G0437 was previously assigned to APC 5822, the commenter believed that CPT code 99407 should also be assigned to the same APC. Moreover, the commenter urged CMS to crosswalk all deleted codes to the same APC assignment as their replacement codes when calculating APC payment rates during the transition.

Response: While we generally crosswalk the APC assignment of deleted codes to the same APC as its replacement code, we acknowledge that our calculation of the geometric mean cost for APC 5821 in the CY 2017 OPPS/ASC proposed rule did not include costs associated with HCPCS code G0437. We appreciate the commenter bringing this to our attention and have corrected this oversight in this final rule with comment period. In particular, we are assigning CPT codes 99406 and 99407, and HCPCS codes G0436 and G0437 to APC 5821 and are using the geometric mean costs of these procedures in determining the final payment rate for APC 5821. Based on our analysis of the updated claims data for this final rule with comment period, the geometric mean cost of approximately $32 for CPT code 99407 based on 2,859 single claims (out of 4,148 total claims) is relatively similar to the geometric mean cost of approximately $26 for APC 5821. We do not agree with the commenter that CPT code 99407 should be assigned to APC 5822 because its geometric mean cost of approximately $72 is more than twice the geometric mean cost of CPT code 94407. Therefore, based on the resource costs and similar characteristics to the other procedures within APC 5821, we believe that CPT code 99407 is more appropriately assigned to this APC.

Comment: One commenter expressed confusion regarding the reporting of CPT codes 99406 and 99407, and requested that CMS clarify whether these codes apply to both asymptomatic and symptomatic patients. The commenter noted that the descriptor of HCPCS codes G0436 and G0437 specifically described services for the asymptomatic patient. However, the commenter indicated that this distinction is not included in the code descriptors for CPT codes 99406 and 99407.

Response: While not explicit in their code descriptors, CPT codes 99406 and 99407 apply to both asymptomatic and symptomatic patients. We note that the more recent preventive service policy related to these codes can be found in section 210.4.1 (Counseling to Prevent Tobacco Use (Effective August 25, 2010)) of the Medicare National Coverage Determination Manual, which is can be viewed on the CMS Web site at: https://www.cms.gov/​Regulations-and-Guidance/​Guidance/​Manuals/​downloads/​ncd103c1_​part4.pdf, as well as on the Medicare Coverage Database Web site at: https://www.cms.gov/​medicare-coverage-database/​details/​medicare-coverage-document-details.aspx?​MCDId=​32. After consideration of the public comments we received, we Start Printed Page 79645are finalizing our proposal, without modification, to continue to assign CPT codes 99406 and 99407 to APC 5821 for CY 2017. Table 32 below shows the final status indicator, APC assignment, and payment rate for CPT codes 99406 and 99407 for CY 2017. We refer readers to Addendum B of this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the Internet on the CMS Web site.

Table 32—Final CY 2017 Status Indicator (SI), APC Assignment, and Payment Rate for the Smoking and Tobacco Use Cessation Counseling Services

CPT/HCPCS codeLong descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS payment rateFinal CY 2017 OPPS SIFinal CY 2017 OPPS APCFinal CY 2017 OPPS payment rate
99406Smoking and tobacco use cessation counseling visit; intermediate, greater than 3 minutes up to 10 minutesS5821$27.12S5821$25.22
99407Smoking and tobacco use cessation counseling visit; intensive, greater than 10 minutesS582127.12S582125.22
G0436Smoking and tobacco cessation counseling visit for the asymptomatic patient; intermediate, greater than 3 minutes, up to 10 minutesS582127.12D
G0437Smoking and tobacco cessation counseling visit for the asymptomatic patient; intensive, greater than 10 minutesS582269.65D

g. Radiofrequency Ablation of Uterine Fibroids (APC 5362)

For CY 2017, the AMA CPT Editorial Panel deleted CPT code 0336T (Laparoscopy, surgical, ablation of uterine fibroid(s), including intraoperative ultrasound guidance and monitoring, radiofrequency) and replacing it with CPT code 58674 (Laparoscopy, surgical, ablation of uterine fibroid(s) including intraoperative ultrasound guidance and monitoring, radiofrequency), effective January 1, 2017. We proposed to assign CPT code 58674 to APC 5362 (Level 2 Laparoscopy and Related Services), which is the same APC assignment for the predecessor CPT code 0336T. We note that CPT code 58674 was listed as placeholder CPT code 585X1 in both Addendum B and O of the CY 2017 OPPS/ASC proposed rule. Addendum B listed the short descriptor with the proposed APC assignment and payment rate, while Addendum O listed the complete long descriptor under placeholder CPT code 585X1. We note that both Addendum B and O also assigned this code to comment indicator “NP” to indicate that we would be accepting comments on the proposed APC assignment for the new code.

Comment: One commenter agreed with the proposed APC assignment for new CY 2017 CPT code 58674 to APC 5362 and stated that the assignment is consistent with the APC assignment for its predecessor code (CPT code 0336T). The commenter indicated that the resources required to furnish the service described by CPT code 58674 is similar to the resources of the other procedures assigned to APC 5362. Consequently, the commenter urged CMS to finalize the proposal.

Response: We appreciate the commenter's support. As noted by the commenter, we assigned new CY 2017 CPT code 58674 to APC 5362 based on its similarity to the other procedures within this APC.

After consideration of the public comment we received, we are finalizing our proposal, without modification, to assign CPT code 58674 to APC 5362. The final status indicator, APC assignment, and payment rate for CPT code 58674 can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site).

h. Intrapulmonary Surfactant Administration (APC 5791)

As listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 94610 (Intrapulmonary surfactant administration by a physician or other qualified health care professional through endotracheal tube) to APC 5791 (Pulmonary Treatment), with a proposed payment rate of approximately $161. We also proposed to continue to assign CPT code 94610 to OPPS status indicator “Q1” (STV-Packaged Codes) to indicate that the service is conditionally packaged.

Comment: One commenter disagreed with CMS' proposal to assign CPT code 94610 to OPPS status indicator “Q1.” The commenter indicated that this is a primary service, not an ancillary service as designated by the status indicator, and recommended that CMS reassign the CPT code to OPPS status indicator “T” (Procedure or Service, Multiple Procedure Reduction Applies. Paid under OPPS; separate APC payment).

Response: We believe that the commenter may have misunderstood the meaning of OPPS status indicator “Q1.” Assigning a procedure to OPPS status indicator “Q1” indicates that payment for the service is conditionally packaged under the OPPS. A criterion under the conditional packaging policy is that payment for a service is packaged when it is provided in combination with a significant procedure on the same date of service, but the service is separately paid when it is reported on the claim without a significant procedure. Addendum D1 to the CY 2017 OPPS/ASC proposed rule (which is available via the Internet on the CMS Web site) showed the definition of status indicator “Q1.”

In the case of the procedure described by CPT code 94610, payment for this service is included in the payment for the significant procedure when it is reported in combination with HCPCS codes that are assigned to either status indicators “S,” “T,” or “V.” Alternatively, the service is separately paid when performed alone, or when reported in combination with HCPCS codes that described procedures assigned to a status indicator other than “S,” “T,” or “V.” In addition, assignment to OPPS status indicator Start Printed Page 79646“Q1” indicates that the service or procedure is assigned a composite APC payment when billed with specific combinations of services based on OPPS composite-specific payment criteria, and payment is packaged into a single payment for specific combinations of services. We disagree with the commenter that CPT code 94610 should be reassigned to OPPS status indicator “T.” Based on our understanding of the service, we believe that status indicator “Q1” is the most appropriate status indicator assignment for CPT code 94610 because the service is often provided in combination with other services on the same day.

After consideration of the public comment we received, we are finalizing our proposal, without modification, to continue to assign CPT code 94610 to APC 5791, and to assign status indicator “Q1” to the code for CY 2017. The complete list of the OPPS payment status indicators and their definitions for CY 2017 is displayed in Addendum D1 to this final rule with comment period, which is available on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​Hospital-Outpatient-Regulations-and-Notices.html. Further, we refer readers to Addendum B of this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the Internet on the CMS Web site.

i. Non-Contact Low Frequency Ultrasound (NLFU) Therapy (APC 5051)

As listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 97610 (Low frequency, non-contact, non-thermal ultrasound, including topical application(s), when performed, wound assessment, and instruction(s) for ongoing care, per day) to APC 5051 (Level 1 Skin Procedures), with a proposed payment rate of approximately $154. In addition, we proposed to continue to assign CPT code 97610 to OPPS status indicator “Q1” (STV-Packaged Codes) to indicate that the service is conditionally packaged.

Comment: One commenter disagreed with CMS' proposal to assign CPT code 97610 to OPPS status indicator “Q1.” The commenter indicated that this is a primary service, not an ancillary service, and providers frequently perform NLFU therapy as a standalone, independent procedure. The commenter further stated that CMS' proposed OPPS status indicator assignment of “Q1” contradicts AMA's guidance in the June 2014 CPT Assistant, which clearly describes the service as a standalone procedure. The commenter recommended that CMS reassign CPT code 97610 to OPPS status indicator “T” (Procedure or Service, Multiple Procedure Reduction Applies. Paid under OPPS; separate APC payment.).

Response: Assigning CPT code 97610 to OPPS status indicator “Q1” indicates that payment for the service is conditionally packaged under the OPPS. A criterion under the conditional packaging policy is that payment for a service is packaged when it is provided in combination with a significant procedure on the same date of service, but the service is separately paid when it is reported on the claim without a significant procedure. Addendum D1 to the CY 2017 OPPS/ASC proposed rule (which is available via the Internet on the CMS Web site) showed the definition of status indicator “Q1.”

We note that payment for the procedure described by CPT code 97610 is included in the payment for the significant procedure when it is reported in combination with HCPCS codes that are assigned to any of status indicators “S,” “T,” or “V.” Alternatively, the service is separately paid when performed alone, or when reported in combination with HCPCS codes that describe procedures assigned to a status indicator other than “S,” “T,” or “V.” In addition, assignment to OPPS status indicator “Q1” indicates that the service or procedure is assigned a composite APC payment if billed with specific combinations of services based on OPPS composite-specific payment criteria, and payment is packaged into a single payment for specific combinations of services. Based on our understanding of the service, we believe that “Q1” is the most appropriate status indicator assignment for CPT code 97610 because the service is provided in combination with other services on the same day.

After consideration of the public comment we received, we are finalizing our proposal, without modification, to continue to assign CPT code 97610 to APC 5051 and to assign CPT code 97610 to OPPS status indicator “Q1” for CY 2017. The complete list of the OPPS payment status indicators and their definitions for CY 2017 is displayed in Addendum D1 to this final rule with comment period, which is available on the CMS Web site at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​Hospital-Outpatient-Regulations-and-Notices.html. Further, we refer readers to Addendum B of this final rule with comment period for the payment rates for all codes reportable under the OPPS. Addendum B is available via the Internet on the CMS Web site.

j. Pulmonary Rehabilitation Services (APCs 5732 and 5733)

Currently, there are four HCPCS codes that describe pulmonary rehabilitation services, specifically, HCPCS codes G0237, G0238, G0239, and G0424. As shown in Table 33 below and as listed in Addendum B of the CY 2017 OPPS/ASC proposed rule, we proposed to reassign these services to APCs 5734 (Level 4 Minor Procedures), 5735 (Level 5 Minor Procedures), and 5791 (Pulmonary Treatment). In addition, we proposed to continue their status indicator assignment of “Q1” to indicate that these services are conditionally packaged.

Table 33—Proposed CY 2017 Status Indicator (SI), APC Assignments, and Payment Rates for the Pulmonary Rehabilitation Services

HCPCS codeLong descriptorsCY 2016 OPPS SICY 2016 OPPS APCCY 2016 OPPS paymentProposed CY 2017 OPPS SIProposed CY 2017 OPPS APCProposed CY 2017 OPPS payment
G0237Therapeutic procedures to increase strength or endurance of respiratory muscles, face to face, one on one, each 15 minutes (includes monitoring)Q15734$91.18Q15735$265.56
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