Skip to Content

Proposed Rule

Medicare Program: Proposed Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Requests for Information on Promoting Interoperability and Electronic Health Care Information, Price Transparency, and Leveraging Authority for the Competitive Acquisition Program for Part B Drugs and Biologicals for a Potential CMS Innovation Center Model

Document Details

Information about this document as published in the Federal Register.

Document Statistics
Document page views are updated periodically throughout the day and are cumulative counts for this document including its time on Public Inspection. Counts are subject to sampling, reprocessing and revision (up or down) throughout the day.
Enhanced Content

Relevant information about this document from Regulations.gov provides additional context. This information is not part of the official Federal Register document.

Published Document

This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble Start Printed Page 37046

AGENCY:

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

ACTION:

Proposed rule.

SUMMARY:

This proposed rule would revise the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2019 to implement changes arising from our continuing experience with these systems. In this proposed rule, we describe the proposed 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 proposed rule would update and refine the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program. The proposed rule also includes requests for information on promoting interoperability and electronic health care information exchange, improving beneficiary access to provider and supplier charge information, and leveraging the authority for the Competitive Acquisition Program (CAP) for Part B drugs and biologicals for a potential CMS Innnovation Center model. In addition, we are proposing to modify the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey measure under the Hospital Inpatient Quality Reporting (IQR) Program by removing the Communication about Pain questions.

DATES:

To be assured consideration, comments on this proposed rule must be received at one of the addresses provided in the ADDRESSES section no later than 5 p.m. EST on September 24, 2018.

ADDRESSES:

In commenting, please refer to file code CMS-1695-P when commenting on the issues in this proposed rule. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed):

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-1695-P, 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-1695-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

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:

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

340B Drug Payment Policy to Nonexcepted Off-Campus Departments of a Hospital, contact Juan Cortes via email Juan.Cortes@cms.hhs.gov or at 410-786-4325.

Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact the HOP Panel mailbox at APCPanel@cms.hhs.gov.

Ambulatory Surgical Center (ASC) Payment System, contact Scott Talaga via email Scott.Talaga@cms.hhs.gov or at 410-786-4142.

Ambulatory Surgical Center Quality Reporting (ASCQR) Program Administration, Validation, and Reconsideration Issues, contact Anita Bhatia via email Anita.Bhatia@cms.hhs.gov or at 410-786-7236.

Ambulatory Surgical Center Quality Reporting (ASCQR) Program Measures, contact Vinitha Meyyur via email Vinitha.Meyyur@cms.hhs.gov or at 410-786-8819.

Blood and Blood Products, contact Joshua McFeeters via email Joshua.McFeeters@cms.hhs.gov or at 410-786-9732.

Cancer Hospital Payments, contact Scott Talaga via email Scott.Talaga@cms.hhs.gov or at 410-786-4142.

CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck Braver via email Chuck.Braver@cms.hhs.gov or at 410-786-6719.

CPT Codes, contact Marjorie Baldo via email Marjorie.Baldo@cms.hhs.gov or at 410-786-4617.

Collecting Data on Services Furnished in Off-Campus Provider-Based Emergency Departments, contact Twi Jackson via email Twi.Jackson@cms.hhs.gov or at 410-786-1159.

Comment Solicitation to Control for Unnecessary Increases in Volume of Outpatient Services, contact Elise Barringer via email Elise.Barringer@cms.hhs.gov or at 410-786-9222.

Composite APCs (Low Dose Brachytherapy and Multiple Imaging), contact Elise Barringer via email Elise.Barringer@cms.hhs.gov or at 410-786-9222.

Comprehensive APCs (C-APCs), contact Lela Strong-Holloway via email Lela.Strong@cms.hhs.gov or at 410-786-3213.

Expansion of Clinical Families of Services at Excepted Off-Campus Departments of a Provider, contact Juan Cortes via email Juan.Cortes@cms.hhs.gov or at 410-786-4325.

Hospital Outpatient Quality Reporting (OQR) Program Administration, Validation, and Reconsideration Issues, contact Anita Bhatia via email Anita.Bhatia@cms.hhs.gov or at 410-786-7236.

Hospital Outpatient Quality Reporting (OQR) Program Measures, contact Vinitha Meyyur via email Vinitha.Meyyur@cms.hhs.gov or at 410-786-8819.

Hospital Outpatient Visits (Emergency Department Visits and Critical Care Visits), contact Twi Jackson via email Start Printed Page 37047 Twi.Jackson@cms.hhs.gov or at 410-786-1159.

Inpatient Only (IPO) Procedures List, contact Lela Strong-Holloway via email Lela.Strong@cms.hhs.gov or at 410-786-3213.

New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga via email Scott.Talaga@cms.hhs.gov or at 410-786-4142.

No Cost/Full Credit and Partial Credit Devices, contact Twi Jackson via email Twi.Jackson@cms.hhs.gov or at 410-786-1159.

OPPS Brachytherapy, contact Scott Talaga via email Scott.Talaga@cms.hhs.gov or at 410-786-4142.

OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-Charge Ratios (CCRs), Data Claims, Geometric Mean Calculation, Outlier Payments, and Wage Index), contact Erick Chuang via email Erick.Chuang@cms.hhs.gov or at 410-786-1816 or Scott Talaga via email Scott.Talaga@cms.hhs.gov or at 410-786-4142.

OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar Products, contact Josh McFeeters via email Josh.McFeeters@cms.hhs.gov or at 410-786-9732.

OPPS New Technology Procedures/Services, contact the New Technology APC email at NewTechAPCapplications@cms.hhs.gov.

OPPS Exceptions to the 2 Times Rule, contact Marjorie Baldo via email Marjorie.Baldo@cms.hhs.gov or at 410-786-4617.

OPPS Packaged Items/Services, contact Lela Strong-Holloway via email Lela.Strong@cms.hhs.gov or at 410-786-3213.

OPPS Pass-Through Devices, contact the Device Pass-Through email at DevicePTapplications@cms.hhs.gov.

OPPS Status Indicators (SI) and Comment Indicators (CI), contact Marina Kushnirova via email Marina.Kushnirova@cms.hhs.gov or at 410-786-2682.

Partial Hospitalization Program (PHP) and Community Mental Health Center (CMHC) Issues, contact the PHP Payment Policy Mailbox at PHPPaymentPolicy@cms.hhs.gov.

Request for Information on Leveraging the Authority for the Competitive Acquisition Program (CAP) for Part B Drugs and Biologicals for a Potential CMS Innovation Center Model, contact the CMS Innovation Center Team Mailbox via email at CMMIPartBDrugCAP_RFI@cms.hhs.gov.

Request for Information on Promoting Interoperability and Electronic Healthcare Information Exchange, contact Scott Cooper via email at Scott.Cooper@cms.hhs.gov or at 410-786-9465.

Request for Information on Requirements for Hospitals To Make Public a List of Their Standard Charges via the internet, contact Elise Barringer via email Elise.Barringer@cms.hhs.gov or at 410-786-9222.

Rural Hospital Payments, contact Joshua McFeeters via email Joshua.McFeeters@cms.hhs.gov or at 410-786-9732.

Skin Substitutes, contact Josh McFeeters via email Joshua.McFeeters@cms.hhs.gov or at 410-786-9732.

All Other Issues Related to Hospital Outpatient and Ambulatory Surgical Center Payments Not Previously Identified, contact Marjorie Baldo via email Marjorie.Baldo@cms.hhs.gov or at 410-786-4617.

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 website as soon as possible after they have been received: http://www.regulations.gov/​. Follow the search instructions on that website 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 Publishing Office. This database can be accessed via the internet at https://www.gpo.gov/​fdsys/​.

Addenda Available Only Through the Internet on the CMS Website

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 website. 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.

Table of Contents

I. Summary and Background

A. Executive Summary of This Document

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)

F. Public Comments Received in Response to CY 2018 OPPS/ASC Final Rule With Comment Period

II. Proposed Updates Affecting OPPS Payments

A. Recalibration of APC Relative Payment Weights

B. Proposed Conversion Factor Update

C. Proposed Wage Index Changes

D. Proposed Statewide Average Default Cost-to-Charge Ratios (CCRs)

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

F. Proposed Payment Adjustment for Certain Cancer Hospitals for CY 2019

G. Proposed Hospital Outpatient Outlier Payments

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

I. Proposed Beneficiary Copayments

III. Proposed OPPS Ambulatory Payment Classification (APC) Group Policies

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

B. Proposed OPPS Changes—Variations within APCs

C. Proposed New Technology APCs

D. Proposed OPPS APC-Specific Policies

IV. Proposed OPPS Payment for Devices

A. Pass-Through Payments for Devices

B. Proposed Device-Intensive Procedures

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

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

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

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

A. BackgroundStart Printed Page 37048

B. Estimate of Pass-Through Spending

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

VIII. Proposed Payment for Partial Hospitalization Services

A. Background

B. Proposed PHP APC Update for CY 2019

C. Proposed Outlier Policy for CMHCs

IX. Proposed Procedures That Would Be Paid Only as Inpatient Procedures

A. Background

B. Proposed Changes to the Inpatient Only (IPO) List

X. Proposed Nonrecurring Policy Changes

A. Collecting Data on Services Furnished in Off-Campus Provider-Based Emergency Departments

B. Proposal and Comment Solicitation on Method to Control Unnecessary Increases in the Volume of Outpatient Services

C. Proposal to Apply the 340B Drug Payment Policy to Nonexcepted Off-Campus Departments of a Hospital

D. Expansion of Clinical Families of Services at Excepted Off-Campus Departments of a Provider

XI. Proposed CY 2019 OPPS Payment Status and Comment Indicators

A. Proposed CY 2019 OPPS Payment Status Indicator Definitions

B. Proposed CY 2019 Comment Indicator Definitions

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

A. Background

B. Proposed Treatment of New and Revised Codes

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

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

E. New Technology Intraocular Lenses (NTIOLs)

F. Proposed ASC Payment and Comment Indicators

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

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

A. Background

B. Hospital OQR Program Quality Measures

C. Administrative Requirements

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

E. Proposed Payment Reduction for Hospitals That Fail to Meet the Hospital OQR Program Requirements for the CY 2019 Payment Determination

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

A. Background

B. ASCQR Program Quality Measures

C. Administrative Requirements

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

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

XV. Requests for Information (RFIs)

A. Request for Information on Promoting Interoperability and Electronic Health Care Information Exchange Through Possible Revisions to the CMS Patient Health and Safety Requirements for Hospitals and Other Medicare-Participating and Medicaid-Participating Providers and Suppliers

B. Request for Information on Price Transparency: Improving Beneficiary Access to Provider and Supplier Charge Information

C. Request for Information on Leveraging the Authority for the Competitive Acquisition Program (CAP) for Part B Drugs and Biologicals for a Potential CMS Innovation Center Model

XVI. Proposed Additional Hospital Inpatient Quality Reporting (IQR) Program Policies

XVII. Files Available to the Public Via the Internet

XVIII. 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 for the Proposed Update to the HCAHPS Survey Measure in the Hospital IQR Program

E. Total Reduction in Burden Hours and in Costs

XIX. Response to Comments

XX. Economic Analyses

A. Statement of Need

B. Overall Impact for the Provisions of This Proposed Rule

C. Detailed Economic Analyses

D. Effects of the Proposed Update to the HCAHPS Survey Measure in the Hospital IQR Program

E. Regulatory Review Costs

F. Regulatory Flexibility Act (RFA) Analysis

G. Unfunded Mandates Reform Act Analysis

H. Reducing Regulation and Controlling Regulatory Costs

I. Conclusion

XXI. Federalism Analysis

Regulation Text

I. Summary and Background

A. Executive Summary of This Document

1. Purpose

In this proposed rule, we are proposing to update 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, 2019. 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 proposed rule. In addition, this proposed rule would update and refine the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program.

In this proposed rule, we also are including three Requests for Information (RFIs) on: (1) Promoting interoperability and electronic health care information exchange through possible revisions to the CMS patient health and safety requirements for hospitals and other Medicare-participating and Medicaid-participating providers and suppliers; (2) improving beneficiary access to provider and supplier charge information; and (3) leveraging the authority for the Competitive Acqisition Program (CAP) for Part B drugs and biologicals for a potential CMS Innovation Center model. In addition, we are proposing to modify the HCAHPS Survey measure by removing the Communication about Pain questions from the HCAHPS Survey for the Hospital IQR Program, which are used to assess patients' experiences of care, effective with January 2022 discharges for the FY 2024 payment determination.

2. Improving Patient Outcomes and Reducing Burden Through Meaningful Measures

Regulatory reform and reducing regulatory burden are high priorities for CMS. To reduce the regulatory burden on the healthcare industry, lower health care costs, and enhance patient care, in October 2017, we launched the Meaningful Measures Initiative.[1] This initiative is one component of our agency-wide Patients Over Paperwork Initiative,[2] which is aimed at evaluating and streamlining regulations with a goal to reduce unnecessary cost and burden, increase efficiencies, and improve Start Printed Page 37049beneficiary experience. The Meaningful Measures Initiative is aimed at identifying the highest priority areas for quality measurement and quality improvement in order to assess the core quality of care issues that are most vital to advancing our work to improve patient outcomes. The Meaningful Measures Initiative represents a new approach to quality measures that fosters operational efficiencies, and will reduce costs including, collection and reporting burden while producing quality measurement that is more focused on meaningful outcomes.

The Meaningful Measures framework has the following objectives:

  • Address high-impact measure areas that safeguard public health;
  • Patient-centered and meaningful to patients;
  • Outcome-based where possible;
  • Fulfill each program's statutory requirements;
  • Minimize the level of burden for health care providers;
  • Significant opportunity for improvement;
  • Address measure needs for population based payment through alternative payment models; and
  • Align across programs and/or with other payers.

In order to achieve these objectives, we have identified 19 Meaningful Measures areas and mapped them to six overarching quality priorities as shown in the table below.

Quality priorityMeaningful measure area
Making Care Safer by Reducing Harm Caused in the Delivery of CareHealthcare-Associated Infections Preventable Healthcare Harm
Strengthen Person and Family Engagement as Partners in Their CareCare is Personalized and Aligned with Patient's Goals End of Life Care According to Preferences Patient's Experience of Care Patient Reported Functional Outcomes
Promote Effective Communication and Coordination of CareMedication Management Admissions and Readmissions to Hospitals Transfer of Health Information and Interoperability
Promote Effective Prevention and Treatment of Chronic DiseasePreventive Care Management of Chronic Conditions Prevention, Treatment, and Management of Mental Health Prevention and Treatment of Opioid and Substance Use Disorders Risk Adjusted Mortality
Work with Communities to Promote Best Practices of Healthy LivingEquity of Care Community Engagement
Make Care AffordableAppropriate Use of Healthcare Patient-focused Episode of Care Risk Adjusted Total Cost of Care

By including Meaningful Measures in our programs, we believe that we can also address the following cross-cutting measure criteria:

  • Eliminating disparities;
  • Tracking measurable outcomes and impact;
  • Safeguarding public health;
  • Achieving cost savings;
  • Improving access for rural communities; and
  • Reducing burden.

We believe that the Meaningful Measures Initiative will improve outcomes for patients, their families, and health care providers while reducing burden and costs for clinicians and providers as well as promoting operational efficiencies.

3. Summary of the Major Provisions

  • OPPS Update: For CY 2019, we are proposing to increase the payment rates under the OPPS by an outpatient department (OPD) fee schedule increase factor of 1.25 percent. This increase factor is based on the proposed hospital inpatient market basket percentage increase of 2.8 percent for inpatient services paid under the hospital inpatient prospective payment system (IPPS), minus the proposed multifactor productivity (MFP) adjustment of 0.8 percentage point, and minus a 0.75 percentage point adjustment required by the Affordable Care Act. Based on this proposed update, we estimate that total payments to OPPS providers (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix) for CY 2019 would be approximately $74.6 billion, an increase of approximately $4.9 billion compared to estimated CY 2018 OPPS payments.

We are proposing to continue 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.

  • Comprehensive APCs: For CY 2019, we are proposing to create three new comprehensive APCs (C-APCs). These proposed new C-APCs include ears, nose, and throat (ENT) and vascular procedures. This proposal would increase the total number of C-APCs to 65.
  • Proposed Changes to the Inpatient Only List: For CY 2019, we are proposing to remove two procedures from the inpatient only list and add one procedure to the list.
  • Proposal and Comment Solicitation on Method to Control Unnecessary Increases in Volume of Outpatient Services: To the extent that similar services can be safely provided in more than one setting, it is not prudent for the Medicare program to pay more for these services in one setting than another. We believe that capping the OPPS payment at the Physician Fee Schedule (PFS)-equivalent rate would be an effective method to control the volume of these unnecessary services because the payment differential that is driving the site-of-service decision will be removed. In particular, we believe this method of capping payment will control unnecessary volume increases as manifested both in terms of numbers of covered outpatient department services furnished and costs of those services. Therefore, we are proposing to use our authority under section 1833(t)(2)(F) of the Act to apply an amount equal to the site-specific PFS payment rate for nonexcepted items and services furnished by a nonexcepted off-campus PBD (the PFS payment rate) for the clinic visit service, as described by HCPCS code G0463, when provided at an off-campus PBD excepted from section 1833(t)(21) of the Act. In addition, we are soliciting public Start Printed Page 37050comments on how to expand the Secretary's statutory authority under section 1833(t)(2)(F) of the Act to additional items and services paid under the OPPS that may represent unnecessary increases in hospital outpatient department utilization.

Expansion of Services at Off-Campus Provider-Based Departments (PBDs) Paid under the OPPS (Section 603): For CY 2019, we are proposing that if an excepted off-campus PBD furnishes a service from a clinical family of services for which it did not previously furnish a service (and subsequently bill for that service) during a baseline period, services from this new clinical family of services would not be covered OPD services. Instead, services in the new clinical family of services would be paid under the PFS.

Proposal to Apply 340B Drug Payment Policy to Off-Campus Departments of a Hospital Paid under the Medicare Physician Fee Schedule: For CY 2019, we are proposing to pay average sales price (ASP) minus 22.5 percent for 340B-acquired drugs furnished by nonexcepted, off-campus provider-based departments (PBDs). This is consistent with the payment methodology adopted in CY 2018 for 340B-acquired drugs furnished in hospital departments paid under the OPPS.

Payment Policy for Biosimilar Biological Products without Pass-Through Status That Are Acquired under the 340B Program: For CY 2019, we are proposing to pay nonpass-through biosimilars acquired under the 340B program at ASP minus 22.5 percent of the biosimilar's own ASP rather than ASP minus 22.5 percent of the reference product's ASP.

Payment of Drugs, Biologicals, and Radiopharmaceuticals If Average Sales Price (ASP) Data Are Not Available: For CY 2019, we are proposing to pay separately payable drugs and biological products that do not have pass-through payment status and are not acquired under the 340B Program at wholesale acquisition cost (WAC)+3 percent instead of WAC+6 percent. If WAC data are not available for a drug or biological product, we are proposing to continue our policy to pay separately payable drugs and biological products at 95 percent of the average wholesale price (AWP). Drugs and biologicals that are acquired under the 340B Program would continue to be paid at ASP minus 22.5 percent, WAC minus 22.5 percent, or 69.46 percent of AWP, as applicable.

  • Device-Intensive Procedure Criteria: For CY 2019, we are proposing to modify the device-intensive criteria to allow procedures that involve single-use devices, regardless of whether or not they remain in the body after the conclusion of the procedure, to qualify as device-intensive procedures. We also are proposing to allow procedures with a device offset percentage of greater than 30 percent to qualify as device-intensive procedures. In addition, we are soliciting comments on whether any high-cost devices (other than capital equipment) should be left out of the definition of single-use devices or, alternatively, whether our proposed definition excludes devices that commenters believe should be subject to our device-intensive policy.
  • Device Pass-Through Payment Applications: For CY 2019, we are evaluating seven applications for device pass-through payments and are seeking public comments in this CY 2019 proposed rule on whether these applications meet the criteria for device pass-through payment status.
  • New Technology APC Payment for Extremely Low-Volume Procedures: For CY 2019, we are proposing to apply a “smoothing methodology” based on multiple years of claims data to establish a more stable rate for services assigned to New Technology APCs with fewer than 100 claims per year under the OPPS. Under the smoothing methodology, we would calculate the geometric mean costs, the median costs, and the arithmetic mean costs for these procedures to promote payment stability. This methodology allows the option to use of one of these methodologies to assign the most representative payment for the service. In addition, we are proposing to exclude low-volume services from bundling into C-APC procedures.
  • Cancer Hospital Payment Adjustment: For CY 2019, we are proposing to continue to provide additional payments to cancer hospitals so that the cancer hospital's payment-to-cost ratio (PCR) after the additional payments is equal to the weighted average PCR for the other OPPS hospitals using the most recently submitted or settled cost report data. However, section 16002(b) of the 21st Century Cures Act requires that this weighted average PCR be reduced by 1.0 percentage point. Based on the data and the required 1.0 percentage point reduction, we are proposing that a target PCR of 0.88 would be used to determine the CY 2019 cancer hospital payment adjustment to be paid at cost report settlement. That is, the payment adjustments would be the additional payments needed to result in a PCR equal to 0.88 for each cancer hospital.
  • Rural Adjustment: For 2019 and subsequent years, we are proposing to continue the 7.1 percent adjustment to OPPS payments for certain rural SCHs, including essential access community hospitals (EACHs). We intend to continue the 7.1 percent adjustment for future years in the absence of data to suggest a different percentage adjustment should apply.
  • Ambulatory Surgical Center (ASC) Payment Update: For CYs 2019 through 2023, we are proposing to update the ASC payment system using the hospital market basket update instead of the CPI-U. However, we are requesting public comments on ASCs' cost structure to assess whether the hospital market basket is an appropriate proxy for ASC costs. During this 5-year period, we intend to examine whether such adjustment leads to a migration of services from other settings to the ASC setting. Using the hospital market basket methodology, for CY 2019, we are proposing to increase payment rates under the ASC payment system by 2.0 percent for ASCs that meet the quality reporting requirements under the ASCQR Program. This proposed increase is based on a proposed hospital market basket percentage increase of 2.8 percent minus a proposed MFP adjustment required by the Affordable Care Act of 0.8 percentage point.

Based on this proposed update, we estimate that total payments to ASCs (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix) for CY 2019 would be approximately $4.89 billion, an increase of approximately $300 million compared to estimated CY 2018 Medicare payments to ASCs. We note that the CY 2019 ASC payment update, under our prior policy, would have been 1.3 percent, based on a projected CPI-U update of 2.1 percent minus a MFP adjustment required by the Affordable Care Act of 0.8 percentage point. In addition, we will assess the feasibility of collaborating with stakeholders to collect ASC cost data in a minimally burdensome manner and could propose a plan to collect such information.

  • Proposed Changes to the List of ASC Covered Surgical Procedures: For CY 2019, we are proposing to revise our definition of “surgery” in the ASC payment system to account for certain “surgery-like” procedures that are assigned codes outside the Current Procedural Terminology (CPT) surgical range. In addition, we are proposing to add 12 cardiac catheterization procedures to the ASC covered procedures list. We also are soliciting public comments on our proposal to reassess, and soliciting further public comments on, procedures recently Start Printed Page 37051added to the ASC covered procedures list.
  • Payment for Non-Opioid Pain Management Therapy: For CY 2019, in response to the recommendation from the President's Commission on Combating Drug Addiction and the Opioid Crisis, we are proposing to change the packaging policy for certain drugs when administered in the ASC setting and provide separate payment for non-opioid pain management drugs that function as a supply when used in a surgical procedure when the procedure is performed in an ASC. In addition, we are soliciting public comments and peer-reviewed evidence to help determine whether we should pay separately for other non-opioid treatments for pain under the OPPS and the ASC payment system.
  • Hospital Outpatient Quality Reporting (OQR) Program: For the Hospital OQR Program, we are proposing changes for the CY 2019, CY 2020, and CY 2021 payment determinations and subsequent years. Effective upon the final rule, we are proposing to: (1) Update measure removal Factor 7; (2) add a new removal Factor 8; and (3) codify our measure removal policies and factors. We also are providing clarification of our “topped-out” criteria. These proposals would align the Hospital OQR Program measure removal factors with those used in the ASCQR Program. In addition, beginning with CY 2019, we are proposing to update the frequency with which we would release a Hospital OQR Program Specifications Manual such that it would occur every 6 to 12 months. We also are proposing for the CY 2020 payment determination and subsequent years: (1) To update the participation status requirements by removing the Notice of Participation (NOP) form; and (2) to extend the reporting period for the OP-32: Facility Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy measure to 3 years.

Beginning with the CY 2020 payment determination and subsequent years, we also are proposing to remove the OP-27: Influenza Vaccination Coverage Among Healthcare Personnel measure.

Beginning with the CY 2021 payment determination and subsequent years, we are proposing to remove the following nine measures: (1) OP-5: Median Time to ECG; (2) OP-9: Mammography Follow-up Rates; (3) OP-11: Thorax CT Use of Contrast Material; (4) OP-12: The Ability for Providers with HIT to Receive Laboratory Data Electronically Directly into Their Qualified/Certified EHR System as Discrete Searchable Data; (5) OP-14: Simultaneous Use of Brain Computed Tomography (CT) and Sinus CT; (6) OP-17: Tracking Clinical Results between Visits; (7) OP-29: Endoscopy/Polyp Surveillance: Appropriate Follow-Up Interval for Normal Colonoscopy in Average Risk Patients; (8) OP-30: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps—Avoidance of Inappropriate Use; and (9) OP-31: Cataracts—Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery.

  • Ambulatory Surgical Center Quality Reporting (ASCQR) Program: For the ASCQR Program, we are proposing changes in policies for the CY 2020 payment determination and CY 2021 payment determination and subsequent years. Effective upon the final rule, we are proposing to: (1) Remove one factor; (2) add two new measure removal factors; and (3) update the regulations to better reflect our measure removal policies. We also are making one clarification to measure removal Factor 1. These proposals would align the ASCQR Program measure removal factors with those used in the Hospital OQR Program.

Beginning with the CY 2020 payment determination and subsequent years, we are proposing to extend the reporting period for the ASC-12: Facility Seven-Day Risk-Standardized Hospital Visit Rate after Outpatient Colonoscopy measure to 3 years. For the CY 2020 payment determination and subsequent years, we also are proposing to remove one measure from the ASCQR Program measure set, ASC-8: Influenza Vaccination Coverage Among Healthcare Personnel.

Beginning with the CY 2021 payment determination and subsequent years, we are proposing to remove seven measures: (1) ASC-1: Patient Burn; (2) ASC-2: Patient Fall; (3) ASC-3: Wrong Site, Wrong Side, Wrong Patient, Wrong Procedure, Wrong Implant; (4) ASC-4: All-Cause Hospital Transfer/Admission; (5) ASC-9: Endoscopy/Polyp Surveillance Follow-up Interval for Normal Colonoscopy in Average Risk Patients; (6) ASC-10: Endoscopy/Polyp Surveillance: Colonoscopy Interval for Patients with a History of Adenomatous Polyps—Avoidance of Inappropriate Use; and (7) ASC-11: Cataracts—Improvement in Patient's Visual Function within 90 Days Following Cataract Surgery.

  • Hospital Inpatient Quality Reporting (IQR) Program Update: In this proposed rule, we are proposing to modify the HCAHPS Survey measure by removing the Communication about Pain questions from the HCAHPS Survey for the Hospital IQR Program, effective with January 2022 discharges for the FY 2024 payment determination and subsequent years.

4. Summary of Costs and Benefits

In sections XX. and XXI. of this proposed rule, we set forth a detailed analysis of the regulatory and Federalism impacts that the proposed changes would have on affected entities and beneficiaries. Key estimated impacts are described below.

a. Impacts of the Proposed OPPS Update

(1) Impacts of All Proposed OPPS Changes

Table 42 in section XX. of this proposed rule displays the distributional impact of all the proposed OPPS changes on various groups of hospitals and CMHCs for CY 2019 compared to all estimated OPPS payments in CY 2018. We estimate that policies in this proposed rule would result in a 0.1 percent overall decrease in OPPS payments to providers. We estimate that total OPPS payments for CY 2019, including beneficiary cost-sharing, to the approximate 3,800 facilities paid under the OPPS (including general acute care hospitals, children's hospitals, cancer hospitals, and CMHCs) would decrease by approximately $80 million compared to CY 2018 payments, excluding our estimated changes in enrollment, utilization, and case-mix.

We estimated the isolated impact of our proposed OPPS policies on CMHCs because CMHCs are only paid for partial hospitalization services under the OPPS. Continuing the provider-specific structure we adopted beginning in CY 2011 and basing payment fully on the type of provider furnishing the service, we estimate a 17.9 percent decrease in CY 2019 payments to CMHCs relative to their CY 2018 payments.

(2) Impacts of the Proposed Updated Wage Indexes

We estimate that our proposed update of the wage indexes based on the FY 2019 IPPS proposed rule wage indexes would result in no estimated payment change for urban and rural hospitals under the OPPS. These proposed wage indexes include the continued implementation of the OMB labor market area delineations based on 2010 Decennial Census data, with updates as discussed in section II.C. of this proposed rule.Start Printed Page 37052

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

There are no significant impacts of our proposed CY 2019 payment policies for hospitals that are eligible for the rural adjustment or for the cancer hospital payment adjustment. We are not proposing to make any change in policies for determining the rural hospital payment adjustments. While we are implementing the required reduction to the cancer hospital payment adjustment in section 16002 of the 21st Century Cures Act for CY 2019, the proposed target payment-to-cost ratio (PCR) for CY 2019 remains the same as in CY 2018 and therefore does not impact the budget neutrality adjustments.

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

For the CY 2019 OPPS, we are proposing an OPD fee schedule increase factor of 1.25 percent to the conversion factor for CY 2019. As a result of the proposed OPD fee schedule increase factor and other budget neutrality adjustments, we estimate that rural and urban hospitals would experience increases of approximately 1.3 percent for urban hospitals and 1.5 percent for rural hospitals. Classifying hospitals by teaching status, we estimate nonteaching hospitals would experience increases of 1.4 percent, minor teaching hospitals would experience increases of 1.3 percent, and major teaching hospitals would experience a decrease of 1.1 percent. We also classified hospitals by type of ownership. We estimate that hospitals with voluntary ownership would experience increases of 1.3 percent, hospitals with proprietary ownership would experience increases of 1.4 percent, and hospitals with government ownership would experience decrease of 1.3 percent in payments.

(5) Impacts of the Proposal to Control for Unnecessary Increases in the Volume of Outpatient Services

In section X.B. of this proposed rule, we discuss our CY 2019 proposal to control for unnecessary increases in the volume of outpatient service by paying for clinic visits furnished at an off-campus provider-based department at a PFS-equivalent rate under the OPPS rather than at the standard OPPS rate. As a result of this proposal, we estimated decreases of 1.2 percent to urban hospitals, and estimated decreases of 1.3 percent to rural hospitals, with the estimated effect for individual groups of hospitals depending on the volume of clinic visits provided at off-campus provider-based departments.

b. Impacts of the Proposed 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 proposed CY 2019 payment rates, compared to estimated CY 2018 payment rates, generally ranges between an increase of 1 to 4 percent, depending on the service, with some exceptions. We estimate the impact of applying the hospital market basket update to proposed ASC payment rates would increase payments by $32 million under the ASC payment system in CY 2019 compared to if we applied an update based on CPI-U.

c. Impact of the Proposed Changes to the Hospital OQR Program

Across 3,300 hospitals participating in the Hospital OQR Program, we estimate that our proposed requirements would result in the following changes to costs and burdens related to information collection for the Hospital OQR Program compared to previously adopted requirements: (1) No change in the total collection of information burden or costs for the CY 2020 payment determination; (2) a total collection of information burden reduction of 1,468,614 hours and a total collection of information cost reduction of approximately $57.3 million for the CY 2021 payment determination due to the proposed removal of six specific measures: OP-5, OP-12, OP-17, OP-29, OP-30, and OP-31.

Further, we anticipate that the proposed removal of a total of 10 measures would result in a reduction in costs unrelated to information collection. For example, it may be costly for health care providers to track the confidential feedback, preview reports, and publicly reported information on a measure where we use the measure in more than one program. Also, when measures are in multiple programs, maintaining the specifications for those measures, as well as the tools we need to collect, validate, analyze, and publicly report the measure data may result in costs to CMS. In addition, beneficiaries may find it confusing to see public reporting on the same measure in different programs.

d. Impact of the Proposed Changes to the ASCQR Program

Across 3,937 ASCs participating in the ASCQR Program, we estimate that our proposed requirements would result in the following changes to costs and burdens related to information collection for the ASCQR Program compared to previously adopted requirements: (1) No change in the total collection of information burden or costs for the CY 2020 payment determination; (2) a total collection of information burden reduction of 140,585 hours and a total collection of information cost reduction of approximately $5.1 million for the CY 2021 payment determination due to the proposed removal of three specific measures: ASC-9, ASC-10, and ASC-11.

Further, we anticipate that the proposed removal of a total of eight measures would result in a reduction in costs unrelated to information collection. For example, it may be costly for health care providers to track the confidential feedback, preview reports, and publicly reported information on a measure where we use the measure in more than one program. Also, when measures are in multiple programs, maintaining the specifications for those measures as well as the tools we need to collect, analyze, and publicly report the measure data may result in costs to CMS. In addition, beneficiaries may find it confusing to see public reporting on the same measure in different programs.

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, Start Printed Page 37053Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8, 2006; the Medicare Improvements and Extension Act under Division B of Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) (Pub. L. 109-432), enacted on December 20, 2006; the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), enacted on December 29, 2007; the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July 15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-148), enacted on March 23, 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on March 30, 2010 (these two public laws are collectively known as the Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010 (MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L. 112-96), enacted on February 22, 2012; the American Taxpayer Relief Act of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93), enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2, 2015; the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), enacted on December 18, 2015, and the 21st Century Cures Act (Pub. L. 114-255), enacted on December 13, 2016.

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

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

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

For new technology items and services, special payments under the OPPS may be made in one of two ways. Section 1833(t)(6) of the Act generally 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 and in some cases, provides for a longer period under which transitional pass-through payments are made. For new technology services that are not eligible for transitional pass-through payments, and for which we lack sufficient clinical information and cost data to appropriately assign them to a clinical APC group, we have established special APC groups based on costs, which we refer to as New Technology APCs. These New Technology APCs are designated by cost bands which allow us to provide appropriate and consistent payment for designated new procedures that are not yet reflected in our claims data. Similar to pass-through payments, an assignment to a New Technology APC is temporary; that is, we retain a service within a New Technology APC until we acquire sufficient data to assign it to a clinically appropriate APC group.

C. Excluded OPPS Services and Hospitals

Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to designate the hospital outpatient services that are paid under the OPPS. While most hospital outpatient services are payable under the OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for ambulance, physical and occupational therapy, and speech-language pathology services, for which payment is made under a fee schedule. It also excludes screening mammography, diagnostic mammography, and effective January 1, 2011, an annual wellness visit providing personalized prevention plan services. The Secretary exercises the authority granted under the statute to also exclude from the OPPS certain services that are paid under fee schedules or other payment systems. Such excluded services include, for example, the professional services of physicians and nonphysician practitioners paid under the Physician Fee Schedule (PFS); certain laboratory services paid under the Clinical Laboratory Fee Schedule (CLFS); services for beneficiaries with end-stage renal disease (ESRD) that are paid under the ESRD prospective payment system; and services and procedures that require an inpatient stay that are paid under the hospital IPPS. In addition, section 1833(t)(1)(B)(v) of the Act does not include applicable items and services (as defined in subparagraph (A) of paragraph (21)) that are furnished on or after January 1, 2017 by an off-campus outpatient department of a provider (as defined in subparagraph (B) of paragraph (21). We set forth the services that are excluded from payment under the OPPS in regulations at 42 CFR 419.22.

Under § 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 Start Printed Page 37054implemented 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 website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​Hospital-Outpatient-Regulations-and-Notices.html.

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

1. Authority of the Panel

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

2. Establishment of the Panel

On November 21, 2000, the Secretary signed the initial charter establishing the Panel, and at that time named the APC Panel. This expert panel is composed of appropriate representatives of providers (currently employed full-time, not as consultants, in their respective areas of expertise) who review clinical data, and advise CMS about the clinical integrity of the APC groups and their payment weights. Since CY 2012, the Panel also is charged with advising the Secretary on the appropriate level of supervision for individual hospital outpatient therapeutic services. The Panel is technical in nature, and it is governed by the provisions of the Federal Advisory Committee Act (FACA). The current charter specifies, among other requirements, that the Panel—

  • May advise on the clinical integrity of Ambulatory Payment Classification (APC) groups and their associated weights;
  • May advise on the appropriate supervision level for hospital outpatient services;
  • Continues to be technical in nature;
  • Is governed by the provisions of the FACA;
  • Has a Designated Federal Official (DFO); and
  • Is chaired by a Federal Official designated by the Secretary.

The Panel's charter was amended on November 15, 2011, renaming the Panel and expanding the Panel's authority to include supervision of hospital outpatient therapeutic services and to add critical access hospital (CAH) representation to its membership. The Panel's charter was also amended on November 6, 2014 (80 FR 23009), and the number of members was revised from up to 19 to up to 15 members. The Panel's current charter was approved on November 21, 2016, for a 2-year period (81 FR 94378).

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

3. Panel Meetings and Organizational Structure

The Panel has held many meetings, with the last meeting taking place on August 21, 2017. Prior to each meeting, we publish a notice in the Federal Register to announce the meeting and, when necessary, to solicit nominations for Panel membership, to announce new members and to announce any other changes of which the public should be aware. Beginning in CY 2017, we have transitioned to one meeting per year (81 FR 31941). Further information on the 2018 summer meeting can be found in the meeting notice titled “Medicare Program: Announcement of the Advisory Panel on Hospital Outpatient Payment (the Panel) Meeting on August 20-21, 2018” (83 FR 19785).

In addition, the Panel has established an operational structure that, in part, currently includes the use of three subcommittees to facilitate its required review process. The three current subcommittees include the following:

  • APC Groups and Status Indicator Assignments Subcommittee, which advises the Panel on the appropriate status indicators to be assigned to HCPCS codes, including but not limited to whether a HCPCS code or a category of codes should be packaged or separately paid, as well as the appropriate APC assignment of HCPCS codes regarding services for which separate payment is made;
  • Data Subcommittee, which is responsible for studying the data issues confronting the Panel and for recommending options for resolving them; and
  • Visits and Observation Subcommittee, which reviews and makes recommendations to the Panel on all technical issues pertaining to observation services and hospital outpatient visits paid under the OPPS.

Each of these subcommittees was established by a majority vote from the full Panel during a scheduled Panel meeting, and the Panel recommended at the August 21, 2017 meeting that the subcommittees continue. We accepted this recommendation.

Discussions of the other recommendations made by the Panel at the August 21, 2017 Panel meeting, namely endovascular procedure APCs, blood derived hematopoietic stem cell transplantation, OPPS payment for drugs acquired under the 340B program, and packaging of drug administration services, were discussed in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59216) and the CY 2018 OPPS/ASC correction notice (82 FR 61184), or are included in the sections of this proposed rule 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 website mentioned earlier in this section, and the FACA database at http://facadatabase.gov.

F. Public Comments Received on the CY 2018 OPPS/ASC Final Rule With Comment Period

We received approximately 127 timely pieces of correspondence on the Start Printed Page 37055CY 2018 OPPS/ASC final rule with comment period that appeared in the Federal Register on December 14, 2017 (82 FR 59216), 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 will be set forth in the CY 2019 final rule with comment period under the appropriate subject matter headings.

II. Proposed Updates Affecting OPPS Payments

A. Proposed 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 this CY 2019 OPPS/ASC proposed rule, for CY 2019, we are proposing to recalibrate the APC relative payment weights for services furnished on or after January 1, 2019, and before January 1, 2020 (CY 2019), using the same basic methodology that we described in the CY 2018 OPPS/ASC final rule with comment period (82 FR 52367 through 52370), using updated CY 2017 claims data. That is, we are proposing 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 APC proposed relative payment weights for CY 2019, we began with approximately 163 million final action claims (claims for which all disputes and adjustments have been resolved and payment has been made) for HOPD services furnished on or after January 1, 2017, and before January 1, 2018, before applying our exclusionary criteria and other methodological adjustments. After the application of those data processing changes, we used approximately 86 million final action claims to develop the proposed CY 2019 OPPS payment weights. For exact numbers of claims used and additional details on the claims accounting process, we refer readers to the claims accounting narrative under supporting documentation for this CY 2019 OPPS/ASC proposed rule on the CMS website at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html.

Addendum N to this proposed rule (which is available via the internet on the CMS website) includes the proposed list of bypass codes for CY 2019. The proposed list of bypass codes contains codes that were reported on claims for services in CY 2017 and, therefore, includes codes that were in effect in CY 2017 and used for billing, but were deleted for CY 2018. We retained these deleted bypass codes on the proposed CY 2019 bypass list because these codes existed in CY 2017 and were covered OPD services in that period, and CY 2017 claims data are used to calculate CY 2019 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 are identified by asterisks (*) in the third column of Addendum N to this proposed rule. HCPCS codes that we are proposing to add for CY 2019 are identified by asterisks (*) in the fourth column of Addendum N.

We are not proposing to remove any codes from the CY 2019 bypass list.

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

For CY 2019, in this CY 2019 OPPS/ASC proposed rule, we are proposing 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 proposed CY 2019 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 2017 claims data by comparing these claims data to the most recently available hospital cost reports, which, in most cases, are from CY 2016. For the proposed CY 2019 OPPS payment rates, we used the set of claims processed during CY 2017. 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 website 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 2017 (the year of claims data we used to calculate the proposed CY 2019 OPPS payment rates) and found that the National Uniform Billing Committee (NUBC) did not add any new revenue codes to the NUBC 2017 Data Specifications Manual.

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

In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74840 through 74847), we finalized our policy of creating new cost centers and distinct CCRs for implantable devices, magnetic resonance imagings (MRIs), computed tomography (CT) scans, and cardiac catheterization. However, in response to the CY 2014 OPPS/ASC proposed rule, commenters reported that some hospitals currently use an imprecise “square feet” allocation methodology for the costs of large moveable equipment like CT scan and MRI machines. They indicated that while CMS recommended using two alternative allocation methods, “direct assignment” or “dollar value,” as a more accurate methodology for directly assigning equipment costs, industry analysis suggested that approximately only half of the reported cost centers for CT scans and MRIs rely on these preferred methodologies. In response to concerns from commenters, we finalized a policy for the CY 2014 OPPS to remove claims from providers that use a cost allocation method of “square feet” to calculate CCRs used to estimate costs associated with the APCs for CT and MRI (78 FR 74847). Further, we finalized a transitional policy to estimate the imaging APC relative Start Printed Page 37056payment weights using only CT and MRI cost data from providers that do not use “square feet” as the cost allocation statistic. We provided that this finalized policy would sunset in 4 years to provide a sufficient time for hospitals to transition to a more accurate cost allocation method and for the related data to be available for ratesetting purposes (78 FR 74847). Therefore, beginning CY 2018, with the sunset of the transition policy, we would estimate the imaging APC relative payment weights using cost data from all providers, regardless of the cost allocation statistic employed. However, in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59228 and 59229), we finalized a policy to extend the transition policy for 1 additional year and continued to remove claims from providers that use a cost allocation method of “square feet” to calculate CT and MRI CCRs for the CY 2018 OPPS.

As we discussed in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59228), some stakeholders have raised concerns regarding using claims from all providers to calculate CT and MRI CCRs, regardless of the cost allocations statistic employed (78 FR 74840 through 74847). Stakeholders noted that providers continue to use the “square feet” cost allocation method and that including claims from such providers would cause significant reductions in the imaging APC payment rates.

Table 1 below demonstrates the relative effect on imaging APC payments after removing cost data for providers that report CT and MRI standard cost centers using “square feet” as the cost allocation method by extracting HCRIS data on Worksheet B-1. Table 2 below provides statistical values based on the CT and MRI standard cost center CCRs using the different cost allocation methods.

Table 1—Percentage Change in Estimate Cost for CT and MRI APCs When Excluding Claims From Provider Using “Square Feet” as the Cost Allocation Method

APCAPC descriptorPercentage change
5521Level 1 Imaging without Contrast−3.6
5522Level 2 Imaging without Contrast5.5
5523Level 3 Imaging without Contrast4.3
5524Level 4 Imaging without Contrast4.7
5571Level 1 Imaging with Contrast7.7
5572Level 2 Imaging with Contrast8.4
5573Level 3 Imaging with Contrast2.8
8005CT and CTA without Contrast Composite13.9
8006CT and CTA with Contrast Composite11.4
8007MRI and MRA without Contrast Composite6.6
8008MRI and MRA with Contrast Composite7.4

Table 2—CCR Statistical Values Based on use of Different Cost Allocation Methods

Cost allocation methodCTMRI
Median CCRMean CCRMedian CCRMean CCR
All Providers0.03770.05270.07800.1046
Square Feet Only0.03090.04750.07010.0954
Direct Assign0.05530.06450.10580.1227
Dollar Value0.04460.05920.08660.1166
Direct Assign and Dollar Value0.04470.05920.08670.1163

Our analysis shows that since the CY 2014 OPPS in which we established the transition policy, the number of valid MRI CCRs has increased by 17.4 percent to 2,174 providers and the number of valid CT CCRs has increased by 14.8 percent to 2,244 providers. However, as shown in Table 1 above, nearly all imaging APCs would see an increase in payment rates for CY 2019 if claims from providers that report using the “square feet” cost allocation method were removed. This can be attributed to the generally lower CCR values from providers that use a cost allocation method of “square feet” as shown in Table 2 above.

In response to provider concerns and to provide added flexibility for hospitals to improve their cost allocation methods, for the CY 2019 OPPS, we are proposing to extend our transition policy and remove claims from providers that use a cost allocation method of “square feet” to calculate CCRs used to estimate costs with the APCs for CT and MRI identified in Table 2 above. This proposed extension would mean that CMS would now be providing 6 years for providers to transition from a “square feet” cost allocation method to another cost allocation method. We do not believe another extension in CY 2020 will be warranted and expect to determine the imaging APC relative payment weights for CY 2020 using cost data from all providers, regardless of the cost allocation method employed.

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

In this section of this proposed rule, we discuss the use of claims to calculate the proposed OPPS payment rates for CY 2019. The Hospital OPPS page on the CMS website on which this proposed rule 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 proposed payment rates. That accounting provides additional detail regarding the number of claims derived at each stage of the process. In addition, below in this section we discuss the file of claims that comprises the data set that is available upon payment of an administrative fee Start Printed Page 37057under a CMS data use agreement. The CMS website, http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html, includes information about obtaining the “OPPS Limited Data Set,” which now includes the additional variables previously available only in the OPPS Identifiable Data Set, including ICD-10-CM diagnosis codes and revenue code payment amounts. This file is derived from the CY 2017 claims that were used to calculate the proposed payment rates for the CY 2019 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 2019, in this CY 2019 OPPS/ASC proposed rule, we are proposing to continue to use geometric mean costs to calculate the proposed relative weights on which the CY 2019 OPPS payment rates are based.

We used the methodology described in sections II.A.2.a. through II.A.2.c. of this proposed rule to calculate the costs we used to establish the proposed relative payment weights used in calculating the proposed OPPS payment rates for CY 2019 shown in Addenda A and B to this proposed rule (which are available via the internet on the CMS website). We refer readers to section II.A.4. of this proposed rule for a discussion of the conversion of APC costs to scaled payment weights.

We note that this will be the first year in which claims data containing lines with the modifier “PN” will be available, which indicate nonexcepted items and services furnished and billed by off-campus provider-based departments (PBDs) of hospitals. Because nonexcepted services are not paid under the OPPS, we are proposing to remove those claim lines reported with modifier “PN” from the claims data used in ratesetting for the CY 2019 OPPS and subsequent years.

For details of the claims process used in this proposed rule, we refer readers to the claims accounting narrative under supporting documentation for this CY 2019 OPPS/ASC proposed rule on the CMS website at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html.

a. Proposed Calculation of Single Procedure APC Criteria-Based Costs

(1) Blood and Blood Products

(a) Methodology

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

In this CY 2019 OPPS/ASC proposed rule, we are proposing 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 are proposing 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 are proposing 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 are proposing to calculate the costs upon which the proposed CY 2019 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 2019 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.b. of the CY 2018 OPPS/ASC final rule with comment period (82 FR 59234 through 59239), we defined a comprehensive APC (C-APC) as a classification for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service. Under this policy, we include the costs of blood and blood products when calculating the overall costs of these C-APCs. In this CY 2019 OPPS/ASC proposed rule, we are proposing to continue to apply the blood-specific CCR methodology described in this section when calculating the costs of the blood and blood products that appear on claims with services assigned to the C-APCs. Because the costs of blood and blood products would be reflected in the overall costs of the C-APCs (and, as a result, in the proposed payment rates of the C-APCs), we are proposing to not make separate payments for blood and blood products when they appear on the same claims as services assigned to the C-APCs (we refer readers to the CY 2015 OPPS/ASC final rule with comment period (79 FR 66796)).

We also refer readers to Addendum B to this proposed rule (which is available via the internet on the CMS website) for the proposed CY 2019 payment rates for blood and blood products (which are identified with status indicator “R”). For a more detailed discussion of the blood-specific CCR methodology, we refer readers to the CY 2005 OPPS proposed rule (69 FR 50524 through 50525). For a full history of OPPS Start Printed Page 37058payment for blood and blood products, we refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66807 through 66810).

(b) Pathogen-Reduced Platelets Payment Rate

In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70322 through 70323), we reiterated that we calculate payment rates for blood and blood products using our blood-specific CCR methodology, which utilizes actual or simulated CCRs from the most recently available hospital cost reports to convert hospital charges for blood and blood products to costs. Because HCPCS code P9072 (Platelets, pheresis, pathogen reduced or rapid bacterial tested, each unit), the predecessor code to HCPCS code P9073 (Platelets, pheresis, pathogen-reduced, each unit), was new for CY 2016, there were no claims data available on the charges and costs for this blood product upon which to apply our blood-specific CCR methodology. Therefore, we established an interim payment rate for HCPCS code P9072 based on a crosswalk to existing blood product HCPCS code P9037 (Platelets, pheresis, leukocytes reduced, irradiated, each unit), which we believed provided the best proxy for the costs of the new blood product. In addition, we stated that once we had claims data for HCPCS code P9072, we would calculate its payment rate using the claims data that should be available for the code beginning in CY 2018, which is our practice for other blood product HCPCS codes for which claims data have been available for 2 years.

We stated in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59232) that, although our standard practice for new codes involves using claims data to set payment rates once claims data become available, we were concerned that there may have been confusion among the provider community about the services that HCPCS code P9072 described. That is, as early as 2016, there were discussions about changing the descriptor for HCPCS code P9072 to include the phrase “or rapid bacterial tested”, which is a less costly technology than pathogen reduction. In addition, effective January 2017, the code descriptor for HCPCS code P9072 was changed to describe rapid bacterial testing of platelets and, effective July 1, 2017, the descriptor for the temporary successor code for HCPCS code P9072 (HCPCS code Q9988) was changed again back to the original descriptor for HCPCS code P9072 that was in place for 2016.

Based on the ongoing discussions involving changes to the original HCPCS code P9072 established in CY 2016, we believed that claims from CY 2016 for pathogen reduced platelets may have potentially reflected certain claims for rapid bacterial testing of platelets. Therefore, we decided to continue to crosswalk the payment amount for services described by HCPCS code P9073 to the payment amount for services described by HCPCS P9037 for CY 2018 (82 FR 59232), as had been done previously, to determine the payment rate for services described by HCPCS code P9072. In this proposed rule, for CY 2019, we have reviewed the CY 2017 claims data for the two predecessor codes to HCPCS code P9073 (HCPCS codes P9072 and Q9988), along with the claims data for the CY 2017 temporary code for pathogen test for platelets (HCPCS code Q9987), which describes rapid bacterial testing of platelets.

We found that there were over 2,200 claims billed with either HCPCS code P9072 or Q9988. Accordingly, we believe that there are a sufficient number of claims to use to calculate a payment rate for HCPCS code P9073 for CY 2019. We also performed checks to estimate the share of claims that may have been billed for rapid bacterial testing of platelets as compared to the share of claims that may have been billed for pathogen-reduced, pheresis platelets (based on when HCPCS code P9072 was an active procedure code from January 1, 2017 to June 30, 2017). First, we found that the geometric mean cost for pathogen-reduced, pheresis platelets, as reported by HCPCS code Q9988 when billed separately for rapid bacterial testing of platelets, was $453.87, and that over 1,200 claims were billed for services described by HCPCS code Q9988. Next, we found that the geometric mean cost for rapid bacterial testing of platelets, as reported by HCPCS code Q9987 on claims, was $33.44, and there were only 59 claims reported for services described by HCPCS code Q9987, of which 3 were separately paid.

These findings imply that almost all of the claims billed for services reported with HCPCS code P9072 were for pathogen-reduced, pheresis platelets. In addition, the geometric mean cost for services described by HCPCS code P9072, which may contain rapid bacterial testing of platelets claims, was $468.11, which is lower than the geometric mean cost for services described by HCPCS code Q9988 of $453.87, which would not have contained claims for rapid bacterial testing of platelets. Because the geometric mean for services described by HCPCS code Q9987 is only $33.44, it would be expected that if a significant share of claims billed for services described by HCPCS code P9072 were for the rapid bacterial testing of platelets, the geometric mean cost for services described by HCPCS code P9072 would be lower than the geometric mean cost for services described by HCPCS code Q9988. Instead, we found that the geometric mean cost for services described by HCPCS code Q9988 is higher than the geometric mean cost for services described by HCPCS code P9072.

Based on our analysis of claims data, we believe there are sufficient claims available to establish a payment rate for pathogen-reduced pheresis platelets without using a crosswalk. Therefore, we are proposing to calculate the payment rate for services described by HCPCS code P9073 in CY 2019 and in subsequent years using claims payment history, which is the standard methodology used by the OPPS for HCPCS and CPT codes with at least 2 years of claims history. We refer readers to Addendum B of this proposed rule for the proposed payment rate for services described by HCPCS code P9073 reportable under the OPPS. Addendum B is available via the internet on the CMS website.

(2) Brachytherapy Sources

Section 1833(t)(2)(H) of the Act mandates the creation of additional groups of covered OPD services that classify devices of brachytherapy consisting of a seed or seeds (or radioactive source) (“brachytherapy sources”) separately from other services or groups of services. The statute provides certain criteria for the additional groups. For the history of OPPS payment for brachytherapy sources, we refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC final rule with comment period (77 FR 68240 through 68241). As we have stated in prior OPPS updates, we believe that adopting the general OPPS prospective payment methodology for brachytherapy sources is appropriate for a number of reasons (77 FR 68240). The general OPPS methodology uses costs based on claims data to set the relative payment weights for hospital outpatient services. This payment methodology results in more consistent, predictable, and equitable payment amounts per source across hospitals by averaging the extremely high and low values, in contrast to payment based on hospitals' charges adjusted to costs. We believe that the OPPS methodology, as opposed to payment based on hospitals' charges Start Printed Page 37059adjusted 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 this CY 2019 OPPS/ASC proposed rule, for CY 2019, we are proposing to use the costs derived from CY 2017 claims data to set the proposed CY 2019 payment rates for brachytherapy sources because CY 2017 is the same year of data we are proposing to use to set the proposed payment rates for most other items and services that would be paid under the CY 2019 OPPS. We are proposing to base the payment rates for brachytherapy sources on the geometric mean unit costs for each source, consistent with the methodology that we are proposing for other items and services paid under the OPPS, as discussed in section II.A.2. of this proposed rule. We also are proposing 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 are proposing to pay for the stranded and nonstranded not otherwise specified (NOS) codes, HCPCS codes C2698 (Brachytherapy source, stranded, not otherwise specified, per source) and C2699 (Brachytherapy source, non-stranded, not otherwise specified, per source), at a rate equal to the lowest stranded or nonstranded prospective payment rate for such sources, respectively, on a per source basis (as opposed to, for example, a per mCi), which is based on the policy we established in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66785). We also are proposing 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 2019 payment rates for brachytherapy sources are included in Addendum B to this proposed rule (which is available via the internet on the CMS website) and are identified with status indicator “U”. For CY 2019, we are proposing to continue to assign status indicator “U” (Brachytherapy Sources, Paid under OPPS; separate APC payment) to HCPCS code C2645 (Brachytherapy planar source, palladium-103, per square millimeter) and to use external data (invoice prices) and other relevant information to establish the proposed APC payment rate for HCPCS code C2645. Specifically, we are proposing to set the payment rate at $4.69 per mm2, the same rate that was in effect for CYs 2017 and 2018.

We note that, for CY 2019, we are proposing to assign 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 2017 claims. Therefore, we are unable to calculate a proposed payment rate based on the general OPPS ratesetting methodology described earlier. Although HCPCS code C2644 became effective July 1, 2014, there are no CY 2017 claims reporting this code. Therefore, we are proposing to assign new proposed status indicator “E2” to HCPCS code C2644 in the CY 2019 OPPS.

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

b. Proposed Comprehensive APCs (C-APCs) for CY 2019

(1) Background

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

A C-APC is defined as a classification for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service. We established C-APCs as a category broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015 (79 FR 66809 through 66810). In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70332), we finalized 10 additional C-APCs to be paid under the existing C-APC payment policy and added one additional level to both the Orthopedic Surgery and Vascular Procedures clinical families, which increased the total number of C-APCs to 37 for CY 2016. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79584 through 79585), we finalized another 25 C-APCs for a total of 62 C-APCs. In the CY 2018 OPPS/ASC final rule, we did not change the total number of C-APCs from 62.

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

Services excluded from the C-APC policy under the OPPS include services that are not covered OPD services, services that cannot by statute be paid for under the OPPS, and services that are required by statute to be separately paid. This includes certain mammography and ambulance services that are not covered OPD services in accordance with section 1833(t)(1)(B)(iv) of the Act; Start Printed Page 37060brachytherapy seeds, which also are required by statute to receive separate payment under section 1833(t)(2)(H) of the Act; pass-through payment drugs and devices, which also require separate payment under section 1833(t)(6) of the Act; self-administered drugs (SADs) that are not otherwise packaged as supplies because they are not covered under Medicare Part B under section 1861(s)(2)(B) of the Act; and certain preventive services (78 FR 74865 and 79 FR 66800 through 66801). A list of services excluded from the C-APC policy is included in Addendum J to this proposed rule (which is available via the internet on the CMS website).

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

Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule with comment period, we define the C-APC payment policy as including all covered OPD services on a hospital outpatient claim reporting a primary service that is assigned to status indicator “J1”, excluding services that are not covered OPD services or that cannot by statute be paid for under the OPPS. Services and procedures described by HCPCS codes assigned to status indicator “J1” are assigned to C-APCs based on our usual APC assignment methodology by evaluating the geometric mean costs of the primary service claims to establish resource similarity and the clinical characteristics of each procedure to establish clinical similarity within each APC.

In the CY 2016 OPPS/ASC final rule with comment period, we expanded the C-APC payment methodology to qualifying extended assessment and management encounters through the “Comprehensive Observation Services” C-APC (C-APC 8011). Services within this APC are assigned status indicator “J2”. Specifically, we make a payment through C-APC 8011 for a claim that:

  • Does not contain a procedure described by a HCPCS code to which we have assigned status indicator “T” that is reported with a date of service on the same day or 1 day earlier than the date of service associated with services described by HCPCS code G0378;
  • Contains 8 or more units of services described by HCPCS code G0378 (Observation services, per hour);
  • Contains services provided on the same date of service or 1 day before the date of service for HCPCS code G0378 that are described by one of the following codes: HCPCS code G0379 (Direct referral of patient for hospital observation care) on the same date of service as HCPCS code G0378; CPT code 99281 (Emergency department visit for the evaluation and management of a patient (Level 1)); CPT code 99282 (Emergency department visit for the evaluation and management of a patient (Level 2)); CPT code 99283 (Emergency department visit for the evaluation and management of a patient (Level 3)); CPT code 99284 (Emergency department visit for the evaluation and management of a patient (Level 4)); CPT code 99285 (Emergency department visit for the evaluation and management of a patient (Level 5)) or HCPCS code G0380 (Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B emergency department visit (Level 2)); HCPCS code G0382 (Type B emergency department visit (Level 3)); HCPCS code G0383 (Type B emergency department visit (Level 4)); HCPCS code G0384 (Type B emergency department visit (Level 5)); CPT code 99291 (Critical care, evaluation and management of the critically ill or critically injured patient; first 30-74 minutes); or HCPCS code G0463 (Hospital outpatient clinic visit for assessment and management of a patient); and
  • Does not contain services described by a HCPCS code to which we have assigned status indicator “J1”.

The assignment of status indicator “J2” to a specific combination of services performed in combination with each other allows for all other OPPS payable services and items reported on the claim (excluding services that are not covered OPD services or that cannot by statute be paid for under the OPPS) to be deemed adjunctive services representing components of a comprehensive service and resulting in a single prospective payment for the comprehensive service based on the costs of all reported services on the claim (80 FR 70333 through 70336).

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

In addition, payment for hospital outpatient department services that are similar to therapy services and delivered either by therapists or nontherapists is included as part of the payment for the packaged complete comprehensive service. These services that are provided during the perioperative period are adjunctive services and are deemed not to be therapy services as described in section 1834(k) of the Act, regardless of whether the services are delivered by therapists or other nontherapist health care workers. We have previously noted that therapy services are those provided by therapists under a plan of care in accordance with section 1835(a)(2)(C) and section 1835(a)(2)(D) of the Act and are paid for under section 1834(k) of the Act, subject to annual therapy caps as applicable (78 FR 74867 and 79 FR 66800). However, certain other services similar to therapy services are considered and paid for as hospital outpatient department services. Payment for these nontherapy outpatient department services that are reported with therapy codes and provided with a comprehensive service is included in the payment for the packaged complete comprehensive service. We note that these services, even though they are reported with therapy codes, are hospital outpatient department services and not therapy services. Therefore, the requirement for functional reporting under the regulations at 42 CFR 410.59(a)(4) and 42 CFR 410.60(a)(4) does not apply. We refer readers to the July 2016 OPPS Change Request 9658 (Transmittal 3523) for further instructions on reporting these services in the context of a C-APC service.

Items included in the packaged payment provided in conjunction with the primary service also include all 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 Start Printed Page 37061FR 66801). Line item charges for services included on the C-APC claim are converted to line item costs, which are then summed to develop the estimated APC costs. These claims are then assigned one unit of the service with status indicator “J1” and later used to develop the geometric mean costs for the C-APC relative payment weights. (We note that we use the term “comprehensive” to describe the geometric mean cost of a claim reporting “J1” service(s) or the geometric mean cost of a C-APC, inclusive of all of the items and services included in the C-APC service payment bundle.) Charges for services that would otherwise be separately payable are added to the charges for the primary service. This process differs from our traditional cost accounting methodology only in that all such services on the claim are packaged (except certain services as described above). We apply our standard data trims, which exclude claims with extremely high primary units or extreme costs.

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

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

  • Frequency of 25 or more claims reporting the code combination (frequency threshold); and
  • Violation of the 2 times rule in the originating C-APC (cost threshold).

These criteria identify paired code combinations that occur commonly and exhibit materially greater resource requirements than the primary service. The CY 2017 OPPS/ASC final rule with comment period (81 FR 79582) included a revision to the complexity adjustment eligibility criteria. Specifically, we finalized a policy to discontinue the requirement that a code combination (that qualifies for a complexity adjustment by satisfying the frequency and cost criteria thresholds described above) also not create a 2 times rule violation in the higher level or receiving APC.

After designating a single primary service for a claim, we evaluate that service in combination with each of the other procedure codes reported on the claim assigned to status indicator “J1” (or certain add-on codes) to determine if there are paired code combinations that meet the complexity adjustment criteria. For a new HCPCS code, we determine initial C-APC assignment and qualification for a complexity adjustment using the best available information, crosswalking the new HCPCS code to a predecessor code(s) when appropriate.

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

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

To determine which combinations of primary service codes reported in conjunction with an add-on code may qualify for a complexity adjustment for CY 2019, in this CY 2019 OPPS/ASC proposed rule, we are proposing to apply the frequency and cost criteria thresholds discussed above, testing claims reporting one unit of a single primary service assigned to status indicator “J1” and any number of units of a single add-on code for the primary “J1” service. If the frequency and cost criteria thresholds for a complexity adjustment are met and reassignment to the next higher cost APC in the clinical family is appropriate (based on meeting the criteria outlined above), we make a complexity adjustment for the code combination; that is, we reassign the primary service code reported in conjunction with the add-on code to the next higher cost C-APC within the same clinical family of C-APCs. As previously stated, we package payment for add-on codes into the C-APC payment rate. If any add-on code reported in conjunction with the “J1” primary service code does not qualify for a complexity adjustment, payment for the add-on service continues to be packaged into the payment for the primary service and is not reassigned to the next higher cost C-APC. We list the complexity adjustments proposed for “J1” and add-on code combinations for CY 2019, along with all of the other proposed complexity adjustments, in Addendum J to this proposed rule (which is available via the internet on the CMS website).

Addendum J to this proposed rule includes the cost statistics for each code combination that would qualify for a complexity adjustment (including primary code and add-on code Start Printed Page 37062combinations). Addendum J to this proposed rule also contains summary cost statistics for each of the paired 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 paired 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 this proposed rule allows stakeholders the opportunity to better assess the impact associated with the proposed reassignment of claims with each of the paired code combinations eligible for a complexity adjustment.

(2) Proposed Additional C-APCs for CY 2019

For CY 2019 and subsequent years, in this CY 2019 OPPS/ASC proposed rule, we are proposing to continue to apply the C-APC payment policy methodology made effective in CY 2015 and updated with the implementation of status indicator “J2” in CY 2016. We refer readers to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79583) for a discussion of the C-APC payment policy methodology and revisions. Each year, in accordance with section 1833(t)(9)(A) of the Act, we review and revise the services within each APC group and the APC assignments under the OPPS. As a result of our annual review of the services and the APC assignments under the OPPS, we are proposing to add three C-APCs under the existing C-APC payment policy beginning in CY 2019: proposed C-APC 5163 (Level 3 ENT Procedures); proposed C-APC 5183 (Level 3 Vascular Procedures); and proposed C-APC 5184 (Level 4 Vascular Procedures). These APCs were selected to be included in this proposal because, similar to other C-APCs, these APCs include primary, comprehensive services, such as major surgical procedures, that are typically reported with other ancillary and adjunctive services. Also, similar to other APCs that have been converted to C-APCs, there are higher APC levels within the clinical family or related clinical family of these APCs that have previously been assigned to a C-APC. Table 3 of this proposed rule lists the proposed C-APCs for CY 2019. All C-APCs are displayed in Addendum J to this proposed rule (which is available via the internet on the CMS website). Addendum J to this proposed rule also contains all of the data related to the C-APC payment policy methodology, including the list of proposed complexity adjustments and other information.

Table 3—Proposed CY 2019 C-APCs

C-APCCY 2019 APC group titleClinical familyProposed new 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
5153Level 3 Airway EndoscopyAENDO
5154Level 4 Airway EndoscopyAENDO
5155Level 5 Airway EndoscopyAENDO
5163Level 3 ENT ProceduresENTXX*
5164Level 4 ENT ProceduresENTXX
5165Level 5 ENT ProceduresENTXX
5166Cochlear Implant ProcedureCOCHL
5183Level 3 Vascular ProceduresVASCX*
5184Level 4 Vascular ProceduresVASCX*
5191Level 1 Endovascular ProceduresEVASC
5192Level 2 Endovascular ProceduresEVASC
5193Level 3 Endovascular ProceduresEVASC
5194Level 4 Endovascular ProceduresEVASC
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
Start Printed Page 37063
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
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; EVASC = Endovascular Procedures; EXEYE = Extraocular Ophthalmic Surgery; GIXXX = Gastrointestinal Procedures; GYNXX = Gynecologic Procedures; INEYE = Intraocular Surgery; LAPXX = Laparoscopic Procedures; NERVE = Nerve Procedures; NSTIM = Neurostimulators; ORTHO = Orthopedic Surgery; PUMPS = Implantable Drug Delivery Systems; RADTX = Radiation Oncology; SCTXX = Stem Cell Transplant; UROXX = Urologic Procedures; VASCX = Vascular Procedures; WPMXX = Wireless PA Pressure Monitor.

(3) Exclusion of Procedures Assigned to New Technology APCs From the Comprehensive APC (C-APC) Policy

Services that are assigned to New Technology APCs are typically new procedures that do not have sufficient claims history to establish an accurate payment for the procedures. 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 (82 FR 59277).

The C-APC payment policy packages payment for adjunctive and secondary items, services, and procedures into the most costly primary procedure under the OPPS at the claim level. When a procedure assigned to a New Technology APC is included on the claim with a primary procedure, identified by OPPS status indicator “J1”, payment for the new technology service is typically packaged into the payment for the primary procedure. Because the new technology service is not separately paid in this scenario, the overall number of single claims available to determine an appropriate clinical APC for the new service is reduced. This is contrary to the objective of the New Technology APC payment policy, which is to gather sufficient claims data to enable us to assign the service to an appropriate clinical APC.

For example, for CY 2017, there were seven claims generated for HCPCS code 0100T (Placement of a subconjunctival retinal prosthesis receiver and pulse generator, and implantation of intraocular retinal electrode array, with vitrectomy), which involves the use of the Argus® II Retinal Prosthesis System. However, several of these claims were not available for ratesetting because HCPCS code 0100T was reported with a “J1” procedure and, therefore, payment was packaged into the associated C-APC payment. If these services had been separately paid under the OPPS, there would be at least two additional single claims available for ratesetting. As mentioned previously, the purpose of the new technology APC policy is to ensure that there are sufficient claims data for new services, which is particularly important for services with a low volume such as procedures described by HCPCS code 0100T. Another concern is the costs reported for the claims when payment is not packaged for a new technology procedure may not be representative of all of the services included on a claim that is generated, which may also affect our ability to assign the new service to the most appropriate clinical APC.

To address this issue and help ensure that there is sufficient claims data for services assigned to New Technology APCs, we are proposing to exclude payment for any procedure that is assigned to a New Technology APC (APCs 1491 through 1599 and APCs 1901 through 1908) from being packaged when included on a claim with a “J1” service assigned to a C-APC. This issue is also addressed in section III.C.3.b. of this proposed rule.

c. Proposed 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 Start Printed Page 37064groups 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 mental health services and multiple imaging services. (We note that, in the CY 2018 OPPS/ASC final rule with comment period, we finalized a policy to delete the composite APC 8001 (LDR Prostate Brachytherapy Composite) for CY 2018 and subsequent years.) We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66611 through 66614 and 66650 through 66652) for a full discussion of the development of the composite APC methodology, and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74163) and the CY 2018 OPPS/ASC final rule with comment period (82 FR 59241 through 59242 and 59246 through 52950) for more recent background.

In this CY 2019 OPPS/ASC proposed rule, for CY 2019 and subsequent years, we are proposing to continue our composite APC payment policies for mental health services and multiple imaging services, as discussed below. In addition, as discussed in section II.A.2.b.(3) and II.A.2.c. of the CY 2018 OPPS/ASC proposed rule and final rule with comment period (82 FR 33577 through 33578 and 59241 through 59242 and 59246, respectively), we are proposing to continue to assign CPT code 55875 (Transperineal placement of needs or catheters into prostate for interstitial radioelement application, with or without cystoscopy) to status indicator “J1” and to continue to assign the services described by CPT code 55875 to C-APC 5375 (Level 5 Urology and Related Services) for CY 2019.

(1) Mental Health Services Composite APC

In this CY 2019 OPPS/ASC proposed rule, we are proposing to continue our longstanding policy of limiting the aggregate payment for specified less resource-intensive mental health services furnished on the same date to the payment for a day of partial hospitalization services provided by a hospital, which we consider to be the most resource intensive of all outpatient mental health services. We refer readers to the April 7, 2000 OPPS final rule with comment period (65 FR 18452 through 18455) for the initial discussion of this longstanding policy and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74168) for more recent background.

In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79588 through 79589), we finalized a policy to combine the existing Level 1 and Level 2 hospital-based PHP APCs into a single hospital-based PHP APC, and thereby discontinue APCs 5861 (Level 1 Partial Hospitalization (3 services) for Hospital-Based PHPs) and 5862 (Level 2 Partial Hospitalization (4 or more services) for Hospital-Based PHPs) and replace them with APC 5863 (Partial Hospitalization (3 or more services per day)).

In the CY 2018 OPPS/ASC proposed rule and final rule with comment period (82 FR 33580 through 33581 and 59246 through 59247, respectively), we proposed and finalized the policy for CY 2018 and subsequent years 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). In addition, we set the payment rate for composite APC 8010 for CY 2018 at the same payment rate that will be paid for APC 5863, which is the maximum partial hospitalization per diem payment rate for a hospital, and finalized a policy that the hospital will continue to be paid the payment rate for composite APC 8010. Under this policy, the I/OCE will continue to determine whether to pay for these specified mental health services individually, or to make a single payment at the same payment rate established for APC 5863 for all of the specified mental health services furnished by the hospital on that single date of service. We 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.

For CY 2019, we are proposing 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 would be paid through composite APC 8010 for CY 2019. In addition, we are proposing to set the proposed payment rate for composite APC 8010 at the same payment rate that we are proposing for APC 5863, which is the maximum partial hospitalization per diem payment rate for a hospital, and that the hospital continue to be paid the proposed payment rate for composite APC 8010.

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

Effective January 1, 2009, we provide a single payment each time a hospital submits a claim for more than one imaging procedure within an imaging family on the same date of service, in order to reflect and promote the efficiencies hospitals can achieve when performing multiple imaging procedures during a single session (73 FR 41448 through 41450). We utilize three imaging families based on imaging modality for purposes of this methodology: (1) Ultrasound; (2) computed tomography (CT) and computed tomographic angiography (CTA); and (3) magnetic resonance imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes subject to the multiple imaging composite policy and their respective families are listed in Table 12 of the CY 2014 OPPS/ASC final rule with comment period (78 FR 74920 through 74924).

While there are three imaging families, there are five multiple imaging composite APCs due to the statutory requirement under section 1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging services provided with and without contrast. While the ultrasound procedures included under the policy do not involve contrast, both CT/CTA and MRI/MRA scans can be provided either with or without contrast. The five multiple imaging composite APCs established in CY 2009 are:

  • APC 8004 (Ultrasound Composite);
  • APC 8005 (CT and CTA without Contrast Composite);
  • APC 8006 (CT and CTA with Contrast Composite);Start Printed Page 37065
  • 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 this CY 2019 OPPS/ASC proposed rule, we are proposing, for CY 2019 and subsequent years, to continue to pay for all multiple imaging procedures within an imaging family performed on the same date of service using the multiple imaging composite APC payment methodology. We continue to believe that this policy would reflect and promote the efficiencies hospitals can achieve when performing multiple imaging procedures during a single session.

The proposed CY 2019 payment rates for the five multiple imaging composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) are based on proposed geometric mean costs calculated from a partial year of CY 2017 claims available for this CY 2019 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 have used to calculate the 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), are identified by asterisks in Addendum N to this CY 2019 OPPS/ASC proposed rule (which is available via the internet on the CMS website) and are discussed in more detail in section II.A.1.b. of this CY 2019 OPPS/ASC proposed rule.

For this CY 2019 OPPS/ASC proposed rule, we were able to identify approximately 638,902 “single session” claims out of an estimated 1.7 million potential claims for payment through composite APCs from our ratesetting claims data, which represents approximately37 percent of all eligible claims, to calculate the proposed CY 2019 geometric mean costs for the multiple imaging composite APCs. Table 4 of this CY 2019 OPPS/ASC 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 2019.

Table 4—Proposed OPPS Imaging Families and Multiple Imaging Procedure Composite APCs

Proposed CY 2019 APC 8004 (ultrasound composite)Proposed CY 2019 approximate APC geometric mean cost = $300
Family 1—Ultrasound
76700Us exam, abdom, complete.
76705Echo exam of abdomen.
76770Us exam abdo back wall, comp.
76776Us exam k transpl w/Doppler.
76831Echo exam, uterus.
76856Us exam, pelvic, complete.
76857Us exam, pelvic, limited.
Proposed CY 2019 APC 8005 (CT and CTA without contrast composite) *Proposed CY 2019 approximate APC geometric mean cost = $275
Family 2—CT and CTA with and without Contrast
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.
Proposed CY 2019 APC 8006 (CT and CTA with contrast composite)Proposed CY 2019 approximate APC geometric mean cost = $501
70487Ct maxillofacial w/dye.
70460Ct head/brain w/dye.
Start Printed Page 37066
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.
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.
Proposed CY 2019 APC 8007 (MRI and MRA without contrast composite) *Proposed CY 2019 approximate APC geometric mean cost = $556
Family 3—MRI and MRA with and without Contrast
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.
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.
Proposed CY 2019 APC 8008 (MRI and MRA with contrast composite)Proposed CY 2019 approximate APC geometric mean cost = $871
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.
Start Printed Page 37067
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.
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. Proposed Changes to Packaged Items and Services

a. Background and Rationale for Packaging in the OPPS

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

Packaging also encourages hospitals to effectively negotiate with manufacturers and suppliers to reduce the purchase price of items and services or to explore alternative group purchasing arrangements, thereby encouraging the most economical health care delivery. Similarly, packaging encourages hospitals to establish protocols that ensure that necessary services are furnished, while scrutinizing the services ordered by practitioners to maximize the efficient use of hospital resources. Packaging payments into larger payment bundles promotes the predictability and accuracy of payment for services over time. Finally, packaging may reduce the importance of refining service-specific payment because packaged payments include costs associated with higher cost cases requiring many ancillary items and services and lower cost cases requiring fewer ancillary items and services. Because packaging encourages efficiency and is an essential component of a prospective payment system, packaging payments for items and services that are typically integral, ancillary, supportive, dependent, or adjunctive to a primary service has been a fundamental part of the OPPS since its implementation in August 2000. For an extensive discussion of the history and background of the OPPS packaging policy, we refer readers to the CY 2000 OPPS final rule (65 FR 18434), the CY 2008 OPPS/ASC final rule with comment period (72 FR 66580), the CY 2014 OPPS/ASC final rule with comment period (78 FR 74925), the CY 2015 OPPS/ASC final rule with comment period (79 FR 66817), the CY 2016 OPPS/ASC final rule with comment period (80 FR 70343), the CY 2017 OPPS/ASC final rule with comment period (81 FR 79592), and the Start Printed Page 37068CY 2018 OPPS/ASC final rule with comment period (82 FR 59250). 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 payments for all services 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 2019, we examined the items and services currently provided under the OPPS, reviewing categories of integral, ancillary, supportive, dependent, or adjunctive items and services for which we believe payment would be appropriately packaged into payment of the primary service that they support. Specifically, we examined the HCPCS code definitions (including CPT code descriptors) and outpatient hospital billing patterns to determine whether there were categories of codes for which packaging would be appropriate according to existing OPPS packaging policies or a logical expansion of those existing OPPS packaging policies. In this CY 2019 OPPS/ASC proposed rule, for CY 2019, we are proposing to conditionally package the costs of selected newly identified ancillary services into payment with a primary service where we believe that the packaged item or service is integral, ancillary, supportive, dependent, or adjunctive to the provision of care that was reported by the primary service HCPCS code. Below we discuss proposed changes to packaging policies beginning in CY 2019.

b. Proposed CY 2019 Packaging Policy for Non-Opioid Pain Management Treatments

In the CY 2018 OPPS/ASC proposed rule (82 FR 33588), within the framework of existing packaging categories, such as drugs that function as supplies in a surgical procedure or diagnostic test or procedure, we requested stakeholder feedback on common clinical scenarios involving currently packaged items and services described by HCPCS codes that stakeholders believe should not be packaged under the OPPS. We also expressed interest in stakeholder feedback on common clinical scenarios involving separately payable HCPCS codes for which payment would be most appropriately packaged under the OPPS. Commenters expressed a variety of views on packaging under the OPPS. In the CY 2018 OPPS/ASC final rule with comment period, we summarized the comments received in response to our request (82 FR 59255). The comments ranged from requests to unpackage most items and services that are either conditionally or unconditionally packaged under the OPPS, including drugs and devices, to specific requests for separate payment for a specific drug or device. We stated in the CY 2018 OPPS/ASC final rule with comment period that CMS would continue to explore and evaluate packaging policies under the OPPS and consider these policies in future rulemaking.

In addition to stakeholder feedback regarding OPPS packaging policies, the President's Commission on Combating Drug Addiction and the Opioid Crisis (the Commission) recently recommended that CMS examine payment policies for certain drugs that function as a supply, specifically non-opioid pain management treatments. The Commission was established in 2017 to study ways to combat and treat drug abuse, addiction, and the opioid crisis. The Commission's report [3] included a recommendation for CMS to “. . . review and modify ratesetting policies that discourage the use of non-opioid treatments for pain, such as certain bundled payments that make alternative treatment options cost prohibitive for hospitals and doctors, particularly those options for treating immediate postsurgical pain. . . . ” [4] With respect to the packaging policy, the Commission's report states that “. . . the current CMS payment policy for `supplies' related to surgical procedures creates unintended incentives to prescribe opioid medications to patients for postsurgical pain instead of administering non-opioid pain medications. Under current policies, CMS provides one all-inclusive bundled payment to hospitals for all `surgical supplies,' which includes hospital-administered drug products intended to manage patients' postsurgical pain. This policy results in the hospitals receiving the same fixed fee from Medicare whether the surgeon administers a non-opioid medication or not.” [5] HHS also presented an Opioid Strategy in April 2017 [6] that aims in part to support cutting-edge research and advance the practice of pain management. On October 26, 2017, the opioid crisis was declared a national public health emergency under Federal law [7] and this determination was renewed on April 20, 2018.[8]

In response to stakeholder comments on the CY 2018 OPPS/ASC proposed rule and in light of the recommendations regarding payment policies for certain drugs, we recently evaluated the impact of our packaging policy for drugs that function as a supply when used in a surgical procedure on the utilization of these drugs in both the hospital outpatient department and the ASC setting. Currently, as noted above, drugs that function as a supply are packaged under the OPPS and the ASC payment system, regardless of the costs of the drugs. The costs associated with packaged drugs that function as a supply are included in the ratesetting methodology for the surgical procedures with which they are billed and the payment rate for the associated procedure reflects the costs of the packaged drugs and other packaged items and services to the extent they are billed with the procedure. In our evaluation, we used currently available data to analyze the utilization patterns associated with specific drugs that function as a supply over a 5-year time period (CYs 2013 through 2017) to determine whether this packaging policy has reduced the use of these drugs. If the packaging policy discouraged the use of drugs that function as a supply or impeded access to these products, we would expect to see a significant decline in utilization of these drugs over time, although we note that a decline in utilization could also reflect other factors, such as the availability of alternative products. We did not observe significant declines in the total number of units used in the hospital outpatient department for a majority of the drugs included in our analysis.

In fact, under the OPPS, we observed the opposite effect for several drugs that function as a supply, including Exparel Start Printed Page 37069(HCPCS code C9290). Exparel is a liposome injection of bupivacaine, an amide local anesthetic, indicated for single-dose infiltration into the surgical site to produce postsurgical analgesia. In 2011, Exparel was approved by the FDA for administration into the postsurgical site to provide postsurgical analgesia.[9] Exparel had pass-through payment status from CYs 2012 through 2014 and was separately paid under both the OPPS and the ASC payment system during this 3-year period. Beginning in CY 2015, Exparel was packaged as a surgical supply under both the OPPS and the ASC payment system. Exparel is currently the only non-opioid pain management drug that is packaged as a drug that functions as a supply when used in a surgical procedure under the OPPS and the ASC payment system.

From CYs 2013 through 2017, there was an overall increase in the OPPS Medicare utilization of Exparel of approximately 229 percent (from 2.3 million units to 7.7 million units) during this 5-year time period. The total number of claims reporting Exparel increased by 222 percent (from 10,609 claims to 34,183 claims) over this time period. This increase in utilization continued, even after the 3-year drug pass-through payment period ended for this product in 2014, with 18 percent overall growth in the total number of units used from CYs 2015 through 2017 (from 6.5 million units to 7.7 million units). The number of claims reporting Exparel increased by 21 percent during this time period (from 28,166 claims to 34,183 claims).

Thus, we have not found evidence to support the notion that the OPPS packaging policy has had an unintended consequence of discouraging the use of non-opioid treatment for postsurgical pain management in the hospital outpatient department. Therefore, based on this data analysis, we do not believe that changes are necessary under the OPPS for the packaged drug policy for drugs that function as a surgical supply when used in a surgical procedure in this setting at this time.

In terms of Exparel in particular, we have received several requests to pay separately for the drug rather than packaging payment for it as a surgical supply. In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66874 and 66875), in response to comments from stakeholders requesting separate payment for Exparel, we stated that we considered Exparel to be a drug that functions as a surgical supply because it is indicated for the alleviation of postoperative pain. We also stated that we consider all items related to the surgical outcome and provided during the hospital stay in which the surgery is performed, including postsurgical pain management drugs, to be part of the surgery for purposes of our drug and biological surgical supply packaging policy. In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59345), we reiterated our position with regard to payment for Exparel, stating that we believed that payment for this drug is appropriately packaged with the primary surgical procedure. In addition, we have reviewed recently available literature with respect to Exparel, including a briefing document [10] submitted for the FDA Advisory Committee Meeting held February 14-15, 2018, by the manufacturer of Exparel that notes that “. . . Bupivacaine, the active pharmaceutical ingredient in Exparel, is a local anesthetic that has been used for infiltration/field block and peripheral nerve block for decades” and that “since its approval, Exparel has been used extensively, with an estimated 3.5 million patient exposures in the U.S.” [11] On April 6, 2018, the FDA approved Exparel's new indication for use as an interscalene brachial plexus nerve block to produce postsurgical regional analgesia.[12] Based on our review of currently available OPPS Medicare claims data and public information from the manufacturer of the drug, we do not believe that the OPPS packaging policy has discouraged the use of Exparel for either of the drug's indications. Accordingly, we continue to believe it is appropriate to package payment for Exparel as we do with other postsurgical pain management drugs when it is furnished in a hospital outpatient department. However, we are seeking public comments on whether separate payment would nonetheless further incentivize appropriate use of Exparel in the hospital outpatient setting and peer-reviewed evidence that such increased utilization would lead to a decrease in opioid use and addiction among Medicare beneficiaries.

Although we found increases in utilization for Exparel when it is paid under the OPPS, we did notice different effects on Exparel utilization when examining the effects of our packaging policy under the ASC payment system. In particular, during the same 5-year period of CYs 2013 through 2017, the total number of units of Exparel used in the ASC setting decreased by 25 percent (from 98,160 total units to 73,595 total units) and the total number of claims reporting Exparel decreased by 16 percent (from 527 claims to 441 claims). In the ASC setting, after the pass-through payment period ended for Exparel at the end of CY 2014, the total number of units of Exparel used decreased by 70 percent (from 244,757 units to 73,595 units) between CYs 2015 and 2017. The total number of claims reporting Exparel also decreased during this time period by 62 percent (from 1,190 claims to 441 claims). However, there was an increase of 238 percent (from 98,160 total units to 331,348 total units) in the total number of units of Exparel used in the ASC setting during the time period of CYs 2013 and 2014 when the drug received pass-through payments, indicating that the payment rate of ASP +6 percent for Exparel may have an impact on its usage in the ASC setting. The total number of claims reporting Exparel also increased during this time period from 527 total claims to 1,540 total claims, an increase of 192 percent.

While several variables may contribute to this difference between utilization and claims reporting in the hospital outpatient department and the ASC setting, one potential explanation is that, in comparison to hospital outpatient departments, ASCs tend to provide specialized care and a more limited range of services. Also, ASCs are paid, in aggregate, approximately 55 percent of the OPPS rate. Therefore, fluctuations in payment rates for specific services may impact these providers more acutely than hospital outpatient departments, and therefore, ASCs may be less likely to choose to furnish non-opioid postsurgical pain management treatments, which are typically more expensive than opioids, as a result. Another possible contributing factor is that ASCs do not typically report packaged items and services and, accordingly, our analysis may be undercounting the number of Exparel units utilized in the ASC setting.

In light of the results of our evaluation of packaging policies under the OPPS and the ASC payment system, which showed decreased utilization for certain drugs that function as a supply in the ASC setting in comparison to the hospital outpatient department setting, as well as the Commission's recommendation to examine payment Start Printed Page 37070policies for non-opioid pain management drugs that function as a supply, we believe a change in how we pay for non-opioid pain management drugs that function as surgical supplies may be warranted. In particular, we believe it may be appropriate to pay separately for evidence-based non-opioid pain management drugs that function as a supply in a surgical procedure in the ASC setting to address the decreased utilization of these drugs and to encourage use of these types of drugs rather than prescription opioids. Therefore, we are proposing in section XII.D.3. of this proposed rule to unpackage and pay separately for the cost of non-opioid pain management drugs that function as surgical supplies when they are furnished in the ASC setting for CY 2019.

We have stated previously (82 FR 59250) that our packaging policies are designed to support our strategic goal of using larger payment bundles in the OPPS to maximize hospitals' incentives to provide care in the most efficient manner. The packaging policies established under the OPPS also typically apply when services are provided in the ASC setting, and the policies have the same strategic goals in both settings. While this proposal is a departure from our current ASC packaging policy for drugs (specifically, non-opioid pain management drugs) that function as a supply when used in a surgical procedure, we believe that this proposed change will incentivize the use of non-opioid pain management drugs and is responsive to the Commission's recommendation to examine payment policies for non-opioid pain management drugs that function as a supply, with the overall goal of combating the current opioid addiction crisis. As previously noted, the proposal for payment of non-opioid pain management drugs in the ASC setting is presented in further detail in section XII.D.3. of this proposed rule. However, we also are interested in peer-reviewed evidence that demonstrates that non-opioid alternatives, such as Exparel, in the outpatient setting actually do lead to a decrease in prescription opioid use and addiction and are seeking public comments containing evidence that demonstrate whether and how such non-opioid alternatives affect prescription opioid use during or after an outpatient visit or procedure.

In addition, as noted in section XII.D.3. of this proposed rule, we are seeking comment on whether the proposed policy would decrease the dose, duration, and/or number of opioid prescriptions beneficiaries receive during and following an outpatient visit or procedure (especially for beneficiaries at high-risk for opioid addiction) as well as whether there are other non-opioid pain management alternatives that would have similar effects and may warrant separate payment. For example, we are interested in identifying whether single post-surgical analgesic injections, such as Exparel, or other non-opioid drugs or devices that are used during an outpatient visit or procedure are associated with decreased opioid prescriptions and reduced cases of associated opioid addiction following such an outpatient visit or procedure. We also are requesting comments that provide evidence (such as published peer-reviewed literature) we could use to determine whether these products help to deter or avoid prescription opioid use and addiction as well as evidence that the current packaged payment for such non-opioid alternatives presents a barrier to access to care and therefore warrants separate payment under either or both the OPPS and the ASC payment system. The reduction or avoidance of prescription opioids would be the criteria we would seek to determine whether separate payment is warranted for CY 2019. Should evidence change over time, we would consider whether a reexamination of any policy adopted in the final rule would be necessary.

In addition, we are inviting the public to submit ideas on regulatory, subregulatory, policy, practice, and procedural changes to help prevent opioid use disorders and improve access to treatment under the Medicare program. We are interested in identifying barriers that may inhibit access to non-opioid alternatives for pain treatment and management or access to opioid use disorder treatment, including those barriers related to payment methodologies or coverage. In addition, consistent with our “Patients Over Paperwork” Initiative, we are interested in suggestions to improve existing requirements in order to more effectively address the opioid epidemic.

As noted above, we are interested in comments regarding other non-opioid treatments besides Exparel that might be affected by OPPS and ASC packaging policies, including alternative, non-opioid pain treatments, such as devices or therapy services that are not currently separable payable. We are specifically interested in comments regarding whether CMS should consider separate payment for such items and services for which payment is currently packaged under the OPPS and the ASC payment system that are effective non-opioid alternatives as well as evidence that demonstrates such items and services lead to a decrease in prescription opioid use during or after an outpatient visit or procedure in order to determine whether separate payment may be warranted. We intend to examine the evidence submitted to determine whether to adopt a final policy that incentivizes use of non-opioid alternative items and services that have evidence to demonstrate an associated decrease in prescription opioid use and addiction following an outpatient visit or procedure. Some examples of evidence that may be relevant could include an indication on the product's FDA label or studies published in peer-reviewed literature that such product aids in the management of acute or chronic pain and is an evidence-based non-opioid alternative for acute and/or chronic pain management. We would also be interested in evidence relating to products that have shown clinical improvement over other alternatives, such as a device that has been shown to provide a substantial clinical benefit over the standard of care for pain management. This could include, for example, spinal cord stimulators used to treat chronic pain such as the devices described by HCPCS codes C1822 (Generator, neurostimulator (implantable), high frequency, with rechargeable battery and charging system), C1820 (Generator, neurostimulator (implantable), with rechargeable battery and charging system), and C1767 (Generator, neurostimulator (implantable), nonrechargeable) which are primarily assigned to APCs 5463 and 5464 (Levels 3 and 4 Neurostimulator and Related Procedures) with proposed CY 2019 payment rates of $18,718 and $27,662, respectively, that have received pass-through payment status as well as other similar devices.

Currently, all devices are packaged under the OPPS and the ASC payment system unless they have pass-through payment status. However, in light of the Commission's recommendation to review and modify ratesetting policies that discourage the use of non-opioid treatments for pain, we are interested in comments from stakeholders regarding whether, similar to the goals of the proposed payment policy for non-opioid pain management drugs that function as a supply when used in a surgical procedure, a policy of providing separate payment (rather than packaged payment) for these products, indefinitely or for a specified period of time, would also incentivize the use of alternative non-opioid pain Start Printed Page 37071management treatments and improve access to care for non-opioid alternatives, particularly for innovative and low-volume items and services.

We also are interested in comments regarding whether we should provide separate payment for non-opioid pain management treatments or products using a mechanism such as an equitable payment adjustment under our authority at section 1833(t)(2)(E) of the Act, which states that the Secretary shall establish, in a budget neutral manner, other adjustments as determined to be necessary to ensure equitable payments. For example, we are considering whether an equitable payment adjustment in the form of an add-on payment for APCs that use a non-opioid pain management drug, device, or service would be appropriate. To the extent that commenters provide evidence to support this approach, we would consider adopting a final policy, which could include regulatory changes that would allow for an exception to the packaging of certain nonpass-through devices that represent non-opioid alternatives for acute or chronic pain that have evidence to demonstrate that their use leads to a decrease in opioid prescriptions or addictions, in the final rule for CY 2019 to effectuate such change.

Alternatively, we are interested in comments on whether a reorganization of the APC structure for procedures involving these products or establishing more granular APC groupings for specific procedure and device combinations to ensure that the payment rate for such services is aligned with the resources associated with procedures involving specific devices would better achieve our goal of incentivizing increased use of non-opioid alternatives, with the aim of reducing opioid use and subsequent addiction. For example, we would consider finalizing a policy to establish new APCs for procedures involving non-opioid pain management packaged items or services if such APCs would better recognize the resources involved in furnishing such items and services and decrease or eliminate the need for prescription opioids. In addition, given the general desire to encourage provider efficiency through creating larger bundles of care and packaging items and services that are integral, ancillary, supportive, dependent, or adjunctive to a primary service, we also are seeking comment on how such alternative payment structures would continue to balance the goals of incentivizing provider efficiencies with encouraging the use of non-opioid alternatives to pain management. Furthermore, because patients may receive opioid prescriptions following receipt of a non-opioid drug or implantation of a device, we are interested in identifying any cost implications for the patient and the Medicare program caused by this potential change in policy. The implications of incentivizing non-opioid pain management drugs available for postsurgical acute pain relief during or after an outpatient visit or procedure are also of interest, including for non-opioid drugs. The goal is to encourage appropriate use of such non-opioid alternatives. We note that this comment solicitation is also discussed in section XII.D.3. of this proposed rule.

4. Proposed 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 2018 OPPS/ASC final rule with comment period (82 FR 59255 through 59256), we applied this policy and calculated the relative payment weights for each APC for CY 2018 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 website) using the APC costs discussed in sections II.A.1. and II.A.2. of that final rule with comment period. For CY 2019, as we did for CY 2018, we are proposing to continue to apply the policy established in CY 2013 and calculate relative payment weights for each APC for CY 2019 using geometric mean-based APC costs.

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

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 70372). For CY 2019, as we did for CY 2018, we are proposing to continue to standardize all of the relative payment weights to APC 5012. 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 2019, as we did for CY 2018, we are proposing to assign APC 5012 a relative payment weight of 1.00 and to divide the geometric mean cost of each APC by the geometric mean cost for APC 5012 to derive the unscaled relative payment weight for each APC. The choice of the APC on which to standardize the relative payment weights does not affect payments made under the OPPS because we scale the weights for budget neutrality.

We note that, in section X.B. of this proposed rule, we discuss our CY 2019 proposal to control for unnecessary increases in the volume of outpatient service by paying for clinic visits furnished at an off-campus provider-based department at a PFS-equivalent rate under the OPPS rather than at the standard OPPS rate. While the volume associated with these visits is included in the impact model, and thus used in calculating the weight scalar, the proposal has only a negligible effect on the scalar. Specifically, under the proposed policy, there would be no change to the relativity of the OPPS payment weights because the adjustment is made at the payment level rather than in the cost modeling. Further, under our proposal, the savings that would result from the change in payments for these clinic visits would not be budget neutral. Therefore, the impact of the proposed policy would generally not be reflected in the budget neutrality adjustments, whether the adjustment is to the OPPS relative weights or to the OPPS conversion factor.

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 2019 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 are proposing to compare Start Printed Page 37072the estimated aggregate weight using the CY 2018 scaled relative payment weights to the estimated aggregate weight using the proposed CY 2019 unscaled relative payment weights.

For CY 2018, we multiplied the CY 2018 scaled APC relative payment weight applicable to a service paid under the OPPS by the volume of that service from CY 2017 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 2019, we are proposing to apply the same process using the estimated CY 2019 unscaled relative payment weights rather than scaled relative payment weights. We are proposing to calculate the weight scalar by dividing the CY 2018 estimated aggregate weight by the unscaled CY 2019 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 website at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html. Click on the CY 2019 OPPS proposed rule link and open the claims accounting document link at the bottom of the page.

We are proposing to compare the estimated unscaled relative payment weights in CY 2019 to the estimated total relative payment weights in CY 2018 using CY 2017 claims data, holding all other components of the payment system constant to isolate changes in total weight. Based on this comparison, we are proposing to adjust the calculated CY 2019 unscaled relative payment weights for purposes of budget neutrality. We are proposing to adjust the estimated CY 2019 unscaled relative payment weights by multiplying them by a proposed weight scalar of 1.4553 to ensure that the proposed CY 2019 relative payment weights are scaled to be budget neutral. The proposed CY 2019 relative payment weights listed in Addenda A and B to this proposed rule (which are available via the internet on the CMS website) were scaled and incorporated the recalibration adjustments discussed in sections II.A.1. and II.A.2. of this 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.2. of this proposed rule) is included in the budget neutrality calculations for the CY 2019 OPPS.

B. Proposed 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 2019 IPPS/LTCH PPS proposed rule (83 FR 20381), consistent with current law, based on IHS Global, Inc.'s fourth quarter 2017 forecast of the FY 2019 market basket increase, the proposed FY 2019 IPPS market basket update is 2.8 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 2019.

Specifically, section 1833(t)(3)(F)(i) of the Act requires that, for 2012 and subsequent years, the OPD fee schedule increase factor under subparagraph (C)(iv) be reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as equal to the 10-year moving average of changes in annual economy-wide, private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, year, cost reporting period, or other annual period) (the “MFP adjustment”). In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51689 through 51692), we finalized our methodology for calculating and applying the MFP adjustment, and then revised this methodology as discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49509). In this proposed rule, the proposed MFP adjustment for FY 2019 is 0.8 percentage point.

We are proposing that if more recent data become subsequently available after the publication of this 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 2019 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 the CY 2019 OPPS/ASC final rule with comment period.

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 2019, 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, we are proposing to apply a 0.75 percentage point reduction to the OPD fee schedule increase factor for CY 2019.

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 proposing to apply an OPD fee schedule increase factor of 1.25 percent for the CY 2019 OPPS (which is 2.8 percent, the proposed estimate of the hospital inpatient market basket percentage increase, less the proposed 0.8 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 proposed rule.

In this CY 2019 OPPS/ASC proposed rule, we are proposing to amend 42 CFR 419.32(b)(1)(iv)(B) by adding a new paragraph (10) to reflect the requirement in section 1833(t)(3)(F)(i) of the Act that, for CY 2019, we reduce the OPD fee schedule increase factor by the MFP adjustment as determined by CMS, and Start Printed Page 37073to 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 2019.

To set the OPPS conversion factor for this CY 2019 OPPS/ASC proposed rule, we are proposing to increase the CY 2018 conversion factor of $78.636 by 1.25 percent. In accordance with section 1833(t)(9)(B) of the Act, we are proposing further to adjust the conversion factor for CY 2019 to ensure that any revisions made to the wage index and rural adjustment are made on a budget neutral basis. We are proposing to calculate an overall proposed budget neutrality factor of 1.0004 for wage index changes by comparing proposed total estimated payments from our simulation model using the proposed FY 2019 IPPS wage indexes to those payments using the FY 2018 IPPS wage indexes, as adopted on a calendar year basis for the OPPS.

For this CY 2019 OPPS/ASC proposed rule, we are proposing to maintain the current rural adjustment policy, as discussed in section II.E. of this proposed rule. Therefore, the proposed budget neutrality factor for the rural adjustment would be 1.0000.

For this CY 2019 OPPS/ASC proposed rule, we are proposing 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 proposed rule. We are proposing to calculate a CY 2019 budget neutrality adjustment factor for the cancer hospital payment adjustment by comparing estimated proposed total CY 2019 payments under section 1833(t) of the Act, including the proposed CY 2019 cancer hospital payment adjustment, to estimated CY 2019 total payments using the CY 2018 final cancer hospital payment adjustment as required under section 1833(t)(18)(B) of the Act. The CY 2019 proposed estimated payments applying the proposed CY 2019 cancer hospital payment adjustment are the same as estimated payments applying the CY 2018 final cancer hospital payment adjustment. Therefore, we are proposing to apply a budget neutrality adjustment factor of 1.0000 to the conversion factor for the cancer hospital payment adjustment. In accordance with section 16002(b) of the 21st Century Cures Act, we are applying a budget neutrality factor calculated as if the proposed cancer hospital adjustment target payment-to-cost ratio was 0.89, not the 0.88 target payment-to-cost ratio we are proposing to apply as stated in section II.F. of this proposed rule.

For this CY 2019 OPPS/ASC proposed rule, we estimate that proposed pass-through spending for drugs, biologicals, and devices for CY 2019 would equal approximately $126.7 million, which represents 0.17 percent of total projected CY 2019 OPPS spending. Therefore, the proposed conversion factor would be adjusted by the difference between the 0.04 percent estimate of pass-through spending for CY 2018 and the 0.17 percent estimate of proposed pass-through spending for CY 2019, resulting in a proposed decrease for CY 2019 of 0.13 percent. Proposed estimated payments for outliers would remain at 1.0 percent of total OPPS payments for CY 2019. We estimate for this proposed rule that outlier payments would be 1.02 percent of total OPPS payments in CY 2018; the 1.00 percent for proposed outlier payments in CY 2019 would constitute a 0.02 percent increase in payment in CY 2019 relative to CY 2018.

For this CY 2019 OPPS/ASC proposed rule, we also are proposing 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 are proposing to make all other adjustments discussed above, but use a reduced OPD fee schedule update factor of −0.75 percent (that is, the proposed OPD fee schedule increase factor of 1.25 percent further reduced by 2.0 percentage points). This would result in a proposed reduced conversion factor for CY 2019 of $77.955 for hospitals that fail to meet the Hospital OQR Program requirements (a difference of −1.591 in the conversion factor relative to hospitals that met the requirements).

In summary, for CY 2019, we are proposing to amend § 419.32(b)(1)(iv)(B) by adding a new paragraph (10) to reflect the reductions to the OPD fee schedule increase factor that are required for CY 2019 to satisfy the statutory requirements of sections 1833(t)(3)(F) and (t)(3)(G)(v) of the Act. We are proposing to use a reduced conversion factor of $77.955 in the calculation of payments for hospitals that fail to meet the Hospital OQR Program requirements (a difference of −1.591 in the conversion factor relative to hospitals that met the requirements).

For CY 2019, we are proposing to use a conversion factor of $79.546 in the calculation of the national unadjusted payment rates for those items and services for which payment rates are calculated using geometric mean costs; that is, the proposed OPD fee schedule increase factor of 1.25 percent for CY 2019, the required proposed wage index budget neutrality adjustment of approximately1.0004, the proposed cancer hospital payment adjustment of 1.0000, and the proposed 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 proposed conversion factor for CY 2019 of $79.546.

C. Proposed 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 proposed rule.

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). We are proposing to continue this policy for the CY 2019 OPPS. We refer readers to section II.H. of this proposed rule 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 the claims accounting narrative included with the supporting documentation for this proposed rule (which is available via the internet on the CMS website), for estimating APC costs, we standardize 60 percent of estimated claims costs for geographic area wage variation using the same proposed FY 2019 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-Start Printed Page 37074reclassified 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 and amended section 1833(t) of the Act to add paragraph (19), which requires a frontier State wage index floor of 1.00 in certain cases, and states that the frontier State floor shall not be applied in a budget neutral manner. We codified these requirements at § 419.43(c)(2) and (c)(3) of our regulations. For the CY 2019 OPPS, we are proposing 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, the rural floor, and rural floor budget neutrality) is less than 1.00 (as discussed below, we are proposing not to extend the imputed floor under the OPPS for CY 2019 and subsequent years, consistent with our proposal in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20362 and 20363) not to extend the imputed floor under the IPPS for FY 2019 and subsequent fiscal years). Because the HOPD receives a wage index based on the geographic location of the specific inpatient hospital with which it is associated, the frontier State wage index adjustment applicable for the inpatient hospital also would apply for any associated HOPD. We refer readers to the FY 2011 through FY 2018 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; for FY 2017, 81 FR 56922; and for FY 2018, 82 FR 38142.

In addition to the changes required by the Affordable Care Act, we note that the proposed FY 2019 IPPS wage indexes continue to reflect a number of adjustments implemented over the past few years, including, but not limited to, reclassification of hospitals to different geographic areas, the rural floor provisions, an adjustment for occupational mix, and an adjustment to the wage index based on commuting patterns of employees (the out-migration adjustment). We refer readers to the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20353 through 20377) for a detailed discussion of all proposed changes to the FY 2019 IPPS wage indexes. We note that, in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20362 through 20363), we proposed not to apply the imputed floor to the IPPS wage index computations for FY 2019 and subsequent fiscal years. Consistent with this, we are proposing not to extend the imputed floor policy under the OPPS beyond December 31, 2018 (the date the imputed floor policy is set to expire under the OPPS). We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38138 through 38142) for a detailed discussion of the application of the imputed floor under the IPPS for FY 2018.

As discussed in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through 49963) and in each subsequent IPPS/LTCH PPS final rule, including the FY 2018 IPPS/LTCH PPS final rule (82 FR 38129 through 38130), the Office of Management and Budget (OMB) issued revisions to the labor market area delineations on February 28, 2013 (based on 2010 Decennial Census data), that included a number of significant changes such as new Core Based Statistical Areas (CBSAs), urban counties that became rural, rural counties that became urban, and existing CBSAs that were split apart (OMB Bulletin 13-01). This bulletin can be found at: https://obamawhitehouse.archives.gov/​sites/​default/​files/​omb/​bulletins/​2013/​b13-01.pdf. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49950 through 49985), for purposes of the IPPS, we adopted the use of the OMB statistical area delineations contained in OMB Bulletin No. 13-01, effective October 1, 2014. For purposes of the OPPS, in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66826 through 66828), we adopted the use of the OMB statistical area delineations contained in OMB Bulletin No. 13-01, effective January 1, 2015, beginning with the CY 2015 OPPS wage indexes. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56913), we adopted revisions to statistical areas contained in OMB Bulletin No. 15-01, issued on July 15, 2015, which provided updates to and superseded OMB Bulletin No. 13-01 that was issued on February 28, 2013. For purposes of the OPPS, in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79598), we adopted the revisions to the OMB statistical area delineations contained in OMB Bulletin No. 15-01, effective January 1, 2017, beginning with the CY 2017 OPPS wage indexes. 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.

On August 15, 2017, OMB issued OMB Bulletin No. 17-01, which provided updates to and superseded OMB Bulletin No. 15-01 that was issued on July 15, 2015. The attachments to OMB Bulletin No. 17-01 provide detailed information on the update to the statistical areas since July 15, 2015, and are based on the application of the 2010 Standards for Delineating Metropolitan and Micropolitan Statistical Areas to Census Bureau population estimates for July 1, 2014 and July 1, 2015. In OMB Bulletin No. 17-01, OMB announced that one Micropolitan Statistical Area now qualifies as a Metropolitan Statistical Area. The new urban CBSA is as follows:

  • Twin Falls, Idaho (CBSA 46300). This CBSA is comprised of the principal city of Twin Falls, Idaho in Jerome County, Idaho and Twin Falls County, Idaho.

The OMB Bulletin No. 17-01 is available on the OMB website at https://www.whitehouse.gov/​sites/​whitehouse.gov/​files/​omb/​bulletins/​2017/​b-17-01.pdf. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20354), we noted that we did not have sufficient time to include this change in the computation of the proposed FY 2019 IPPS wage index, ratesetting, and Tables 2 and 3 associated with the FY 2019 IPPS/LTCH PPS proposed rule. We stated that this new CBSA may affect the IPPS budget neutrality factors and wage indexes, depending on whether the area is eligible for the rural floor and the impact of the overall payments of the hospital located in this new CBSA. As we did in the FY 2019 IPPS/LTCH Start Printed Page 37075PPS proposed rule (83 FR 20354), we are providing below an estimate of this new area's wage index based on the average hourly wages for new CBSA 46300 and the national average hourly wages from the wage data for the proposed FY 2019 IPPS wage index (described in section III.B. of the preamble of the FY 2019 IPPS/LTCH PPS proposed rule). Currently, provider 130002 is the only hospital located in Twin Falls County, Idaho, and there are no hospitals located in Jerome County, Idaho. Thus, the proposed wage index for CBSA 46300 is calculated using the average hourly wage data for one provider (provider 130002).

Below we provide the proposed FY 2019 IPPS unadjusted and occupational mix adjusted national average hourly wages and the estimated CBSA average hourly wages. Taking the estimated average hourly wage of new CBSA 46300 and dividing by the proposed national average hourly wage results in the estimated wage indexes shown in the table below.

Estimated unadjusted wage index for new CBSA 46300Estimated occupational mix adjusted wage index for new CBSA 46300
Proposed National Average Hourly Wage42.99062526742.948428861
Estimated CBSA Average Hourly Wage35.83356481338.127590025
Estimated Wage Index0.83350.8878

As we stated in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20354), for the proposed FY 2019 IPPS wage indexes, we would use the OMB delineations that were adopted beginning with FY 2015 to calculate the area wage indexes, with updates as reflected in OMB Bulletin Nos. 13-01, 15-01, and 17-01. We also stated that we would incorporate the revision from OMB Bulletin No. 17-01 in the final FY 2019 IPPS wage index, ratesetting, and tables. Similarly, for the proposed CY 2019 OPPS wage indexes, we are proposing to use the OMB delineations that were adopted beginning with CY 2015 to calculate the area wage indexes, with updates as reflected in OMB Bulletin Nos. 13-01, 15-01, and 17-01. We would incorporate the revision from OMB Bulletin No. 17-01 in the final CY 2019 OPPS wage index, ratesetting, and tables.

CBSAs are made up of one or more constituent counties. Each CBSA and constituent county has its own unique identifying codes. The FY 2018 IPPS/LTCH PPS final rule (82 FR 38130) discussed the two different lists of codes to identify counties: Social Security Administration (SSA) codes and Federal Information Processing Standard (FIPS) codes. Historically, CMS listed and used SSA and FIPS county codes to identify and crosswalk counties to CBSA codes for purposes of the IPPS and OPPS wage indexes. However, the SSA county codes are no longer being maintained and updated, although the FIPS codes continue to be maintained by the U.S. Census Bureau. The Census Bureau's most current statistical area information is derived from ongoing census data received since 2010; the most recent data are from 2015. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38130), for purposes of crosswalking counties to CBSAs for the IPPS wage index, we finalized our proposal to discontinue the use of the SSA county codes and begin using only the FIPS county codes. Similarly, for the purposes of crosswalking counties to CBSAs for the OPPS wage index, in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59260), we finalized our proposal to discontinue the use of SSA county codes and begin using only the FIPS county codes for the purposes of crosswalking counties to CBSAs for the OPPS wage index.

The Census Bureau maintains a complete list of changes to counties or county equivalent entities on the website at: https://www.census.gov/​geo/​reference/​county-changes.html. In our transition to using only FIPS codes for counties for the IPPS wage index, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38130), we updated the FIPS codes used for crosswalking counties to CBSAs for the IPPS wage index effective October 1, 2017, to incorporate changes to the counties or county equivalent entities included in the Census Bureau's most recent list. We included these updates to calculate the area IPPS wage indexes in a manner that is generally consistent with the CBSA-based methodologies finalized in the FY 2005 IPPS final rule and the FY 2015 IPPS/LTCH PPS final rule. In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59261), we finalized our proposal to implement these FIPS code updates for the OPPS wage index effective January 1, 2018, beginning with the CY 2018 OPPS wage indexes.

For this CY 2019 OPPS/ASC proposed rule, we are proposing to use the FY 2019 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 2019. Therefore, any adjustments for the FY 2019 IPPS post-reclassified wage index would be reflected in the final CY 2019 OPPS wage index. (We refer readers to the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20353 through 20377) and the proposed FY 2019 hospital wage index files posted on the CMS website.) As explained above, 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.

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 are proposing to continue this policy for CY 2019. The following is a brief summary of the major proposed FY 2019 IPPS wage index policies and adjustments that we are proposing to apply to these hospitals under the OPPS for CY 2019. We are inviting public comments on these proposals. We refer readers to the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20353 through 20377) for a detailed discussion of the proposed changes to the FY 2019 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 Start Printed Page 37076Modernization Act of 2003 (MMA)). Applying this adjustment is consistent with our policy of adopting IPPS wage index policies for hospitals paid under the OPPS. We note that, because non-IPPS hospitals cannot reclassify, they are eligible for the out-migration wage adjustment if they are located in a section 505 out-migration county. This is the same out-migration adjustment policy that applies if the hospital were paid under the IPPS. For CY 2019, we are proposing 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 maintained the wage index of the CBSA in which they were physically located for FY 2014 for 3 calendar years (until December 31, 2017). Because this 3-year transition ended at the end of CY 2017, it was not applied beginning in CY 2018.

In addition, under the IPPS, the imputed floor policy is set to expire effective October 1, 2018. In the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20362 through 20363), we proposed not to extend the imputed floor policy under the IPPS for FY 2019 and subsequent fiscal years. For purposes of the CY 2019 OPPS, the imputed floor policy is set to expire effective December 31, 2018. Consistent with the FY 2019 IPPS/LTCH PPS proposed rule, as discussed earlier, we are proposing not to extend the imputed floor policy under the OPPS beyond December 31, 2018.

For CMHCs, for CY 2019, we are proposing to continue to calculate the wage index by using the post-reclassification IPPS wage index based on the CBSA where the CMHC is located. As with OPPS hospitals and for the same reasons, for CMHCs previously located in urban CBSAs that were designated as rural under the revised OMB labor market area delineations in OMB Bulletin No. 13-01, we finalized a policy to maintain the urban wage index value of the CBSA in which they were physically located for CY 2014 for 3 calendar years (until December 31, 2017). Because this 3-year transition ended at the end of CY 2017, it was not applied beginning in CY 2018. The wage index that would apply to CMHCs for CY 2019 would include the rural floor adjustment, but would not include the imputed floor adjustment because, as discussed above, we are proposing to not extend the imputed floor policy beyond December 31, 2018. Also, the wage index that would apply to CMHCs would not include the out-migration adjustment because that adjustment only applies to hospitals.

Table 2 associated with the FY 2019 IPPS/LTCH PPS proposed rule (available via the internet on the CMS website 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 would receive the adjustment for FY 2019. We are including the out-migration adjustment information from Table 2 associated with the FY 2019 IPPS/LTCH PPS proposed rule as Addendum L to this proposed rule with the addition of non-IPPS hospitals that would receive the section 505 out-migration adjustment under the CY 2019 OPPS. Addendum L is available via the internet on the CMS website. We refer readers to the CMS website 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 proposed FY 2019 IPPS wage index tables and Addendum L.

D. Proposed Statewide Average Default Cost-to-Charge Ratios (CCRs)

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

In this CY 2019 OPPS/ASC proposed rule, we are proposing to update the default ratios for CY 2019 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 refer readers to the CY 2019 OPPS proposed rule Claims Accounting Narrative that is posted on the CMS website. Table 5 below lists the proposed statewide average default CCRs for OPPS services furnished on or after January 1, 2019, based on proposed rule data.

Table 5—Proposed CY 2019 Statewide Average CCRs

StateUrban/RuralProposed CY 2019 default CCRPrevious default CCR (CY 2018 OPPS Final Rule)
ALASKARURAL0.6550.659
Start Printed Page 37077
ALASKAURBAN0.2240.218
ALABAMARURAL0.1900.190
ALABAMAURBAN0.1540.155
ARKANSASRURAL0.1930.186
ARKANSASURBAN0.1950.200
ARIZONARURAL0.2410.232
ARIZONAURBAN0.1570.160
CALIFORNIARURAL0.1810.181
CALIFORNIAURBAN0.1880.193
COLORADORURAL0.3370.346
COLORADOURBAN0.2010.204
CONNECTICUTRURAL0.3220.324
CONNECTICUTURBAN0.2510.249
DISTRICT OF COLUMBIAURBAN0.2730.279
DELAWAREURBAN0.2680.295
FLORIDARURAL0.1710.158
FLORIDAURBAN0.1360.138
GEORGIARURAL0.2230.222
GEORGIAURBAN0.1990.198
HAWAIIRURAL0.3550.332
HAWAIIURBAN0.3210.322
IOWARURAL0.2880.296
IOWAURBAN0.2420.254
IDAHORURAL0.3390.339
IDAHOURBAN0.3760.369
ILLINOISRURAL0.2090.214
ILLINOISURBAN0.2050.208
INDIANARURAL0.2560.299
INDIANAURBAN0.2130.213
KANSASRURAL0.2660.264
KANSASURBAN0.1950.199
KENTUCKYRURAL0.1790.184
KENTUCKYURBAN0.1900.187
LOUISIANARURAL0.2110.212
LOUISIANAURBAN0.1930.195
MASSACHUSETTSRURAL0.3140.322
MASSACHUSETTSURBAN0.3430.348
MAINERURAL0.4230.419
MAINEURBAN0.4190.422
MARYLANDRURAL0.2560.258
MARYLANDURBAN0.2260.227
MICHIGANRURAL0.2960.302
MICHIGANURBAN0.3140.318
MINNESOTARURAL0.3760.379
MINNESOTAURBAN0.3090.302
MISSOURIRURAL0.2160.220
MISSOURIURBAN0.2470.240
MISSISSIPPIRURAL0.2190.213
MISSISSIPPIURBAN0.1570.160
MONTANARURAL0.4780.486
MONTANAURBAN0.3390.350
NORTH CAROLINARURAL0.2040.206
NORTH CAROLINAURBAN0.2170.212
NORTH DAKOTARURAL0.3250.366
NORTH DAKOTAURBAN0.3750.369
NEBRASKARURAL0.3040.313
NEBRASKAURBAN0.2270.233
NEW HAMPSHIRERURAL0.3040.307
NEW HAMPSHIREURBAN0.2470.255
NEW JERSEYURBAN0.1980.200
NEW MEXICORURAL0.2310.224
NEW MEXICOURBAN0.2800.284
NEVADARURAL0.1630.175
NEVADAURBAN0.1210.114
NEW YORKRURAL0.2970.299
NEW YORKURBAN0.3100.303
OHIORURAL0.2770.280
OHIOURBAN0.2040.203
Start Printed Page 37078
OKLAHOMARURAL0.2150.215
OKLAHOMAURBAN0.1660.169
OREGONRURAL0.2770.290
OREGONURBAN0.3270.336
PENNSYLVANIARURAL0.2640.267
PENNSYLVANIAURBAN0.1770.173
PUERTO RICOURBAN0.5470.577
RHODE ISLANDURBAN0.2760.276
SOUTH CAROLINARURAL0.1660.170
SOUTH CAROLINAURBAN0.1870.191
SOUTH DAKOTARURAL0.3380.391
SOUTH DAKOTAURBAN0.2400.242
TENNESSEERURAL0.1730.173
TENNESSEEURBAN0.1660.174
TEXASRURAL0.2180.205
TEXASURBAN0.1690.168
UTAHRURAL0.2880.391
UTAHURBAN0.3040.304
VIRGINIARURAL0.1770.177
VIRGINIAURBAN0.2150.215
VERMONTRURAL0.3920.393
VERMONTURBAN0.3830.378
WASHINGTONRURAL0.2600.256
WASHINGTONURBAN0.3250.323
WISCONSINRURAL0.3420.348
WISCONSINURBAN0.3040.308
WEST VIRGINIARURAL0.2610.253
WEST VIRGINIAURBAN0.2990.297
WYOMINGRURAL0.3970.407
WYOMINGURBAN0.3430.327

E. Proposed Adjustment for Rural Sole Community Hospitals (SCHs) and Essential Access Community Hospitals (EACHs) Under Section 1833(t)(13)(B) of the Act for CY 2019

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

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

This adjustment for rural SCHs is budget neutral and applied before calculating outlier payments and copayments. We stated in the CY 2006 OPPS final rule with comment period (70 FR 68560) that we would not reestablish the adjustment amount on an annual basis, but we may review the adjustment in the future and, if appropriate, would revise the adjustment. We provided the same 7.1 percent adjustment to rural SCHs, including EACHs, again in CYs 2008 through 2018. 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.

For the CY 2019 OPPS, we are proposing to continue the current 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. In addition, we are proposing to maintain this 7.1 percent payment adjustment for the years after CY 2019 until we identify data in the future that would support a change to this payment adjustment.Start Printed Page 37079

F. Proposed Payment Adjustment for Certain Cancer Hospitals for CY 2019

1. Background

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

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

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

Based on these findings, we finalized a policy to provide a payment adjustment to the 11 specified cancer hospitals that reflects their higher outpatient costs as discussed in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74202 through 74206). Specifically, we adopted a policy to provide additional payments to the cancer hospitals so that each cancer hospital's final PCR for services provided in a given calendar year is equal to the weighted average PCR (which we refer to as the “target PCR”) for other hospitals paid under the OPPS. The target PCR is set in advance of the calendar year and is calculated using the most recently submitted or settled cost report data that are available at the time of final rulemaking for the calendar year. The amount of the payment adjustment is made on an aggregate basis at cost report settlement. We note that the changes made by section 1833(t)(18) of the Act do not affect the existing statutory provisions that provide for TOPs for cancer hospitals. The TOPs are assessed as usual after all payments, including the cancer hospital payment adjustment, have been made for a cost reporting period. For CYs 2012 and 2013, the target PCR for purposes of the cancer hospital payment adjustment was 0.91. For CY 2014, the target PCR for purposes of the cancer hospital payment adjustment was 0.89. For CY 2015, the target PCR was 0.90. For CY 2016, the target PCR was 0.92, as discussed in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70362 through 70363). For CY 2017, the target PCR was 0.91, as discussed in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79603 through 79604). For CY 2018, the target PCR was 0.88, as discussed in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59265 through 59266).

2. Proposed Policy for CY 2019

Section 16002(b) of the 21st Century Cures Act (Pub. L. 114-255) amended section 1833(t)(18) of the Act by adding subparagraph (C), which requires that in applying 42 CFR 419.43(i), that is, the payment adjustment for certain cancer hospitals, for services furnished on or after January 1, 2018, the target PCR adjustment be reduced by 1.0 percentage point less than what would otherwise apply. Section 16002(b) also provides that, in addition to the percentage reduction, the Secretary may consider making an additional percentage point reduction to the target PCR that takes into account payment rates for applicable items and services described under section 1833(t)(21)(C) of the Act for hospitals that are not cancer hospitals described under section 1886(d)(1)(B)(v) of the Act. Further, in making any budget neutrality adjustment under section 1833(t) of the Act, the Secretary shall not take into account the reduced expenditures that result from application of section 1833(t)(18)(C) of the Act. For CY 2019, we are proposing 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 this proposed rule, reduced by 1.0 percentage point to comply with section 16002(b) of the 21st Century Cures Act. We are not proposing an additional reduction beyond the 1.0 percentage point reduction required by section 16002(b) for CY 2019. To calculate the proposed CY 2019 target PCR, we use the same extract of cost report data from HCRIS, as discussed in section II.A. of this proposed rule, used to estimate costs for the CY 2019 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 2017 claims data that we used to model the impact of the proposed CY 2019 APC relative payment weights (3,676 hospitals) because it is appropriate to use the same set of hospitals that we are using to calibrate the modeled CY 2019 OPPS. The cost report data for the hospitals in this dataset were from cost report Start Printed Page 37080periods with fiscal year ends ranging from 2014 to 2017.

We then removed the cost report data of the 43 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 18 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 3,615 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 89 percent of reasonable cost (weighted average PCR of 0.89). Therefore, after applying the 1.0 percentage point reduction as required by section 16002(b) of the 21st Century Cures Act, we are proposing 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 0.88 for each cancer hospital.

Table 6 below indicates the proposed estimated percentage increase in OPPS payments to each cancer hospital for CY 2019 due to the proposed cancer hospital payment adjustment policy. The actual amount of the CY 2019 cancer hospital payment adjustment for each cancer hospital will be determined at cost report settlement and will depend on each hospital's CY 2019 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 6—Proposed Estimated CY 2019 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 2019 due to payment adjustment
050146City of Hope Comprehensive Cancer Center37.1
050660USC Norris Cancer Hospital13.4
100079Sylvester Comprehensive Cancer Center21.0
100271H. Lee Moffitt Cancer Center & Research Institute22.3
220162Dana-Farber Cancer Institute43.7
330154Memorial Sloan-Kettering Cancer Center46.9
330354Roswell Park Cancer Institute16.2
360242James Cancer Hospital & Solove Research Institute22.6
390196Fox Chase Cancer Center8.4
450076M.D. Anderson Cancer Center53.6
500138Seattle Cancer Care Alliance54.3

G. Proposed 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 2018, 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 $4,150 (the fixed-dollar amount threshold) (82 FR 59267 through 59268). If the cost of a service exceeds both the multiplier threshold and the fixed-dollar threshold, the outlier payment is calculated as 50 percent of the amount by which the cost of furnishing the service exceeds 1.75 times the APC payment amount. Beginning with CY 2009 payments, outlier payments are subject to a reconciliation process similar to the IPPS outlier reconciliation process for cost reports, as discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 through 68599).

It has been our policy to report the actual amount of outlier payments as a percent of total spending in the claims being used to model the OPPS. Our estimate of total outlier payments as a percent of total CY 2017 OPPS payments, using CY 2017 claims available for this proposed rule, is approximately 1.0 percent of the total aggregated OPPS payments. Therefore, for CY 2017, we estimate that we paid the outlier target of 1.0 percent of total aggregated OPPS payments.

For this proposed rule, using CY 2017 claims data and CY 2018 payment rates, we estimate that the aggregate outlier payments for CY 2018 would be approximately 1.02 percent of the total CY 2018 OPPS payments. We are providing estimated CY 2019 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 website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html. Start Printed Page 37081

2. Proposed Outlier Calculation for CY 2019

For CY 2019, we are proposing to continue our policy of estimating outlier payments to be 1.0 percent of the estimated aggregate total payments under the OPPS. We are proposing 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 this proposed rule, we are proposing to continue our longstanding policy that if a CMHC's cost for partial hospitalization services, paid under APC 5853 (Partial Hospitalization for CMHCs), exceeds 3.40 times the payment rate for proposed APC 5853, the outlier payment would be calculated as 50 percent of the amount by which the cost exceeds 3.40 times the proposed APC 5853 payment rate. For further discussion of CMHC outlier payments, we refer readers to section VIII.C. of this proposed rule.

To ensure that the estimated CY 2019 aggregate outlier payments would equal 1.0 percent of estimated aggregate total payments under the OPPS, we are proposing that the hospital outlier threshold be set so that outlier payments would be triggered when a hospital's cost of furnishing a service exceeds 1.75 times the APC payment amount and exceeds the APC payment amount plus $4,600.

We calculated this proposed fixed-dollar threshold of $4,600 using the standard methodology most recently used for CY 2018 (82 FR 59267 through 59268). For purposes of estimating outlier payments for this proposed rule, we used the hospital-specific overall ancillary CCRs available in the April 2018 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 2019 hospital outlier payments for this proposed rule, we inflated the charges on the CY 2017 claims using the same inflation factor of 1.085868 that we used to estimate the IPPS fixed-dollar outlier threshold for the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20581). We used an inflation factor of 1.04205 to estimate CY 2018 charges from the CY 2017 charges reported on CY 2017 claims. The methodology for determining this charge inflation factor is discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 20581). As we stated in the CY 2005 OPPS final rule with comment period (69 FR 65845), we believe that the use of these charge inflation factors are appropriate for the OPPS because, with the exception of the inpatient routine service cost centers, hospitals use the same ancillary and outpatient cost centers to capture costs and charges for inpatient and outpatient services.

As noted in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68011), we are concerned that we could systematically overestimate the OPPS hospital outlier threshold if we did not apply a CCR inflation adjustment factor. Therefore, we are proposing to apply the same CCR inflation adjustment factor that we proposed to apply for the FY 2019 IPPS outlier calculation to the CCRs used to simulate the proposed CY 2019 OPPS outlier payments to determine the fixed-dollar threshold. Specifically, for CY 2019, we are proposing to apply an adjustment factor of 0.987842 to the CCRs that were in the April 2018 OPSF to trend them forward from CY 2018 to CY 2019. The methodology for calculating this proposed adjustment is discussed in the FY 2019 IPPS/LTCH PPS proposed rule (83 FR 20582).

To model hospital outlier payments for the proposed rule, we applied the overall CCRs from the April 2018 OPSF after adjustment (using the proposed CCR inflation adjustment factor of 0.987842 to approximate CY 2019 CCRs) to charges on CY 2017 claims that were adjusted (using the proposed charge inflation factor of 1.085868 to approximate CY 2019 charges). We simulated aggregated CY 2019 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 2019 OPPS payments. We estimated that a proposed fixed-dollar threshold of $4,600, 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 are proposing 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 are proposing to continue the policy that we implemented in CY 2010 that the hospitals' costs will be compared to the reduced payments for purposes of outlier eligibility and payment calculation. For more information on the Hospital OQR Program, we referred readers to section XIII. of this proposed rule.

H. Proposed 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 2019 OPPS/ASC proposed rule, the proposed 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 proposed rule and the proposed relative payment weight determined under section II.A. of this proposed rule. Therefore, the proposed national unadjusted payment rate for most APCs contained in Addendum A to this proposed rule (which is available via the internet on the CMS website) and for most HCPCS codes to which separate payment under the OPPS has been assigned in Addendum B to this proposed rule (which is available via the internet on the CMS website) was calculated by multiplying the proposed CY 2019 scaled weight for the APC by the proposed CY 2019 conversion factor.Start Printed Page 37082

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 proposed rule.

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

Individual providers interested in calculating the payment amount that they would receive for a specific service from the proposed national unadjusted payment rates presented in Addenda A and B to this proposed rule (which are available via the internet on the CMS website) should follow the formulas presented in the following steps. For purposes of the payment calculations below, we refer to the proposed 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 proposed 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 proposed reduced national unadjusted payment rate is calculated by multiplying the reporting ratio of 0.980 times the “full” national unadjusted payment rate. The proposed 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 proposed full CY 2019 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 proposed CY 2019 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 proposed rule. The proposed 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 2019 under the IPPS, reclassifications through the Metropolitan Geographic Classification Review Board (MGCRB), section 1886(d)(8)(B) “Lugar” hospitals, reclassifications under section 1886(d)(8)(E) of the Act, as defined in § 412.103 of the regulations, and hospitals designated as urban under section 601(g) of Public Law 98-21. For further discussion of the proposed changes to the FY 2019 IPPS wage indexes, as applied to the CY 2019 OPPS, we refer readers to section II.C. of this proposed rule. We are proposing to continue 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 proposed rule (which is available via the internet on the CMS website) contains the qualifying counties and the associated wage index increase developed for the proposed FY 2019 IPPS, which are listed in Table 2 in the FY 2019 IPPS/LTCH PPS proposed rule available via the internet on the CMS website at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​AcuteInpatientPPS/​index.html. (Click on the link on the left side of the screen titled “FY 2019 IPPS Proposed Rule Home Page” and select “FY 2019 Proposed Rule Tables.”) This step is to be followed only if the hospital is not reclassified or redesignated under section 1886(d)(8) or section 1886(d)(10) of the Act.

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

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

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

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

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

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

Y is the nonlabor-related portion of the national unadjusted payment rate. Start Printed Page 37083

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 proposed full and reduced national unadjusted payment rates that would apply to certain outpatient items and services performed by hospitals that meet and that fail to meet the 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 proposed CY 2019 full national unadjusted payment rate for APC 5071 is approximately $581.99. The proposed reduced national unadjusted payment rate for APC 5071 for a hospital that fails to meet the Hospital OQR Program requirements is approximately $570.35. This proposed reduced rate is calculated by multiplying the proposed reporting ratio of 0.980 by the proposed full unadjusted payment rate for APC 5071.

The proposed FY 2019 wage index for a provider located in CBSA 35614 in New York is 1.2850. The labor-related portion of the proposed full national unadjusted payment is approximately $448.71 (.60 * $581.99 * 1.2850). The labor-related portion of the proposed reduced national unadjusted payment is approximately $439.74 (.60 * 570.35* 1.2850). The nonlabor-related portion of the proposed full national unadjusted payment is approximately $232.80 (.40 * $581.99). The nonlabor-related portion of the proposed reduced national unadjusted payment is approximately $228.14 (.40 * $570.35). The sum of the labor-related and nonlabor-related portions of the proposed full national adjusted payment is approximately $681.51 ($448.71 + $232.80). The sum of the portions of the proposed reduced national adjusted payment is approximately $667.88 ($439.74 + $228.14).

I. Proposed 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 (including items such as drugs and biologicals) 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. Proposed OPPS Copayment Policy

For CY 2019, we are proposing 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 are proposing to use the same standard rounding principles that we have historically used in instances where the application of our standard copayment methodology would result in a copayment amount that is less than 20 percent and cannot be rounded, under standard rounding principles, to 20 percent. (We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66687) in which we discuss our rationale for applying these rounding principles.) The proposed national unadjusted copayment amounts for services payable under the OPPS that would be effective January 1, 2019 are included in Addenda A and B to this proposed rule (which are available via the internet on the CMS website).

As discussed in section XIII.E. of this proposed rule, for CY 2019, the proposed Medicare beneficiary's minimum unadjusted copayment and national unadjusted copayment for a service to which a reduced national unadjusted payment rate applies will equal the product of the reporting ratio and the national unadjusted copayment, or the product of the reporting ratio and the minimum unadjusted copayment, respectively, for the service.

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

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

  • When an APC group consists solely of HCPCS codes that were not paid under the OPPS the prior year because they were packaged or excluded or are new codes, the unadjusted copayment amount would be 20 percent of the APC payment rate.
  • If a new APC that did not exist during the prior year is created and consists of HCPCS codes previously assigned to other APCs, the copayment amount is calculated as the product of the APC payment rate and the lowest coinsurance percentage of the codes comprising the new APC.
  • If no codes are added to or removed from an APC and, after recalibration of its relative payment weight, the new payment rate is equal to or greater than Start Printed Page 37084the 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 achieves a 20-percent copayment percentage when fully phased in and gives the Secretary the authority to set rules for determining copayment amounts for new services. We further noted that the use of this methodology would, in general, reduce the beneficiary coinsurance rate and copayment amount for APCs for which the payment rate changes as the result of the reconfiguration of APCs and/or recalibration of relative payment weights (68 FR 63459).

3. Proposed 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, $116.40 is approximately 20 percent of the proposed full national unadjusted payment rate of $581.99. For APCs with only a minimum unadjusted copayment in Addenda A and B to this proposed rule (which are available via the internet on the CMS website), 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 proposed rule. Calculate the rural adjustment for eligible providers as indicated in Step 6 under section II.H. of this proposed rule.

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 proposed rule, 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 proposed unadjusted copayments for services payable under the OPPS that would be effective January 1, 2019, are shown in Addenda A and B to this proposed rule (which are available via the internet on the CMS website). We note that the proposed national unadjusted payment rates and copayment rates shown in Addenda A and B to this proposed rule reflect the proposed CY 2019 OPD fee schedule increase factor discussed in section II.B. of this proposed rule.

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

III. Proposed OPPS Ambulatory Payment Classification (APC) Group Policies

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

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

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

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

We note that, under the OPPS, the APC assignment determines the Start Printed Page 37085payment rate for an item, procedure, or service. Those items, procedures, or services not paid separately under the hospital OPPS are assigned to appropriate status indicators. Certain payment status indicators provide separate payment, while other payment status indicators do not. Section XI. of this proposed rule discusses the various status indicators used under the OPPS.

In Table 7 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 7—Comment Timeframe for New or Revised HCPCS Codes

OPPS Quarterly update CRType of codeEffective dateComments soughtWhen finalized
April 1, 2018Level II HCPCS CodesApril 1, 2018CY 2019 OPPS/ASC proposed ruleCY 2019 OPPS/ASC final rule with comment period.
July 1, 2018Level II HCPCS CodesJuly 1, 2018CY 2019 OPPS/ASC proposed ruleCY 2019 OPPS/ASC final rule with comment period.
Category I (certain vaccine codes) CPT Codes, Category III CPT codesJuly 1, 2018CY 2019 OPPS/ASC proposed ruleCY 2019 OPPS/ASC final rule with comment period.
October 1, 2018Level II HCPCS CodesOctober 1, 2018CY 2019 OPPS/ASC final rule with comment periodCY 2020 OPPS/ASC final rule with comment period.
January 1, 2019Category I and III CPT CodesJanuary 1, 2019CY 2019 OPPS/ASC proposed ruleCY 2019 OPPS/ASC final rule with comment period.
Level II HCPCS CodesJanuary 1, 2019CY 2019 OPPS/ASC final rule with comment periodCY 2020 OPPS/ASC final rule with comment period.

1. Proposed Treatment of New HCPCS Codes That Were Effective April 1, 2018 for Which we Are Soliciting Public Comments in This CY 2019 OPPS/ASC Proposed Rule

Through the April 2018 OPPS quarterly update CR (Transmittal 4005, Change Request 10515, dated March 20, 2018), we made effective nine new Level II HCPCS codes for separate payment under the OPPS. In this CY 2019 OPPS/ASC proposed rule, we are soliciting public comments on the proposed APC and status indicator assignments for these Level II HCPCS codes, which are listed in Table 8 of this proposed rule. The proposed payment rates for these codes, where applicable, can be found in Addendum B to this proposed rule (which is available via the internet on the CMS website).

Table 8—New Level II HCPCS Codes Effective April 1, 2018

CY 2018 HCPCS codeCY 2018 Long descriptorProposed CY 2019 SIProposed CY 2019 APC
C9462Injection, delafloxacin, 1 mgG9462
C9463Injection, aprepitant, 1 mgG9463
C9464Injection, rolapitant, 0.5 mgG9464
C9465Hyaluronan or derivative, Durolane, for intra-articular injection, per doseG9465
C9466Injection, benralizumab, 1 mgG9466
C9467Injection, rituximab and hyaluronidase, 10 mgG9467
C9468Injection, factor ix (antihemophilic factor, recombinant), glycopegylated, Rebinyn, 1 i.u.G9468
C9469 *Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mgG9469
C9749Repair of nasal vestibular lateral wall stenosis with implant(s)J15164
* HCPCS code C9469 (Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mg), which was effective April 1, 2018, was deleted June 30, 2018 and replaced with HCPCS code Q9993 (Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mg) effective July 1, 2018.

In addition, there were several new laboratory CPT Multianalyte Assays with Algorithmic Analyses (MAAA) codes (M codes) and Proprietary Laboratory Analyses (PLA) codes (U codes) that were effective April 1, 2018, but were too late to include in the April 2018 OPPS Update. Because these codes were released on the American Medical Association's (AMA) CPT website in February 2018, they were too late for us to include in the April 2018 OPPS Update CR and in the April 2018 Integrated Outpatient Code Editor (IOCE), and, consequently, were included in the July 2018 OPPS Update with an effective date of April 1, 2018. These CPT codes are listed below in Table 9. In this CY 2019 OPPS/ASC proposed rule, we are soliciting public comments on the proposed APC and status indicator assignments for these CPT codes, which are listed in Table 9 of this proposed rule. The proposed payment rates for these codes, where applicable, can be found in Addendum B to this proposed rule (which is available via the internet on the CMS website).Start Printed Page 37086

Table 9—New CPT MAAA and Proprietary Laboratory Analyses (PLA) Codes Effective April 1, 2018

CY 2018 HCPCS codeCY 2018 Long descriptorProposed CY 2019 SIProposed CY 2019 APC
0012MOncology (urothelial), mRNA, gene expression profiling by real-time quantitative PCR of five genes (MDK, HOXA13, CDC2 [CDK1], IGFBP5, and XCR2), utilizing urine, algorithm reported as a risk score for having urothelial carcinomaAN/A
0013MOncology (urothelial), mRNA, gene expression profiling by real-time quantitative PCR of five genes (MDK, HOXA13, CDC2 [CDK1], IGFBP5, and CXCR2), utilizing urine, algorithm reported as a risk score for having recurrent urothelial carcinomaAN/A
0035UNeurology (prion disease), cerebrospinal fluid, detection of prion protein by quaking-induced conformational conversion, qualitativeQ4N/A
0036UExome (i.e., somatic mutations), paired formalin-fixed paraffin-embedded tumor tissue and normal specimen, sequence analysesAN/A
0037UTargeted genomic sequence analysis, solid organ neoplasm, DNA analysis of 324 genes, interrogation for sequence variants, gene copy number amplifications, gene rearrangements, microsatellite instability and tumor mutational burdenAN/A
0038UVitamin D, 25 hydroxy D2 and D3, by LC-MS/MS, serum microsample, quantitativeQ4N/A
0039UDeoxyribonucleic acid (DNA) antibody, double stranded, high avidityQ4N/A
0040UBCR/ABL1 (t(9;22)) (e.g., chronic myelogenous leukemia) translocation analysis, major breakpoint, quantitativeAN/A
0041UBorrelia burgdorferi, antibody detection of 5 recombinant protein groups, by immunoblot, IgMQ4N/A
0042UBorrelia burgdorferi, antibody detection of 12 recombinant protein groups, by immunoblot, IgGQ4N/A
0043UTick-borne relapsing fever Borrelia group, antibody detection to 4 recombinant protein groups, by immunoblot, IgMQ4N/A
0044UTick-borne relapsing fever Borrelia group, antibody detection to 4 recombinant protein groups, by immunoblot, IgGQ4N/A

2. Proposed Treatment of New HCPCS Codes That Were Effective July 1, 2018 for Which we Are Soliciting Public Comments in This CY 2019 OPPS/ASC Proposed Rule

Through the July 2018 OPPS quarterly update CR (Transmittal 4075, Change Request 1078, dated June 15, 2018), we made 4 new Category III CPT codes and 10 Level II HCPCS codes effective July 1, 2018 (14 codes total), and assigned them to appropriate interim OPPS status indicators and APCs. As listed in Table 10 below, 13 of the 14 HCPCS codes are separately payable under the OPPS while 1 HCPCS code is not. Specifically, HCPCS code QQ994 is assigned to status indicator “E1” to indicate that the item is not payable by Medicare. In addition, we note that HCPCS code C9469 was deleted June 30, 2018, and replaced with HCPCS code Q9993 effective July 1, 2018. Because HCPCS code Q9993 describes the same drug as HCPCS code C9469, we are proposing to continue the drug's pass-through payment status and to assign HCPCS code Q9993 to the same APC and status indicators as its predecessor HCPCS code C9469, as shown in Table 10 below.

In this CY 2019 OPPS/ASC proposed rule, we are soliciting public comments on the proposed APC and status indicator assignments for CY 2019 for the CPT and Level II HCPCS codes implemented on July 1, 2018, all of which are listed in Table 10 below.

The proposed payment rates and status indicators for these codes, where applicable, can be found in Addendum B to this proposed rule (which is available via the internet on the CMS website).

Table 10—New HCPCS Codes Effective July 1, 2018

CY 2018 HCPCS codeCY 2018 long descriptorProposed CY 2019 SIProposed CY 2019 APC
C9030Injection, copanlisib, 1 mgG9030
C9031Lutetium Lu 177, dotatate, therapeutic, 1 mCiG9067
C9032Injection, voretigene neparvovec-rzyl, 1 billion vector genomeG9070
Q5105Injection, epoetin alfa, biosimilar, (Retacrit) (for esrd on dialysis), 100 unitsK9096
Q5106Injection, epoetin alfa, biosimilar, (Retacrit) (for non-esrd use), 1000 unitsK9097
Q9991Injection, buprenorphine extended-release (Sublocade), less than or equal to 100 mgG9073
Q9992Injection, buprenorphine extended-release (Sublocade), greater than 100 mgG9239
Q9993 *Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mgG9469
Q9994In-line cartridge containing digestive enzyme(s) for enteral feeding, eachE1N/A
Q9995Injection, emicizumab-kxwh, 0.5 mgG9257
0505TEndovenous femoral-popliteal arterial revascularization, with transcatheter placement of intravascular stent graft(s) and closure by any method, including percutaneous or open vascular access, ultrasound guidance for vascular access when performed, all catheterization(s) and intraprocedural roadmapping and imaging guidance necessary to complete the intervention, all associated radiological supervision and interpretation, when performed, with crossing of the occlusive lesion in an extraluminal fashionJ15193
0506TMacular pigment optical density measurement by heterochromatic flicker photometry, unilateral or bilateral, with interpretation and reportQ15733
0507TNear-infrared dual imaging (i.e., simultaneous reflective and trans-illuminated light) of meibomian glands, unilateral or bilateral, with interpretation and reportQ15733
Start Printed Page 37087
0508TPulse-echo ultrasound bone density measurement resulting in indicator of axial bone mineral density, tibiaS5522
* HCPCS code C9469 (Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mg), which was effective April 1, 2018, was deleted June 30, 2018 and replaced with HCPCS code Q9993 (Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mg) effective July 1, 2018.

In addition, there are several new PLA codes (U codes) that will be effective July 1, 2018, but were too late to include in the July 2018 OPPS Update. Consequently, these codes will instead be included in the October 2018 OPPS Update with an effective date of July 1, 2018. These CPT codes are listed below in Table 11 along with the proposed APC and status indicator assignment for these CPT codes. In this CY 2019 OPPS/ASC proposed rule, we are soliciting public comments on the proposed APC and status indicator assignments for these CPT codes. The proposed payment rates for these codes, where applicable, can be found in Addendum B to this proposed rule (which is available via the internet on the CMS website).

Table 11—New CPT Proprietary Laboratory Analyses (PLA) Codes Effective July 1, 2018

CY 2018 HCPCS codeCY 2018 long descriptorProposed CY 2019 SIProposed CY 2019 APC
0045UOncology (breast ductal carcinoma in situ), mRNA, gene expression profiling by real-time RT-PCR of 12 genes (7 content and 5 housekeeping), utilizing formalin-fixed paraffin-embedded tissue, algorithm reported as recurrence scoreAN/A.
0046UFLT3 (fms-related tyrosine kinase 3) (e.g., acute myeloid leukemia) internal tandem duplication (ITD) variants, quantitativeAN/A.
0047UOncology (prostate), mRNA, gene expression profiling by real-time RT-PCR of 17 genes (12 content and 5 housekeeping), utilizing formalin-fixed paraffin-embedded tissue, algorithm reported as a risk scoreAN/A.
0048UOncology (solid organ neoplasia), DNA, targeted sequencing of protein-coding exons of 468 cancer-associated genes, including interrogation for somatic mutations and microsatellite instability, matched with normal specimens, utilizing formalin-fixed paraffin-embedded tumor tissue, report of clinically significant mutation(s)AN/A.
0049UNPM1 (nucleophosmin) (e.g., acute myeloid leukemia) gene analysis, quantitativeAN/A.
0050UTargeted genomic sequence analysis panel, acute myelogenous leukemia, DNA analysis, 194 genes, interrogation for sequence variants, copy number variants or rearrangementsAN/A.
0051UPrescription drug monitoring, evaluation of drugs present by LC-MS/MS, urine, 31 drug panel, reported as quantitative results, detected or not detected, per date of serviceQ4N/A.
0052ULipoprotein, blood, high resolution fractionation and quantitation of lipoproteins, including all five major lipoprotein classes and subclasses of HDL, LDL, and VLDL by vertical auto profile ultracentrifugationQ4N/A.
0053UOncology (prostate cancer), FISH analysis of 4 genes (ASAP1, HDAC9, CHD1 and PTEN), needle biopsy specimen, algorithm reported as probability of higher tumor gradeAN/A.
0054UPrescription drug monitoring, 14 or more classes of drugs and substances, definitive tandem mass spectrometry with chromatography, capillary blood, quantitative report with therapeutic and toxic ranges, including steady-state range for the prescribed dose when detected, per date of serviceQ4N/A.
0055UCardiology (heart transplant), cell-free DNA, PCR assay of 96 DNA target sequences (94 single nucleotide polymorphism targets and two control targets), plasmaAN/A.
0056UHematology (acute myelogenous leukemia), DNA, whole genome next-generation sequencing to detect gene rearrangement(s), blood or bone marrow, report of specific gene rearrangement(s)AN/A.
0057UOncology (solid organ neoplasia), mRNA, gene expression profiling by massively parallel sequencing for analysis of 51 genes, utilizing formalin-fixed paraffin-embedded tissue, algorithm reported as a normalized percentile rankAN/A.
0058UOncology (Merkel cell carcinoma), detection of antibodies to the Merkel cell polyoma virus oncoprotein (small T antigen), serum, quantitativeQ4N/A.
0059UOncology (Merkel cell carcinoma), detection of antibodies to the Merkel cell polyoma virus capsid protein (VP1), serum, reported as positive or negativeQ4N/A.
0060UTwin zygosity, genomic targeted sequence analysis of chromosome 2, using circulating cell-free fetal DNA in maternal bloodAN/A.
0061UTranscutaneous measurement of five biomarkers (tissue oxygenation [StO2], oxyhemoglobin [ctHbO2], deoxyhemoglobin [ctHbR], papillary and reticular dermal hemoglobin concentrations [ctHb1 and ctHb2]), using spatial frequency domain imaging (SFDI) and multi-spectral analysisQ4N/A.
Start Printed Page 37088

3. Proposed Process for New Level II HCPCS Codes That Will Be Effective October 1, 2018 and January 1, 2019 for Which We Will Be Soliciting Public Comments in the CY 2019 OPPS/ASC Final Rule With Comment Period

As has been our practice in the past, we will solicit comments on those new Level II HCPCS codes that are effective October 1, 2018 and January 1, 2019 in the CY 2019 OPPS/ASC final rule with comment period, thereby allowing us to finalize the status indicators, APCs, and payment rates for the codes in the CY 2020 OPPS/ASC final rule with comment period. These codes will be released to the public through the October and January OPPS quarterly update CRs and via the CMS HCPCS website (for Level II HCPCS codes).

For CY 2019, we are proposing to continue our established policy of assigning comment indicator “NI” in Addendum B to the OPPS/ASC final rule with comment period to those new Level II HCPCS codes that are effective October 1, 2018 and January 1, 2019 to indicate that we are assigning them an interim payment status, which is subject to public comment. We will be inviting public comments in the CY 2019 OPPS/ASC final rule with comment period on the status indicator, APC assignments, and payment rates for these codes, if applicable, which would then be finalized in the CY 2020 OPPS/ASC final rule with comment period.

4. Proposed Treatment of New and Revised CY 2019 Category I and III CPT Codes That Will Be Effective January 1, 2019 for Which We Are Soliciting Public Comments in This CY 2019 OPPS/ASC Proposed Rule

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

For the CY 2019 OPPS update, we received the CY 2019 CPT codes from AMA in time for inclusion in this CY 2019 OPPS/ASC proposed rule. The new, revised, and deleted CY 2019 Category I and III CPT codes can be found in Addendum B to this proposed rule (which is available via the internet on the CMS website). We note that the new and revised codes are assigned to new comment indicator “NP” to indicate that the code is new for the next calendar year or the code is an existing code with substantial revision to its code descriptor in the next calendar year as compared to current calendar year with a proposed APC assignment, and that comments will be accepted on the proposed APC assignment and status indicator.

Further, we remind readers that the CPT code descriptors that appear in Addendum B are short descriptors and do not accurately describe the complete procedure, service, or item described by the CPT code. Therefore, we are including the 5-digit placeholder codes and their long descriptors for the new and revised CY 2019 CPT codes in Addendum O to this proposed rule (which is available via the internet on the CMS website) so that the public can adequately comment on our proposed APCs and status indicator assignments. The 5-digit placeholder codes can be found in Addendum O, specifically under the column labeled “CY 2019 OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code,” to this proposed rule. The final CPT code numbers will be included in the CY 2019 OPPS/ASC final rule with comment period. We note that not every code listed in Addendum O is subject to comment. For the new and revised Category I and III CPT codes, we are requesting comments on only those codes that are assigned to comment indicator “NP”.

In summary, we are soliciting public comments on the proposed CY 2019 status indicators and APC assignments for the new and revised Category I and III CPT codes that will be effective January 1, 2019. The CPT codes are listed in Addendum B to this proposed rule with short descriptors only. We list them again in Addendum O to this proposed rule with long descriptors. We also are proposing to finalize the status indicator and APC assignments for these codes (with their final CPT code numbers) in the CY 2019 OPPS/ASC final rule with comment period. The proposed status indicator and APC assignment for these codes can be found in Addendum B to this proposed rule (which is available via the internet on the CMS website).

B. Proposed 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 regulations at 42 CFR 419.31. 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 Start Printed Page 37089primary 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 regulations at 42 CFR 419.2(b). A further discussion of packaged services is included in section II.A.3. of this proposed rule.

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. For CY 2019, we are proposing that each APC relative payment weight represents the hospital cost of the services included in that APC, relative to the hospital cost of the services included in APC 5012 (Clinic Visits and Related Services). The APC relative payment weights are scaled to APC 5012 because it is the hospital clinic visit APC and clinic visits are among the most frequently furnished services in the hospital outpatient setting.

2. Application of the 2 Times Rule

Section 1833(t)(9)(A) of the Act requires the Secretary to review, not less often than annually, and revise the APC groups, the relative payment weights, and the wage and other adjustments described in paragraph (2) to take into account changes in medical practice, changes in technology, the addition of new services, new cost data, and other relevant information and factors. Section 1833(t)(9)(A) of the Act also requires the Secretary to consult with an expert outside advisory panel composed of an appropriate selection of representatives of providers to review (and advise the Secretary concerning) the clinical integrity of the APC groups and the relative payment weights. We note that the HOP Panel recommendations for specific services for the CY 2019 OPPS update will be discussed in the relevant specific sections throughout the CY 2019 OPPS/ASC 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). 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 both have more than 99 single major claims and contribute at least 2 percent of the single major claims used to establish the APC cost to be significant (75 FR 71832). This longstanding definition of when a procedure code is significant for purposes of the 2 times rule was selected because we believe that a subset of 1,000 or fewer 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 that comprises less than 2 percent of the single major claims within an APC will have a negligible impact on the APC cost (75 FR 71832). In this section of this proposed rule, for CY 2019, we are proposing to make exceptions to this limit on the variation of costs within each APC group in unusual cases, such as for certain low-volume items and services.

For the CY 2019 OPPS update, we have identified the APCs with violations of the 2 times rule. Therefore, we are proposing changes to the procedure codes assigned to these APCs in Addendum B to this proposed rule. We note that Addendum B does not appear in the printed version of the Federal Register as part of this CY 2019 OPPS/ASC proposed rule. Rather, it is published and made available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​index.html. To eliminate a violation of the 2 times rule and improve clinical and resource homogeneity, we are proposing 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 2019 included in this proposed rule are related to changes in costs of services that were observed in the CY 2017 claims data newly available for CY 2019 ratesetting. Addendum B to this CY 2019 OPPS/ASC proposed rule identifies with a comment indicator “CH” those procedure codes for which we are proposing a change to the APC assignment or status indicator, or both, that were initially assigned in the July 1, 2018 OPPS Addendum B Update (available via the internet on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​Addendum-A-and-Addendum-B-Updates.html).

3. Proposed APC Exceptions to the 2 Times Rule

Taking into account the APC changes that we are proposing to make for CY 2019, 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 2017 claims data available for this CY 2019 proposed rule, we found 16 APCs with violations of the 2 times rule. We applied the criteria as described above to identify the APCs for which we are proposing to make exceptions under the 2 times rule for CY 2019, and found that all of the 16 APCs we identified meet the criteria for an exception to the 2 times rule based on the CY 2017 claims data available for this proposed rule. We did not include in that determination those APCs where a 2 times rule violation was not a relevant concept, such as APC 5401 (Dialysis), which only has two HCPCS codes assigned to it that have a similar geometric mean costs and do not create a 2 time rule violation. Therefore, we have only identified those APCs, including those with criteria-based costs, such as device-dependent CPT/HCPCS codes, with violations of the 2 times rule.

We note that, for cases in which a recommendation by the HOP Panel appears to result in or allow a violation of the 2 times rule, we may accept the HOP Panel's recommendation because those recommendations are based on explicit consideration (that is, a review of the latest OPPS claims data and group discussion of the issue) of resource use, clinical homogeneity, site of service, Start Printed Page 37090and the quality of the claims data used to determine the APC payment rates.

Table 12 of this proposed rule lists the 16 APCs that we are proposing to make an exception for under the 2 times rule for CY 2019 based on the criteria cited above and claims data submitted between January 1, 2017, and December 31, 2017, and processed on or before December 31, 2017. For the final rule with comment period, we intend to use claims data for dates of service between January 1, 2017, and December 31, 2017, that were processed on or before June 30, 2018, and updated CCRs, if available. The proposed geometric mean costs for covered hospital outpatient services for these and all other APCs that were used in the development of this proposed rule can be found on the CMS website at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​Hospital-Outpatient-Regulations-and-Notices.html.

Table 12—Proposed APC Exceptions to the 2 Times Rule for CY 2019

Proposed CY 2019 APCProposed CY 2019 APC title
5071Level 1 Excision/Biopsy/Incision and Drainage.
5113Level 3 Musculoskeletal Procedures.
5521Level 1 Imaging without Contrast.
5522Level 2 Imaging without Contrast.
5523Level 3 Imaging without Contrast.
5571Level 1 Imaging with Contrast.
5612Level 2 Therapeutic Radiation Treatment Preparation.
5691Level 1 Drug Administration.
5692Level 2 Drug Administration.
5721Level 1 Diagnostic Tests and Related Services.
5724Level 4 Diagnostic Tests and Related Services.
5731Level 1 Minor Procedures.
5732Level 2 Minor Procedures.
5735Level 5 Minor Procedures.
5822Level 2 Health and Behavior Services.
5823Level 3 Health and Behavior Services.

C. Proposed New Technology APCs

1. Background

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

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.

For CY 2018, there were 52 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 1908 (New Technology—Level 52 ($145,001-$160,000)). We note that the cost bands for the New Technology APCs, specifically, APCs 1491 through 1599 and 1901 through 1908, vary with increments ranging from $10 to $14,999. 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.

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

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

Start Printed Page 37091

(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 system, 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). For CY 2019, the proposed payment rates for New Technology APCs 1491 to 1599 and 1901 through 1908 can be found in Addendum A to this proposed rule (which is available via the internet on the CMS website).

2. Establishing Payment Rates for Low-Volume New Technology Procedures

Procedures that are assigned to New Technology APCs are typically new procedures that do not have sufficient claims history to establish an accurate payment for the procedures. One of the objectives of establishing New Technology APCs is to generate sufficient claims data for a new procedure so that it can be assigned to an appropriate clinical APC. Some procedures that are assigned to New Technology APCs have very low annual volume, which we consider to be fewer than 100 claims. We consider procedures with fewer than 100 claims annually as low-volume procedures because there is a higher probability that the payment data for a procedure may not have a normal statistical distribution, which could affect the quality of our standard cost methodology that is used to assign services to an APC. In addition, services with fewer than 100 claims per year are not generally considered to be a significant contributor to the APC ratesetting calculations and, therefore, are not included in the assessment of the 2 times rule. For these low-volume procedures, we are concerned that the methodology we use to estimate the cost of a procedure under the OPPS by calculating the geometric mean for all separately paid claims for a HCPCS procedure code from the most recent available year of claims data may not generate an accurate estimate of the actual cost of the procedure. In accordance with section 1833(t)(2)(B) of the Act, services classified within each APC must be comparable clinically and with respect to the use of resources. As described earlier, assigning a procedure to a new technology APC allows us to gather claims data to price the procedure and assign it to the APC with services that use similar resources and are clinically comparable. However, where utilization of services assigned to a New Technology APC is low, it can lead to wide variation in payment rates from year to year, resulting in even lower utilization and potential barriers to access to new technologies, which ultimately limits our ability to assign the service to the appropriate clinical APC. To mitigate these issues, we believe that it is appropriate to utilize our equitable adjustment authority at section 1833(t)(2)(E) of the Act to adjust how we determine the costs for low-volume services assigned to New Technology APCs. We have utilized our equitable adjustment authority at section 1833(t)(2)(E) of the Act, which states that the Secretary shall establish, in a budget neutral manner, other adjustments as determined to be necessary to ensure equitable payments, to estimate an appropriate payment amount for low-volume new technology procedures in the past (82 FR 59281). Although we have used this adjustment authority on a case-by-case basis in the past, we believe that it is appropriate to adopt an adjustment for low-volume services assigned to New Technology APCs in order mitigate the wide payment fluctuations that can occur for new technology services with fewer than 100 claims and to provide more predictable payment for these services.

For purposes of this adjustment, we believe that it is appropriate to use up to 4 years of claims data in calculating the applicable payment rate for the prospective year, rather than using solely the most recent available year of claims data, when a service assigned to a New Technology APC has a low annual volume of claims, which, for purposes of this adjustment, we define as fewer than 100 claims annually. We consider procedures with fewer than 100 claims annually as low-volume procedures because there is a higher probability that the payment data for a procedure may not have a normal statistical distribution, which could affect the quality of our standard cost methodology that is used to assign services to an APC. For these low-volume procedures, we are concerned that the methodology we use to estimate the cost of a procedure under the OPPS by calculating the geometric mean for all separately paid claims for a HCPCS procedure code from the most recent available year of claims data may not generate an accurate estimate of the actual cost of the procedure. Using multiple years of claims data will potentially allow for more than 100 claims to be used to set the payment rate, which would, in turn, create a more statistically reliable payment rate.

In addition, to better approximate the cost of a low-volume service within a New Technology APC, we believe that using the median or arithmetic mean rather than the geometric mean (which “trims” the costs of certain claims out) may be more appropriate in some circumstances, given the extremely low volume of claims. Low claim volumes increase the impact of “outlier” claims; that is, claims with either a very low or very high payment rate as compared to the average claim, which would have a substantial impact on any statistical methodology used to estimate the most appropriate payment rate for a service. We believe that having the flexibility to utilize an alternative statistical methodology to calculate the payment rate in the case of low-volume new technology services would help to create a more stable payment rate. Therefore, we are proposing that, in each of our annual rulemakings, we will seek public comments on which statistical methodology should be used for each low-volume New Technology APC. In the preamble of each annual rulemaking (including this proposed rule), we will present the result of each statistical methodology and solicit public comment on which methodology should be used to establish the payment rate for a low-volume new technology service. In addition, we will use our assessment of the resources used to perform a service and guidance from the developer or manufacturer of the service, as well as other stakeholders, to determine the most appropriate payment rate. Once we identify the most appropriate payment rate for a service, we would assign the service to the New Technology APC with the cost band that includes its payment rate.

Accordingly, for CY 2019, we are proposing to establish a different payment methodology for services assigned to New Technology APCs with fewer than 100 claims using our equitable adjustment authority under Start Printed Page 37092section 1833(t)(2)(E) of the Act. Under this proposal, we are proposing to use up to 4 years of claims data to establish a payment rate for each applicable service both for purposes of assigning a service to a New Technology APC and for assigning a service to a regular APC at the conclusion of payment for the service through a New Technology APC. The goal of such a policy is to promote transparency and stability in the payment rates for these low-volume new technology procedures and to mitigate wide variation from year to year for such services. We also are proposing to use the geometric mean, the median, or the arithmetic mean to calculate the cost of furnishing the applicable service, present the result of each statistical methodology in our annual rulemaking, and solicit public comment on which methodology should be used to establish the payment rate. The geometric mean may not be representative of the actual cost of a service when fewer than 100 claims are present because the payment amounts for the claims may not be distributed normally. Under this proposal, we would have the option to use the median payment amount or the arithmetic mean to assign a more representative payment for the service. Once we identify the payment rate for a service, we would assign the service to the New Technology APC with the cost band that includes its payment rate.

3. Proposed Procedures Assigned to New Technology APC Groups for CY 2019

As we explained in the CY 2002 OPPS final rule with comment period (66 FR 59902), we generally retain a procedure in the New Technology APC to which it is initially assigned until we have obtained sufficient claims data to justify reassignment of the procedure to a clinically appropriate APC.

In addition, in cases where we find that our initial New Technology APC assignment was based on inaccurate or inadequate information (although it was the best information available at the time), where we obtain new information that was not available at the time of our initial New Technology APC assignment, or where the New Technology APCs are restructured, we may, based on more recent resource utilization information (including claims data) or the availability of refined New Technology APC cost bands, reassign the procedure or service to a different New Technology APC that more appropriately reflects its cost (66 FR 59903).

Consistent with our current policy, for CY 2019, in this CY 2019 OPPS/ASC proposed rule, we are proposing to retain services within New Technology APC groups until we obtain sufficient claims data to justify reassignment of the service to a clinically appropriate APC. The flexibility associated with this policy allows us to reassign a service from a New Technology APC in less than 2 years if sufficient claims data are available. It also allows us to retain a service in a New Technology APC for more than 2 years if sufficient claims data upon which to base a decision for reassignment have not been obtained (66 FR 59902).

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

Currently, there are four CPT/HCPCS codes that describe magnetic resonance image-guided, high-intensity focused ultrasound (MRgFUS) procedures, three of which we are proposing to continue to assign to standard APCs, and one that we are proposing to reassign to a different New Technology APC for CY 2019. These codes include CPT codes 0071T, 0072T, and 0398T, and HCPCS code C9734. CPT codes 0071T and 0072T describe procedures for the treatment of uterine fibroids, CPT code 0398T describes procedures for the treatment of essential tremor, and HCPCS code C9734 describes procedures for pain palliation for metastatic bone cancer.

As shown in Table 13 of this proposed rule, and as listed in Addendum B to this CY 2019 OPPS/ASC proposed rule, we are proposing to continue to assign the procedures described by CPT codes 0071T and 0072T to APC 5414 (Level 4 Gynecologic Procedures), with a proposed payment rate of approximately $2,410 for CY 2019. We also are proposing to continue to assign the APC to status indicator “J1” (Hospital Part B services paid through a comprehensive APC) to indicate that payment for all covered Part B services reported 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 are proposing to continue to assign the services described by HCPCS code C9734 (Focused ultrasound ablation/therapeutic intervention, other than uterine leiomyomata, with magnetic resonance (mr) guidance) to APC 5115 (Level 5 Musculoskeletal Procedures), with a proposed payment rate of approximately $10,936 for CY 2019. We also are proposing to continue to assign HCPCS code C9734 to status indicator “J1”.

For procedures described by CPT code 0398T, we have only identified one paid claim for a procedure in CY 2016 and two paid claims in CY 2017, for a total of three paid claims. We note that the procedures described by CPT code 0398T were first assigned to a New Technology APC in CY 2016. Accordingly, there are only 2 years of claims data available for the OPPS ratesetting purposes. The payment amounts for the claims vary widely, with a cost of $29,254 for the sole CY 2016 claim and a geometric mean cost of $4,647 for the two CY 2017 claims. We are concerned that the reported geometric mean cost for CY 2017, which we would normally use to determine the proposed payment rate for the procedures described by CPT code 0398T, is significantly lower than the reported cost of the claim received in CY 2016, as well as the payment rate for the procedures for CY 2016 ($9,750.50) and for CY 2017 ($17,500.50). In accordance with section 1833(t)(2)(B) of the Act, we must establish that services classified within each APC are comparable clinically and with respect to the use of resources.

Therefore, as mentioned in section III.C.2. of this proposed rule, we are proposing to use our equitable adjustment authority under section 1833(t)(2)(E) of the Act, which states that the Secretary shall establish, in a budget neutral manner, other adjustments as determined to be necessary to ensure equitable payments, to establish a payment rate that is more likely to be representative of the cost of the procedures described by CPT code 0398T, despite the low geometric mean costs for procedures described by CPT code 0398T available in the claims data used for this proposed rule. We continue to believe that this situation for the procedures described by CPT code 0398T is unique, given the very limited number of claims for the procedures and the high variability for the cost of the claims which makes it challenging to determine a reliable payment rate for the procedures.

Our analysis found that the arithmetic mean of the three claims is $12,849.11, the geometric mean of the three claims is $8,579.91 (compared to $4,646.56 for CY 2017), and the median of the claims is $4,676.77. Consistent with what we state in section III.C.2. of this proposed rule, we have presented the result of each statistical methodology in this preamble, and we are seeking public comments on which method should be used to establish payment for the Start Printed Page 37093procedures described by CPT code 0398T. We believe that the arithmetic mean is the most appropriate representative cost of the procedures described by CPT code 0398T, which gives consideration to the payment rates established for the procedures in CY 2017 and CY 2018, without any trimming. The arithmetic mean also gives consideration to the range in cost for the three paid claims, which represent 2 years of claims data for the procedures. We are proposing to estimate the proposed payment rate for the procedures described by CPT code 0398T by calculating the arithmetic mean of the three paid claims for the procedures in CY 2016 and CY 2017, and assigning the procedures described by CPT code 0398T to the New Technology APC that includes the estimated cost. Accordingly, we are proposing to reassign the procedures described by CPT code 0398T from APC 1576 (New Technology—Level 39 ($15,001-$20,000)) to APC 1575 (New Technology—Level 38 ($10,001-$15,000)), with a proposed payment rate of $12,500.50. We refer readers to Addendum B to this proposed rule for the proposed payment rates for all codes reportable under the OPPS. Addendum B is available via the internet on the CMS website.

Table 13—Proposed CY 2019 Status Indicator (SI), APC Assignment, and Payment Rate for the Magnetic Resonance Image Guided High Intensity Focused Ultrasound (MRgFUS) Procedures

CPT/HCPCS codeLong descriptorCY 2018 OPPS SICY 2018 OPPS APCCY 2018 OPPS payment rateProposed CY 2019 OPPS SIProposed CY 2019 OPPS APCProposed CY 2019 OPPS payment rate
0071TFocused ultrasound ablation of uterine leiomyomata, including mr guidance; total leiomyomata volume less than 200 cc of tissueJ15414$2,272.77J15414Refer to OPPS Addendum B.
0072TFocused ultrasound ablation of uterine leiomyomata, including mr guidance; total leiomyomata volume greater or equal to 200 cc of tissueJ154142,272.77J15414Refer to OPPS Addendum B.
0398TMagnetic resonance image guided high intensity focused ultrasound (mrgfus), stereotactic ablation lesion, intracranial for movement disorder including stereotactic navigation and frame placement when performedS157617,500.50S1575Refer to OPPS Addendum B.
C9734Focused ultrasound ablation/therapeutic intervention, other than uterine leiomyomata, with magnetic resonance (mr) guidanceJ151155,606.42J15115Refer to OPPS Addendum B.

b. Retinal Prosthesis Implant Procedure

CPT code 0100T (Placement of a subconjunctival retinal prosthesis receiver and pulse generator, and implantation of intra-ocular retinal electrode array, with vitrectomy) describes the implantation of a retinal prosthesis, specifically, a procedure involving the use of the Argus® II Retinal Prosthesis System. This first retinal prosthesis was approved by the Food and Drug Administration (FDA) in 2013 for adult patients diagnosed with severe to profound 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 this status expired on December 31, 2015. We note that after pass-through payment status expires for a medical device, the payment for the device is packaged into the payment for the associated surgical procedure. Consequently, for CY 2016, the device described by HCPCS code C1841 was assigned to OPPS status indicator “N” to indicate that payment for the device is packaged and included in the payment rate for the surgical procedure described by CPT code 0100T. For CY 2016, the procedure described by CPT code 0100T was assigned to New Technology APC 1599, with a payment rate of $95,000, which was the highest paying New Technology APC for that year. This payment includes both the surgical procedure (CPT code 0100T) and the use of the Argus® II device (HCPCS code C1841). However, stakeholders (including the device manufacturer and hospitals) believed that the CY 2016 payment rate for the procedure involving the Argus® II System was insufficient to cover the hospital cost of performing the procedure, which includes the cost of the retinal prosthesis at the retail price of approximately $145,000.

For CY 2017, analysis of the CY 2015 OPPS claims data used for the CY 2017 final rule with comment period showed 9 single claims (out of 13 total claims) for the procedure described by CPT code 0100T, with a geometric mean cost of approximately $142,003 based on claims submitted between January 1, 2015, through December 31, 2015, and processed through June 30, 2016. Based on the CY 2015 OPPS claims data available for the final rule with comment period and our understanding of the Argus® II procedure, we reassigned the procedure described by CPT code 0100T from New Technology APC 1599 to New Technology APC 1906, with a final payment rate of $150,000.50 for CY 2017. We noted that this payment rate included the cost of both the surgical procedure (CPT code 0100T) and the retinal prosthesis device (HCPCS code C1841).

For CY 2018, the reported cost of the Argus® II procedure based on CY 2016 hospital outpatient claims data used for the CY 2018 OPPS/ASC final rule with comment period was approximately $94,455, which was more than $55,000 less than the payment rate for the procedure in CY 2017. We noted that the costs of the Argus® II procedure are extraordinarily high compared to many other procedures paid under the OPPS. In addition, the number of claims submitted has been very low and has not exceeded 10 claims within a single year. We believed that it is important to mitigate significant payment differences, especially shifts of several tens of thousands of dollars, while also basing payment rates on available cost information and claims data. In CY 2016, the payment rate for the Argus® II procedure was $95,000.50. The payment rate increased to $150,000.50 Start Printed Page 37094in CY 2017. For CY 2018, if we had established the payment rate based on updated final rule claims data, the payment rate would have decreased to $95,000.50 for CY 2018, a decrease of $55,000 relative to CY 2017. We were concerned that these large changes in payment could potentially create an access to care issue for the Argus® II procedure, and we wanted to establish a payment rate to mitigate the potential sharp decline in payment from CY 2017 to CY 2018.

In accordance with section 1833(t)(2)(B) of the Act, we must establish that services classified within each APC are comparable clinically and with respect to the use of resources. Therefore, we used our equitable adjustment authority under section 1833(t)(2)(E) of the Act, which states that the Secretary shall establish, in a budget neutral manner, other adjustments as determined to be necessary to ensure equitable payments, to maintain the payment rate for this procedure, despite the lower geometric mean costs available in the claims data used for the final rule with comment period. For CY 2018, we reassigned the Argus® II procedure to APC 1904 (New Technology—Level 50 ($115,001-$130,000)), which established a payment rate for the Argus® II procedure of $122,500.50, which was the arithmetic mean of the payment rates for the procedure for CY 2016 and CY 2017.

For CY 2019, the reported cost of the Argus® II procedure based on CY 2017 hospital outpatient claims data used for this CY 2019 OPPS/ASC proposed rule is approximately $152,021, which is $29,520 more than the payment rate for the procedure for CY 2018. We continue to note that the costs of the Argus® II procedure are extraordinarily high compared to many other procedures paid under the OPPS. In addition, the number of claims submitted has been very low and did not exceed 10 claims for CY 2017. We continue to believe that it is important to mitigate significant payment differences, especially shifts of several tens of thousands of dollars, while also basing payment rates on available cost information and claims data because we are concerned that large decreases in the payment rate could potentially create an access to care issue for the Argus® II procedure. In addition, we want to establish a payment rate to mitigate the potential sharp increase in payment from CY 2018 to CY 2019, and potentially ensure a more stable payment rate in future years.

In accordance with section 1833(t)(2)(B) of the Act, we must establish that services classified within each APC are comparable clinically and with respect to the use of resources. Therefore, as discussed in section III.C.2. of this proposed rule, we are proposing to use our equitable adjustment authority under section 1833(t)(2)(E) of the Act, which states that the Secretary shall establish, in a budget neutral manner, other adjustments as determined to be necessary to ensure equitable payments, to establish a payment rate that is more representative of the likely cost of the service. We believe the likely cost of the Argus® II procedure is lower than the geometric mean cost calculated from the CY 2017 claims data used for this proposed rule and closer to the CY 2018 payment rate.

We analyzed claims data for the Argus® II procedure using the last 3 years of available data from CY 2015 through CY 2017. These data include claims from the last year (CY 2015) that the Argus® II received transitional device pass-through payments and the first 2 years since device pass-through payment status for the Argus® II expired. We found the geometric mean for the procedure to be $129,891 (compared to $152,021 in CY 2017 alone), the arithmetic mean to be $134,619, and the median to be $133,679. As indicated in our proposal in section III.C.2. of this proposed rule, we have presented the result of each statistical methodology in this preamble, and are requesting public comment on which methodology should be used to establish a payment rate. We are proposing to use the arithmetic mean, which generates the highest payment rate of the three statistical methodologies, to estimate the cost of the Argus® II procedure as a means to balance the fluctuations in the costs of the procedure that have occurred from CY 2015 through CY 2017, while acknowledging the higher payment rates for the procedure in CY 2015 and CY 2017. Therefore, for CY 2019, we are proposing to reassign the Argus® II procedure from APC 1904 (New Technology—Level 50 ($115,001-$130,000)) to APC 1906 (New Technology—Level 51 ($130,001-$145,000)), which would result in a proposed payment rate for the Argus® II procedure of $137,500.50.

As we do each year, we acquired claims data regarding hospital costs associated with new procedures. We regularly examine the claims data and any available new information regarding the clinical aspects of new procedures to confirm that our OPPS payments remain appropriate for procedures like the Argus® II procedure as they transition into mainstream medical practice (77 FR 68314). We note that this proposed payment rate includes both the surgical procedure (CPT code 0100T) and the use of the Argus® II device (HCPCS code C1841).

The most recent claims data available have shown another payment issue with regard to the Argus® II procedure. We have found that payment for the Argus® II procedure is sometimes bundled into the payment for another procedure. We have identified two possible instances in the CY 2017 claims data in which this may have occurred. The bundling of payment for the Argus® II procedure occurs when the procedure is reported with other eye procedures assigned to a comprehensive APC (C-APC). A C-APC bundles payment for all services related to the primary service into one payment rate. We are concerned that when payment for new technology services is bundled into the payment for comprehensive procedures, there is not complete claims information to estimate accurately the cost of these services to allow their assignment to clinical APCs. Therefore, we are proposing to exclude payment for all procedures assigned to New Technology APCs from being bundled into the payment for procedures assigned to a C-APC. This action would allow for separate payment for the Argus® II procedure even when it is performed with another comprehensive service, which would provide more cost information regarding the procedure. This proposal is also discussed in section II.A.2.c. of this proposed rule.

D. Proposed OPPS APC-Specific Policies

Section 1833(t)(9)(A) of the Act requires the Secretary to review, not less often than annually, and to revise the APC groups, the relative payment weights, and the wage and other adjustments to take into account changes in medical practices, changes in technology, the addition of new services, new cost data, and other relevant information and factors. Each year, under the OPPS, we revise and make changes to the APC groupings based on the latest hospital outpatient claims data to appropriately place procedures and services in APCs based on clinical characteristics and resource similarity. Although we do not discuss every APC change in the proposed and final rules, these changes are listed in the OPPS Addendum B of the proposed and final rules. Specifically, the procedure and service codes with revised APC and/or status indicator assignments are identified with comment indicator “CH” (Active HCPCS code in current year and next Start Printed Page 37095calendar year, status indicator and/or APC assignment has changed) in the OPPS Addendum B payment file.

1. Endovascular Procedures (APCs 5191 Through 5194)

At the annual meeting for the HOP Panel held on August 21, 2017, the HOP Panel recommended that, for CY 2018, CMS examine the number of APCs for endovascular procedures. The HOP Panel also recommended that the appropriate Panel subcommittee review the APCs for endovascular procedures to determine whether more granularity (that is, more APCs) is warranted.

In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59293 through 59294), we stated that we believed that the current C-APC levels for the Endovascular Procedures C-APC family provide an appropriate distinction between the resource costs at each level and clinical homogeneity. We also stated that we would continue to review the C-APC structure for endovascular procedures to determine if any additional granularity is necessary for this C-APC family.

Using the most recent data available for this proposed rule, we have analyzed the four existing levels of the Endovascular Procedures C-APCs. We did not observe any violations of the 2 times rule within the current Endovascular Procedures C-APC structure. Some stakeholders have suggested that for certain procedures, such as angioplasty procedures involving the use of a drug-coated balloon in addition to a nondrug-coated balloon, resource costs are significantly higher than the geometric mean cost (and associated C-APC payment) for all of the angioplasty procedures combined. We recognize that the costs of a given procedure involving additional devices will be higher than the costs of the procedure when it does not involve such additional devices. However, the OPPS is a prospective payment system based on a system of averages in which the costs of some cases within an APC will be more costly than the APC payment rate, while the costs of other cases will be less costly. While we believe that there is sufficient granularity within the existing Endovascular Procedures C-APC structure and at least one stakeholder agrees, we have also received input from other stakeholders who have suggested alternative structures for this C-APC family that include a five-level structure and a six-level structure. An illustration of these proposed C-APC structure levels is displayed in Table 15 and Table 16, respectively. Because interested stakeholders have suggested a variety of options for the endovascular procedures C-APC structure, including keeping the existing C-APC structure, in this CY 2019 OPPS/ASC proposed rule, we are proposing to maintain the existing four-level structure for this C-APC family listed in Table 14 below. However, we are inviting public comments on our proposal, as well as the stakeholder-requested five-level and six-level structures displayed in the tables below. We note that the approximate geometric mean costs associated with the suggested five-level and six-level C-APC structures shown in Tables 15 and 16 are only estimates and, if either of the suggested structure levels are adopted, they would be subject to change, depending on the final rule with comment period data and the particular services that are assigned to each C-APC.

Table 14—Proposed CY 2019 C-APC Structure for Endovascular Procedures

C-APCProposed geometric mean cost
5191—Level 1 Endovascular Procedures$2,882
5192—Level 2 Endovascular Procedures4,843
5193—Level 3 Endovascular Procedures9,945
5194—Level 4 Endovascular Procedures15,789

Table 15—Requested CY 2019 Five-Level Endovascular C-APC Structure

C-APCPotential approximate geometric mean cost
5191—Level 1 Endovascular Procedures$2,881
5192—Level 2 Endovascular Procedures4,476
5193—Level 3 Endovascular Procedures9,207
5194—Level 4 Endovascular Procedures13,524
5195—New Level 5 Endovascular Procedures16,926

Table 16—Requested CY 2019 Six-Level Endovascular C-APC Structure

C-APCPotential approximate geometric mean cost
5191—Level 1 Endovascular Procedures$2,880
5192—Level 2 Endovascular Procedures4,722
5193—New Level 3 Endovascular Procedures7,743
5194—Level 4 Endovascular Procedures10,128
5195—New Level 5 Endovascular Procedures12,216
5196—Level 6 Endovascular Procedures16,140

2. Imaging Procedures and Services (APCs 5521 Through 5524 and 5571 Through 5573)

Section 1833(t)(2)(G) of the Act requires the Secretary to create additional groups of covered OPD services that classify separately those procedures that utilize contrast agents from those procedures that do not utilize contrast agents. In CY 2016, as a part of our comprehensive review of the structure of the APCs and procedure code assignments, we restructured the APCs that contain imaging services (80 FR 70392). The purpose of this restructuring was to more appropriately reflect the resource costs and clinical characteristics of the services classified within the Imaging APCs. The restructuring of the Imaging APCs resulted in broader groupings that removed the excessive granularity of grouping imaging services according to organ or physiologic system, which did not necessarily reflect either significant differences in resources or how these services are delivered in the hospital outpatient setting. In CY 2017, in response to public comments on the CY 2017 OPPS/ASC proposed rule, we further consolidated the Imaging APCs from 17 APCs in CY 2016 to 7 APCs in CY 2017 (81 FR 79633). These included four Imaging without Contrast APCs and three Imaging with Contrast APCs.

For CY 2018, we proposed to establish a new Level 5 Imaging without Contrast APC to more appropriately group certain imaging services with higher resource costs and stated that our latest claims data supported splitting the CY 2017 Level 4 Imaging without Contrast APC into two APCs such that the Level 4 Imaging without Contrast APC would include high frequency, low-cost services and the proposed Level 5 Imaging without Contrast APC would include low frequency high-cost services. Therefore, for CY 2018, we proposed to add a fifth level within the Start Printed Page 37096Imaging without Contrast APCs (82 FR 33608). However, based on public comments, we did not finalize this proposal. In general, commenters disagreed with CMS' proposal to add a fifth level within the Imaging without Contrast APC series because they believed that the addition of a fifth level would reduce payment for several imaging services, including vascular ultrasound procedures (82 FR 59309 through 59311). Commenters also noted that the lower payment rates under the OPPS would also apply under the PFS.

For this CY 2019 proposed rule, we reviewed the services assigned to the seven imaging APCs listed below in Table 17. Specifically, we evaluated the resource costs and clinical coherence of the procedures associated with the four levels of Imaging without Contrast APCs and the three levels of Imaging with Contrast APCs, as well as identified for correction any 2 times rule violations, to the extent feasible. Based on the geometric mean cost for each APC, which is listed in Table 17, for CY 2019, we are proposing to maintain the seven Imaging APCs, which consist of four levels of Imaging without Contrast APCs and three levels of Imaging with Contrast APCs, and to make minor reassignments to the HCPCS codes within this series to resolve or mitigate any violations of the 2 times rule, or both.

Table 17—Proposed CY 2019 Imaging APCs

CY 2019 APCCY 2019 APC titleCY 2018 APC geometric mean costProposed CY 2019 APC geometric mean cost
5521Level 1 Imaging without Contrast$62.08$64.02
5522Level 2 Imaging without Contrast114.39115.89
5523Level 3 Imaging without Contrast232.17236.05
5524Level 4 Imaging without Contrast486.38502.75
5571Level 1 Imaging with Contrast252.58206.94
5572Level 2 Imaging with Contrast456.08395.84
5573Level 3 Imaging with Contrast681.45699.02

We are inviting public comments on our proposal to maintain the seven Imaging APCs and the current APC structure level of the imaging APCs. Moreover, we are specifically interested in receiving public comments and recommendations on the proposed HCPCS code reassignments associated with each of the seven Imaging APCs. We refer readers to Addendum B to this proposed rule (which is available via the internet on the CMS website) for the proposed list of specific codes that would be reassigned to each Imaging APC.

3. Musculoskeletal Procedures (APCs 5111 Through 5116)

Prior to the CY 2016 OPPS, payment for musculoskeletal procedures was primarily divided according to anatomy and the type of musculoskeletal procedure. As part of the CY 2016 reorganization to better structure the OPPS payments towards prospective payment packages, we consolidated those individual APCs so that they became a general Musculoskeletal APC series (80 FR 70397 through 70398).

In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59300), we continued to apply a six-level structure for the Musculoskeletal APCs because doing so provided an appropriate distinction for resource costs at each level and to provide clinical homogeneity. However, we also indicated that we would continue to review the structure of these APCs to determine whether additional granularity would be necessary.

While we are not proposing any changes to the 2019 OPPS structure of the Musculoskeletal APC series in this proposed rule, we recognize that commenters have previously expressed concerns regarding the granularity of the current APC levels and requested establishment of additional levels. Therefore, we are soliciting comments on the creation of a new APC level between the current Level 5 and Level 6 within the Musculoskeletal APC series.

Table 18—Proposed CY 2019 Musculoskeletal Procedures APCs

APCGroup titleHCPCS codes assigned to APCProposed APC geometric mean cost
5111Level 1 Musculoskeletal Procedures102$229.40
5112Level 2 Musculoskeletal Procedures133$1,345.93
5113Level 3 Musculoskeletal Procedures442$2,673.08
5114Level 4 Musculoskeletal Procedures287$5,816.78
5115Level 5 Musculoskeletal Procedures67$10,935.83
5116Level 6 Musculoskeletal Procedures15$15,785.37

4. Level 5 Intraocular Procedures (APC 5495)

In prior years, CPT code 0308T (Insertion of ocular telescope prosthesis including removal of crystalline lens or intraocular lens prosthesis) has been assigned to the APC 5495 (Level 5 Intraocular Procedures) based on its estimated costs. In addition, its relative payment weight has been based on its median under our payment policy for low-volume device-intensive procedures because the APC contained a low volume of claims. The low-volume device-intensive procedures policy is discussed in more detail in section III.C.2. of this proposed rule.Start Printed Page 37097

In reviewing the claims data available for this proposed rule for CY 2019 OPPS ratesetting, there are only two claims containing procedures described by CPT code 0308T. Based on those two claims, APC 5495 would have a proposed geometric mean of $5,438.99 and a proposed median of $8,237.56. Based on its estimated costs in the most recently available claims data, we believe that the procedure described by CPT code 0308T is more appropriately placed in the APC 5493, which has a geometric mean of $9,821.47, which is more comparable to that of CPT code 0308T. Therefore, for CY 2019, we are proposing to reassign the procedure described by CPT code 0308T from APC 5495 to APC 5493 (Level 3 Intraocular Procedures) and to delete APC 5495. We will continue to monitor the volume of claims reporting a procedure described by CPT code 0308T available to us for future ratesetting.

IV. Proposed OPPS Payment for Devices

A. Pass-Through Payments for Devices

1. Beginning Eligibility Date for Device Pass-Through Status and Quarterly Expiration of Device Pass-Through Payments

a. Background

Under section 1833(t)(6)(B)(iii) of the Act, the period for which a device category eligible for transitional pass-through payments under the OPPS can be in effect is at least 2 years but not more than 3 years. Prior to CY 2017, our regulation at 42 CFR 419.66(g) provided that this pass-through payment eligibility period began on the date CMS established a particular transitional pass-through category of devices, and we based the pass-through status expiration date for a device category on the date on which pass-through payment was effective for the category. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79654), in accordance with section 1833(t)(6)(B)(iii)(II) of the Act, we amended § 419.66(g) to provide that the pass-through eligibility period for a device category begins on the first date on which pass-through payment is made under the OPPS for any medical device described by such category. In addition, prior to CY 2017, our policy was to propose and finalize the dates for expiration of pass-through status for device categories as part of the OPPS annual update. This means that device pass-through status would expire at the end of a calendar year when at least 2 years of pass-through payments have been made, regardless of the quarter in which the device was approved. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79655), we changed our policy to allow for quarterly expiration of pass-through payment status for devices, beginning with pass-through devices approved in CY 2017 and subsequent calendar years, to afford a pass-through payment period that is as close to a full 3 years as possible for all pass-through payment devices. We refer readers to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79648 through 79661) for a full discussion of the changes to the device pass-through payment policy. We also have an established policy to package the costs of the devices that are no longer eligible for pass-through payments into the costs of the procedures with which the devices are reported in the claims data used to set the payment rates (67 FR 66763).

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

As stated earlier, section 1833(t)(6)(B)(iii) of the Act requires that, under the OPPS, a category of devices be eligible for transitional pass-through payments for at least 2 years, but not more than 3 years. There currently are no device categories eligible for pass-through payment.

2. New Device Pass-Through Applications

a. Background

Section 1833(t)(6) of the Act provides for pass-through payments for devices, and section 1833(t)(6)(B) of the Act requires CMS to use categories in determining the eligibility of devices for pass-through payments. As part of implementing the statute through regulations, we have continued to believe that it is important for hospitals to receive pass-through payments for devices that offer substantial clinical improvement in the treatment of Medicare beneficiaries to facilitate access by beneficiaries to the advantages of the new technology. Conversely, we have noted that the need for additional payments for devices that offer little or no clinical improvement over previously existing devices is less apparent. In such cases, these devices can still be used by hospitals, and hospitals will be paid for them through appropriate APC payment. Moreover, a goal is to target pass-through payments for those devices where cost considerations might be most likely to interfere with patient access (66 FR 55852; 67 FR 66782; and 70 FR 68629).

As specified in regulations at 42 CFR 419.66(b)(1) through (b)(3), to be eligible for transitional pass-through payment under the OPPS, a device must meet the following criteria: (1) If required by FDA, the device must have received FDA approval or clearance (except for a device that has received an FDA investigational device exemption (IDE) and has been classified as a Category B device by the FDA), or another appropriate FDA exemption; and the pass-through payment application must be submitted within 3 years from the date of the initial FDA approval or clearance, if required, unless there is a documented, verifiable delay in U.S. market availability after FDA approval or clearance is granted, in which case CMS will consider the pass-through payment application if it is submitted within 3 years from the date of market availability; (2) the device is determined to be reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body part, as required by section 1862(a)(1)(A) of the Act; and (3) the device is an integral part of the service furnished, is used for one patient only, comes in contact with human tissue, and is surgically implanted or inserted (either permanently or temporarily), or applied in or on a wound or other skin lesion. In addition, according to § 419.66(b)(4), a device is not eligible to be considered for device pass-through payment if it is any of the following: (1) Equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciation assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker).

Separately, we use the following criteria, as set forth under § 419.66(c), to determine whether a new category of pass-through payment devices should be established. The device to be included in the new category must—

  • Not be appropriately described by an existing category or by any category previously in effect established for transitional pass-through payments, and was not being paid for as an outpatient service as of December 31, 1996;
  • Have an average cost that is not “insignificant” relative to the payment amount for the procedure or service with which the device is associated as determined under § 419.66(d) by demonstrating: (1) The estimated average reasonable costs of devices in the category exceeds 25 percent of the applicable APC payment amount for the service related to the category of devices; (2) the estimated average Start Printed Page 37098reasonable cost of the devices in the category exceeds the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent; and (3) the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device exceeds 10 percent of the APC payment amount for the related service (with the exception of brachytherapy and temperature-monitored cryoblation, which are exempt from the cost requirements as specified at §§ 419.66(c)(3) and (e)); and
  • Demonstrate a substantial clinical improvement, that is, substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment.

Beginning in CY 2016, we changed our device pass-through evaluation and determination process. Device pass-through applications are still submitted to CMS through the quarterly subregulatory process, but the applications will be subject to notice-and-comment rulemaking in the next applicable OPPS annual rulemaking cycle. Under this process, all applications that are preliminarily approved upon quarterly review will automatically be included in the next applicable OPPS annual rulemaking cycle, while submitters of applications that are not approved upon quarterly review will have the option of being included in the next applicable OPPS annual rulemaking cycle or withdrawing their application from consideration. Under this notice-and-comment process, applicants may submit new evidence, such as clinical trial results published in a peer-reviewed journal or other materials for consideration during the public comment process for the proposed rule. This process allows those applications that we are able to determine meet all the criteria for device pass-through payment under the quarterly review process to receive timely pass-through payment status, while still allowing for a transparent, public review process for all applications (80 FR 70417 through 70418).

More details on the requirements for device pass-through payment applications are included on the CMS website in the application form itself at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​passthrough_​payment.html, in the “Downloads” section. In addition, CMS is amenable to meeting with applicants or potential applicants to discuss research trial design in advance of any device pass-through application or to discuss application criteria, including the substantial clinical improvement criterion.

b. Applications Received for Device Pass-Through Payment for CY 2019

We received seven applications by the March 1, 2018 quarterly deadline, which is the last quarterly deadline for applications to be received in time to be included in this CY 2019 OPPS/ASC proposed rule. We received four of the applications in the second quarter of 2017, one of the applications in the third quarter of 2017, and two of the applications in the first quarter of 2018. None of the seven applications were approved for device pass-through payment during the quarterly review process.

Applications received for the later deadlines for the remaining 2018 quarters (June 1, September 1, and December 1), if any, will be presented in the CY 2020 OPPS/ASC proposed rule. We note that the quarterly application process and requirements have not changed in light of the addition of rulemaking review. Detailed instructions on submission of a quarterly device pass-through payment application are included on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​Downloads/​catapp.pdf. A discussion of the seven applications received by the March 1, 2018 deadline is presented below.

(1) AquaBeam System

PROCEPT BioRobotics Corporation submitted an application for a new device category for transitional pass-through payment status for the AquaBeam System. The AquaBeam System is intended for the resection and removal of prostate tissue in males suffering from lower urinary tract symptoms (LUTS) due to benign prostatic hyperplasia (BPH). The applicant stated that this is a very common condition typically occurring in elderly men. The clinical symptoms of this condition can include diminished urinary stream and partial urethral obstruction.[13] According to the applicant, the AquaBeam system resects the prostate to relieve symptoms of urethral compression. The resection is performed robotically using a high velocity, nonheated sterile saline water jet (in a procedure called Aquablation). The applicant stated that the AquaBeam System utilizes real-time intra-operative ultrasound guidance to allow the surgeon to precisely plan the surgical resection area of the prostate and then the system delivers Aquablation therapy to accurately resect the obstructive prostate tissue without the use of heat. The materials submitted by the applicant state that the AquaBeam System consists of a disposable, single-use handpiece as well as other components that are considered capital equipment.

With respect to the newness criterion at § 419.66(b)(1), FDA granted a De Novo request classifying the AquaBeam System as a class II device under section 513(f)(2) of the Federal Food, Drug, and Cosmetic Act on December 21, 2017. The application for a new device category for transitional pass-through payment status for the AquaBeam System was received on March 1, 2018, which is within 3 years of the date of the initial FDA approval or clearance. We are inviting public comments on whether the AquaBeam System meets the newness criterion.

With respect to the eligibility criterion at § 419.66(b)(3), according to the applicant, the AquaBeam System is integral to the service provided, is used for one patient only, comes in contact with human skin, and is applied in or on a wound or other skin lesion. The applicant also claimed the AquaBeam System meets the device eligibility requirements of § 419.66(b)(4) because it is not an instrument, apparatus, implement, or items for which depreciation and financing expenses are recovered, and it is not a supply or material furnished incident to a service. However, in the CY 2000 interim final rule with comment period (65 FR 67804 through 67805), we explained how we interpreted § 419.43(e)(4)(iv). We stated that we consider a device to be surgically implanted or inserted if is surgically inserted or implanted via a natural or surgically created orifice, or inserted or implanted via a surgically created incision. We also stated that we do not consider an item used to cut or otherwise create a surgical opening to be a device that is surgically implanted or inserted. We consider items used to create incisions, such as scalpels, electrocautery units, biopsy apparatuses, or other commonly used operating room instruments, to be supplies or capital equipment, not eligible for transitional pass-through payments. We stated that we believe the function of these items is different and distinct from that of devices that are Start Printed Page 37099used for surgical implantation or insertion. Finally, we stated that, generally, we would expect that surgical implantation or insertion of a device occurs after the surgeon uses certain primary tools, supplies, or instruments to create the surgical path or site for implanting the device. In the CY 2006 final rule with comment period (70 FR 68329 and 68630), we adopted as final our interpretation that surgical insertion or implantation criteria include devices that are surgically inserted or implanted via a natural or surgically created orifice, as well as those devices that are inserted or implanted via a surgically created incision. We reiterated that we maintain all of the other criteria in § 419.66 of the regulations, namely, that we do not consider an item used to cut or otherwise create a surgical opening to be a device that is surgically implanted or inserted. We are inviting public comments on whether the AquaBeam System meets the eligibility criteria at § 419.66(b).

The criteria for establishing new device categories are specified at § 419.66(c). The first criterion, at § 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. We have not identified an existing pass-through payment category that describes the AquaBeam System. The applicant proposed a category descriptor for the AquaBeam System of “Probe, image guided, robotic resection of prostate.” We are inviting public comments on this issue.

The second criterion for establishing a device category, at § 419.66(c)(2), provides that CMS determines that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment. With respect to this criterion, the applicant submitted several articles that examined the use of a current standard treatment for BPH—transurethral prostatectomy (TURP), including complications associated with the procedure and the comparison of the effectiveness of TURP to other modalities used to treat BPH, including holmium laser enucleation of the prostate (HoLEP) [14] and photoselective vaporization (PVP).[15]

The most recent clinical study involving the AquaBeam System was an accepted manuscript describing a double-blind trial that compared men treated with the AquaBeam System versus men treated with traditional TURP.[16] This was a multicenter study in four countries with 17 sites, 6 of which contributed 5 patients or fewer. Patients were randomized to receive either the AquaBeam System or TURP in a two-to-one ratio. With exclusions and dropouts, 117 patients were treated with the AquaBeam System and 67 patients with TURP. The data on efficacy supported the equivalence of the two procedures based upon noninferiority analysis. The safety data were reported as showing superiority of the AquaBeam System over TURP, although the data were difficult to track because adverse consequences were combined into categories. The applicant claimed that the International Prostate Symptom Scores (IPPS) were significantly improved in AquaBeam System patients as compared to TURP patients in men whose prostate was greater the 50 ml in size.

Although there may be some evidence of the improved safety of the AquaBeam System over TURP, we believe that the comparison of the AquaBeam System with TURP does not recognize that there are other treatment modalities available that are likely to have a similar safety profile as the AquaBeam System. No studies comparing other treatment modalities can be cited to show that AquaBeam System is a significant improvement over other available procedures.

Based on the evidence submitted with the application, we have insufficient evidence that the AquaBeam System provides a substantial clinical improvement over other similar products. We are inviting public comments on whether the AquaBeam System meets the substantial clinical improvement criterion.

The third criterion for establishing a device category, at § 419.66(c)(3), requires us to determine that the cost of the device is not insignificant, as described in § 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant provided the following information in support of the cost significance requirements. The applicant stated that the AquaBeam System would be reported with CPT code 0421T. CPT code 0421T is assigned to APC 5375 (Level 5 Urology and Related Services). To meet the cost criterion for device pass-through payment, a device must pass all three tests of the cost criterion for at least one APC. For our calculations, we used APC 5375, which has a CY 2018 payment rate of $3,706.03. Beginning in CY 2017, we calculate the device offset amount at the HCPCS/CPT code level instead of the APC level (81 FR 79657). CPT code 0421T had device offset amount of $0.00 at the time the application was received. According to the applicant, the cost of the handpiece for the AquaBeam System is $2,500.

Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The estimated average reasonable cost of $2,500 for the AquaBeam System exceeds 68 percent of the applicable APC payment amount for the service related to the category of devices of $3,706.03 ($2,500/$3,706.03 × 100 = 67.5 percent). Therefore, we believe the AquaBeam System meets the first cost significance test.

The second cost significance test, at § 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The estimated average reasonable cost of $2,500 for the AquaBeam System exceeds the cost of the device-related portion of the APC payment amount for the related service of $0.00 by at least 25 percent. Therefore, we believe that the AquaBeam System meets the second cost significance test.

The third cost significance test, at § 419.66(d)(3), requires that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must Start Printed Page 37100exceed 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost of $2,500 for the AquaBeam System and the portion of the APC payment amount for the device of $0.00 exceeds the APC payment amount for the related service of $3,706.03 by 68 percent (($2,500-$0.00)/$3,706.03 × 100 = 67.5 percent). Therefore, we believe that the AquaBeam System meets the third cost significance test.

We are inviting public comments on whether the AquaBeam System meets the device pass-through payment criteria discussed in this section, including the cost criteria.

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

BioMonde US, LLC resubmitted an application for a new device pass-through category for the BioBag® (larval debridement therapy in a contained dressing), hereinafter referred to as the BioBag®. The application submitted contained similar information to the previous application received in March 2016 that was evaluated in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79650). The only new information provided by the applicant were additional studies completed since the original application addressing the substantial clinical improvement criterion.

According to the applicant, BioBag® is a biosurgical wound treatment (“maggot therapy”) consisting of disinfected, living larvae (Lucilia sericata) in a polyester net bag; the larvae remove dead tissue from wounds. The BioBag® is indicated for debridement of nonhealing necrotic skin and soft tissue wounds, including pressure ulcers, venous stasis ulcers, neuropathic foot ulcers, and nonhealing traumatic or postsurgical wounds. Debridement, which is the action of removing devitalized tissue and bacteria from a wound, is required to treat or prevent infection and to allow the wound to progress through the healing process. This system contains disinfected, living larvae that remove the dead tissue from wounds and leave healthy tissue undisturbed. The larvae are provided in a sterile polyester net bag, available in different sizes. The only other similar product is free-range (that is, uncontained) larvae. Free-range larvae are not widely used in the United States because application is time consuming, there is a fear of larvae escaping from the wound, and there are concerns about proper and safe handling of the larvae. The total number of treatment cycles depends on the characteristics of the wound, the response of the wound, and the aim of the therapy. Most ulcers are completely debrided within 1 to 6 treatment cycles.

With respect to the newness criterion at § 419.66(b)(1), the applicant received FDA clearance for BioBag® through the premarket notification section 510(k) process on August 28, 2013, and the first U.S. sale of BioBag® occurred in April 2015. The June 1, 2017 application is more than 3 years after FDA clearance but less than 3 years after its first U.S. sale. We are inviting public comments on whether BioBag® meets the newness criterion.

With respect to the eligibility criterion at § 419.66(b)(3), the applicant claimed that the BioBag® is an integral part of the wound debridement, is used for one patient only, comes in contact with human skin, and is applied in or on a wound. In addition, the applicant stated that the BioBag® meets the device eligibility requirements of § 419.66(b)(4) because it is not an instrument, apparatus, or item for which depreciation and financing expenses are recovered. We had also determined in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79650) that the BioBag® is not a material or supply furnished incident to a service. We are inviting public comments on whether BioBag® meets the eligibility criterion.

The criteria for establishing new device categories are specified at § 419.66(c). The first criterion, at § 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. With respect to the existence of a previous pass-through device category that describes the BioBag®, the applicant suggested a category descriptor of “Contained medicinal larvae for the debridement of necrotic non-healing skin and soft tissue wounds.” We have not identified an existing pass-through payment category that describes the BioBag®.

The second criterion for establishing a device category, at § 419.66(c)(2), provides that CMS determines that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment. With respect to the substantial clinical improvement criterion, the applicant provided substantial evidence that larval therapy may improve outcomes compared to other methods of wound debridement. However, given the existence of the Medical Maggots®, another form of larval therapy that has been on the market since 2004, the relevant comparison is between the BioBag® and the Medical Maggots®. There are many reasons to suspect that the BioBag® could improve outcomes and be preferable to the Medical Maggots®. In essence, with the latter, the maggots are directly placed on the wound, which may result in escape, leading to infection control issues as well as dosing variability. In addition, there are the issues with patient comfort. With the Biobag®, the maggots are in a sealed container so escape is not an issue. The applicant cited a study showing large decreases in maggot escape with the BioBag® as opposed to the Medical Maggots®. However, the applicant did not provide any data that clinical outcomes are improved using the BioBag® as opposed to the Medical Maggots®. Based on the studies presented, we believe there is insufficient data to determine whether the BioBag® offers a substantial clinical improvement over other treatments for wound care. We are inviting public comments on whether BioBag® meets the substantial clinical improvement criterion.

The third criterion for establishing a device category, at § 419.66(c)(3), requires us to determine that the cost of device is not insignificant, as described in § 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. With respect to the cost criterion, the applicant stated that the BioBag® would be reported with CPT code 97602 (Removal of devitalized tissue from wound(s), non-selective debridement, without anesthesia (e.g., wet-to-moist dressings, enzymatic, abrasion, larval therapy), including topical application(s), wound assessment, and instruction(s) for ongoing care, per session). CPT code 97602 is assigned to APC 5051 (Level 1 Skin Procedures), with a proposed CY 2019 payment rate of $178.60, and the device offset is $0.02. The price of the BioBag® varies with the size of the bag ($375 to $435 per bag), and bag size selection is based on the size of the wound.

Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The estimated reasonable cost of $435 for the BioBag® Start Printed Page 37101exceeds the applicable APC amount for the service related to the category of devices of $178.60 by 243.56 percent ($435/$178.60 × 100 = 243.56 percent). Thus, the BioBag® appears to meet the first cost significance test.

The second cost significance test, at § 419.66(d)(2), provides that the estimated average reasonable cost of devices in the category must exceed the cost of the device-related portion of the APC payment amount by at least 25 percent, which means the device cost needs to be at least 125 percent of the device offset amount (the device-related portion of the APC found on the offset list). The estimated average reasonable cost of $435 for the BioBag® exceeds the device-related portion of the APC amount for the related service of $0.02 by 2,175,000 percent ($435/$0.02 × 100 = 2,175,000 percent). Thus, the BioBag® appears to meet the second cost significance test.

Section 419.66(d)(3), the third cost significance test, requires that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount determined to be associated with the device exceeds 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost of $435 for the BioBag® and the portion of the APC payment for the device of $0.02 exceeds 10 percent at 243.55 percent (($435 − $0.02)/$178.60 × 100 = 243.55 percent). Thus, the BioBag® appears to meet the third cost significance test and satisfies the cost significance criterion. We are inviting public comments on whether the BioBag® Wound Matrix meets the device pass-through payment criteria discussed in this section, including the cost criteria.

(3) BlastXTM Antimicrobial Wound Gel

Next ScienceTM has submitted an application for a new device category for transitional pass-through payment status for BlastXTM. According to the manufacturer, BlastXTM is a PEG-based aqueous hydrogel which contains citric acid, sodium citrate, and benzalkonium chloride, buffered to a pH of 4.0 at 2.33 osmolarity. BlastXTM received a 510(k) clearance from the FDA on March 6, 2017. BlastXTM is indicated for the management of wounds such as Stage I-IV pressure ulcers, partial and full thickness wounds, diabetic foot and leg ulcers, postsurgical wounds, first and second degree burns, and grafted and donor sites.

The manufacturer stated in its application for transitional pass-through payment status that BlastXTM works by disrupting the biofilm matrix in a wound and eliminating the bacteria absorbed within the gel. The manufacturer asserted that disrupting and eliminating the biofilm removes a major barrier to wound healing. The manufacturer also asserted that BlastXTM is not harmful to host tissue and stated that BlastXTM is applied to the wound every other day as a thin layer throughout the entire wound healing process.

When used as an adjunct to debridement, BlastXTM is applied immediately after debridement to eliminate any remaining biofilm and prevent the growth of new biofilm. Based on the evidence provided in the manufacturer's application, BlastXTM is not a skin substitute and cannot be considered for transitional pass-through payment status as a device. To be considered a device for purposes of the medical device pass-through payment process under the OPPS, a skin substitute needs to be applied in or on a wound or other skin lesion based on 42 CFR 419.66(b)(3). It should be a product that is primarily used in conjunction with the skin graft procedures described by CPT codes 15271 through 15278 or HCPCS codes C5271 through C5278 (78 FR 74937). The skin substitute should only be applied a few times during a typical treatment episode. BlastXTM, according to the manufacturer, may be used in many other procedures other than skin graft procedures, including several debridement and active wound care management procedures. The manufacturer also stated that BlastXTM would be used in association with any currently available skin substitute product and that the product should be applied every other day, which is not how skin substitute products for skin graft procedures are used to heal wounds. BlastXTM is not a required component of the skin graft service, and is used as a supply that may assist with the wound healing process that occurs primarily because of the use of sheet skin substitute product in a skin graft procedure.

Therefore, with respect to the eligibility criterion at § 419.66(b)(3), we have determined that BlastXTM is not integral to the service provided (which is a skin graft procedure using a sheet skin substitute), is a material or supply furnished incidentally to a service, and is not surgically inserted into a patient. BlastXTM does not meet the basic criterion of being an eligible device for transitional pass-through payment. Therefore, it is not feasible to evaluate the product on the other criteria required for transitional pass-through payment for devices, including the newness criterion, the substantial clinical improvement criterion, and the cost criterion. We are inviting public comments on the eligibility of BlastXTM for transitional pass-through payment for devices.

(4) EpiCord®

MiMedx® submitted an application for a new OPPS device category for transitional pass-through payment status for EpiCord®, a skin substitute product. According to the applicant, EpiCord® is a minimally manipulated, dehydrated, devitalized cellular umbilical cord allograft for homologous use that provides a protective environment for the healing process. According to the applicant, EpiCord® is comprised of the protective elements of the umbilical cord with a thin amnion layer and a thicker Wharton's Jelly mucopolysaccharides component. The Wharton's Jelly contains collagen, hyaluronic acid, and chondroitin sulfate, which are the components principally responsible for its mechanical properties.

The applicant stated that EpiCord® is packaged as an individual unit in two sizes, 2 cm x 3 cm and 3 cm x 5 cm. The applicant asserted that EpiCord® is clinically superior to other skin substitutes because it is much thicker than dehydrated amnion/chorion allografts, which allows for application over exposed bone, tendon, nerves, muscle, joint capsule and hardware. According to the applicant, due to its unique thicker, stiffer structure, clinicians are able to apply or suture EpiCord® for deep, tunneling wounds where other products cannot fill the entire wound bed or dead spaces.

With respect to the newness criterion at § 419.66(b)(1), EpiCord® was added to the MiMedx® registration for human cells, tissues, and cellular and tissue-based products (HCT/Ps) on December 31, 2015. In adding EpiCord, MiMedx® asserted that EpiCord® conformed to the requirements for HCT/Ps regulated solely under section 361 of the Public Health Service Act and the regulations at 21 CFR part 1271. For these products, FDA requires that the manufacturer register and list its HCT/Ps with the FDA's Center for Biologics Evaluation and Research (CBER) within 5 days after beginning operations and update its registration annually, and MiMedx® provided documentation verifying that EpiCord® had been registered. However, no documentation regarding an FDA determination that EpiCord® is appropriate for regulation solely under section 361 of the Public Health Service Act had been submitted. According to Start Printed Page 37102the applicant, December 31, 2015 was the first date of sale within the United States for EpiCord®. Therefore, it appears that market availability of EpiCord® is within 3 years of this application.

We note that a product that is regulated solely under section 361 of the Public Health Service Act and the regulations in 21 CFR part 1271 is not regulated as a device. The regulations at 21 CFR 1271.20 state that “If you are an establishment that manufactures an HCT/P that does not meet the criteria set out in § 1271.10(a), and you do not qualify for any of the exceptions in § 1271.15, your HCT/P will be regulated as a drug, device, and/or biological product . . . .”). The Federal Food, Drug, and Cosmetic Act requires that manufacturers of devices that are not exempt obtain marketing approval or clearance for their products from FDA before they may offer them for sale in the United States. We did not receive documentation from the applicant that EpiCord® is regulated as a device by FDA in accordance with Medicare regulations at 42 CFR 419.66(b)(1). We are inviting public comments on whether EpiCord® meets the newness criterion.

With respect to the eligibility criterion at § 419.66(b)(3), according to the applicant, EpiCord® is a skin substitute product that is integral to the service provided, is used for one patient only, comes in contact with human tissue, and is surgically inserted into the patient. The applicant also claimed EpiCord® meets the device eligibility requirements of § 419.66(b)(4) because EpiCord® is not an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and it is not a supply or material. We are inviting public comments on whether EpiCord® meets these eligibility criteria.

The criteria for establishing new device categories are specified at § 419.66(c). The first criterion, at § 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. We have not identified an existing pass-through category that describes EpiCord®. There are no present or previously established device categories for pass-through status that describe minimally manipulated, lyophilized, non-viable cellular umbilical membrane allografts. MiMedx® proposed a new device category descriptor of “Dehydrated Human Umbilical Cord Allografts” for EpiCord®.

The second criterion for establishing a device category, at § 419.66(c)(2), provides that CMS determines that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment. With regard to the substantial clinical improvement criterion, the applicant asserted that EpiCord® reduces the mortality rate with use of the device; reduces the rate of device-related complications; decreases the rate of subsequent diagnostic or therapeutic interventions; decreases the number of future hospitalizations or physician visits; provides more rapid beneficial resolution of the disease process treated because of the use of the device; decreases pain, bleeding, or other quantifiable symptom; and reduces recovery time.

To determine if the product meets the substantial improvement criterion, we compared EpiCord® to other skin substitute products. Compared to NEOX CORD 1K Wound Allograft, EpiCord® has half the levels of Vascular Endothelial Growth Factor (VEGF) and insulin-like growth factor binding protein-4 (IGFBP-4) and lower levels of Glial Cell Line Derived Neurotrophic Factor (GDNF) and Epidermal Growth Factor (EGF). Despite EpiCord® having higher levels of other growth factors, the cumulative effect of these differences has not been sufficiently demonstrated in the application. Moreover, most professional opinions do not compare EpiCord® to specific alternative skin substitutes; the few that do are, for the most part, of limited specificity (in terms of foci of superiority to other skin substitutes). Studies demonstrated 41 percent higher relative rates (4.1 percent higher absolute rates) of severe complications for EpiCord® compared to standard of care. Additionally, the control group was moist dressings and offloading (instead of another umbilical or biologic product). Furthermore, 38 percent of EpiCord® patients in the study were smokers versus 58 percent of control patients (smoking impairs wound healing; thus, this important dissimilarity between intervention and study populations casts doubt on attributing observed benefit to the intervention).

Based on the evidence submitted with the application, we have insufficient evidence that EpiCord® provides a substantial clinical improvement over other treatments for wound care. We are inviting public comments on whether EpiCord® meets the substantial clinical improvement criterion.

The third criterion for establishing a device category, at § 419.66(c)(3), requires us to determine that the cost of the device is not insignificant, as described in § 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant provided the following information in support of the cost significance requirements. EpiCord® would be reported with CPT code 15271 or 15275. CPT code 15271 describes the application of 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. CPT code 15275 describes the application of skin substitute graft to face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple digits, total wound surface area up to 100 sq cm; first 25 sq cm or less wound surface area. Both codes are assigned to APC 5054 (Level 4 Skin Procedures). CPT codes 15271 through 15278 are assigned to either APC 5054 (Level 4 Skin Procedures), with a proposed CY 2019 payment rate of $1,593.38 and a device offset of $4.62, or APC 5055 (Level 5 Skin Procedures), with a proposed CY 2019 payment rate of $2,811.13 and a device offset of $37.11. The price of EpiCord® is $1,595 for the 2 cm x 3 cm and $3,695 for the 3 cm x 5 cm product size. To meet the cost criterion for device pass-through payment, a device must pass all three tests of the cost criterion for at least one APC. Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The estimated average reasonable cost of $3,695 for the 3 cm x 5 cm product exceeds the applicable APC amount for the service related to the category of devices of $1,593.38 by 231.90 percent ($3,695/$1,593.38 × 100 percent = 231.90 percent). Therefore, it appears that EpiCord® meets the first cost significance test.

The second cost significance test, at § 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The estimated Start Printed Page 37103average reasonable cost of $3,695 for the 3 cm x 5 cm product exceeds the device-related portion of the APC payment amount for the related service of $4.62 by 79,978.35 percent ($3,695/$4.62 × 100 percent = 79,978.35 percent). Therefore, it appears that EpiCord® meets the second cost significance test.

Section 419.66(d)(3), the third cost significance test, requires that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost of $3,695 for the 3 cm x 5 cm product and the portion of the APC payment amount for the device of $4.62 exceeds 10 percent at 231.61 percent (($3,695 − $4.62)/$1,593.38) × 100 percent = 231.61 percent). Therefore, it appears that EpiCord® meets the third cost significance test. Based on the costs submitted by the applicant and the calculations noted earlier, it appears that EpiCord® meets the cost criterion at § 419.66(c)(3) for new device categories. We are inviting public comments on whether EpiCord® meets the cost criterion for device pass-through payment.

(5) remedē® System Transvenous Neurostimulator

Respicardia, Inc. submitted an application for a new device category for transitional pass-through payment status for the remedē® System Transvenous Neurostimulator. According to the applicant, the remedē® System is an implantable phrenic nerve stimulator indicated for the treatment of moderate to severe central sleep apnea (CSA) in adult patients. The applicant stated that the remedē® System is the first and only implantable neurostimulator to use transvenous sensing and stimulation technology. The applicant also stated that the remedē® System consists of an implantable pulse generator, a transvenous lead to stimulate the phrenic nerve and a transvenous sensing lead to sense respiration via transthoracic impedance. Lastly, the applicant stated that the device stimulates a nerve located in the chest (phrenic nerve) that is responsible for sending signals to the diaphragm to stimulate breathing to restore normal sleep and respiration in patients with moderate to severe central sleep apnea (CSA).

With respect to the newness criterion at § 419.66(b)(1), the applicant received a Category B Investigational Device Exemption (IDE) from FDA on April 18, 2013. Subsequently, the applicant received approval of its premarket approval (PMA) application from FDA on October 6, 2017. The application for a new device category for transitional pass-through payment status for the remedē® System was received on May 31, 2017, which is within 3 years of the date of the initial FDA approval or clearance. We are inviting public comments on whether the remedē® System meets the newness criterion.

With respect to the eligibility criterion at § 419.66(b)(3), according to the applicant, the remedē® System is integral to the service provided, is used for one patient only, comes in contact with human skin, and is applied in or on a wound or other skin lesion. The applicant also claimed the remedē® System meets the device eligibility requirements of § 419.66(b)(4) because it is not an instrument, apparatus, implement, or items for which depreciation and financing expenses are recovered, and it is not a supply or material furnished incident to a service.

The criteria for establishing new device categories are specified at § 419.66(c). The first criterion, at § 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. We have not identified an existing pass-through payment category that describes the remedē® System. The applicant proposed a category descriptor for the remedē® System of “generator, neurostimulator (implantable), non-rechargeable, with transvenous sensing and stimulation.” We are inviting public comments on this issue.

The second criterion for establishing a device category, at § 419.66(c)(2), provides that CMS determines that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment. With respect to this criterion, the applicant submitted several journal articles that discussed the health effects of central sleep apnea (CSA) which include fatigue, decreased mental acuity, myocardial ischemia, and dysrhythmias. The applicant stated that patients with CSA may suffer from poor clinical outcomes, including myocardial infarction and congestive heart failure.[17]

The applicant claims that the remedē® System has been found to significantly improve apnea-hypopnea index (AHI), which is an index used to indicate the severity of sleep apnea. AHI is represented by the number of apnea and hypopnea events per hour of sleep and was used as the primary effectiveness endpoint in the remedē® System pivotal trial. The applicant noted that the remedē® System was shown to improve AHI in small, self-controlled studies as well as in larger trials.

The applicant reported that in the pivotal study, a large, multicenter, randomized controlled trial of CSA patients, intention-to-treat analysis found that 51 percent (35/68) of CSA patients using the remedē® System had greater than 50 percent reduction of apnea-hypopnea index (AHI) from baseline at 6 months compared to 11 percent (8/73) of the control group (p < 0.0001). Per-protocol analysis found that 60 percent (35/58) of remedē® System patients had a greater than 50 percent reduction of AHI and in 74 percent (26/35) of these patients AHI dropped to <20.[18]

According to the applicant, an exploratory post-hoc analysis of patients with CSA and congestive heart failure (CHF) in the Pivotal trial found that, at 6 months, the remedē® System group had a greater percentage of patients with >=50 percent reduction in AHI compared to control group (63 percent versus 4 percent, p < 0.001).[19]

The applicant noted that patient symptoms and quality of life were improved with the remedē® System therapy. The mean Epworth Sleepiness Scale (ESS) score significantly decreased in remedē® System patients, indicating less daytime sleepiness.[20] Adverse events associated with remedē® System insertion and therapy included lead dislodgement/dislocation, hematoma, migraine, atypical chest pain, pocket perforation, pocket infection, extra-respiratory stimulation, Start Printed Page 37104concomitant device interaction, and elevated transaminases.[21] There were no patient deaths that were related to the device implantation or therapy.

One concern regarding the remedē® System is the potential for complications in patients with coexisting cardiac devices, such as pacemakers or ICDs, given that the remedē® System device requires lead placement and generation of electric impulses. Another concern with the evidence of substantial clinical improvement is that there is limited long-term data on patients with remedē® System implants. The pivotal trial included only 6 months of follow-up. Also, while the applicant reported a reduction in AHI in the treatment group, the applicant did not establish that that level of change was biologically meaningful in the population(s) being studied. The applicant did not conduct a power analysis to determine the necessary size of the study population and the necessary duration of the study to detect both early and late events.

In addition, patients in the pivotal study were not characterized by the use of cardiac devices. Cardiac resynchronization therapy (CRT), in particular, is known to improve chronic sleep apnea in addition to its primary effects on heart failure, and central apnea is a marker of the severity of the congestive heart failure. The applicant did not conduct subset analyses to assess the impact of cardiac resynchronization therapy.

Lastly, while evaluation of AHI and quality of life metrics show improvement with the remedē® System, the translation of those effects to mortality benefit is yet to be determined. Further studies of the remedē® System are likely needed to determine long-term effects of the device, and as well as its efficacy compared to existing treatments of CPAP or medications.

Based on the evidence submitted with the application, we have insufficient evidence that the remedē® System provides a substantial clinical improvement over other similar products. We are inviting public comments on whether the remedē® System meets the substantial clinical improvement criterion.

The third criterion for establishing a device category, at § 419.66(c)(3), requires us to determine that the cost of the device is not insignificant, as described in § 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant provided the following information in support of the cost significance requirements. The applicant stated that the remedē® System would be reported with CPT code 0424T. CPT code 0424T is assigned to APC 5464 (Level 4 Neurostimulator and Related Procedures). To meet the cost criterion for device pass-through payment, a device must pass all three tests of the cost criterion for at least one APC. For our calculations, we used APC 5464, which had a CY 2017 payment rate of $27,047.11 at the time the application was received. Beginning in CY 2017, we calculate the device offset amount at the HCPCS/CPT code level instead of the APC level (81 FR 79657). CPT code 0424T had a device offset amount of $11,089 at the time the application was received. According to the applicant, the cost of the remedē® System was $34,500. Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The estimated average reasonable cost of $34,500 for the remedē® System exceeds 127 percent of the applicable APC payment amount for the service related to the category of devices of $27,047.11 ($34,500/$27,047.11 × 100 = 127.5 percent). Therefore, we believe the remedē® System meets the first cost significance test.

The second cost significance test, at § 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The estimated average reasonable cost of $34,500 for the remedē® System exceeds the cost of the device-related portion of the APC payment amount for the related service of $11,089 by 311 percent ($34,500/$11,089) × 100 = 311 percent). Therefore, we believe that the remedē® System meets the second cost significance test.

The third cost significance test, at § 419.66(d)(3), requires that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost of $34,500 for the remedē® System and the portion of the APC payment amount for the device of $11,089 exceeds the APC payment amount for the related service of $27,047.11 by 87 percent (($34,500−$11,089)/$27,047.11 × 100 = 86.6 percent). Therefore, we believe that the remedē® System meets the third cost significance test.

We are inviting public comments on whether the remedē® System meets the device pass-through payment criteria discussed in this section, including the cost criteria for device pass-through payment.

(6) Restrata® Wound Matrix

Acera Surgical, Inc. submitted an application for a new device category for transitional pass-through payment status for Restrata® Wound Matrix. Restrata® Wound Matrix is a sterile, single-use product intended for use in local management of wounds. According to the applicant, Restrata® Wound Matrix is a soft, white, conformable, non-friable, absorbable matrix that works as a wound care management product by acting as a protective covering for wound defects, providing a moist environment for the body's natural healing process to occur. Restrata® Wound Matrix is made from synthetic biocompatible materials and was designed with a nanoscale non-woven fibrous structure with high porosity, similar to native extracellular matrix. Restrata® Wound Matrix allows for cellular infiltration, new tissue formation, neovascularization, and wound healing before completely degrading via hydrolysis. The product permits the ingress of cells and soft tissue formation in the defect space/wound bed. Restrata® Wound Matrix can be used to manage wounds, including: Partial and full-thickness wounds, pressure sores/ulcers, venous ulcers, diabetic ulcers, chronic vascular ulcers, tunneled/undermined wounds, surgical wounds (for example, donor site/grafts, post-laser surgery, post-Mohs surgery, podiatric wounds, wound dehiscence), trauma wounds (for example, abrasions, lacerations, partial thickness burns, skin tears), and draining wounds.

With respect to the newness criterion at § 419.66(b)(1), the applicant received FDA clearance for Restrata® Wound Matrix through the premarket notification section 510(k) process on April 26, 2017 and its February 27, 2018 application for pass-through payment status was within 3 years of FDA clearance. We are inviting public Start Printed Page 37105comment on whether Restrata® Wound Matrix meets the newness criterion.

With respect to the eligibility criterion at § 419.66(b)(3), according to the applicant, Restrata® Wound Matrix is a product that is integral to the service provided, is used for one patient only, comes in contact with human skin, and is surgically inserted into the patient. The description of Restrata® Wound Matrix shows the product meets the device eligibility requirements of § 419.66(b)(4) because Restrata® Wound Matrix is not an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and it is not a supply or material. We are inviting public comment on whether Restrata® Wound Matrix meets the eligibility criteria.

The criteria for establishing new device categories are specified at § 419.66(c). The first criterion, at § 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. We have not identified an existing pass-through category that describes Restrata® Wound Matrix. The applicant proposed a new device category descriptor of “Nanofiber Skin Substitute” for Restrata® Wound Matrix. We are inviting public comments on this issue.

The second criterion for establishing a device category, at § 419.66(c)(2), provides that CMS determines that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment. With regard to the substantial clinical improvement criterion, the applicant submitted three clinical studies about Restrata® to address this criterion. The largest study is non-randomized, non-blinded, uncontrolled single site retrospective analysis of 70 patients with 82 wounds. This study has not been published but has been submitted to a journal. The study included different types of wounds including diabetic wounds, venous wounds, and other wounds. The study asserted that the wounds had not responded to other wound care treatments, but provides little information on the reasons for the failure of previous treatments.

The study had no power analysis of the results. There were no corrections for multiple comparisons or peeks at the data, and the study did not address if participants dropped out or why there was a lack of drop-outs. The conclusions were descriptive statistics and were compared to the findings in another study where the average wound duration was nearly twice as long as in the original study. There was no previously established endpoint for the most important aspect of functionality, which would be the proportion of wounds with total closure that remained closed after six months despite weight bearing.

The other two studies were extremely small. One study was performed on two non-human subjects (pigs) with a competitor skin matrix product compared to Restrata®. The results of the study were mixed with Restrata® performing better on some measures and the competitor product performing better on other measures. The other study was a case series of six patients that was non-randomized without a control group. It was not clear how the results of these non-randomly selected pre-treated patients relate to the larger population of ulcer patients.

Based on the evidence submitted, we believe there is insufficient data to determine whether Restrata® offers a substantial clinical improvement over other treatments for wound care. We are inviting public comments on whether Restrata® meets the substantial clinical improvement criterion.

The third criterion for establishing a device category, at § 419.66(c)(3), requires CMS to determine that the cost of the device is not insignificant, as described in § 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant provided the following information in support of the cost significance requirements. Restrata® Wound Matrix would be reported with CPT codes 15271 through 15278, which cover the application of skin substitute grafts to different areas of the body for high-cost skin substitutes. To meet the cost criterion for device pass-through payment, a device must pass all three tests of the cost criterion for at least one APC. CPT codes 15271 through 15278 are assigned to either APC 5054 (Level 4 Skin Procedures), with a proposed CY 2019 payment rate of $1,593.38 and a device offset of $4.62, or APC 5055 (Level 5 Skin Procedures), with a proposed CY 2019 payment rate of $2,811.13 and a device offset of $37.11. According to the applicant, the highest retail cost of Restrata® Wound Matrix is $11,718.

Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The estimated average reasonable cost of $11,718 for Restrata® Wound Matrix exceeds the applicable APC amount for the service related to the category of devices of $1,593.38 by 735.42 percent ($11,718/$1,593.38 × 100 percent = 735.42 percent). Therefore, it appears that Restrata® Wound Matrix meets the first cost significance test.

The second cost significance test, at § 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The estimated average reasonable cost of $11,718 for Restrata® Wound Matrix exceeds the device-related portion of the APC payment amount for the related service of $4.62 by 253,636.36 percent ($11,718/$4.62 × 100 percent = 253,636.36 percent). Therefore, it appears that Restrata® Wound Matrix meets the second cost significance test.

Section 419.66(d)(3), the third cost significance test, requires that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost of $11,718 for Restrata® Wound Matrix and the portion of the APC payment amount for the device of $4.62 exceeds 10 percent at 735.13 percent (($11,718−$4.62)/$1,593.38 × 100 percent = 735.13 percent). Therefore, it appears that Restrata® Wound Matrix meets the third cost significance test. Based on the costs submitted by the applicant and the calculations noted earlier, we believe that Restrata® Wound Matrix appears to meet the cost criterion at § 419.66(c)(3) for new device categories. We are inviting public comments on whether Restrata® Wound Matrix meets the device pass-through payment criteria discussed in this section, including the cost criteria.

(7) SpaceOAR® System

Augmenix, Inc. submitted an application for a new device category for transitional pass-through payment status for the SpaceOAR® System. According to the applicant, the Start Printed Page 37106SpaceOAR® System is a polyethylene glycol hydrogel spacer that temporarily positions the anterior rectal wall away from the prostate to reduce the radiation delivered to the anterior rectum during prostate cancer radiotherapy treatment. The applicant stated that the SpaceOAR® System reduces some of the side effects associated with radiotherapy, which are collectively known as “rectal toxicity” (diarrhea, rectal bleeding, painful defecation, and erectile dysfunction, among other conditions). The applicant also stated that the SpaceOAR® is implanted several weeks before radiotherapy; the hydrogel maintains space between the prostate and rectum for the entire course of radiotherapy and is completely absorbed by patient's body within 6 months.

With respect to the newness criterion at § 419.66(b)(1), FDA granted a De Novo request classifying the SpaceOAR® System as a class II device under section 513(f)(2) of the Federal Food, Drug, and Cosmetic Act on April 1, 2015. We received the application for a new device category for transitional pass-through payment status for the SpaceOAR® System on June 1, 2017, which is within 3 years of the date of the initial FDA approval or clearance. We are inviting public comments on whether the SpaceOAR® System meets the newness criterion.

With respect to the eligibility criterion at § 419.66(b)(3), according to the applicant, the SpaceOAR® System is integral to the service provided, is used for one patient only, comes in contact with human skin, and is applied in or on a wound or other skin lesion. The applicant also claimed the SpaceOAR® System meets the device eligibility requirements of § 419.66(b)(4) because it is not an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and it is not a supply or material furnished incident to a service.

The criteria for establishing new device categories are specified at § 419.66(c). The first criterion, at § 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. We have not identified an existing pass-through payment category that describes the SpaceOAR® System. The applicant proposed a category descriptor for the SpaceOAR® System of “Absorbable perirectal spacer”. We are inviting public comments on this issue.

The second criterion for establishing a device category, at § 419.66(c)(2), provides that CMS determines that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment. With respect to this criterion, the applicant submitted several studies which generally discussed the benefits and techniques for using hydrogel spacers to limit radiation exposure to the rectum in prostate radiotherapy. The applicant also submitted several studies that specifically examined the effect that the SpaceOAR® System had on mitigating outcomes such as rectal dose, toxicity, and quality of life declines after image guided intensity modulated radiation therapy for prostate cancer. Articles by Hamstra et al.[22] and Mariados et al.[23] discussed the results of a single-blind phase III trial of image guided intensity modulated radiation therapy with 3 years of follow up. A total of 222 men were randomized 2:1 to the spacer or control group and received 79.2 Gy in 1.8-Gy fractions to the prostate with or without the seminal vesicles. The results of this study showed that after 3 years, compared with the control group, the participants who received the SpaceOAR® System injection had a statistically significant smaller volume of the rectum receiving a threshold radiation exposure, which was the primary effectiveness endpoint. The results also showed that in an extended follow up period, the control group experienced larger declines in bowel and urinary quality of life compared to participants who received the SpaceOAR® System treatment. Lastly, in an extended follow-up period, the probability of grade ≥1 rectal toxicity was decreased in the SpaceOAR® System arm (9 percent control group, 2 percent SpaceOAR® System group, p<.03) and no ≥ grade 2 rectal toxicity was observed in the SpaceOAR® System arm. However, the control arm had low rates of rectal toxicity in general. The results of this 3-year follow-up of these participants showed that the differences identified in the 15-month follow-up study were maintained or increased.[24]

The applicant also included a secondary analysis of the phase III trial data which showed that participants who received lower radiation doses to the penile bulb, associated with the SpaceOAR® System injection, reported similar erectile function compared with the control group based on patient-reported sexual quality of life.[25] A 2017 retrospective cohort study by Pinkawa et al.[26] evaluated quality of life changes up to 5 years after RT for prostate cancer with the SpaceOAR® System and showed that 5 years after radiation therapy, no patients who received the SpaceOAR® System reported moderate/big problems with bowel urgency, losing control of stools, or with bowel habits overall. However, there were no statistically significant differences in mean score changes for urinary, bowel, or sexual bother between the percentage of participants in the SpaceOAR® System and control groups at either 1.5 or 5 years post radiation therapy. Concerns regarding the phase III trial include inclusion of only low to moderate risk prostate cancer in the study population and failing to use a clinical outcome as a primary endpoint, although the purpose of the spacer is to reduce the side effects of undesired radiation to the rectum including bleeding, diarrhea, fistula, pain, and/or stricture. Notwithstanding acknowledgement that rectal complications may be reduced using biodegradable biomaterials placed to increase the distance between the rectum and the prostate, it is not clear that SpaceOAR® System is superior to existing alternative biodegradable biomaterials currently utilized for spacing in the context of prostate radiotherapy.

Based on the evidence submitted with the application, we have insufficient evidence that the SpaceOAR® System provides a substantial clinical improvement over other similar products. We are inviting public comments on whether the SpaceOAR® System meets the substantial clinical improvement criterion.Start Printed Page 37107

The third criterion for establishing a device category, at § 419.66(c)(3), requires us to determine that the cost of the device is not insignificant, as described in § 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant provided the following information in support of the cost significance requirements. The applicant stated that the SpaceOAR® System would be reported with CPT code 0438T (which was deleted and replaced with CPT code 55874, effective January 1, 2018). CPT code 0438T was assigned to APC 5374 (Level 4 Urology and Related Services). To meet the cost criterion for device pass-through payment, a device must pass all three tests of the cost criterion for at least one APC. For our calculations, we used APC 5374, which had a CY 2017 payment rate of $2,542.56 at the time the application was received. Beginning in CY 2017, we calculate the device offset amount at the HCPCS/CPT code level instead of the APC level (81 FR 79657). CPT code 0438T had device offset amount of $587.07 at the time the application was received. According to the applicant, the cost of the SpaceOAR® System was $2,850.

Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The estimated average reasonable cost of $2,850 for the SpaceOAR® System exceeds 112 percent of the applicable APC payment amount for the service related to the category of devices of $2,542.56 ($2850/$2,542.56 × 100 = 112 percent). Therefore, we believe the SpaceOAR® system meets the first cost significance test.

The second cost significance test, at § 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The estimated average reasonable cost of $2,850 for the SpaceOAR® System exceeds the cost of the device-related portion of the APC payment amount for the related service of $587.07 by 485 percent ($2,850/$587.07) × 100 = 485 percent). Therefore, we believe that the SpaceOAR® System meets the second cost significance test.

The third cost significance test, at § 419.66(d)(3), requires that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost of $2,850 for the SpaceOAR® System and the portion of the APC payment amount for the device of $587.07 exceeds the APC payment amount for the related service of $2,542.56 by 89 percent (($2,850-$587.07)/$2,542.56 × 100 = percent). Therefore, we believe that the SpaceOAR® System meets the third cost significance test.

We are inviting public comments on whether the SpaceOAR® System meets the device pass-through payment criteria discussed in this section, including the cost criteria.

B. Proposed Device-Intensive Procedures

1. Background

Under the OPPS, prior to CY 2017, device-intensive status for procedures was determined at the APC level for APCs with a device offset percentage greater than 40 percent (79 FR 66795). Beginning in CY 2017, CMS began determining device-intensive status at the HCPCS code level. In assigning device-intensive status to an APC prior to CY 2017, the device costs of all the procedures within the APC were calculated and the geometric mean device offset of all of the procedures had to exceed 40 percent. Almost all of the procedures assigned to device-intensive APCs utilized devices, and the device costs for the associated HCPCS codes exceeded the 40-percent threshold. The no cost/full credit and partial credit device policy (79 FR 66872 through 66873) applied to device-intensive APCs and is discussed in detail in section IV.B.4. of this proposed rule. A related device policy was the requirement that certain procedures assigned to device-intensive APCs require the reporting of a device code on the claim (80 FR 70422). For further background information on the device-intensive APC policy, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70421 through 70426).

a. HCPCS Code-Level Device-Intensive Determination

As stated earlier, prior to CY 2017, the device-intensive methodology assigned device-intensive status to all procedures requiring the implantation of a device that were assigned to an APC with a device offset greater than 40 percent and, beginning in CY 2015, that met the three criteria listed below. Historically, the device-intensive designation was at the APC level and applied to the applicable procedures within that given APC. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658), we changed our methodology to assign device-intensive status at an individual HCPCS code level rather than at the APC level. Under this policy, a procedure could be assigned device-intensive status regardless of its APC assignment, and device-intensive APCs were no longer employed under the OPPS or the ASC payment system.

We believe that a HCPCS code-level device offset is, in most cases, a better representation of a procedure's device cost than an APC-wide average device offset based on the average device offset of all of the procedures assigned to an APC. Unlike a device offset calculated at the APC level, which is a weighted average offset for all devices used in all of the procedures assigned to an APC, a HCPCS code-level device offset is calculated using only claims for a single HCPCS code. We believe that this methodological change results in a more accurate representation of the cost attributable to implantation of a high-cost device, which ensures consistent device-intensive designation of procedures with a significant device cost. Further, we believe a HCPCS code-level device offset removes inappropriate device-intensive status for procedures without a significant device cost that are granted such status because of APC assignment.

Under our existing policy, procedures that meet the criteria listed below are identified as device-intensive procedures and are subject to all the policies applicable to procedures assigned device-intensive status under our established methodology, including our policies on device edits and no cost/full credit and partial credit devices discussed in sections IV.B.3. and IV.B.4. of this proposed rule, respectively.

b. Use of the Three Criteria To Designate Device-Intensive Procedures

We clarified our established policy in the CY 2018 OPPS/ASC final rule with comment period (82 FR 52474), where we explained that device-intensive procedures require the implantation of a device and additionally are subject to the following criteria:

  • All procedures must involve implantable devices that would be reported if device insertion procedures were performed;Start Printed Page 37108
  • The required devices must be surgically inserted or implanted devices that remain in the patient's body after the conclusion of the procedure (at least temporarily); and
  • The device offset amount must be significant, which is defined as exceeding 40 percent of the procedure's mean cost.

We changed our policy to apply these three criteria to determine whether procedures qualify as device-intensive in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66926), where we stated that we would apply the no cost/full credit and partial credit device policy—which includes the three criteria listed above—to all device-intensive procedures beginning in CY 2015. We reiterated this position in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70424), where we explained that we were finalizing our proposal to continue using the three criteria established in the CY 2007 OPPS/ASC final rule with comment period for determining the APCs to which the CY 2016 device intensive policy will apply. Under the policies we adopted in CYs 2015, 2016, and 2017, all procedures that require the implantation of a device and meet the above criteria are assigned device-intensive status, regardless of their APC placement.

2. Proposed Changes to the Device-Intensive Procedure Policy for CY 2019

As part of CMS' effort to better capture costs for procedures with significant device costs, for CY 2019, we are proposing to modify our criteria for device-intensive procedures. We have heard from stakeholders that the current criteria exclude some procedures that stakeholders believe should qualify as device-intensive procedures. Specifically, we were persuaded by stakeholder arguments that procedures requiring expensive surgically inserted or implanted devices that are not capital equipment should nonetheless qualify as device-intensive procedures, regardless of whether the device remains in the patient's body after the conclusion of the procedure. We agree that a broader definition of device-intensive procedures is warranted, and are proposing two modifications to the current criteria. First, we are proposing to allow procedures that involve surgically inserted or implanted, single-use devices that meet the device offset percentage threshold to qualify as device-intensive procedures, regardless of whether the device remains in the patient's body after the conclusion of the procedure, because we no longer believe that whether a device remains in the patient's body should affect its designation as a device-intensive procedure because such devices could, nonetheless, comprise a large cost of the applicable procedure. Second, we are proposing to modify our criteria to lower the device offset percentage threshold from 40 percent to 30 percent, to allow a greater number of procedures to qualify as device-intensive. We believe allowing these additional procedures to qualify for device-intensive status will help ensure these procedures receive more appropriate payment in the ASC setting, which will help encourage the provision of these services in the ASC setting. In addition, this proposed change would help to ensure that more procedures containing relatively high-cost devices are subject to the device edits, which leads to more correctly coded claims and greater accuracy in our claims data. Specifically, for CY 2019 and subsequent years, we are proposing that device-intensive procedures would be subject to the following criteria:

  • All procedures must involve implantable devices assigned a CPT or HCPCS code;
  • The required devices (including single-use devices) must be surgically inserted or implanted; and
  • The device offset amount must be significant, which is defined as exceeding 30 percent of the procedure's mean cost.

In addition, to further align the device-intensive policy with the criteria used for device pass-through status, we are proposing to specify, for CY 2019 and subsequent years, that for purposes of satisfying the device-intensive criteria, a device-intensive procedure must involve a device that:

  • Has received FDA marketing authorization, has received an FDA investigational device exemption (IDE) and has been classified as a Category B device by the FDA in accordance with 42 CFR 405.203 through 405.207 and 405.211 through 405.215, or meets another appropriate FDA exemption from premarket review;
  • Is an integral part of the service furnished;
  • Is used for one patient only;
  • Comes in contact with human tissue;
  • Is surgically implanted or inserted (either permanently or temporarily); and
  • Is not any of the following:

(a) Equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciable assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or

(b) A material or supply furnished incident to a service (for example, a suture, customized surgical kit, scalpel, or clip, other than a radiological site marker).

As part of this proposal, we also are soliciting public comment on these proposed revised criteria, including whether there are any devices that are not capital equipment that commenters believe should be deemed part of device-intensive procedures that would not meet the proposed definition of single-use devices. In addition, we are soliciting public comments on the full list of proposed CY 2019 OPPS device-intensive procedures provided in Addendum P to this proposed rule, which is available at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​Hospital-Outpatient-Regulations-and-Notices.html. Specifically, we are inviting public comment on whether any procedures proposed to receive device-intensive status for CY 2019 should not receive device-intensive status according to the proposed criteria, or if we did not assign device-intensive status for CY 2019 to any procedures commenters believed should receive device-intensive status based on the proposed criteria.

In addition, for new HCPCS codes describing procedures requiring the implantation of medical devices that do not yet have associated claims data, in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658), we finalized a policy for CY 2017 to apply device-intensive status with a default device offset set at 41 percent for new HCPCS codes describing procedures requiring the implantation or insertion of a medical device that do not yet have associated claims data until claims data are available to establish the HCPCS code-level device offset for the procedures. This default device offset amount of 41 percent is not calculated from claims data; instead, it is applied as a default until claims data are available upon which to calculate an actual device offset for the new code. The purpose of applying the 41-percent default device offset to new codes that describe procedures that implant or insert medical devices is to ensure ASC access for new procedures until claims data become available.

In accordance with our proposal above to lower the device offset percentage threshold for procedures to qualify as device-intensive from greater than 40 percent to greater than 30 percent, for CY 2019 and subsequent years, we are proposing to modify this Start Printed Page 37109policy and apply a 31-percent default device offset to new HCPCS codes describing procedures requiring the implantation of a medical device that do not yet have associated claims data until claims data are available to establish the HCPCS code-level device offset for the procedures. In conjunction with the proposal to lower the default device offset from 41 percent to 31 percent, we are proposing to continue our current policy of, in certain rare instances (for example, in the case of a very expensive implantable device), temporarily assigning a higher offset percentage if warranted by additional information such as pricing data from a device manufacturer (81 FR 79658). Once claims data are available for a new procedure requiring the implantation of a medical device, device-intensive status will be applied to the code if the HCPCS code-level device offset is greater than 30 percent, according to our policy of determining device-intensive status by calculating the HCPCS code-level device offset.

In addition, we are clarifying that since the adoption of our current policy, the associated claims data used for purposes of determining whether or not to apply the default device offset are the associated claims data for either the new HCPCS code or any predecessor code, as described by CPT coding guidance, for the new HCPCS code. Additionally, for CY 2019 and subsequent years, in limited instances where a new HCPCS code does not have a predecessor code as defined by CPT, but describes a procedure that was previously described by an existing code, we are proposing to use clinical discretion to identify HCPCS codes that are clinically related or similar to the new HCPCS code but are not officially recognized as a predecessor code by CPT, and to use the claims data of the clinically related or similar code(s) for purposes of determining whether or not to apply the default device offset to the new HCPCS code. Clinically related and similar procedures for purposes of this policy are procedures that have little to no clinical differences and use the same devices as the new HCPCS code. In addition, clinically related and similar codes for purposes of this policy are codes that either currently or previously describe the procedure described by the new HCPCS code. Under this proposal, claims data from clinically related and similar codes will be included as associated claims data for a new code, and where an existing HCPCS code is found to be clinically related or similar to a new HCPCS code, we are proposing to apply the device offset percentage derived from the existing clinically related or similar HCPCS code's claims data to the new HCPCS code for determining the device offset percentage. We believe that claims data for HCPCS codes describing procedures that have very minor differences from the procedures described by new HCPCS codes would provide an accurate depiction of the cost relationship between the procedure and the device(s) that are used, and would be appropriate to use to set a new code's device offset percentage, in the same way that predecessor codes are used. For instance, for CY 2019, we are proposing to use the claims data from existing CPT code 36568 (Insertion of peripherally inserted central venous catheter (PICC), without subcutaneous port or pump; younger than 5 years of age), for which the description as of January 1, 2019 is changing to “(Insertion of peripherally inserted central venous catheter (PICC), without subcutaneous port or pump, without imaging guidance; younger than 5 years of age)”, to determine the appropriate device offset percentage for new CPT code 36X72 (Insertion of peripherally inserted central venous catheter (PICC), without subcutaneous port or pump, including all imaging guidance, image documentation, and all associated radiological supervision and interpretation required to perform the insertion; younger than 5 years of age). We believe that although CPT code 36568 is not identified as a predecessor code by CPT, the procedure described by new CPT code 36X72 was previously described by CPT code 36568 and, therefore, CPT code 36X72 is clinically related and similar to CPT code 36568, and the device offset percentage for CPT code 36568 can be accurately applied to both codes. If a new HCPCS code has multiple predecessor codes, the claims data for the predecessor code that has the highest individual HCPCS-level device offset percentage will be used to determine whether the new HCPCS code qualifies for device-intensive status. Similarly, in the event that a new HCPCS code does not have a predecessor code but has multiple clinically related or similar codes, the claims data for the clinically related or similar code that has the highest individual HCPCS level device offset percentage will be used to determine whether the new HCPCS code qualifies for device-intensive status.

Additional information for our consideration of an offset percentage higher than the proposed default of 31 percent for new HCPCS codes describing procedures requiring the implantation (or, in some cases, the insertion) of a medical device that do not yet have associated claims data, such as pricing data or invoices from a device manufacturer, should be directed to the Division of Outpatient Care, Mail Stop C4-01-26, Centers for Medicare and Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244-1850, or electronically at outpatientpps@cms.hhs.gov. Additional information can be submitted prior to issuance of an OPPS/ASC proposed rule or as a public comment in response to an issued OPPS/ASC proposed rule. Device offset percentages will be set in each year's final rule.

The full listing of proposed CY 2019 device-intensive procedures is included in Addendum P to this proposed rule (which is available via the internet on the CMS website).

3. Device Edit Policy

In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66795), we finalized a policy and implemented claims processing edits that require any of the device codes used in the previous device-to-procedure edits to be present on the claim whenever a procedure code assigned to any of the APCs listed in Table 5 of the CY 2015 OPPS/ASC final rule with comment period (the CY 2015 device-dependent APCs) is reported on the claim. In addition, in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70422), we modified our previously existing policy and applied the device coding requirements exclusively to procedures that require the implantation of a device that are assigned to a device-intensive APC. In the CY 2016 OPPS/ASC final rule with comment period, we also finalized our policy that the claims processing edits are such that any device code, when reported on a claim with a procedure assigned to a device-intensive APC (listed in Table 42 of the CY 2016 OPPS/ASC final rule with comment period (80 FR 70422)) will satisfy the edit.

In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658 through 79659), we changed our policy for CY 2017 and subsequent years to apply the CY 2016 device coding requirements to the newly defined device-intensive procedures. For CY 2017 and subsequent years, we also specified that any device code, when reported on a claim with a device-intensive procedure, will satisfy the edit. In addition, we created HCPCS code C1889 to recognize devices furnished during a device-intensive procedure that are not described by a specific Level II HCPCS Category C-code. Reporting HCPCS code C1889 Start Printed Page 37110with a device-intensive procedure will satisfy the edit requiring a device code to be reported on a claim with a device-intensive procedure.

We are not proposing any changes to this policy for CY 2019.

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

a. Background

To ensure equitable OPPS payment when a hospital receives a device without cost or with full credit, in CY 2007, we implemented a policy to reduce the payment for specified device-dependent APCs by the estimated portion of the APC payment attributable to device costs (that is, the device offset) when the hospital receives a specified device at no cost or with full credit (71 FR 68071 through 68077). Hospitals were instructed to report no cost/full credit device cases on the claim using the “FB” modifier on the line with the procedure code in which the no cost/full credit device is used. In cases in which the device is furnished without cost or with full credit, hospitals were instructed to report a token device charge of less than $1.01. In cases in which the device being inserted is an upgrade (either of the same type of device or to a different type of device) with a full credit for the device being replaced, hospitals were instructed to report as the device charge the difference between the hospital's usual charge for the device being implanted and the hospital's usual charge for the device for which it received full credit. In CY 2008, we expanded this payment adjustment policy to include cases in which hospitals receive partial credit of 50 percent or more of the cost of a specified device. Hospitals were instructed to append the “FC” modifier to the procedure code that reports the service provided to furnish the device when they receive a partial credit of 50 percent or more of the cost of the new device. We refer readers to the CY 2008 OPPS/ASC final rule with comment period for more background information on the “FB” and “FC” modifiers payment adjustment policies (72 FR 66743 through 66749).

In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 through 75007), beginning in CY 2014, we modified our policy of reducing OPPS payment for specified APCs when a hospital furnishes a specified device without cost or with a full or partial credit. For CY 2013 and prior years, our policy had been to reduce OPPS payment by 100 percent of the device offset amount when a hospital furnishes a specified device without cost or with a full credit and by 50 percent of the device offset amount when the hospital receives partial credit in the amount of 50 percent or more of the cost for the specified device. For CY 2014, we reduced OPPS payment, for the applicable APCs, by the full or partial credit a hospital receives for a replaced device. Specifically, under this modified policy, hospitals are required to report on the claim the amount of the credit in the amount portion for value code “FD” (Credit Received from the Manufacturer for a Replaced Medical Device) when the hospital receives a credit for a replaced device that is 50 percent or greater than the cost of the device. For CY 2014, we also limited the OPPS payment deduction for the applicable APCs to the total amount of the device offset when the “FD” value code appears on a claim. For CY 2015, we continued our existing policy of reducing OPPS payment for specified APCs when a hospital furnishes a specified device without cost or with a full or partial credit and to use the three criteria established in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68072 through 68077) for determining the APCs to which our CY 2015 policy will apply (79 FR 66872 through 66873). In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70424), we finalized our policy to no longer specify a list of devices to which the OPPS payment adjustment for no cost/full credit and partial credit devices would apply and instead apply this APC payment adjustment to all replaced devices furnished in conjunction with a procedure assigned to a device-intensive APC when the hospital receives a credit for a replaced specified device that is 50 percent or greater than the cost of the device.

b. Proposed Policy for No Cost/Full Credit and Partial Credit Devices

In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79659 through 79660), for CY 2017 and subsequent years, we finalized our policy to reduce OPPS payment for device-intensive procedures, by the full or partial credit a provider receives for a replaced device, when a hospital furnishes a specified device without cost or with a full or partial credit. Under our current policy, hospitals continue to be required to report on the claim the amount of the credit in the amount portion for value code “FD” when the hospital receives a credit for a replaced device that is 50 percent or greater than the cost of the device.

For CY 2019 and subsequent years, we are proposing to apply our no cost/full credit and partial credit device policies to all procedures that qualify as device-intensive under our proposed modified criteria discussed in section IV.B.2. of this proposed rule.

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

In CY 2016, we used our equitable adjustment authority under section 1833(t)(2)(E) of the Act and used the median cost (instead of the geometric mean cost per our standard methodology) to calculate the payment rate for the implantable miniature telescope procedure described by CPT code 0308T (Insertion of ocular telescope prosthesis including removal of crystalline lens or intraocular lens prosthesis), which is the only code assigned to APC 5494 (Level 4 Intraocular Procedures) (80 FR 70388). We note that, as stated in the CY 2017 OPPS/ASC proposed rule (81 FR 45656), we proposed to reassign the procedure described by CPT code 0308T to APC 5495 (Level 5 Intraocular Procedures) for CY 2017, but it would be the only procedure code assigned to APC 5495. The payment rates for a procedure described by CPT code 0308T (including the predecessor HCPCS code C9732) were $15,551 in CY 2014, $23,084 in CY 2015, and $17,551 in CY 2016. The procedure described by CPT code 0308T is a high-cost device-intensive surgical procedure that has a very low volume of claims (in part because most of the procedures described by CPT code 0308T are performed in ASCs), and we believe that the median cost is a more appropriate measure of the central tendency for purposes of calculating the cost and the payment rate for this procedure because the median cost is impacted to a lesser degree than the geometric mean cost by more extreme observations. We stated that, in future rulemaking, we would consider proposing a general policy for the payment rate calculation for very low-volume device-intensive APCs (80 FR 70389).

For CY 2017, we proposed and finalized a payment policy for low-volume device-intensive procedures that is similar to the policy applied to the procedure described by CPT code 0308T in CY 2016. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79660 through 79661), we established our current policy that the payment rate for any device-intensive procedure that is assigned to a clinical APC with fewer than 100 total claims for all procedures in the APC be calculated using the median cost instead Start Printed Page 37111of the geometric mean cost, for the reasons described above for the policy applied to the procedure described by CPT code 0308T in CY 2016. The CY 2018 final rule geometric mean cost for the procedure described by CPT code 0308T (based on 19 claims containing the device HCPCS C-code, in accordance with the device-intensive edit policy) was approximately $21,302, and the median cost was approximately $19,521. The final CY 2018 payment rate (calculated using the median cost) was approximately $17,560.

For CY 2019, we are proposing to continue with our current policy of establishing the payment rate for any device-intensive procedure that is assigned to a clinical APC with fewer than 100 total claims for all procedures in the APC based on calculations using the median cost instead of the geometric mean cost. For CY 2019, there are no procedures to which this policy would apply. Due to the proposed change in APC assignment for CPT code 0308T to APC 5493 (Level 3 Intraocular Procedures) from APC 5495 (Level 5 Intraocular Procedures), our payment policy for low-volume device-intensive procedures would not apply to CPT code 0308T for CY 2019 because there are now more than 100 total claims for the APC to which CPT code 0308T is assigned. For more information on the proposed APC assignment change for CPT code 0308T, we refer readers to section III.D.4. of this proposed rule.

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

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

1. Background

Section 1833(t)(6) of the Act provides for temporary additional payments or “transitional pass-through payments” for certain drugs and biologicals. Throughout this proposed rule, the term “biological” is used because this is the term that appears in section 1861(t) of the Act. A “biological” as used in this proposed rule includes (but is not necessarily limited to) a “biological product” or a “biologic” as defined in the Public Health Service Act. As enacted by the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113), this pass-through payment provision requires the Secretary to make additional payments to hospitals for: Current orphan drugs, as designated under section 526 of the Federal Food, Drug, and Cosmetic Act; current drugs and biologicals and brachytherapy sources used in cancer therapy; and current radiopharmaceutical drugs and biologicals. “Current” refers to those types of drugs or biologicals mentioned above that are hospital outpatient services under Medicare Part B for which transitional pass-through payment was made on the first date the hospital OPPS was implemented.

Transitional pass-through payments also are provided for certain “new” drugs and biologicals that were not being paid for as an HOPD service as of December 31, 1996 and whose cost is “not insignificant” in relation to the OPPS payments for the procedures or services associated with the new drug or biological. For pass-through payment purposes, radiopharmaceuticals are included as “drugs.” As required by statute, transitional pass-through payments for a drug or biological described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a period of at least 2 years, but not more than 3 years, after the payment was first made for the product as a hospital outpatient service under Medicare Part B. Proposed CY 2019 pass-through drugs and biologicals and their designated APCs are assigned status indicator “G” in Addenda A and B to this proposed rule (which are available via the internet on the CMS website). Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through payment amount, in the case of a drug or biological, is the amount by which the amount determined under section 1842(o) of the Act for the drug or biological exceeds the portion of the otherwise applicable Medicare OPD fee schedule that the Secretary determines is associated with the drug or biological. The methodology for determining the pass-through payment amount is set forth in regulations at 42 CFR 419.64. These regulations specify that the pass-through payment equals the amount determined under section 1842(o) of the Act minus the portion of the APC payment that CMS determines is associated with the drug or biological.

Section 1847A of the Act establishes the average sales price (ASP) methodology, which is used for payment for drugs and biologicals described in section 1842(o)(1)(C) of the Act furnished on or after January 1, 2005. The ASP methodology, as applied under the OPPS, uses several sources of data as a basis for payment, including the ASP, the wholesale acquisition cost (WAC), and the average wholesale price (AWP). In this proposed rule, the term “ASP methodology” and “ASP-based” are inclusive of all data sources and methodologies described therein. Additional information on the ASP methodology can be found on the CMS website at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Part-B-Drugs/​McrPartBDrugAvgSalesPrice/​index.html.

The pass-through application and review process for drugs and biologicals is described on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​passthrough_​payment.html.

2. Three-Year Transitional Pass-Through Payment Period for All Pass-Through Drugs, Biologicals, and Radiopharmaceuticals and Quarterly Expiration of Pass-Through Status

As required by statute, transitional pass-through payments for a drug or biological described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a period of at least 2 years, but not more than 3 years, after the payment was first made for the product as a hospital outpatient service under Medicare Part B. Our current policy is to accept pass-through applications on a quarterly basis and to begin pass-through payments for newly approved pass-through drugs and biologicals on a quarterly basis through the next available OPPS quarterly update after the approval of a product's pass-through status. However, prior to CY 2017, we expired pass-through status for drugs and biologicals on an annual basis through notice-and-comment rulemaking (74 FR 60480). In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79662), we finalized a policy change, beginning with pass-through drugs and biologicals newly approved in CY 2017 and subsequent calendar years, to allow for a quarterly expiration of pass-through payment status for drugs, biologicals, and radiopharmaceuticals to afford a pass-through payment period that is as close to a full 3 years as possible for all pass-through drugs, biologicals, and radiopharmaceuticals.

This change eliminated the variability of the pass-through payment eligibility period, which previously varied based on when a particular application was initially received. We adopted this change for pass-through approvals beginning on or after CY 2017, to allow, on a prospective basis, for the maximum pass-through payment period for each pass-through drug without exceeding the statutory limit of 3 years.Start Printed Page 37112

3. Proposed Drugs and Biologicals With Expiring Pass-Through Payment Status in CY 2018

We are proposing that the pass-through payment status of 23 drugs and biologicals would expire on December 31, 2018, as listed in Table 19 below. All of these drugs and biologicals will have received OPPS pass-through payment for at least 2 years and no more than 3 years by December 31, 2018. These drugs and biologicals were approved for pass-through payment status on or before January 1, 2017. In accordance with the policy finalized in CY 2017 and described earlier, pass-through payment status for drugs and biologicals newly approved in CY 2017 and subsequent years will expire on a quarterly basis, with a pass-through payment period as close to 3 years as possible. With the exception of those groups of drugs and biologicals that are always packaged when they do not have pass-through payment status (specifically, anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure (including diagnostic radiopharmaceuticals, contrast agents, and stress agents); and drugs and biologicals that function as supplies when used in a surgical procedure), our standard methodology for providing payment for drugs and biologicals with expiring pass-through payment status in an upcoming calendar year is to determine the product's estimated per day cost and compare it with the OPPS drug packaging threshold for that calendar year (which is proposed to be $125 for CY 2019), as discussed further in section V.B.2. of this proposed rule. We are proposing that if the estimated per day cost for the drug or biological is less than or equal to the applicable OPPS drug packaging threshold, we would package payment for the drug or biological into the payment for the associated procedure in the upcoming calendar year. If the estimated per day cost of the drug or biological is greater than the OPPS drug packaging threshold, we are proposing to provide separate payment at the applicable relative ASP-based payment amount (which is proposed at ASP+6 percent for CY 2019, as discussed further in section V.B.3. of this proposed rule).

Table 19—Proposed Drugs and Biologicals for Which PasS-Through Payment Status Expires December 31, 2018

CY 2018 HCPCS codeCY 2018 long descriptorCY 2018 status indicatorCY 2018 APCPass- through payment effective date
A9515Choline C 11, diagnostic, per study doseG946104/01/2016
C9460Injection, cangrelor, 1 mgG946001/01/2016
C9482Injection, sotalol hydrochloride, 1 mgG948210/01/2016
J1942Injection, aripiprazole lauroxil, 1 mgG947004/01/2016
J2182Injection, mepolizumab, 1 mgG947304/01/2016
J2786Injection, reslizumab, 1 mgG948110/01/2016
J2840Injection, sebelipase alfa, 1 mgG947807/01/2016
J7202Injection, Factor IX, albumin fusion protein (recombinant), Idelvion, 1 i.u.G917110/01/2016
J7207Injection, Factor VIII (antihemophilic factor, recombinant) PEGylated, 1 I.U.G184404/01/2016
J7209Injection, Factor VIII (antihemophilic factor, recombinant) (Nuwiq), per i.u.G184604/01/2016
J7322Hyaluronan or derivative, Hymovis, for intra-articular injection, 1 mgG947104/01/2016
J7342Instillation, ciprofloxacin otic suspension, 6 mgG947907/01/2016
J7503Tacrolimus, extended release, (envarsus xr), oral, 0.25 mgG184504/01/2016
J9022Injection, atezolizumab, 10 mgG948310/01/2016
J9145Injection, daratumumab, 10 mgG947607/01/2016
J9176Injection, elotuzumab, 1 mgG947707/01/2016
J9205Injection, irinotecan liposome, 1 mgG947404/01/2016
J9295Injection, necitumumab, 1 mgG947504/01/2016
J9325Injection, talimogene laherparepvec, 1 million plaque forming units (PFU)G947204/01/2016
J9352Injection, trabectedin, 0.1 mgG948007/01/2016
Q5101Injection, filgrastim-sndz, biosimilar, (zarxio), 1 microgramG182207/01/2015
Q9982Flutemetamol F18, diagnostic, per study dose, up to 5 millicuriesG945901/01/2016
Q9983Florbetaben F18, diagnostic, per study dose, up to 8.1 millicuriesG945801/01/2016

The proposed packaged or separately payable status of each of these drugs or biologicals is listed in Addendum B to this proposed rule (which is available via the internet on the CMS website).

4. Proposed Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing Pass-Through Payment Status in CY 2019

We are proposing to continue pass-through payment status in CY 2019 for 45 drugs and biologicals. These drugs and biologicals, which were approved for pass-through payment status between January 1, 2017, and July 1, 2018, are listed in Table 20 below. The APCs and HCPCS codes for these drugs and biologicals approved for pass-through payment status through December 31, 2018 are assigned status indicator “G” in Addenda A and B to this proposed rule (which are available via the internet on the CMS website). In addition, there are four drugs and biologicals that have already had 3 years of pass-through payment status but for which pass-through payment status is required to be extended for an additional 2 years under section 1833(t)(6)(G) of the Act, as added by section 1301(a)(1)(C) of the Consolidated Appropriations Act of 2018 (Pub. L. 115-141). Because of this requirement, these drugs and biologicals are also included in Table 20, which brings the total number of drugs and biologicals with proposed pass-through payment status in CY 2019 to 49. The requirements of section 1301 of Pub. L. 115-141 are described in further detail in section V.A.5. of this proposed rule.

Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through payment for pass-through drugs and biologicals (the pass-through payment amount) as the difference between the amount authorized under section 1842(o) of the Start Printed Page 37113Act and the portion of the otherwise applicable OPD fee schedule that the Secretary determines is associated with the drug or biological. For CY 2019, we are proposing to continue to pay for pass-through drugs and biologicals at ASP+6 percent, equivalent to the payment rate these drugs and biologicals would receive in the physician's office setting in CY 2019. We are proposing that a $0 pass-through payment amount would be paid for pass-through drugs and biologicals under the CY 2019 OPPS because the difference between the amount authorized under section 1842(o) of the Act, which is proposed at ASP+6 percent, and the portion of the otherwise applicable OPD fee schedule that the Secretary determines is appropriate, which is proposed at ASP+6 percent, is $0.

In the case of policy-packaged drugs (which include the following: Anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure (including contrast agents, diagnostic radiopharmaceuticals, and stress agents); and drugs and biologicals that function as supplies when used in a surgical procedure), we are proposing that their pass-through payment amount would be equal to ASP+6 percent for CY 2019 minus a payment offset for any predecessor drug products contributing to the pass-through payment as described in section V.A.6. of this proposed rule. We are making this proposal because, if not for the pass-through payment status of these policy-packaged products, payment for these products would be packaged into the associated procedure.

We are proposing to continue to update pass-through payment rates on a quarterly basis on the CMS website during CY 2019 if later quarter ASP submissions (or more recent WAC or AWP information, as applicable) indicate that adjustments to the payment rates for these pass-through payment drugs or biologicals are necessary. For a full description of this policy, we refer readers to the CY 2006 OPPS/ASC final rule with comment period (70 FR 68632 through 68635).

For CY 2019, consistent with our CY 2018 policy for diagnostic and therapeutic radiopharmaceuticals, we are proposing to provide payment for both diagnostic and therapeutic radiopharmaceuticals that are granted pass-through payment status based on the ASP methodology. As stated earlier, for purposes of pass-through payment, we consider radiopharmaceuticals to be drugs under the OPPS. Therefore, if a diagnostic or therapeutic radiopharmaceutical receives pass-through payment status during CY 2019, we are proposing to follow the standard ASP methodology to determine the pass-through payment rate that drugs receive under section 1842(o) of the Act, which is proposed at ASP+6 percent. If ASP data are not available for a radiopharmaceutical, we are proposing to provide pass-through payment at WAC+3 percent (consistent with our proposed policy in section V.B.2.b. of this proposed rule), the equivalent payment provided to pass-through payment drugs and biologicals without ASP information. If WAC information also is not available, we are proposing to provide payment for the pass-through radiopharmaceutical at 95 percent of its most recent AWP.

The 49 drugs and biologicals that we are proposing to continue to have pass-through payment status for CY 2019 or have been granted pass-through payment status as of July 2018 are shown in Table 20 below.

Table 20—Proposed Drugs and Biologicals With Pass-Through Payment Status in CY 2019

CY 2018 HCPCS codeCY 2019 HCPCS codeCY 2019 long descriptorProposed CY 2019 status indicatorProposed CY 2019 APCPass- through payment effective date
A9586A9586Florbetapir f18, diagnostic, per study dose, up to 10 millicuriesG908410/01/2018
A9587A9587Gallium ga-68, dotatate, diagnostic, 0.1 millicurieG905601/01/2017
A9588A9588Fluciclovine f-18, diagnostic, 1 millicurieG905201/01/2017
C9014C9014Injection, cerliponase alfa, 1 mgG901401/01/2018
C9015C9015Injection, c-1 esterase inhibitor (human), Haegarda, 10 unitsG901501/01/2018
C9016C9016Injection, triptorelin extended release, 3.75 mgG901601/01/2018
C9024C9024Injection, liposomal, 1 mg daunorubicin and 2.27 mg cytarabineG930201/01/2018
C9028C9028Injection, inotuzumab ozogamicin, 0.1 mgG902801/01/2018
C9029C9029Injection, guselkumab, 1 mgG902901/01/2018
C9030C9030Injection, copanlisib, 1 mgG903007/01/2018
C9031C9031Lutetium Lu 177, dotatate, therapeutic, 1 mCiG906707/01/2018
C9032C9032Injection, voretigene neparvovec-rzyl, 1 billion vector genomeG907007/01/2018
C9447C9447Injection, phenylephrine and ketorolac, 4 ml vialG908310/01/2018
C9462C9462Injection, delafloxacin, 1 mgG946204/01/2018
C9463C9463Injection, aprepitant, 1 mgG946304/01/2018
C9465C9465Hyaluronan or derivative, Durolane, for intra-articular injection, per doseG946504/01/2018
C9466C9466Injection, benralizumab, 1 mgG946604/01/2018
C9467C9467Injection, rituximab and hyaluronidase, 10 mgG946704/01/2018
C9468C9468Injection, factor ix (antihemophilic factor, recombinant), glycopegylated, Rebinyn, 1 i.u.G946804/01/2018
C9469C9469Injection, triamcinolone acetonide, preservative-free, extended-release, microsphere formulation, 1 mgG946904/01/2018
C9488C9488Injection, conivaptan hydrochloride, 1 mgG948804/01/2017
C9492C9492Injection, durvalumab, 10 mgG949210/01/2017
C9493C9493Injection, edaravone, 1 mgG949310/01/2017
J0565J0565Injection, bezlotoxumab, 10 mgG949007/01/2017
J0570J0570Buprenorphine implant, 74.2 mgG905801/01/2017
Start Printed Page 37114
J0606J0606Injection, etelcalcetide, 0.1 mgG903101/01/2018
J1428J1428Injection, eteplirsen, 10 mgG948404/01/2017
J1627J1627Injection, granisetron extended release, 0.1 mgG948604/01/2017
J2326J2326Injection, nusinersen, 0.1 mgG948907/01/2017
J2350J2350Injection, ocrelizumab, 1 mgG949410/01/2017
J3358J3358Ustekinumab, for Intravenous Injection, 1 mgG948704/01/2017
J7179J7179Injection, von willebrand factor (recombinant), (Vonvendi), 1 i.u. vwf:rcoG905901/01/2017
J7210J7210Injection, factor viii, (antihemophilic factor, recombinant), (afstyla), 1 i.uG904301/01/2017
J7328J7328Hyaluronan or derivative, gelsyn-3, for intra-articular injection, 0.1 mgG186201/01/2016
J7345J7345Aminolevulinic acid hcl for topical administration, 10% gel, 10 mgG930101/01/2018
J9023J9023Injection, avelumab, 10 mgG949110/01/2017
J9034J9034Injection, bendamustine hcl (Bendeka), 1 mgG186101/01/2017
J9203J9203Injection, gemtuzumab ozogamicin, 0.1 mgG949501/01/2018
J9285J9285Injection, olaratumab, 10 mgG948504/01/2017
Q2040Q2040Tisagenlecleucel, up to 250 million car-positive viable t cells, including leukapheresis and dose preparation procedures, per infusionG908101/01/2018
Q2041Q2041Axicabtagene Ciloleucel, up to 200 Million Autologous Anti-CD19 CAR T Cells, Including Leukapheresis And Dose Preparation Procedures, Per InfusionG903504/01/2018
Q4172Q4172PuraPly, and PuraPly Antimicrobial, any type, per square centimeterG908210/01/2018
Q5103Q5103Injection, infliximab-dyyb, biosimilar, (inflectra), 10 mgG184704/01/2018
Q5104Q5104Injection, infliximab-abda, biosimilar, (renflexis), 10 mgG903604/01/2018
Q9950Q9950Injection, sulfur hexafluoride lipid microsphere, per mlG908510/01/2018
Q9991Q9991Injection, buprenorphine extended-release (Sublocade), less than or equal to 100 mgG907307/01/2018
Q9992Q9992Injection, buprenorphine extended-release (Sublocade), greater than 100 mgG923907/01/2018
Q9993Q9993Injection, rolapitant, 0.5 mgG946404/01/2018
Q9995Q9995Injection, emicizumab-kxwh, 0.5 mgG925707/01/2018

5. Proposed Drugs, Biologicals, and Radiopharmaceuticals With Pass-Through Status as a Result of Section 1301 of the Consolidated Appropriations Act of 2018 (Pub. L. 115-141)

As mentioned earlier, section 1301(a)(1) of the Consolidated Appropriations Act of 2018 (Pub. L. 115-141) amended section 1833(t)(6) of the Act and added a new section 1833(t)(6)(G), which provides that for drugs or biologicals whose period of pass-through payment status ended on December 31, 2017 and for which payment was packaged into a covered hospital outpatient service furnished beginning January 1, 2018, such pass-through payment status shall be extended for a 2-year period beginning on October 1, 2018 through September 30, 2020. There are four products whose period of drugs and biologicals pass-through payment status ended on December 31, 2017. These products are listed in Table 21 below. For CY 2019, we are proposing to continue pass-through payment status for the drugs and biologicals listed in Table 21 (we note that these drugs and biologicals are also listed in Table 20 above). The APCs and HCPCS codes for these drugs and biologicals approved for pass-through payment status are assigned status indicator “G” in Addenda A and B to this proposed rule (which are available via the internet on the CMS website).

In addition, new section 1833(t)(6)(H) of the Act specifies that the payment amount for such drug or biological under this subsection that is furnished during the period beginning on October 1, 2018, and ending on March 31, 2019, shall be the greater of: (i) The payment amount that would otherwise apply under section 1833(t)(6)(D)(i) of the Act for such drug or biological during such period; or (ii) the payment amount that applied under section 1833(t)(6)(D)(i) of the Act for such drug or biological on December 31, 2017. We intend to address pass-through payment for these drugs and biologicals for the last quarter of CY 2018 through program instruction. For January 1, 2019 through March 31, 2019, we are proposing that pass-through payment for these four drugs and biologicals would be the greater of: (1) ASP+6 percent based on current ASP data; or (2) the payment rate for the drug or biological on December 31, 2017. We also are proposing for the period of April 1, 2019 through December 31, 2019 that the pass-through payment amount for these drugs and biologicals would be the amount that applies under section 1833(t)(6)(D)(i) of the Act.

We are proposing to continue to update pass-through payment rates for these four drugs and biologicals on a quarterly basis on the CMS website during CY 2019 if later quarter ASP submissions (or more recent WAC or AWP information, as applicable) indicate that adjustments to the payment rates for these pass-through drugs or biologicals are necessary. For a full description of this policy, we refer readers to the CY 2006 OPPS/ASC final rule with comment period (70 FR 68632 through 68635).Start Printed Page 37115

The four drugs and biologicals that we are proposing would have pass-through payment status for CY 2019 under section 1833(t)(6)(G) of the Act, as added by section 1301(a)(1)(C) of the Consolidated Appropriations Act of 2018, are shown in Table 21 below. Included as one of the four drugs and biologicals with pass-through payment status for CY 2019 is HCPCS code Q4172 (PuraPly, and PuraPly Antimicrobial, any type, per square centimeter). PuraPly is a skin substitute product that was approved for pass-through payment status on January 1, 2015, through the drug and biological pass-through payment process. Beginning on April 1, 2015, skin substitute products are evaluated for pass-through payment status through the device pass-through payment process. However, we stated in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66887) that skin substitutes that are approved for pass-through payment status as biologicals effective on or before January 1, 2015 would continue to be paid as pass-through biologicals for the duration of their pass-through payment period. Because PuraPly was approved for pass-through payment status through the drug and biological pass-through payment pathway, we are proposing to consider PuraPly to be a drug or biological as described by section 1833(t)(6)(G) of the Act, as added by section 1301(a)(1)(C) of the Consolidated Appropriations Act of 2018, and to be eligible for extended pass-through payment under our proposal for CY 2019.

Table 21—Proposed Drugs and Biologicals With Pass-Through Payment Status in CY 2019 in Accordance With Public Law 115-141

CY 2018 HCPCS codeCY 2019 HCPCS codeCY 2019 long descriptorProposed CY 2019 status indicatorProposed CY 2019 APCPass- through payment effective date
A9586A9586Florbetapir f18, diagnostic, per study dose, up to 10 millicuriesG908410/01/2018
C9447C9447Injection, phenylephrine and ketorolac, 4 ml vialG908310/01/2018
Q4172Q4172PuraPly, and PuraPly Antimicrobial, any type, per square centimeterG908210/01/2018
Q9950Q9950Injection, sulfur hexafluoride lipid microsphere, per mlG908510/01/2018

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

Under the regulations at 42 CFR 419.2(b), nonpass-through drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure are packaged in the OPPS. This category includes diagnostic radiopharmaceuticals, contrast agents, stress agents, and other diagnostic drugs. Also under 42 CFR 419.2(b), nonpass-through drugs and biologicals that function as supplies in a surgical procedure are packaged in the OPPS. This category includes skin substitutes and other surgical-supply drugs and biologicals. As described earlier, section 1833(t)(6)(D)(i) of the Act specifies that the transitional pass-through payment amount for pass-through drugs and biologicals is the difference between the amount paid under section 1842(o) of the Act and the otherwise applicable OPD fee schedule amount. Because a payment offset is necessary in order to provide an appropriate transitional pass-through payment, we deduct from the pass-through payment for policy-packaged drugs, biologicals, and radiopharmaceuticals an amount reflecting the portion of the APC payment associated with predecessor products in order to ensure no duplicate payment is made. This amount reflecting the portion of the APC payment associated with predecessor products is called the payment offset.

The payment offset policy applies to all policy packaged drugs, biologicals, and radiopharmaceuticals. For a full description of the payment offset policy as applied to diagnostic radiopharmaceuticals, contrast agents, stress agents, and skin substitutes, we refer readers to the discussion in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70430 through 70432). For CY 2019, as we did in CY 2018, we are proposing to continue to apply the same policy packaged offset policy to payment for pass-through diagnostic radiopharmaceuticals, pass-through contrast agents, pass-through stress agents, and pass-through skin substitutes. The proposed APCs to which a payment offset may be applicable for pass-through diagnostic radiopharmaceuticals, pass-through contrast agents, pass-through stress agents, and pass-through skin substitutes are identified in Table 22 below.

Table 22—Proposed APCS To Which a Policy-Packaged Drug or Radiopharmaceutical Offset May Be Applicable in CY 2019

Proposed CY 2019 APCProposed CY 2019 APC title
Diagnostic Radiopharmaceutical
5591Level 1 Nuclear Medicine and Related Services.
5592Level 2 Nuclear Medicine and Related Services.
5593Level 3 Nuclear Medicine and Related Services.
5594Level 4 Nuclear Medicine and Related Services.
Contrast Agent
5571Level 1 Imaging with Contrast.
5572Level 2 Imaging with Contrast.
5573Level 3 Imaging with Contrast.
Stress Agent
5722Level 2 Diagnostic Tests and Related Services.
5593Level 3 Nuclear Medicine and Related Services.
Skin Substitute
5054Level 4 Skin Procedures.
5055Level 5 Skin Procedures.
Start Printed Page 37116

We are proposing to continue to post annually on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​Annual-Policy-Files.html a file that contains the APC offset amounts that will be used for that year for purposes of both evaluating cost significance for candidate pass-through payment device categories and drugs and biologicals and establishing any appropriate APC offset amounts. Specifically, the file will continue to provide the amounts and percentages of APC payment associated with packaged implantable devices, policy-packaged drugs, and threshold packaged drugs and biologicals for every OPPS clinical APC.

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

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

a. Proposed Packaging Threshold

In accordance with section 1833(t)(16)(B) of the Act, the threshold for establishing separate APCs for payment of drugs and biologicals was set to $50 per administration during CYs 2005 and 2006. In CY 2007, we used the four quarter moving average Producer Price Index (PPI) levels for Pharmaceutical Preparations (Prescription) to trend the $50 threshold forward from the third quarter of CY 2005 (when the Pub. L. 108-173 mandated threshold became effective) to the third quarter of CY 2007. We then rounded the resulting dollar amount to the nearest $5 increment in order to determine the CY 2007 threshold amount of $55. Using the same methodology as that used in CY 2007 (which is discussed in more detail in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68085 through 68086)), we set the packaging threshold for establishing separate APCs for drugs and biologicals at $120 for CY 2018 (82 FR 59343).

Following the CY 2007 methodology, for this CY 2019 OPPS/ASC proposed rule, we used the most recently available four quarter moving average PPI levels to trend the $50 threshold forward from the third quarter of CY 2005 to the third quarter of CY 2019 and rounded the resulting dollar amount ($126.03) to the nearest $5 increment, which yielded a figure of $125. In performing this calculation, we used the most recent forecast of the quarterly index levels for the PPI for Pharmaceuticals for Human Use (Prescription) (Bureau of Labor Statistics series code WPUSI07003) from CMS' Office of the Actuary. Based on these calculations, we are proposing a packaging threshold for CY 2019 of $125.

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

To determine the proposed CY 2019 packaging status for all nonpass-through drugs and biologicals that are not policy packaged, we calculated, on a HCPCS code-specific basis, the per day cost of all drugs, biologicals, and therapeutic radiopharmaceuticals (collectively called “threshold-packaged” drugs) that had a HCPCS code in CY 2017 and were paid (via packaged or separate payment) under the OPPS. We used data from CY 2017 claims processed before January 1, 2018 for this calculation. However, we did not perform this calculation for those drugs and biologicals with multiple HCPCS codes that include different dosages, as described in section V.B.1.d. of this proposed rule, or for the following policy-packaged items that we are proposing to continue to package in CY 2019: Anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure; and drugs and biologicals that function as supplies when used in a surgical procedure.

In order to calculate the per day costs for drugs, biologicals, and therapeutic radiopharmaceuticals to determine their proposed packaging status in CY 2019, we used the methodology that was described in detail in the CY 2006 OPPS proposed rule (70 FR 42723 through 42724) and finalized in the CY 2006 OPPS final rule with comment period (70 FR 68636 through 68638). For each drug and biological HCPCS code, we used an estimated payment rate of ASP+6 percent (which is the payment rate we are proposing for separately payable drugs and biologicals for CY 2019, as discussed in more detail in section V.B.2.b. of this proposed rule) to calculate the CY 2019 proposed rule per day costs. We used the manufacturer submitted ASP data from the fourth quarter of CY 2017 (data that were used for payment purposes in the physician's office setting, effective April 1, 2018) to determine the proposed rule per day cost. As is our standard methodology, for CY 2019, we are proposing to use payment rates based on the ASP data from the first quarter of CY 2018 for budget neutrality estimates, packaging determinations, impact analyses, and completion of Addenda A and B to this proposed rule (which are available via the internet on the CMS website) because these are the most recent data available for use at the time of development of this proposed rule. These data also were the basis for drug payments in the physician's office setting, effective April 1, 2018. For items that did not have an ASP-based payment rate, such as some therapeutic radiopharmaceuticals, we used their mean unit cost derived from the CY 2017 hospital claims data to determine their per day cost.

We are proposing to package items with a per day cost less than or equal to $125, and identify items with a per day cost greater than $125 as separately payable unless they are policy-packaged. Consistent with our past practice, we cross-walked historical OPPS claims data from the CY 2017 HCPCS codes that were reported to the CY 2018 HCPCS codes that we display in Addendum B to this proposed rule (which is available via the internet on the CMS website) for proposed payment in CY 2019.

Our policy during previous cycles of the OPPS has been to use updated ASP and claims data to make final determinations of the packaging status of HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals for the OPPS/ASC final rule with comment period. We note that it is also our policy to make an annual packaging determination for a HCPCS code only when we develop the OPPS/ASC final rule with comment period for the update year. Only HCPCS codes that are identified as separately payable in the final rule with comment period are subject to quarterly updates. For our calculation of per day costs of HCPCS codes for drugs and biologicals in this CY 2019 OPPS/ASC proposed rule, we are proposing to use ASP data from the fourth quarter of CY 2017, which is the basis for calculating payment rates for drugs and biologicals in the physician's office setting using the ASP methodology, effective April 1, 2018, along with updated hospital claims data from CY 2017. We note that we also are proposing to use these data for budget neutrality estimates and impact analyses for this CY 2019 OPPS/ASC proposed rule.

Payment rates for HCPCS codes for separately payable drugs and biologicals included in Addenda A and B for the final rule with comment period will be based on ASP data from the third quarter of CY 2018. These data will be the basis for calculating payment rates for drugs and biologicals in the physician's office setting using the ASP Start Printed Page 37117methodology, effective October 1, 2018. These payment rates would then be updated in the January 2019 OPPS update, based on the most recent ASP data to be used for physician's office and OPPS payment as of January 1, 2019. For items that do not currently have an ASP-based payment rate, we are proposing to recalculate their mean unit cost from all of the CY 2017 claims data and updated cost report information available for the CY 2019 final rule with comment period to determine their final per day cost.

Consequently, the packaging status of some HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals in this proposed rule may be different from the same drug HCPCS code's packaging status determined based on the data used for the final rule with comment period. Under such circumstances, we are proposing to continue to follow the established policies initially adopted for the CY 2005 OPPS (69 FR 65780) in order to more equitably pay for those drugs whose cost fluctuates relative to the proposed CY 2019 OPPS drug packaging threshold and the drug's payment status (packaged or separately payable) in CY 2018. These established policies have not changed for many years and are the same as described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434). Specifically, for CY 2019, consistent with our historical practice, we are proposing to apply the following policies to these HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals whose relationship to the drug packaging threshold changes based on the updated drug packaging threshold and on the final updated data:

  • HCPCS codes for drugs and biologicals that were paid separately in CY 2018 and that were proposed for separate payment in CY 2019, and that then have per day costs equal to or less than the CY 2019 final rule drug packaging threshold, based on the updated ASPs and hospital claims data used for the CY 2019 final rule, would continue to receive separate payment in CY 2019.
  • HCPCS codes for drugs and biologicals that were packaged in CY 2018 and that were proposed for separate payment in CY 2019, and that then have per day costs equal to or less than the CY 2019 final rule drug packaging threshold, based on the updated ASPs and hospital claims data used for the CY 2019 final rule, would remain packaged in CY 2019.
  • HCPCS codes for drugs and biologicals for which we proposed packaged payment in CY 2019 but then have per day costs greater than the CY 2019 final rule drug packaging threshold, based on the updated ASPs and hospital claims data used for the CY 2019 final rule, would receive separate payment in CY 2019.

c. Policy Packaged Drugs, Biologicals, and Radiopharmaceuticals

As mentioned earlier in this section, in the OPPS, we package several categories of drugs, biologicals, and radiopharmaceuticals, regardless of the cost of the products. Because the products are packaged according to the policies in 42 CFR 419.2(b), we refer to these packaged drugs, biologicals, and radiopharmaceuticals as “policy-packaged” drugs, biologicals, and radiopharmaceuticals. These policies are either longstanding or based on longstanding principles and inherent to the OPPS and are as follows:

  • Anesthesia, certain drugs, biologicals, and other pharmaceuticals; medical and surgical supplies and equipment; surgical dressings; and devices used for external reduction of fractures and dislocations (§ 419.2(b)(4));
  • Intraoperative items and services (§ 419.2(b)(14));
  • Drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure (including but not limited to, diagnostic radiopharmaceuticals, contrast agents, and pharmacologic stress agents (§ 419.2(b)(15)); and
  • Drugs and biologicals that function as supplies when used in a surgical procedure (including, but not limited to, skin substitutes and similar products that aid wound healing and implantable biologicals) (§ 419.2(b)(16)).

The policy at § 419.2(b)(16) is broader than that at § 419.2(b)(14). As we stated in the CY 2015 OPPS/ASC final rule with comment period: “We consider all items related to the surgical outcome and provided during the hospital stay in which the surgery is performed, including postsurgical pain management drugs, to be part of the surgery for purposes of our drug and biological surgical supply packaging policy” (79 FR 66875). The category described by § 419.2(b)(15) is large and includes diagnostic radiopharmaceuticals, contrast agents, stress agents, and some other products. The category described by § 419.2(b)(16) includes skin substitutes and some other products. We believe it is important to reiterate that cost consideration is not a factor when determining whether an item is a surgical supply (79 FR 66875).

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

In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74938), we unconditionally packaged skin substitute products into their associated surgical procedures as part of a broader policy to package all drugs and biologicals that function as supplies when used in a surgical procedure. As part of the policy to finalize the packaging of skin substitutes, we also finalized a methodology that divides the skin substitutes into a high cost group and a low cost group, in order to ensure adequate resource homogeneity among APC assignments for the skin substitute application procedures (78 FR 74933).

Skin substitutes assigned to the high cost group are described by HCPCS codes 15271 through 15278. Skin substitutes assigned to the low cost group are described by HCPCS codes C5271 through C5278. Geometric mean costs for the various procedures are calculated using only claims for the skin substitutes that are assigned to each group. Specifically, claims billed with HCPCS code 15271, 15273, 15275, or 15277 are used to calculate the geometric mean costs for procedures assigned to the high cost group, and claims billed with HCPCS code C5271, C5273, C5275, or C5277 are used to calculate the geometric mean costs for procedures assigned to the low cost group (78 FR 74935).

Each of the HCPCS codes described above are assigned to one of the following three skin procedure APCs according to the geometric mean cost for the code: APC 5053 (Level 3 Skin Procedures) (HCPCS codes C5271, C5275, and C5277); APC 5054 (Level 4 Skin Procedures) (HCPCS codes C5273, 15271, 15275, and 15277); or APC 5055 (Level 5 Skin Procedures) (HCPCS code 15273). In CY 2018, the payment rate for APC 5053 (Level 3 Skin Procedures) was $488.20, the payment rate for APC 5054 (Level 4 Skin Procedures) was $1,568.43, and the payment rate for APC 5055 (Level 5 Skin Procedures) was $2,710.48. This information also is available in Addenda A and B of the CY 2018 OPPS/ASC final rule with comment period (which is available via the internet on the CMS website).

We have continued the high cost/low cost categories policy since CY 2014, and we are proposing to continue it for CY 2019. Under this current policy, skin substitutes in the high cost category are reported with the skin substitute application CPT codes, and skin substitutes in the low cost category are reported with the analogous skin substitute HCPCS C-codes. For a Start Printed Page 37118discussion of the CY 2014 and CY 2015 methodologies for assigning skin substitutes to either the high cost group or the low cost group, we refer readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR 74932 through 74935) and the CY 2015 OPPS/ASC final rule with comment period (79 FR 66882 through 66885).

For a discussion of the high cost/low cost methodology that was adopted in CY 2016 and has been in effect since then, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434 through 70435). For CY 2019, as with our policy since CY 2016, we are proposing to continue to determine the high cost/low cost status for each skin substitute product based on either a product's geometric mean unit cost (MUC) exceeding the geometric MUC threshold or the product's per day cost (PDC) (the total units of a skin substitute multiplied by the mean unit cost and divided by the total number of days) exceeding the PDC threshold. For CY 2019, as for CY 2018, we are proposing to assign each skin substitute that exceeds either the MUC threshold or the PDC threshold to the high cost group. In addition, as described in more detail later in this section, for CY 2019, as for CY 2018, we are proposing to assign any skin substitute with a MUC or a PDC that does not exceed either the MUC threshold or the PDC threshold to the low cost group. For CY 2019, we are proposing that any skin substitute product that was assigned to the high cost group in CY 2018 would be assigned to the high cost group for CY 2019, regardless of whether it exceeds or falls below the CY 2019 MUC or PDC threshold.

For this CY 2019 OPPS/ASC proposed rule, consistent with the methodology as established in the CY 2014 through CY 2017 final rules with comment period, we analyzed CY 2017 claims data to calculate the MUC threshold (a weighted average of all skin substitutes' MUCs) and the PDC threshold (a weighted average of all skin substitutes' PDCs). The proposed CY 2019 MUC threshold is $49 per cm2 (rounded to the nearest $1) and the proposed CY 2019 PDC threshold is $895 (rounded to the nearest $1).

For CY 2019, we are proposing to continue to assign skin substitutes with pass-through payment status to the high cost category. We are proposing to assign skin substitutes with pricing information but without claims data to calculate a geometric MUC or PDC to either the high cost or low cost category based on the product's ASP+6 percent payment rate as compared to the MUC threshold. If ASP is not available, we are proposing to use WAC+3 percent to assign a product to either the high cost or low cost category. Finally if neither ASP nor WAC is available, we would use 95 percent of AWP to assign a skin substitute to either the high cost or low cost category. We are proposing to use WAC+3 percent instead of WAC+6 percent to conform to our proposed policy described in section V.B.2.b. of this proposed rule to establish a payment rate of WAC+3 percent for separately payable drugs and biologicals that do not have ASP data available. New skin substitutes without pricing information would be assigned to the low cost category until pricing information is available to compare to the CY 2019 MUC threshold. For a discussion of our existing policy under which we assign skin substitutes without pricing information to the low cost category until pricing information is available, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70436).

Some skin substitute manufacturers have raised concerns about significant fluctuation in both the MUC threshold and the PDC threshold from year to year. The fluctuation in the thresholds may result in the reassignment of several skin substitutes from the high cost group to the low cost group which, under current payment rates, can be a difference of approximately $1,000 in the payment amount for the same procedure. In addition, these stakeholders were concerned that the inclusion of cost data from skin substitutes with pass-through payment status in the MUC and PDC calculations would artificially inflate the thresholds. Skin substitute stakeholders requested that CMS consider alternatives to the current methodology used to calculate the MUC and PDC thresholds and also requested that CMS consider whether it might be appropriate to establish a new cost group in between the low cost group and the high cost group to allow for assignment of moderately priced skin substitutes to a newly created middle group.

We share the goal of promoting payment stability for skin substitute products and their related procedures as price stability allows hospitals using such products to more easily anticipate future payments associated with these products. We have attempted to limit year to year shifts for skin substitute products between the high cost and low cost groups through multiple initiatives implemented since CY 2014, including: Establishing separate skin substitute application procedure codes for low-cost skin substitutes (78 FR 74935); using a skin substitute's MUC calculated from outpatient hospital claims data instead of an average of ASP+6 percent as the primary methodology to assign products to the high cost or low cost group (79 FR 66883); and establishing the PDC threshold as an alternate methodology to assign a skin substitute to the high cost group (80 FR 70434 through 70435).

To allow additional time to evaluate concerns and suggestions from stakeholders about the volatility of the MUC and PDC thresholds, in the CY 2018 OPPS/ASC proposed rule (82 FR 33627), for CY 2018, we proposed that a skin substitute that was assigned to the high cost group for CY 2017 would be assigned to the high cost group for CY 2018, even if it does not exceed the CY 2018 MUC or PDC thresholds. We finalized this policy in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59347). We stated in the CY 2018 OPPS/ASC proposed rule that the goal of our proposal to retain the same skin substitute cost group assignments in CY 2018 as in CY 2017 was to maintain similar levels of payment for skin substitute products for CY 2018 while we study our skin substitute payment methodology to determine whether refinement to the existing policies is consistent with our policy goal of providing payment stability for skin substitutes.

We stated in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59347) that we would continue to study issues related to the payment of skin substitutes and take these comments into consideration for future rulemaking. We received many responses to our requests for comments in the CY 2018 OPPS/ASC proposed rule about possible refinements to the existing payment methodology for skin substitutes that would be consistent with our policy goal of providing payment stability for these products. In addition, several stakeholders have made us aware of additional concerns and recommendations since the release of the CY 2018 OPPS/ASC final rule with comment period. We have identified four potential methodologies that have been raised to us that we encourage the public to review and provide comments on. We are especially interested in any specific feedback on policy concerns with any of the options presented as they relate to skin substitutes with differing per day or per episode costs and sizes and other factors that may differ among the dozens of skin substitutes currently on the market. We also are interested in any new ideas that are not represented below along with an analysis of how different skin Start Printed Page 37119substitute products would fare under such ideas. We intend to explore the full array of public comments on these ideas for the CY 2020 rulemaking, and we will consider the feedback received in response to this proposed rule in developing proposals for CY 2020.

  • Establish a lump-sum “episode-based” payment for a wound care episode. Under this option, a hospital would receive a lump sum payment for all wound care services involving procedures using skin substitutes. The payment would be made for a wound care “episode” (such as 12 weeks) for one wound. The lump sum payment could be the same for all skin substitutes or could vary based on the estimated number of applications for a given skin substitute during the wound care episode. Under this option, payment to the provider could be made at the start of treatment, or at a different time, and could be made once or split into multiple payments. Quality metrics, such as using the recommended number of treatments for a given skin substitute during a treatment episode, and establishing a plan of care for patients who do not experience 30-percent wound healing after 4 weeks, could be established to ensure the beneficiary receives appropriate care while limiting excessive additional applications of skin substitute products.
  • Eliminate the high cost/low cost categories for skin substitutes and only have one payment category and set of procedure codes for all skin substitute products. This option would reduce the financial incentives to use expensive skin substitutes and would provide incentives to use less costly skin substitute products that have been shown to have similar efficacy treating wounds as more expensive skin substitute products. A single payment category would likely have a payment rate that is between the current rates paid for high cost and low cost skin substitute procedures. Initially, a single payment category may lead to substantially higher payment for skin graft procedures performed with cheaper skin substitutes as compared to their costs. However, over time, payment for skin graft procedures using skin substitutes might reflect the lower cost of the procedures.
  • Allow for the payment of current add-on codes or create additional procedure codes to pay for skin graft services between 26 cm2 and 99 cm2 and substantially over 100 cm2. Under this option, payment for skin substitutes would be made more granularly based on the size of the skin substitute product being applied. This option also would reduce the risk that hospitals may not use enough of a skin substitute to save money when performing a procedure. However, such granularity in the use of skin substitutes could conflict with the goals of a prospective payment system, which is based on a system of averages. Specifically, it is expected that some skin graft procedures will be less than 25 cm2 or around 100 cm2 and will receive higher payments compared to the cost of the services. Conversely, services between 26 cm2 and 99 cm2 or those that are substantially larger than 100 cm2 will receive lower payments compared to the cost of the services, but the payments will average over many skin graft procedures to an appropriate payment rate for the provider.
  • Keep the high cost/low cost skin substitute categories, but change the threshold used to assign skin substitutes in the high-cost or low-cost group. Consider using other benchmarks that would establish more stable thresholds for the high cost and low cost groups. Ideas include, but are not limited to, fixing the MUC or PDC threshold at amount from a prior year, or setting global payment targets for high cost and low cost skin substitutes and establishing a threshold that meets the payment targets. Establishing different thresholds for the high cost and low cost groups could allow for the use of a mix of lower cost and higher cost skin substitute products that acknowledges that a large share of skin substitutes products used by Medicare providers are higher cost products but still providing substantial cost savings for skin graft procedures. Different thresholds may also reduce the number of skin substitute products that switch between the high cost and low cost groups in a given year to give more payment stability for skin substitute products.

To allow stakeholders time to analyze and comment on the potential ideas raised above, for CY 2019, we are proposing to continue our policy established in CY 2018 to assign skin substitutes to the low cost or high cost group. However, for CY 2020, we may revise our policy to reflect one of the potential new methodologies discussed above or a new methodology included in public comments in response to this proposed rule. Specifically, for CY 2019, we are proposing to assign a skin substitute with a MUC or a PDC that does not exceed either the MUC threshold or the PDC threshold to the low cost group, unless the product was assigned to the high cost group in CY 2018, in which case we will assign the product to the high cost group for CY 2019, regardless of whether it exceeds the CY 2019 MUC or PDC threshold. We also are proposing to assign to the high cost group any skin substitute product that exceeds the CY 2019 MUC or PDC threshold and assign to the low cost group any skin substitute product that does not exceed the CY 2019 MUC or PDC thresholds and were not assigned to the high cost group in CY 2018. We are proposing to continue to use payment methodologies including ASP+6 percent and 95 percent of AWP for skin substitute products that have pricing information but do not have claims data to determine if their costs exceed the CY 2019 MUC. In addition, we are proposing to use WAC+3 percent instead of WAC+6 percent for skin substitute products that do not have ASP pricing information or have claims data to determine if those products' costs exceed the CY 2019 MUC. We also are proposing to retain our established policy to assign new skin substitute products with pricing information to the low cost group.

Table 23 below displays the proposed CY 2019 high cost or low cost category assignment for each skin substitute product.

Table 23—Proposed Skin Substitute Assignments to High Cost and Low Cost Groups for CY 2019

CY 2019 HCPCS codeCY 2019 short descriptorCY 2018 high/low assignmentProposed CY 2019 high/low assignment
C9363Integra Meshed Bil Wound MatHighHigh.
Q4100Skin Substitute, NOSLowLow.
Q4101ApligrafHighHigh.
Q4102Oasis Wound MatrixLowLow.
Q4103Oasis Burn MatrixHighHigh.*
Q4104Integra BMWDHighHigh.
Start Printed Page 37120
Q4105Integra DRTHighHigh.*
Q4106DermagraftHighHigh.
Q4107GraftJacketHighHigh.
Q4108Integra MatrixHighHigh.
Q4110PrimatrixHighHigh.*
Q4111GammagraftLowLow.
Q4115AlloskinLowLow.
Q4116AllodermHighHigh.
Q4117HyalomatrixLowLow.
Q4121TheraskinHighHigh.*
Q4122DermacellHighHigh.
Q4123AlloskinHighHigh.
Q4124Oasis Tri-layer Wound MatrixLowLow.
Q4126Memoderm/derma/tranz/integupHighHigh.*
Q4127TalymedHighHigh.
Q4128Flexhd/Allopatchhd/MatrixhdHighHigh.
Q4131EpifixHighHigh.
Q4132Grafix core and grafixpl core, per square centimeterHighHigh.
Q4133Grafix prime and grafixpl prime, per square centimeterHighHigh.
Q4134hMatrixLowLow.
Q4135MediskinLowLow.
Q4136EzdermLowLow.
Q4137Amnioexcel or Biodexcel, 1cmHighHigh.
Q4138Biodfence DryFlex, 1cmHighHigh.
Q4140Biodfence 1cmHighHigh.
Q4141Alloskin ac, 1cmHighHigh.*
Q4143Repriza, 1cmHighHigh.
Q4146Tensix, 1CMHighHigh.
Q4147Architect ecm, 1cmHighHigh.*
Q4148Neox cord 1k, neox cord rt, or clarix cord 1k, per square centimeterHighHigh.
Q4150Allowrap DS or Dry 1 sq cmHighHigh.
Q4151AmnioBand, Guardian 1 sq cmHighHigh.
Q4152Dermapure 1 square cmHighHigh.
Q4153Dermavest 1 square cmHighHigh.
Q4154Biovance 1 square cmHighHigh.
Q4156Neox 100 or clarix 100, per square centimeterHighHigh.
Q4157Revitalon 1 square cmHighHigh.*
Q4158Kerecis omega3, per square centimeterHighHigh.*
Q4159Affinity 1 square cmHighHigh.
Q4160NuShield 1 square cmHighHigh.
Q4161Bio-Connekt per square cmHighHigh.
Q4163Woundex, bioskin, per square centimeterHighHigh.
Q4164Helicoll, per square cmHighHigh.*
Q4165Keramatrix, per square cmLowLow.
Q4166Cytal, per square cmLowLow.
Q4167Truskin, per square cmLowLow.
Q4169Artacent wound, per square cmHighHigh.*
Q4170Cygnus, per square cmLowLow.
Q4172 +PuraPly, PuraPly antimicHighHigh.
Q4173Palingen or palingen xplus, per sq cmHighHigh.
Q4175Miroderm, per square cmHighHigh.
Q4176Neopatch, per square centimeterLowLow.
Q4178Floweramniopatch, per square centimeterHighHigh.
Q4179Flowerderm, per square centimeterLowLow.
Q4180Revita, per square centimeterHighHigh.
Q4181Amnio wound, per square centimeterLowLow.
Q4182Transcyte, per square centimeterLowLow.
* These products do not exceed either the MUC or PDC threshold for CY 2019, but are assigned to the high cost group because they were assigned to the high cost group in CY 2018.
+ Pass-through payment status in CY 2019.
Start Printed Page 37121

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

In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490 through 60491), we finalized a policy to make a single packaging determination for a drug, rather than an individual HCPCS code, when a drug has multiple HCPCS codes describing different dosages because we believed that adopting the standard HCPCS code-specific packaging determinations for these codes could lead to inappropriate payment incentives for hospitals to report certain HCPCS codes instead of others. We continue to believe that making packaging determinations on a drug-specific basis eliminates payment incentives for hospitals to report certain HCPCS codes for drugs and allows hospitals flexibility in choosing to report all HCPCS codes for different dosages of the same drug or only the lowest dosage HCPCS code. Therefore, we are proposing to continue our policy to make packaging determinations on a drug-specific basis, rather than a HCPCS code-specific basis, for those HCPCS codes that describe the same drug or biological but different dosages in CY 2019.

For CY 2019, in order to propose a packaging determination that is consistent across all HCPCS codes that describe different dosages of the same drug or biological, we aggregated both our CY 2017 claims data and our pricing information at ASP+6 percent across all of the HCPCS codes that describe each distinct drug or biological in order to determine the mean units per day of the drug or biological in terms of the HCPCS code with the lowest dosage descriptor. The following drugs did not have pricing information available for the ASP methodology for this CY 2019 OPPS/ASC proposed rule, and as is our current policy for determining the packaging status of other drugs, we used the mean unit cost available from the CY 2017 claims data to make the proposed packaging determinations for these drugs: HCPCS code J1840 (Injection, kanamycin sulfate, up to 500 mg); HCPCS code J1850 (Injection, kanamycin sulfate, up to 75 mg); HCPCS code J3472 (Injection, hyaluronidase, ovine, preservative free, per 1000 usp units); HCPCS code J7100 (Infusion, dextran 40, 500 ml); and HCPCS code J7110 (Infusion, dextran 75, 500 ml).

For all other drugs and biologicals that have HCPCS codes describing different doses, we then multiplied the proposed weighted average ASP+6 percent per unit payment amount across all dosage levels of a specific drug or biological by the estimated units per day for all HCPCS codes that describe each drug or biological from our claims data to determine the estimated per day cost of each drug or biological at less than or equal to the proposed CY 2019 drug packaging threshold of $125 (so that all HCPCS codes for the same drug or biological would be packaged) or greater than the proposed CY 2019 drug packaging threshold of $125 (so that all HCPCS codes for the same drug or biological would be separately payable). The proposed packaging status of each drug and biological HCPCS code to which this methodology would apply in CY 2019 is displayed in Table 24 below.

Table 24—Proposed HCPCS Codes to Which the CY 2019 Drug-Specific Packaging Determination Methodology Would Apply

CY 2019 HCPCS codeCY 2019 long descriptorProposed CY 2019 status indicator (SI)
C9257Injection, bevacizumab, 0.25 mgK
J9035Injection, bevacizumab, 10 mgK
J1020Injection, methylprednisolone acetate, 20 mgN
J1030Injection, methylprednisolone acetate, 40 mgN
J1040Injection, methylprednisolone acetate, 80 mgN
J1460Injection, gamma globulin, intramuscular, 1 ccK
J1560Injection, gamma globulin, intramuscular over 10 ccK
J1642Injection, heparin sodium, (heparin lock flush), per 10 unitsN
J1644Injection, heparin sodium, per 1000 unitsN
J1840Injection, kanamycin sulfate, up to 500 mgN
J1850Injection, kanamycin sulfate, up to 75 mgN
J2788Injection, rho d immune globulin, human, minidose, 50 micrograms (250 i.u.)N
J2790Injection, rho d immune globulin, human, full dose, 300 micrograms (1500 i.u.)N
J2920Injection, methylprednisolone sodium succinate, up to 40 mgN
J2930Injection, methylprednisolone sodium succinate, up to 125 mgN
J3471Injection, hyaluronidase, ovine, preservative free, per 1 usp unit (up to 999 usp units)N
J3472Injection, hyaluronidase, ovine, preservative free, per 1000 usp unitsN
J7030Infusion, normal saline solution, 1000 ccN
J7040Infusion, normal saline solution, sterile (500 ml=1 unit)N
J7050Infusion, normal saline solution, 250 ccN
J7100Infusion, dextran 40, 500 mlN
J7110Infusion, dextran 75, 500 mlN
J7515Cyclosporine, oral, 25 mgN
J7502Cyclosporine, oral, 100 mgN
J8520Capecitabine, oral, 150 mgN
J8521Capecitabine, oral, 500 mgN
J9250Methotrexate sodium, 5 mgN
J9260Methotrexate sodium, 50 mgN
Start Printed Page 37122

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

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

Section 1833(t)(14) of the Act defines certain separately payable radiopharmaceuticals, drugs, and biologicals and mandates specific payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a “specified covered outpatient drug” (known as a SCOD) is defined as a covered outpatient drug, as defined in section 1927(k)(2) of the Act, for which a separate APC has been established and that either is a radiopharmaceutical agent or is a drug or biological for which payment was made on a pass-through basis on or before December 31, 2002.

Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and biologicals are designated as exceptions and are not included in the definition of SCODs. These exceptions are—

  • A drug or biological for which payment is first made on or after January 1, 2003, under the transitional pass-through payment provision in section 1833(t)(6) of the Act.
  • A drug or biological for which a temporary HCPCS code has not been assigned.
  • During CYs 2004 and 2005, an orphan drug (as designated by the Secretary).

Section 1833(t)(14)(A)(iii) of the Act requires that payment for SCODs in CY 2006 and subsequent years be equal to the average acquisition cost for the drug for that year as determined by the Secretary, subject to any adjustment for overhead costs and taking into account the hospital acquisition cost survey data collected by the Government Accountability Office (GAO) in CYs 2004 and 2005, and later periodic surveys conducted by the Secretary as set forth in the statute. If hospital acquisition cost data are not available, the law requires that payment be equal to payment rates established under the methodology described in section 1842(o), section 1847A, or section 1847B of the Act, as calculated and adjusted by the Secretary as necessary for purposes of paragraph (14). We refer to this alternative methodology as the “statutory default.” Most physician Part B drugs are paid at ASP+6 percent in accordance with section 1842(o) and section 1847A of the Act.

Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in OPPS payment rates for SCODs to take into account overhead and related expenses, such as pharmacy services and handling costs. Section 1833(t)(14)(E)(i) of the Act required MedPAC to study pharmacy overhead and related expenses and to make recommendations to the Secretary regarding whether, and if so how, a payment adjustment should be made to compensate hospitals for overhead and related expenses. Section 1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the weights for ambulatory procedure classifications for SCODs to take into account the findings of the MedPAC study.[27]

It has been our policy since CY 2006 to apply the same treatment to all separately payable drugs and biologicals, which include SCODs, and drugs and biologicals that are not SCODs. Therefore, we apply the payment methodology in section 1833(t)(14)(A)(iii) of the Act to SCODs, as required by statute, but we also apply it to separately payable drugs and biologicals that are not SCODs, which is a policy determination rather than a statutory requirement. In this CY 2019 OPPS/ASC proposed rule, we are proposing to apply section 1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and biologicals, including SCODs. Although we do not distinguish SCODs in this discussion, we note that we are required to apply section 1833(t)(14)(A)(iii)(II) of the Act to SCODs, but we also are applying this provision to other separately payable drugs and biologicals, consistent with our history of using the same payment methodology for all separately payable drugs and biologicals.

For a detailed discussion of our OPPS drug payment policies from CY 2006 to CY 2012, we refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68383 through 68385). In the CY 2013 OPPS/ASC final rule with comment period (77 FR 68386 through 68389), we first adopted the statutory default policy to pay for separately payable drugs and biologicals at ASP+6 percent based on section 1833(t)(14)(A)(iii)(II) of the Act. We continued this policy of paying for separately payable drugs and biologicals at the statutory default for CYs 2014 through 2018.

b. Proposed CY 2019 Payment Policy

For CY 2019, we are proposing to continue our payment policy that has been in effect since CY 2013 to pay for separately payable drugs and biologicals at ASP+6 percent in accordance with section 1833(t)(14)(A)(iii)(II) of the Act (the statutory default). We are proposing to continue to pay for separately payable nonpass-through drugs acquired with a 340B discount at a rate of ASP minus 22.5 percent. We refer readers to section V.A.7. of this proposed rule for more information about how the payment rate for drugs acquired with a 340B discount was established.

In the case of a drug or biological during an initial sales period in which data on the prices for sales for the drug or biological are not sufficiently available from the manufacturer, section 1847A(c)(4) of the Act permits the Secretary to make payments that are based on WAC. Under section 1833(t)(14)(A)(iii)(II), the amount of payment for a separately payable drug equals the average price for the drug for the year established under, among other authorities, section 1847A of the Act. As explained in greater detail in the CY 2019 PFS proposed rule, under section 1847A(c)(4), although payments may be based on WAC, unlike section 1847A(b) of the Act (which specifies that certain payments must be made with a 6-percent add-on), section 1847A(c)(4) of the Act does not require that a particular add-on amount be applied to partial quarter WAC-based pricing. Consistent with section 1847A(c)(4) of the Act, in the CY 2019 PFS proposed rule, we are proposing that, effective January 1, 2019, WAC-based payments for Part B drugs made under section 1847A(c)(4) of the Act would utilize a 3-percent add-on in place of the 6-percent add-on that is currently being used. For the OPPS, we also are proposing to utilize a 3-percent add-on instead of a 6-percent add-on for WAC-based drugs pursuant to our authority under section 1833(t)(14)(A)(iii)(II) of the Act, which provides, in part, that the amount of payment for a SCOD is the average price of the drug in the year established under section 1847A of the Act. We also apply this provision to non-SCOD separately payable drugs. Because we are proposing to establish the average price for a WAC-based drug under section 1847A of the Act as WAC+3 percent instead of WAC+6 percent, we believe it is appropriate to price separately payable WAC-based drugs at the same amount under the OPPS. We are proposing that, if finalized, our proposal to pay for drugs or biologicals at WAC+3 percent, rather than WAC+6 percent, would apply whenever WAC-based pricing is used for a drug or biological. For drugs and biologicals that would otherwise be subject to a payment Start Printed Page 37123reduction because they were acquired under the 340B Program, the 340B Program rate (in this case, WAC minus 22.5 percent) would continue to apply. We refer readers to the CY 2019 PFS proposed rule for additional background on this anticipated proposal.

We are proposing that payments for separately payable drugs and biologicals are included in the budget neutrality adjustments, under the requirements in section 1833(t)(9)(B) of the Act. We also are proposing that the budget neutral weight scalar is not applied in determining payments for these separately paid drugs and biologicals. We note that separately payable drug and biological payment rates listed in Addenda A and B to this proposed rule (available via the internet on the CMS website), which illustrate the proposed CY 2019 payment of ASP+6 percent for separately payable nonpass-through drugs and biologicals and ASP+6 percent for pass-through drugs and biologicals, reflect either ASP information that is the basis for calculating payment rates for drugs and biologicals in the physician's office setting effective April 1, 2018, or WAC, AWP, or mean unit cost from CY 2017 claims data and updated cost report information available for this proposed rule. In general, these published payment rates are not the same as the actual January 2019 payment rates. This is because payment rates for drugs and biologicals with ASP information for January 2019 will be determined through the standard quarterly process where ASP data submitted by manufacturers for the third quarter of CY 2018 (July 1, 2018 through September 30, 2018) will be used to set the payment rates that are released for the quarter beginning in January 2019 near the end of December 2018. In addition, payment rates for drugs and biologicals in Addenda A and B to this proposed rule for which there was no ASP information available for April 2018 are based on mean unit cost in the available CY 2017 claims data. If ASP information becomes available for payment for the quarter beginning in January 2019, we will price payment for these drugs and biologicals based on their newly available ASP information. Finally, there may be drugs and biologicals that have ASP information available for this proposed rule (reflecting April 2018 ASP data) that do not have ASP information available for the quarter beginning in January 2019. These drugs and biologicals would then be paid based on mean unit cost data derived from CY 2017 hospital claims. Therefore, the proposed payment rates listed in Addenda A and B to this proposed rule are not for January 2019 payment purposes and are only illustrative of the proposed CY 2019 OPPS payment methodology using the most recently available information at the time of issuance of this proposed rule.

c. Biosimilar Biological Products

For CY 2016 and CY 2017, we finalized a policy to pay for biosimilar biological products based on the payment allowance of the product as determined under section 1847A of the Act and to subject nonpass-through biosimilar biological products to our annual threshold-packaged policy (for CY 2016, 80 FR 70445 through 70446; and for CY 2017, 81 FR 79674). In the CY 2018 OPPS/ASC proposed rule (82 FR 33630), for CY 2018, we proposed to continue this same payment policy for biosimilar biological products.

In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59351), we noted that, with respect to comments we received regarding OPPS payment for biosimilar biological products, in the CY 2018 PFS final rule, CMS finalized a policy to implement separate HCPCS codes for biosimilar biological products. Therefore, consistent with our established OPPS drug, biological, and radiopharmaceutical payment policy, HCPCS coding for biosimilar biological products will be based on policy established under the CY 2018 PFS final rule.

In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59351), after consideration of the public comments we received, we finalized our proposed payment policy for biosimilar biological products, with the following technical correction: All biosimilar biological products will be eligible for pass-through payment and not just the first biosimilar biological product for a reference product. For CY 2019, we are proposing to continue the policy in place from CY 2018 to make all biosimilar biological products eligible for pass-through payment and not just the first biosimilar biological product for a reference product.

In addition, in CY 2018, we adopted a policy that biosimilars without pass-through payment status that were acquired under the 340B Program would be paid ASP (of the biosimilar) minus 22.5 percent of the reference product (82 FR 59367). We adopted this policy in the CY 2018 OPPS/ASC final rule with comment period because we believe that biosimilars without pass-through payment status acquired under the 340B Program should be treated in the same manner as other drugs and biologicals acquired through the 340B Program. As noted earlier, biosimilars with pass-through payment status are paid their own ASP+6 percent of the reference's product ASP. Biosimilars that do not have pass-through payment status and are not acquired under the 340B Program also are paid their own ASP+6 percent of the reference product's ASP.

Several stakeholders raised concerns to us that the current payment policy for biosimilars acquired under the 340B Program could unfairly lower the OPPS payment for biosimilars not on pass-through payment status because the payment reduction would be based on the reference product's ASP, which would generally be expected to be priced higher than the biosimilar, thus resulting in a more significant reduction in payment than if the 22.5 percent was calculated based on the biosimilar's ASP. We agree with stakeholders that the current payment policy could unfairly lower the price of biosimilars without pass-through payment status that are acquired under the 340B Program. In addition, we believe that these changes would better reflect the resources and production costs that biosimilar manufacturers incur, and we also believe this approach is more consistent with the payment methodology for 340B-acquired drugs and biologicals, for which the 22.5 percent reduction is calculated based on the drug or biological's ASP, rather than the ASP of another product. In addition, we believe that paying for biosimilars acquired under the 340B Program at ASP minus 22.5 percent of the biosimilar's ASP, rather than 22.5 percent of the reference product's ASP, will more closely approximate hospitals' acquisition costs for these products.

Accordingly, for CY 2019, we are proposing changes to our Medicare Part B drug payment methodology for biosimilars acquired under the 340B Program. Specifically, for CY 2019 and subsequent years, in accordance with section 1833(t)(14)(A)(iii)(II) of the Act, we are proposing to pay nonpass-through biosimilars acquired under the 340B Program at ASP minus 22.5 percent of the biosimilar's ASP instead of the biosimilar's ASP minus 22.5 percent of the reference product's ASP.

3. Proposed Payment Policy for Therapeutic Radiopharmaceuticals

For CY 2019, we are proposing to continue the payment policy for therapeutic radiopharmaceuticals that began in CY 2010. We pay for separately payable therapeutic radiopharmaceuticals under the ASP methodology adopted for separately Start Printed Page 37124payable drugs and biologicals. If ASP information is unavailable for a therapeutic radiopharmaceutical, we base therapeutic radiopharmaceutical payment on mean unit cost data derived from hospital claims. We believe that the rationale outlined in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60524 through 60525) for applying the principles of separately payable drug pricing to therapeutic radiopharmaceuticals continues to be appropriate for nonpass-through, separately payable therapeutic radiopharmaceuticals in CY 2019. Therefore, we are proposing for CY 2019 to pay all nonpass-through, separately payable therapeutic radiopharmaceuticals at ASP+6 percent, based on the statutory default described in section 1833(t)(14)(A)(iii)(II) of the Act. For a full discussion of ASP-based payment for therapeutic radiopharmaceuticals, we refer readers to the CY 2010 OPPS/ASC final rule with comment period (74 FR 60520 through 60521). We also are proposing to rely on CY 2017 mean unit cost data derived from hospital claims data for payment rates for therapeutic radiopharmaceuticals for which ASP data are unavailable and to update the payment rates for separately payable therapeutic radiopharmaceuticals according to our usual process for updating the payment rates for separately payable drugs and biologicals on a quarterly basis if updated ASP information is unavailable. For a complete history of the OPPS payment policy for therapeutic radiopharmaceuticals, we refer readers to the CY 2005 OPPS final rule with comment period (69 FR 65811), the CY 2006 OPPS final rule with comment period (70 FR 68655), and the CY 2010 OPPS/ASC final rule with comment period (74 FR 60524). The proposed CY 2019 payment rates for nonpass-through, separately payable therapeutic radiopharmaceuticals are included in Addenda A and B to this proposed rule (which are available via the internet on the CMS website).

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

Radioisotopes are widely used in modern medical imaging, particularly for cardiac imaging and predominantly for the Medicare population. Some of the Technetium-99 (Tc-99m), the radioisotope used in the majority of such diagnostic imaging services, is produced in legacy reactors outside of the United States using highly enriched uranium (HEU).

The United States would like to eliminate domestic reliance on these reactors, and is promoting the conversion of all medical radioisotope production to non-HEU sources. Alternative methods for producing Tc-99m without HEU are technologically and economically viable, and conversion to such production has begun. We expect that this change in the supply source for the radioisotope used for modern medical imaging will introduce new costs into the payment system that are not accounted for in the historical claims data.

Therefore, beginning in CY 2013, we finalized a policy to provide an additional payment of $10 for the marginal cost for radioisotopes produced by non-HEU sources (77 FR 68323). Under this policy, hospitals report HCPCS code Q9969 (Tc-99m from non-highly enriched uranium source, full cost recovery add-on per study dose) once per dose along with any diagnostic scan or scans furnished using Tc-99m as long as the Tc-99m doses used can be certified by the hospital to be at least 95 percent derived from non-HEU sources (77 FR 68321).

We stated in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68321) that our expectation is that this additional payment will be needed for the duration of the industry's conversion to alternative methods to producing Tc-99m without HEU. We also stated that we would reassess, and propose if necessary, on an annual basis whether such an adjustment continued to be necessary and whether any changes to the adjustment were warranted (77 FR 68316). A 2016 report from the National Academies of Sciences, Engineering, and Medicine anticipates the conversion of Tc-99m production from non-HEU sources will not be complete until the end of 2019.[28] In addition, one of the manufacturers of Tc-99m generators supports continuing the payment adjustment at the current level because approximately 30 percent of Tc-99m continues to be produced from non-HEU sources. We also received comments from a trade group of nuclear pharmacies and cyclotron operators supporting an increase in the payment adjustment by the rate of inflation to cover more of the cost of Tc-99m from non-HEU sources.

We appreciate the feedback from stakeholders. However, we continue to believe that the current adjustment is sufficient for the reasons we have outlined in this and prior rulemakings. The information from stakeholders and the National Academies of Sciences, Engineering, and Medicine indicates that the conversion of the production of Tc-99m from non-HEU sources may take more than 1 year after CY 2018. Therefore, for CY 2019 and subsequent years, we are proposing to continue to provide an additional $10 payment for radioisotopes produced by non-HEU sources. We intend to reassess this payment policy once conversion to non-HEU sources is closer to completion or has been completed.

5. Proposed Payment for Blood Clotting Factors

For CY 2018, we provided payment for blood clotting factors under the same methodology as other nonpass-through separately payable drugs and biologicals under the OPPS and continued paying an updated furnishing fee (82 FR 59353). That is, for CY 2018, we provided payment for blood clotting factors under the OPPS at ASP+6 percent, plus an additional payment for the furnishing fee. We note that when blood clotting factors are provided in physicians' offices under Medicare Part B and in other Medicare settings, a furnishing fee is also applied to the payment. The CY 2018 updated furnishing fee was $0.215 per unit.

For CY 2019, we are proposing to pay for blood clotting factors at ASP+6 percent, consistent with our proposed payment policy for other nonpass-through, separately payable drugs and biologicals, and to continue our policy for payment of the furnishing fee using an updated amount. Our policy to pay for a furnishing fee for blood clotting factors under the OPPS is consistent with the methodology applied in the physician's office and in the inpatient hospital setting. These methodologies were first articulated in the CY 2006 OPPS final rule with comment period (70 FR 68661) and later discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66765). The proposed furnishing fee update is based on the percentage increase in the Consumer Price Index (CPI) for medical care for the 12-month period ending with June of the previous year. Because the Bureau of Labor Statistics releases the applicable CPI data after the PFS and OPPS/ASC proposed rules are published, we are not able to include the actual updated furnishing fee in the proposed rules. Therefore, in accordance with our policy, as finalized in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66765), we are proposing to announce the actual figure for the percent change in the Start Printed Page 37125applicable CPI and the updated furnishing fee calculated based on that figure through applicable program instructions and posting on the CMS website at: http://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Part-B-Drugs/​McrPartBDrugAvgSalesPrice/​index.html.

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

For CY 2019, we are proposing to continue to use the same payment policy as in CY 2018 for nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS codes but without OPPS hospital claims data, which describes how we determine the payment rate for drugs, biologicals, or radiopharmaceuticals without an ASP. For a detailed discussion of the payment policy and methodology, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70442 through 70443). The proposed CY 2019 payment status of each of the nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS codes but without OPPS hospital claims data is listed in Addendum B to this proposed rule, which is available via the internet on the CMS website.

7. CY 2019 Proposed OPPS Payment Methodology for 340B Purchased Drugs

In the CY 2018 OPPS/ASC proposed rule (82 FR 33558 through 33724), we proposed changes to the Medicare Part B drug payment methodology for 340B hospitals. We proposed these changes to better, and more appropriately, reflect the resources and acquisition costs that these hospitals incur. We believed that such changes would allow Medicare beneficiaries (and the Medicare program) to pay less when hospitals participating in the 340B Program furnish drugs to Medicare beneficiaries that are purchased under the 340B Program. Subsequently, in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59369 through 59370), we finalized our proposal and adjusted the payment rate for separately payable drugs and biologicals (other than drugs on pass-through payment status and vaccines) acquired under the 340B Program from average sales price (ASP) plus 6 percent to ASP minus 22.5 percent. Our goal is to make Medicare payment for separately payable drugs more aligned with the resources expended by hospitals to acquire such drugs, while recognizing the intent of the 340B Program to allow covered entities, including eligible hospitals, to stretch scarce resources in ways that enable hospitals to continue providing access to care for Medicare beneficiaries and other patients. Critical access hospitals (CAHs) are not included in this 340B policy change because they are paid under section 1834(g) of the Act. We also excepted rural sole community hospitals (SCHs), children's hospitals, and PPS-exempt cancer hospitals from the 340B payment adjustment in CY 2018. In addition, as stated in the CY 2018 OPPS/ASC final rule with comment period, this policy change does not apply to drugs on pass-through payment status, which are required to be paid based on the ASP methodology or vaccines, which are excluded from the 340B Program.

Another topic that has been brought to our attention since we finalized the payment adjustment for 340B-acquired drugs in the CY 2018 OPPS/ASC final rule with comment period is whether drugs that do not have ASP pricing but instead receive WAC or AWP pricing are subject to the 340B payment adjustment. We did not receive public comments on this topic in response to the CY 2018 OPPS/ASC proposed rule. However, we have since heard from stakeholders that there has been some confusion about this issue. We want to clarify that the 340B payment adjustment does apply to drugs that are priced using either WAC or AWP, and it has been our policy to subject 340B-acquired drugs that use these pricing methodologies to the 340B payment adjustment since the policy was first adopted. The 340B payment adjustment for WAC-priced drugs is WAC minus 22.5 percent and AWP-priced drugs have a payment rate of 69.46 percent of AWP when the 340B payment adjustment is applied. The 69.46 percent of AWP is calculated by first reducing the original 95 percent of AWP price by 6 percent to generate a value that is similar to ASP or WAC with no percentage markup. Then we apply the 22.5 percent reduction to ASP/WAC-similar AWP value to obtain the 69.46 percent of AWP, which is similar to either ASP minus 22.5 percent or WAC minus 22.5 percent. The number of separately payable drugs receiving WAC or AWP pricing that are affected by the 340B payment adjustment is small—consisting of less than 10 percent of all separately payable Medicare Part B drugs in April 2018.

Data limitations inhibit our ability to identify which drugs were acquired under the 340B Program in the Medicare OPPS claims data. This lack of information within the claims data has limited researchers' and our ability to precisely analyze differences in acquisition cost of 340B and non-340B acquired drugs with Medicare claims data. Accordingly, in the CY 2018 OPPS/ASC proposed rule (82 FR 33633), we stated our intent to establish a modifier, to be effective January 1, 2018, for hospitals to report with separately payable drugs that were not acquired under the 340B Program. Because a significant portion of hospitals paid under the OPPS participate in the 340B Program, we stated our belief that it is appropriate to presume that a separately payable drug reported on an OPPS claim was purchased under the 340B Program, unless the hospital identifies that the drug was not purchased under the 340B Program. We stated in the proposed rule that we intended to provide further details about this modifier in the CY 2018 OPPS/ASC final rule with comment period and/or through subregulatory guidance, including guidance related to billing for dually eligible beneficiaries (that is, beneficiaries covered under Medicare and Medicaid) for whom covered entities do not receive a discount under the 340B Program. As discussed in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59369 through 59370), to effectuate the payment adjustment for 340B-acquired drugs, CMS implemented modifier “JG”, effective January 1, 2018. Hospitals paid under the OPPS, other than a type of hospital excluded from the OPPS (such as CAHs or those hospitals paid under the Maryland waiver), or excepted from the 340B drug payment policy for CY 2018, are required to report modifier “JG” on the same claim line as the drug HCPCS code to identify a 340B-acquired drug. For CY 2018, rural SCHs, children's hospitals and PPS-exempt cancer hospitals are excepted from the 340B payment adjustment. These hospitals are required to report informational modifier “TB” for 340B-acquired drugs, and continue to be paid ASP+6 percent.

We refer readers to the CY 2018 OPPS/ASC final rule with comment period (82 FR 59353 through 59370) for a full discussion and rationale for the CY 2018 policies and use of modifier “JG”.

For CY 2019, we are proposing to continue the 340B Program policies that were implemented in CY 2018 with the exception of the way we are calculating payment for 340B-acquired biosimilars. We are proposing, in accordance with section 1833(t)(14)(A)(iii)(II) of the Act, to pay for separately payable Medicare Part B drugs (assigned status indicator “K”), other than vaccines and drugs on pass-through payment status, that meet Start Printed Page 37126the definition of “covered outpatient drug” as defined in the section 1927(k) of the Act, that are acquired through the 340B Program at ASP minus 22.5 percent when billed by a hospital paid under the OPPS that is not excepted from the payment adjustment. Medicare Part B drugs or biologicals excluded from the 340B payment adjustment include vaccines (assigned status indicator “L” or “M”) and drugs with OPPS transitional pass-through payment status (assigned status indicator “G”). As discussed in section V.A.2.c. of this proposed rule, we are proposing to pay nonpass-through biosimilars acquired under the 340B Program at ASP minus 22.5 percent of the biosimilar's ASP. We also are proposing that Medicare would continue to pay for drugs or biologicals that were not purchased with a 340B discount at ASP+6 percent.

As stated earlier, to effectuate the payment adjustment for 340B-acquired drugs, CMS implemented modifier “JG”, effective January 1, 2018. For CY 2019, we are proposing that hospitals paid under the OPPS, other than a type of hospital excluded from the OPPS, or excepted from the 340B drug payment policy for CY 2018, continue to be required to report modifier “JG” on the same claim line as the drug HCPCS code to identify a 340B-acquired drug. We also are proposing for CY 2019 that rural sole community hospitals (SCHs), children's hospitals, and PPS-exempt cancer hospitals continue to be excepted from the 340B payment adjustment. We are proposing that these hospitals be required to report informational modifier “TB” for 340B-acquired drugs, and continue to be paid ASP+6 percent.

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

A. Background

Section 1833(t)(6)(E) of the Act limits the total projected amount of transitional pass-through payments for drugs, biologicals, radiopharmaceuticals, and categories of devices for a given year to an “applicable percentage,” currently not to exceed 2.0 percent of total program payments estimated to be made for all covered services under the OPPS furnished for that year. If we estimate before the beginning of the calendar year that the total amount of pass-through payments in that year would exceed the applicable percentage, section 1833(t)(6)(E)(iii) of the Act requires a uniform prospective reduction in the amount of each of the transitional pass-through payments made in that year to ensure that the limit is not exceeded. We estimate the pass-through spending to determine whether payments exceed the applicable percentage and the appropriate prorata reduction to the conversion factor for the projected level of pass-through spending in the following year to ensure that total estimated pass-through spending for the prospective payment year is budget neutral, as required by section 1833(t)(6)(E) of the Act.

For devices, developing a proposed estimate of pass-through spending in CY 2019 entails estimating spending for two groups of items. The first group of items consists of device categories that are currently eligible for pass-through payment and that will continue to be eligible for pass-through payment in CY 2019. The CY 2008 OPPS/ASC final rule with comment period (72 FR 66778) describes the methodology we have used in previous years to develop the pass-through spending estimate for known device categories continuing into the applicable update year. The second group of items consists of items that we know are newly eligible, or project may be newly eligible, for device pass-through payment in the remaining quarters of CY 2018 or beginning in CY 2019. The sum of the proposed CY 2019 pass-through spending estimates for these two groups of device categories equals the proposed total CY 2019 pass-through spending estimate for device categories with pass-through payment status. We base the device pass-through estimated payments for each device category on the amount of payment as established in section 1833(t)(6)(D)(ii) of the Act, and as outlined in previous rules, including the CY 2014 OPPS/ASC final rule with comment period (78 FR 75034 through 75036). We note that, beginning in CY 2010, the pass-through evaluation process and pass-through payment for implantable biologicals newly approved for pass-through payment beginning on or after January 1, 2010, that are surgically inserted or implanted (through a surgical incision or a natural orifice) use the device pass-through process and payment methodology (74 FR 60476). As has been our past practice (76 FR 74335), in this proposed rule, we are proposing to include an estimate of any implantable biologicals eligible for pass-through payment in our estimate of pass-through spending for devices. Similarly, we finalized a policy in CY 2015 that applications for pass-through payment for skin substitutes and similar products be evaluated using the medical device pass-through process and payment methodology (76 FR 66885 through 66888). Therefore, as we did beginning in CY 2015, for CY 2019, we also are proposing to include an estimate of any skin substitutes and similar products in our estimate of pass-through spending for devices.

For drugs and biologicals eligible for pass-through payment, section 1833(t)(6)(D)(i) of the Act establishes the pass-through payment amount as the amount by which the amount authorized under section 1842(o) of the Act (or, if the drug or biological is covered under a competitive acquisition contract under section 1847B of the Act, an amount determined by the Secretary equal to the average price for the drug or biological for all competitive acquisition areas and year established under such section as calculated and adjusted by the Secretary) exceeds the portion of the otherwise applicable fee schedule amount that the Secretary determines is associated with the drug or biological. Our estimate of drug and biological pass-through payment for CY 2019 for this group of items is $0, as discussed below, because we are proposing to pay for most nonpass-through separately payable drugs and biologicals under the CY 2019 OPPS at ASP+6 percent (with the exception of 340B-acquired separately payable drugs, for which we do not yet have sufficient data to estimate a share of total drug payments), and because we are proposing to pay for CY 2019 pass-through payment drugs and biologicals at ASP+6 percent, as we discuss in section V.A. of this proposed rule.

Furthermore, payment for certain drugs, specifically diagnostic radiopharmaceuticals and contrast agents without pass-through payment status, is packaged into payment for the associated procedures, and these products will not be separately paid. In addition, we policy-package all nonpass-through drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure and drugs and biologicals that function as supplies when used in a surgical procedure, as discussed in section II.A.3. of this proposed rule. We are proposing that all of these policy-packaged drugs and biologicals with pass-through payment status would be paid at ASP+6 percent, like other pass-through drugs and biologicals, for CY 2019. Therefore, our proposed estimate of pass-through payment for policy-packaged drugs and biologicals with pass-through payment status approved prior to CY 2019 is not $0, as discussed below. In section V.A.5. of this proposed rule, we discussed our policy to determine if the costs of certain Start Printed Page 37127policy-packaged drugs or biologicals are already packaged into the existing APC structure. If we determine that a policy-packaged drug or biological approved for pass-through payment resembles predecessor drugs or biologicals already included in the costs of the APCs that are associated with the drug receiving pass-through payment, we are proposing to offset the amount of pass-through payment for the policy-packaged drug or biological. For these drugs or biologicals, the APC offset amount is the portion of the APC payment for the specific procedure performed with the pass-through drug or biological, which we refer to as the policy-packaged drug APC offset amount. If we determine that an offset is appropriate for a specific policy-packaged drug or biological receiving pass-through payment, we are proposing to reduce our estimate of pass-through payments for these drugs or biologicals by this amount.

Similar to pass-through spending estimates for devices, the first group of drugs and biologicals requiring a pass-through payment estimate consists of those products that were recently made eligible for pass-through payment and that will continue to be eligible for pass-through payment in CY 2019. The second group contains drugs and biologicals that we know are newly eligible, or project will be newly eligible in the remaining quarters of CY 2018 or beginning in CY 2019. The sum of the CY 2019 pass-through spending estimates for these two groups of drugs and biologicals equals the total CY 2019 pass-through spending estimate for drugs and biologicals with pass-through payment status.

B. Proposed Estimate of Pass-Through Spending

We are proposing to set the applicable pass-through payment percentage limit at 2.0 percent of the total projected OPPS payments for CY 2019, consistent with section 1833(t)(6)(E)(ii)(II) of the Act and our OPPS policy from CY 2004 through CY 2018 (82 FR 59371 through 59373).

For the first group, consisting of device categories that are currently eligible for pass-through payment and will continue to be eligible for pass-through payment in CY 2019, there are no active categories for CY 2019. Because there are no active device categories for CY 2019, we are proposing an estimate for the first group of devices of $0. In estimating our proposed CY 2019 pass-through spending for device categories in the second group, we included: Device categories that we knew at the time of the development of the proposed rule will be newly eligible for pass-through payment in CY 2019; additional device categories that we estimated could be approved for pass-through status subsequent to the development of the proposed rule and before January 1, 2019; and contingent projections for new device categories established in the second through fourth quarters of CY 2019. We are proposing to use the general methodology described in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66778), while also taking into account recent OPPS experience in approving new pass-through device categories. For this proposed rule, the proposed estimate of CY 2019 pass-through spending for this second group of device categories is $10 million.

To estimate proposed CY 2019 pass-through spending for drugs and biologicals in the first group, specifically those drugs and biologicals recently made eligible for pass-through payment and continuing on pass-through payment status for CY 2019, we are proposing to use the most recent Medicare hospital outpatient claims data regarding their utilization, information provided in the respective pass-through applications, historical hospital claims data, pharmaceutical industry information, and clinical information regarding those drugs or biologicals to project the CY 2019 OPPS utilization of the products.

For the known drugs and biologicals (excluding policy-packaged diagnostic radiopharmaceuticals, contrast agents, drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure, and drugs and biologicals that function as supplies when used in a surgical procedure) that will be continuing on pass-through payment status in CY 2019, we estimated the pass-through payment amount as the difference between ASP+6 percent and the payment rate for nonpass-through drugs and biologicals that will be separately paid at ASP+6 percent, which is zero for this group of drugs. Because payment for policy-packaged drugs and biologicals is packaged if the product was not paid separately due to its pass-through payment status, we are proposing to include in the CY 2019 pass-through estimate the difference between payment for the policy-packaged drug or biological at ASP+6 percent (or WAC+6 percent, or 95 percent of AWP, if ASP or WAC information is not available) and the policy-packaged drug APC offset amount, if we determine that the policy-packaged drug or biological approved for pass-through payment resembles a predecessor drug or biological already included in the costs of the APCs that are associated with the drug receiving pass-through payment. For this proposed rule, using the proposed methodology described above, we calculated a CY 2019 proposed spending estimate for this first group of drugs and biologicals of approximately $61.5 million.

To estimate proposed CY 2019 pass-through spending for drugs and biologicals in the second group (that is, drugs and biologicals that we knew at the time of development of this proposed rule were newly eligible for pass-through payment in CY 2019, additional drugs and biologicals that we estimated could be approved for pass-through status subsequent to the development of this proposed rule and before January 1, 2018, and projections for new drugs and biologicals that could be initially eligible for pass-through payment in the second through fourth quarters of CY 2019), we are proposing to use utilization estimates from pass-through applicants, pharmaceutical industry data, clinical information, recent trends in the per unit ASPs of hospital outpatient drugs, and projected annual changes in service volume and intensity as our basis for making the CY 2019 pass-through payment estimate. We also are proposing to consider the most recent OPPS experience in approving new pass-through drugs and biologicals. Using our proposed methodology for estimating CY 2019 pass-through payments for this second group of drugs, we calculated a proposed spending estimate for this second group of drugs and biologicals of approximately $55.2 million.

In summary, in accordance with the methodology described earlier in this section, for this proposed rule, we estimate that total pass-through spending for the device categories and the drugs and biologicals that are continuing to receive pass-through payment in CY 2019 and those device categories, drugs, and biologicals that first become eligible for pass-through payment during CY 2019 is approximately $126.7 million (approximately $10 million for device categories and approximately $116.7 million for drugs and biologicals) which represents 0.18 percent of total projected OPPS payments for CY 2019 (approximately $70 billion). Therefore, we estimate that pass-through spending in CY 2019 would not amount to 2.0 percent of total projected OPPS CY 2019 program spending.Start Printed Page 37128

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

As we did in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59373), for CY 2019, we are proposing to continue with our current clinic and emergency department (ED) hospital outpatient visits payment policies. For a description of the current clinic and ED hospital outpatient visits policies, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70448). We also are proposing to continue our payment policy for critical care services for CY 2019. For a description of the current payment policy for critical care services, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70449), and for the history of the payment policy for critical care services, we refer readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR 75043). In this proposed rule, we are seeking public comments on any changes to these codes that we should consider for future rulemaking cycles. We continue to encourage those commenters to provide the data and analysis necessary to justify any suggested changes.

In section X.V. of this proposed rule, we are proposing a method to control unnecessary increases in the volume of covered outpatient department services under section 1833(t)(2)(F) of the Act by utilizing a Medicare Physician Fee Schedule (MPFS)-equivalent payment rate for the hospital outpatient clinic visit (HCPCS code G0463) when it is furnished by excepted off-campus provider-based departments. For a full discussion of this proposal as well as the comment solicitation on potential methods to control for unnecessary increases in the volume of covered outpatient department services, we refer readers to section X.B. of this proposed rule.

VIII. Proposed Payment for Partial Hospitalization Services

A. Background

A partial hospitalization program (PHP) is an intensive outpatient program of psychiatric services provided as an alternative to inpatient psychiatric care for individuals who have an acute mental illness, which includes, but is not limited to, conditions such as depression, schizophrenia, and substance use disorders. Section 1861(ff)(1) of the Act defines partial hospitalization services as the items and services described in paragraph (2) prescribed by a physician and provided under a program described in paragraph (3) under the supervision of a physician pursuant to an individualized, written plan of treatment established and periodically reviewed by a physician (in consultation with appropriate staff participating in such program), which sets forth the physician's diagnosis, the type, amount, frequency, and duration of the items and services provided under the plan, and the goals for treatment under the plan. Section 1861(ff)(2) of the Act describes the items and services included in partial hospitalization services. Section 1861(ff)(3)(A) of the Act specifies that a PHP is a program furnished by a hospital to its outpatients or by a community mental health center (CMHC), as a distinct and organized intensive ambulatory treatment service, offering less than 24-hour-daily care, in a location other than an individual's home or inpatient or residential setting. Section 1861(ff)(3)(B) of the Act defines a CMHC for purposes of this benefit.

Section 1833(t)(1)(B)(i) of the Act provides the Secretary with the authority to designate the outpatient department (OPD) services to be covered under the OPPS. The Medicare regulations that implement this provision specify, at 42 CFR 419.21, that payments under the OPPS will be made for partial hospitalization services furnished by CMHCs as well as Medicare Part B services furnished to hospital outpatients designated by the Secretary, which include partial hospitalization services (65 FR 18444 through 18445).

Section 1833(t)(2)(C) of the Act requires the Secretary, in part, to establish relative payment weights for covered OPD services (and any groups of such services described in section 1833(t)(2)(B) of the Act) based on median (or, at the election of the Secretary, mean) hospital costs using data on claims from 1996 and data from the most recent available cost reports. In pertinent part, section 1833(t)(2)(B) of the Act provides that the Secretary may establish groups of covered OPD services, within a classification system developed by the Secretary for covered OPD services, so that services classified within each group are comparable clinically and with respect to the use of resources. In accordance with these provisions, we have developed the PHP APCs. Because a day of care is the unit that defines the structure and scheduling of partial hospitalization services, we established a per diem payment methodology for the PHP APCs, effective for services furnished on or after July 1, 2000 (65 FR 18452 through 18455). Under this methodology, the median per diem costs were used to calculate the relative payment weights for the PHP APCs. Section 1833(t)(9)(A) of the Act requires the Secretary to review, not less often than annually, and revise the groups, the relative payment weights, and the wage and other adjustments described in section 1833(t)(2) of the Act 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.

We began efforts to strengthen the PHP benefit through extensive data analysis, along with policy and payment changes finalized in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66670 through 66676). In that final rule with comment period, we made two refinements to the methodology for computing the PHP median: The first remapped 10 revenue codes that are common among hospital-based PHP claims to the most appropriate cost centers; and the second refined our methodology for computing the PHP median per diem cost by computing a separate per diem cost for each day rather than for each bill.

In CY 2009, we implemented several regulatory, policy, and payment changes, including a two-tier payment approach for partial hospitalization services under which we paid one amount for days with 3 services under PHP APC 0172 (Level 1 Partial Hospitalization) and a higher amount for days with 4 or more services under PHP APC 0173 (Level 2 Partial Hospitalization) (73 FR 68688 through 68693). We also finalized our policy to deny payment for any PHP claims submitted for days when fewer than 3 units of therapeutic services are provided (73 FR 68694). Furthermore, for CY 2009, we revised the regulations at 42 CFR 410.43 to codify existing basic PHP patient eligibility criteria and to add a reference to current physician certification requirements under 42 CFR 424.24 to conform our regulations to our longstanding policy (73 FR 68694 through 68695). We also revised the partial hospitalization benefit to include several coding updates (73 FR 68695 through 68697).

For CY 2010, we retained the two-tier payment approach for partial hospitalization services and used only hospital-based PHP data in computing the PHP APC per diem costs, upon which PHP APC per diem payment rates are based. We used only hospital-based PHP data because we were concerned about further reducing both PHP APC per diem payment rates without knowing the impact of the policy and Start Printed Page 37129payment changes we made in CY 2009. Because of the 2-year lag between data collection and rulemaking, the changes we made in CY 2009 were reflected for the first time in the claims data that we used to determine payment rates for the CY 2011 rulemaking (74 FR 60556 through 60559).

In the CY 2011 OPPS/ASC final rule with comment period (75 FR 71994), we established four separate PHP APC per diem payment rates: two for CMHCs (APC 0172 (for Level 1 services) and APC 0173 (for Level 2 services)) and two for hospital-based PHPs (APC 0175 (for Level 1 services) and 0176 (for Level 2 services)), based on each provider type's own unique data. For CY 2011, we also instituted a 2-year transition period for CMHCs to the CMHC APC per diem payment rates based solely on CMHC data. Under the transition methodology, CMHC APCs Level 1 and Level 2 per diem costs were calculated by taking 50 percent of the difference between the CY 2010 final hospital-based PHP median costs and the CY 2011 final CMHC median costs and then adding that number to the CY 2011 final CMHC median costs. A 2-year transition under this methodology moved us in the direction of our goal, which is to pay appropriately for partial hospitalization services based on each provider type's data, while at the same time allowing providers time to adjust their business operations and protect access to care for Medicare beneficiaries. We also stated that we would review and analyze the data during the CY 2012 rulemaking cycle and, based on these analyses, we might further refine the payment mechanism. We refer readers to section X.B. of the CY 2011 OPPS/ASC final rule with comment period (75 FR 71991 through 71994) for a full discussion.

In addition, in accordance with section 1301(b) of the Health Care and Education Reconciliation Act of 2010 (HCERA 2010), we amended the description of a PHP in our regulations to specify that a PHP must be a distinct and organized intensive ambulatory treatment program offering less than 24-hour daily care other than in an individual's home or in an inpatient or residential setting. In accordance with section 1301(a) of HCERA 2010, we revised the definition of a CMHC in the regulations to conform to the revised definition now set forth under section 1861(ff)(3)(B) of the Act (75 FR 71990).

For CY 2012, as discussed in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74348 through 74352), we determined the relative payment weights for partial hospitalization services provided by CMHCs based on data derived solely from CMHCs and the relative payment weights for partial hospitalization services provided by hospital-based PHPs based exclusively on hospital data.

In the CY 2013 OPPS/ASC final rule with comment period, we finalized our proposal to base the relative payment weights that underpin the OPPS APCs, including the four PHP APCs (APCs 0172, 0173, 0175, and 0176), on geometric mean costs rather than on the median costs. We established these four PHP APC per diem payment rates based on geometric mean cost levels calculated using the most recent claims and cost data for each provider type. For a detailed discussion on this policy, we refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68406 through 68412).

In the CY 2014 OPPS/ASC proposed rule (78 FR 43621 through 43622), we solicited comments on possible future initiatives that may help to ensure the long-term stability of PHPs and further improve the accuracy of payment for PHP services, but proposed no changes. In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75050 through 75053), we summarized the comments received on those possible future initiatives. We also continued to apply our established policies to calculate the four PHP APC per diem payment rates based on geometric mean per diem costs using the most recent claims data for each provider type. For a detailed discussion on this policy, we refer readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR 75047 through 75050).

In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66902 through 66908), we continued to apply our established policies to calculate the four PHP APC per diem payment rates based on PHP APC geometric mean per diem costs, using the most recent claims and cost data for each provider type.

In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70455 through 70465), we described our extensive analysis of the claims and cost data and ratesetting methodology. We found aberrant data from some hospital-based PHP providers that were not captured using the existing OPPS ±3 standard deviation trims for extreme cost-to-charge ratios (CCRs) and excessive CMHC charges resulting in CMHC geometric mean costs per day that were approximately the same as or more than the daily payment for inpatient psychiatric facility services. Consequently, we implemented a trim to remove hospital-based PHP service days that use a CCR that was greater than 5 to calculate costs for at least one of their component services, and a trim on CMHCs with a geometric mean cost per day that is above or below 2 (±2) standard deviations from the mean. We stated in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70456) that, without using a trimming process, the data from these providers would inappropriately skew the geometric mean per diem cost for Level 2 CMHC services.

In addition, in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70459 through 70460), we corrected a cost inversion that occurred in the final rule data with respect to hospital-based PHP providers. We corrected the cost inversion with an equitable adjustment to the actual geometric mean per diem costs by increasing the Level 2 hospital-based PHP APC geometric mean per diem costs and decreasing the Level 1 hospital-based PHP APC geometric mean per diem costs by the same factor, to result in a percentage difference equal to the average percent difference between the hospital-based Level 1 PHP APC and the Level 2 PHP APC for partial hospitalization services from CY 2013 through CY 2015.

Finally, we renumbered the PHP APCs, which were previously 0172, 0173, 0175, and 0176, to 5851, 5852, 5861, and 5862, respectively. For a detailed discussion of the PHP ratesetting process, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70462 through 70467).

In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79687 through 79691), we continued to apply our established policies to calculate the PHP APC per diem payment rates based on geometric mean per diem costs using the most recent claims and cost data for each provider type. However, we finalized a policy to combine the Level 1 and Level 2 PHP APCs for CMHCs and to combine the Level 1 and Level 2 APCs for hospital-based PHPs because we believed this would best reflect actual geometric mean per diem costs going forward, provide more predictable per diem costs, particularly given the small number of CMHCs, and generate more appropriate payments for these services, for example by avoiding the cost inversions for hospital-based PHPs addressed in the CY 2016 and CY 2017 OPPS/ASC final rules with comment period (80 FR 70459 and 81 FR 79682). We implemented an 8-percent outlier cap for CMHCs to mitigate potential outlier billing vulnerabilities by limiting the impact of inflated CMHC charges on outlier payments. We will continue to monitor the trends in outlier payments Start Printed Page 37130and consider policy adjustments as necessary.

In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59373 through 59381), we continued to apply our established policies to calculate the PHP APC per diem payment rates based on geometric mean per diem costs using the most recent claims and cost data for each provider type. We continued to designate a portion of the estimated 1.0 percent hospital outpatient outlier threshold specifically for CMHCs, consistent with the percentage of projected payments to CMHCs under the OPPS, excluding outlier payments.

For a comprehensive description of PHP payment policy, including a detailed methodology for determining PHP per diem amounts, we refer readers to the CY 2016 and CY 2017 OPPS/ASC final rules with comment period (80 FR 70453 through 70455 and 81 FR 79678 through 79680).

B. Proposed PHP APC Update for CY 2019

1. Proposed PHP APC Geometric Mean per Diem Costs

For CY 2019, in this CY 2019 OPPS/ASC proposed rule, we are proposing to continue to apply our established policies to calculate the PHP APC per diem payment rates based on geometric mean per diem costs using the most recent claims and cost data for each provider type. Specifically, we are proposing to continue to use CMHC APC 5853 (Partial Hospitalization (3 or More Services Per Day)) and hospital-based PHP APC 5863 (Partial Hospitalization (3 or More Services Per Day)). We are proposing to continue to calculate the geometric mean per diem costs for CY 2019 for APC 5853 for CMHCs using only CY 2017 CMHC claims data and the most recent CMHC cost data, and the CY 2019 geometric mean per diem costs for APC 5863 for hospital-based PHPs using only CY 2017 hospital-based PHP claims data and the most recent hospital cost data.

2. Development of the Proposed PHP APC Geometric Mean per Diem Costs

In this CY 2019 OPPS/ASC proposed rule, we are proposing that for CY 2019 and subsequent years, to follow the PHP ratesetting methodology described in section VIII.B.2. of the CY 2016 OPPS/ASC final rule with comment period (80 FR 70462 through 70466) to determine the PHP APCs' proposed geometric mean per diem costs and to calculate the proposed payment rates for APCs 5853 and 5863, incorporating the modifications made in our CY 2017 OPPS/ASC final rule with comment period. As discussed in section VIII.B.1. of the CY 2017 OPPS/ASC final rule with comment period (81 FR 79680 through 79687), the proposed geometric mean per diem cost for hospital-based PHP APC 5863 would be based upon actual hospital-based PHP claims and costs for PHP service days providing 3 or more services. Similarly, the proposed geometric mean per diem cost for CMHC APC 5853 would be based upon actual CMHC claims and costs for CMHC service days providing 3 or more services.

The CMHC or hospital-based PHP APC per diem costs are the provider-type specific costs derived from the most recent claims and cost data. The CMHC or hospital-based PHP APC per diem payment rates are the national unadjusted payment rates calculated from the CMHC or hospital-based PHP APC per diem costs, after applying the OPPS budget neutrality adjustments described in section II.A.4. of this proposed rule.

We are proposing to apply our established methodologies in developing the CY 2019 proposed geometric mean per diem costs and payment rates, including the application of a ±2 standard deviation trim on costs per day for CMHCs and a CCR greater than 5 hospital service day trim for hospital-based PHP providers. These two trims were finalized in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70455 through 70462) for CY 2016 and subsequent years.

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

For this CY 2019 proposed rule, prior to calculating the proposed geometric mean per diem cost for CMHC APC 5853, we prepared the data by first applying trims and data exclusions, and assessing CCRs as described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70463 through 70465), so that ratesetting is not skewed by providers with extreme data. Before any trims or exclusions were applied, there were 44 CMHCs in the PHP claims data file. Under the ±2 standard deviation trim policy, we exclude any data from a CMHC for ratesetting purposes when the CMHC's geometric mean cost per day is more than ±2 standard deviations from the geometric mean cost per day for all CMHCs. By applying this trim for CY 2019 ratesetting, in this proposed rule, we excluded 4 CMHCs with geometric mean costs per day below the trim's lower limit of $53.33 and 4 CMHCs with geometric mean costs per day above the trim's upper limit of $274.43 from the proposed ratesetting for CY 2019. This standard deviation trim removed 8 providers from the ratesetting whose data would have skewed the calculation of the proposed geometric mean per diem costs for CMHCs.

In accordance with our PHP ratesetting methodology, we also remove service days with no wage index values because we use the wage index data to remove the effects of geographic variation in costs prior to APC geometric mean per diem cost calculation (80 FR 70465). For this CY 2019 proposed rule ratesetting, no CMHCs were missing wage index data for all of their service days. Therefore, we did not exclude any CMHCs due to the lack of wage index data.

In addition to our trims and data exclusions, before determining the proposed PHP APC geometric mean per diem costs, we also assess CCRs (80 FR 70463). Our longstanding PHP OPPS ratesetting methodology defaults any CMHC CCR greater than 1 to the statewide hospital ancillary CCR (80 FR 70457). For this CY 2019 proposed rule ratesetting, we identified 3 CMHCs that had CCRs greater than 1. These CMHCs' CCRs were 1.053, 1.009, and 1.025, and each was defaulted to its appropriate statewide hospital ancillary CCR for CY 2019 ratesetting purposes.

In summary, these data preparation steps adjusted the CCR for 3 CMHCs by defaulting to the appropriate statewide hospital ancillary CCR and excluded 8 CMHCs, resulting in the inclusion of a total of 36 CMHCs (44 total—8 excluded) in our CY 2019 proposed rule ratesetting modeling. The trims removed 645 CMHC claims out of a total of 13,152 CMHC claims, resulting in 12,507 CMHC claims used for ratesetting purposes. We believe that excluding providers with extremely low or high geometric mean costs per day or extremely low or high CCRs protects CMHCs from having that data inappropriately skew the calculation of the proposed CMHC APC geometric mean per diem cost. Moreover, we believe that these trims, exclusions, and adjustments help prevent inappropriate fluctuations in the proposed PHP APC geometric mean per diem payment rates.

After applying all of the above trims, exclusions, and adjustments, we followed the methodology described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70464 through 70465) and modified in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79687 through 79688, and 79691) to calculate the proposed PHP APC geometric mean per diem cost.29 Start Printed Page 37131The proposed CY 2019 geometric mean per diem cost for all CMHCs for providing 3 or more services per day (CMHC PHP APC 5853) is $119.51.

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

For this CY 2019 proposed rule, we followed a data preparation process for hospital-based PHP providers that is similar to that used for CMHCs by applying trims and data exclusions as described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70463 through 70465) so that our ratesetting is not skewed by providers with extreme data. Before any trimming or exclusions were applied, there were 394 hospital-based PHP providers in the CY 2017 PHP claims data used in this CY 2019 OPPS/ASC proposed rule.

For hospital-based PHP providers, we applied a trim on hospital service days when the CCR was greater than 5 at the cost center level. This trim removed hospital-based PHP service days that use a CCR greater than 5 to calculate costs for at least one of their component services. Unlike the ±2 standard deviation trim, which excluded CMHC providers that failed the trim, the CCR greater than 5 trim excluded any hospital-based PHP service day where any of the services provided on that day were associated with a CCR greater than 5 (in other words, the CCR greater than 5 trim is a (service) day-level trim in contrast to the CMHC ±2 standard deviation trim, which is a provider-level trim). Applying this CCR greater than 5 trim removed from our proposed rule ratesetting affected service days from 4 hospital-based PHP providers with CCRs ranging from 5.2024 to 13.1952. However, 100 percent of the service days for 3 of these affected hospital-based PHP providers had at least 1 service associated with a CCR greater than 5, so the trim removed these 3 providers entirely from our proposed rule ratesetting. The fourth provider remained in the ratesetting data, but with affected service days trimmed out. In addition, 16 hospital-based PHPs reported zero daily costs and, therefore, were removed for having no days with PHP payment; no hospital-based PHPs were removed for missing wage index data; and 1 hospital-based PHP was removed by the OPPS ±3 standard deviation trim on costs per day.

Therefore, we excluded 20 hospital-based PHP providers [(3 with CCRs greater than 5) + (16 with zero daily costs) + (1 after applying the ±3 standard deviation trim)], resulting in 374 (394 total—20 excluded) hospital-based PHP providers in the data used for proposed rule ratesetting. In addition, 5 hospital-based PHP providers were defaulted to using their overall hospital ancillary CCRs due to outlier cost center CCR values, which ranged from 0.0331 to 72.7320. After completing these data preparation steps, we calculated the proposed CY 2019 geometric mean per diem cost for hospital-based PHP APC 5863 for hospital-based PHP services by following the methodology described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70464 through 70465) and modified in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79687 and 79691) to calculate the geometric mean per diem cost.[30] The proposed CY 2019 geometric mean per diem cost for hospital-based PHP providers that provide 3 or more services per service day (hospital-based PHP APC 5863) is $220.52.

The proposed CY 2019 PHP APC geometric mean per diem costs for CMHC PHP APC 5853 are $119.51 and for hospital-based PHP APC 5863 are $220.52, as stated above and shown in Table 25. The proposed PHP APCs payment rates, which are derived from these proposed PHP APCs geometric mean per diem costs, are included in Addendum A to this proposed rule (which is available on the CMS website at: https://www.cms.gov/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​Hospital-Outpatient-Regulations-and-Notices.html).[31]

Table 25—CY 2019 Proposed PHP APC Geometric Mean Per Diem Costs

CY 2019 APCGroup titleProposed PHP APC geometric mean per diem costs
5853Partial Hospitalization (3 or more services per day) for CMHCs$119.51
5863Partial Hospitalization (3 or more services per day) for hospital-based PHPs220.52
Start Printed Page 37132

3. Proposed Changes to the Revenue-Code-to-Cost Center Crosswalk

In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79691), we received public comments identifying an issue that may have contributed to a decreased PHP median [sic] cost for hospital-based PHPs. The commenters noted that the lack of a required standardized PHP cost center on the Medicare cost report may be creating some cost-finding nuances in the cost report itself—that hospital-based PHP costs are combined with the costs of less expensive non-PHP outpatient mental health services during CCR calculation, thus “diluting” the CCR values. We agreed with the commenters that, if PHP costs are combined with other less intensive outpatient mental health treatment costs in the same cost center, the CCR values could be diluted, leading to lower geometric mean per diem costs being calculated. We stated in response that we would consider adding a cost center to the hospital cost report for PHP costs only.

On November 17, 2017, in Transmittal No. 12, we added a new cost center, “Partial Hospitalization Program,” on Line 93.99 of Worksheet A (Line 93.99 is also displayed on Worksheets B, Parts I and II, B-1; and C, Parts I and II) for hospital-based PHPs, for cost reporting periods ending on or after August 31, 2017 (https://www.cms.gov/​Regulations-and-Guidance/​Guidance/​Transmittals/​2017Downloads/​R12P240.pdf). On January 30, 2018, in Transmittal No. 13, we changed the implementation date from cost reporting periods ending on or after August 31, 2017, to cost reporting periods ending on or after September 30, 2017 (https://www.cms.gov/​Regulations-and-Guidance/​Guidance/​Transmittals/​2017Downloads/​R12P240.pdf). The instructions for this new PHP cost center (Line 93.99) indicate that effective for cost reporting periods ending on or after September 30, 2017, the provider is to enter the costs of providing hospital-based partial hospitalization program (PHP) services as defined in section 1861(ff) of the Act. Therefore, this cost center is to include all costs associated with providing PHP services, as defined in the statute (for example, occupational therapy, individual and group therapy, among others). It should not include costs for non-PHP outpatient mental health services, such as costs from what providers refer to as “Intensive Outpatient Programs.”

During current hospital-based-PHP ratesetting, costs are estimated by multiplying revenue code charges on the claim by the appropriate cost center-level CCR from the hospital cost report (80 FR 70465). Each PHP revenue code is associated with particular cost centers on the cost report (80 FR 70464). The appropriate cost center-level CCR is identified by using the OPPS Revenue-Code-to-Cost-Center crosswalk; the current crosswalk is discussed in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59228) and is available on the CMS website at: https://www.cms.gov/​apps/​ama/​license.asp?​file=​/​Medicare/​Medicare-Fee-for-Service-Payment/​HospitalOutpatientPPS/​Downloads/​CMS-1678-FC-2018-OPPS-FR-Revenue-Code-to-Cost-Center-Crosswalk.zip. The Revenue-Code-to-Cost-Center crosswalk identifies the primary, secondary (if any), and tertiary (if any) cost centers that are associated with each PHP revenue code, and which are the source for the CCRs used in PHP ratesetting. As discussed in the CY 2002 OPPS interim final rule (66 FR 59885), hospital-based PHP CCRs are assessed by applying the existing OPPS ±3 standard deviation trim to hospital-based PHP CCRs within each cost center and to the overall hospital ancillary CCR. In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70464), we stated that, if the primary cost center has no CCR or if it fails the ±3 standard deviation trim, the ratesetting system will look for a CCR in the secondary cost center. If the secondary cost center has no CCR or if it fails the ±3 standard deviation trim, the system will move to the tertiary cost center to look for a CCR. If the tertiary cost center has no CCR or if it fails the ±3 standard deviation trim, the ratesetting system will default to using the hospital's overall ancillary CCR. If the hospital's overall ancillary CCR fails the ±3 standard deviation trim, we exclude the hospital from ratesetting. While the hierarchy requires a primary cost center to be associated with a given revenue code, it is optional for there to be secondary or tertiary cost centers.

With the new PHP cost center, the crosswalk must be updated for hospital-based PHP cost estimation to correctly match hospital-based PHP revenue code charges with the PHP cost center CCR for future ratesetting. However, because the PHP-allowable revenue codes are also used for reporting non-PHP mental health services, we could not designate the PHP cost center as the primary cost center in the existing OPPS Revenue-Code-to-Cost-Center crosswalk. Therefore, we are proposing to create a separate PHP-only Revenue-Code-to-Cost-Center crosswalk for use in CY 2019 and subsequent years, which would provide a more accurate and operationally simpler method of matching hospital-based PHP charges to the correct hospital-based PHP cost center CCR without affecting non-PHP ratesetting. We note that, because CMHCs have their own cost reports, we use each CMHC's overall CCR in estimating costs for PHP ratesetting (80 FR 70463 and 70464). As such, CMHCs do not have a crosswalk and, therefore, this proposal to create a PHP-only crosswalk does not apply to CMHCs. Therefore, we are proposing that, for CY 2019 and subsequent years, hospital-based PHPs would follow a new Revenue-Code-to-Cost-Center crosswalk that only applies to hospital-based PHPs. We are proposing that this new PHP-only Revenue-Code-to-Cost-Center crosswalk would be comprised of the existing PHP allowable revenue codes and would map each of those PHP-allowable revenue codes to the new PHP cost center Line 93.99 as the primary cost center source for the CCR. We also are proposing to designate as the new secondary cost center the cost center that is currently listed as the existing primary cost center, and to designate as the new tertiary cost center the cost center that is listed as the existing secondary cost center.

In addition, we are proposing one exception to this policy for the mapping for revenue code 0904, which is the only PHP-allowable revenue code in the existing crosswalk with a tertiary cost center source for the CCR. We are proposing that for revenue code 0904, the secondary cost center for CY 2019 and subsequent years would be the existing secondary cost center 3550 (“Psychiatric/Psychological Services”). Similarly, we are proposing that for revenue code 0904, the tertiary cost center for CY 2019 and subsequent years would be existing tertiary cost center 9000 (“Clinic”). We considered expanding the Revenue-Code-to-Cost-Center crosswalk hierarchy to add a 4th or quaternary level to the hierarchy, before the system would default to the overall hospital ancillary CCR. However, we evaluated the usage of the current hierarchy for revenue code 0904 for the CY 2017, CY 2018, and CY 2019 PHP ratesetting modelling, and found that expanding the hierarchy would not be necessary. Our analysis showed that the existing primary cost center 3580 (“Recreational Therapy”) for revenue code 0904 had not been used during any of the past 3 years.

Our current and proposed PHP-only Revenue-Code-to-Cost-Center Crosswalks are shown in Table 26 below.Start Printed Page 37133

Table 26—Current and Proposed PHP-Only Revenue—Code-To-Cost-Center Crosswalks

PHP allowable revenue codeCurrent hierarchy (applicable in CY 2018)Proposed new PHP-only hierarchy (applicable in CY 2019 and beyond)
Primary cost center source for CCRSecondary cost center source for CCRTertiary cost center source for CCRPrimary cost center source for CCRSecondary cost center source for CCRTertiary cost center source for CCR
04306700 Occupational Therapy9399 (PHP)6700 Occupational Therapy
04316700 Occupational Therapy9399 (PHP)6700 Occupational Therapy
04326700 Occupational Therapy9399 (PHP)6700 Occupational Therapy
04336700 Occupational Therapy9399 (PHP)6700 Occupational Therapy
04346700 Occupational Therapy9399 (PHP)6700 Occupational Therapy
0435RESERVED.
0436RESERVED.
0437RESERVED.
0438RESERVED.
04396700 Occupational Therapy9399 (PHP)6700 Occupational Therapy
09003550 (Psychiatric/Psychological Services9000 (Clinic)9399 (PHP)3550 (Psychiatric/Psychological Services)9000 (Clinic).
09043580 (Recreational Therapy)3550 (Psychiatric/Psychological Services9000 (Clinic)9399 (PHP)3550 (Psychiatric/Psychological Services)9000 (Clinic).
09143550 (Psychiatric/Psychological Services9000 (Clinic)9399 (PHP)3550 (Psychiatric/Psychological Services)9000 (Clinic).
09153550 (Psychiatric/Psychological Services9000 (Clinic)9399 (PHP)3550 (Psychiatric/Psychological Services)9000 (Clinic).
09163550 (Psychiatric/Psychological Services9000 (Clinic)9399 (PHP)3550 (Psychiatric/Psychological Services)9000 (Clinic).
09183550 (Psychiatric/Psychological Services9000 (Clinic)9399 (PHP)3550 (Psychiatric/Psychological Services)9000 (Clinic).
09429000 (Clinic)9399 (PHP)9000 (Clinic)

4. PHP Service Utilization Updates

While we are not proposing any changes to this policy, we will continue to monitor the provision of days with only 3 services. In the CY 2016 OPPS/ASC final rule with comment period (81 FR 79684 through 79685), we expressed concern over the low frequency of individual therapy provided to beneficiaries. The CY 2017 claims data used for this CY 2019 proposed rule revealed some changes in the provision of individual therapy compared to CY 2016 and CY 2015 claims data as shown in the table below.

Table 27—Provision of Individual Therapy, by Provider Type and Claims Year

Percent of days with 3 services onlyPercent of days with 4 or more services
CMHCs:
CY 2015 Claims7.94.4
CY 2016 Claims8.55.0
CY 2017 Claims4.84.2
Hospital-based PHPs:
CY 2015 Claims4.06.2
CY 2016 Claims4.75.8
CY 2017 Claims4.112.2

As shown in Table 27, CMHCs have decreased the provision of individual therapy, based on the CY 2017 claims used for this proposed rule. In contrast, the CY 2017 claims data show that hospital-based PHPs have greatly increased the provision of individual therapy.

In the CY 2018 OPPS/ASC proposed rule and final rule with comment period (82 FR 33640 and 59378), we stated that we are aware that our single-tier Start Printed Page 37134payment policy may influence a change in service provision because providers are able to obtain payment that is heavily weighted to the cost of providing 4 or more services when they provide only 3 services. We indicated that we are interested in ensuring that providers furnish an appropriate number of services to beneficiaries enrolled in PHPs. Therefore, with the CY 2017 implementation of APC 5853 and APC 5863 for providing 3 or more PHP services per day, we are continuing to monitor utilization of days with only 3 PHP services. Table 28 below shows the utilization findings based on the most recent claims data.

Table 28—Percentage of PHP Days by Service Unit Frequency

CY 2015 (%)CY 2016 * (%)CY 2017 * (%)% Change ** (%)
CMHCs:
Percent of Days with 3 services4.74.84.80.0
Percent of Days with 4 services62.970.376.38.5
Percent of Days with 5 or more services32.424.918.9−24.1
Hospital-based PHPs:
Percent of Days with 3 services12.410.959.3−14.7
Percent of Days with 4 services69.864.956.1−13.6
Percent of Days with 5 or more services17.824.134.643.6
* May not sum to 100 percent by provider type due to rounding.
** (CY 2017-CY 2016)/CY 2016.

As shown in Table 28, the CY 2017 claims data used for this proposed rule showed that PHPs maintained an appropriately low utilization of 3 service days compared to CY 2016 and CY 2015. Compared to CY 2016, hospital-based PHPs have provided fewer days with 3 services only, fewer days with 4 services only, and more days with 5 or more services. Compared to CY 2016, CMHCs have remained steady in providing an appropriately low level of 3 service days, increased their provision of days with 4 services, but have decreased their provision of days with 5 or more services.

As we noted in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79685), we will continue to monitor the provision of days with only 3 services, particularly now that the single-tier PHP APCs 5853 and 5863 are in place for providing 3 or more services per day to CMHCs and hospital-based PHPs, respectively. The CY 2017 data are the first year of claims data to reflect the change to the single-tier PHP APCs, and the level of utilization of days with 3 services only indicates providers are not reducing care for this patient population by providing more days with only 3 services.

It is important to reiterate our expectation that days with only 3 services are meant to be an exception and not the typical PHP day. In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68694), we clearly stated that we consider the acceptable minimum units of PHP services required in a PHP day to be 3 and explained that it was never our intention that 3 units of service represent the number of services to be provided in a typical PHP day. PHP is furnished in lieu of inpatient psychiatric hospitalization and is intended to be more intensive than a half-day program. We further indicated that a typical PHP day should generally consist of 5 to 6 units of service (73 FR 68689). We explained that days with only 3 units of services may be appropriate to bill in certain limited circumstances, such as when a patient might need to leave early for a medical appointment and, therefore, would be unable to complete a full day of PHP treatment. At that time, we noted that if a PHP were to only provide days with 3 services, it would be difficult for patients to meet the eligibility requirement in 42 CFR 410.43(c)(1), that patients must require a minimum of 20 hours per week of therapeutic services as evidenced in their plan of care (73 FR 68689).

C. Outlier Policy for CMHCs

In this proposed rule, for CY 2019, we are proposing to continue to calculate the CMHC outlier percentage, cutoff point and percentage payment amount, outlier reconciliation, outlier payment cap, and fixed-dollar threshold according to previously established policies. These topics are discussed in more detail below. We refer readers to section II.G. of this proposed rule for our general policies for hospital outpatient outlier payments.

1. Background

As discussed in the CY 2004 OPPS final rule with comment period (68 FR 63469 through 63470), we noted a significant difference in the amount of outlier payments made to hospitals and CMHCs for PHP services. Given the difference in PHP charges between hospitals and CMHCs, we did not believe it was appropriate to make outlier payments to CMHCs using the outlier percentage target amount and threshold established for hospitals. Therefore, beginning in CY 2004, we created a separate outlier policy specific to the estimated costs and OPPS payments provided to CMHCs. We designated a portion of the estimated OPPS outlier threshold specifically for CMHCs, consistent with the percentage of projected payments to CMHCs under the OPPS each year, excluding outlier payments, and established a separate outlier threshold for CMHCs. This separate outlier threshold for CMHCs resulted in $1.8 million in outlier payments to CMHCs in CY 2004 and $0.5 million in outlier payments to CMHCs in CY 2005 (82 FR 59381). In contrast, in CY 2003, more than $30 million was paid to CMHCs in outlier payments (82 FR 59381).

2. CMHC Outlier Percentage

In the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267 through 59268), we described the current outlier policy for hospital outpatient payments and CMHCs. We note that we also discussed our outlier policy for CMHCs in more detail in section VIII. C. of that same final rule (82 FR 59381). For CMHCs, we set our projected target for aggregate outlier payments at 1.0 percent of the estimated aggregate total payments under the OPPS (82 FR 59267). We estimate CMHC per diem payments and outlier payments by using the most recent available utilization and charges from CMHC claims, updated CCRs, and the updated payment rate for APC 5853. For increased transparency, we are providing a more detailed explanation of the existing calculation process for determining the CMHC outlier Start Printed Page 37135percentages below. As previously stated, we are proposing to continue to calculate the CMHC outlier percentage according to previously established policies, and we are not proposing any changes to our current methodology for calculating the CMHC outlier percentage for CY 2019. To calculate the CMHC outlier percentage, we follow three steps:

  • Step 1: We multiply the OPPS outlier threshold, which is 1.0 percent, by the total estimated OPPS Medicare payments (before outliers) for the prospective year to calculate the estimated total OPPS outlier payments: (0.01 × Estimated Total OPPS Payments) = Estimated Total OPPS Outlier Payments.
  • Step 2: We estimate CMHC outlier payments by taking each provider's estimated costs (based on their allowable charges multiplied by the provider's CCR) minus each provider's estimated CMHC outlier multiplier threshold (we refer readers to section VIII.C.3. of this proposed rule). That threshold is determined by multiplying the provider's estimated paid days by 3.4 times the CMHC PHP APC payment rate. If the provider's costs exceed the threshold, we multiply that excess by 50 percent, as described in section VIII.C.3. of this proposed rule, to determine the estimated outlier payments for that provider. CMHC outlier payments are capped at 8 percent of the provider's estimated total per diem payments (including the beneficiary's copayment), as described in section VIII.C.5. of this proposed rule, so any provider's costs that exceed the CMHC outlier cap would have its payments adjusted downward. After accounting for the CMHC outlier cap, we sum all of the estimated outlier payments to determine the estimated total CMHC outlier payments.

(Each Provider's Estimated Costs−Each Provider's Estimated Multiplier Threshold) = A. If A > 0, then (A × 0.50) = Estimated CMHC Outlier Payment (before cap) = B. If B > (0.08 × Provider's Total Estimated Per Diem Payments), then cap-adjusted B = (0.08 × Provider's Total Estimated Per Diem Payments); otherwise, B = B. Sum (B or cap-adjusted B) for Each Provider = Total CMHC Outlier Payments.

  • Step 3: We determine the percentage of all OPPS outlier payments that CMHCs represent by dividing the estimated CMHC outlier payments from Step 2 by the total OPPS outlier payments from Step 1: (Estimated CMHC Outlier Payments/Total OPPS Outlier Payments).

In CY 2018, we designated approximately 0.03 percent of that estimated 1.0 percent hospital outpatient outlier threshold for CMHCs (82 FR 59381), based on this methodology. In this proposed rule, we are proposing to continue to use the same methodology for CY 2019. Therefore, based on our CY 2019 payment estimates, CMHCs are projected to receive 0.02 percent of total hospital outpatient payments in CY 2019, excluding outlier payments. We are proposing to designate approximately less than 0.01 percent of the estimated 1.0 percent hospital outpatient outlier threshold for CMHCs. This percentage is based upon the formula given in Step 3 above.

3. Cutoff Point and Percentage Payment Amount

As described in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59381), our policy has been to pay CMHCs for outliers if the estimated cost of the day exceeds a cutoff point. In CY 2006, we set the cutoff point for outlier payments at 3.4 times the highest CMHC PHP APC payment rate implemented for that calendar year (70 FR 68551). This cutoff point is sometimes called a multiplier threshold (70 FR 68550). For CY 2018, the highest CMHC PHP APC payment rate is the payment rate for CMHC PHP APC 5853. In addition, in 2002, the final OPPS outlier payment percentage for costs above the multiplier threshold was set at 50 percent (66 FR 59889). In CY 2018, we continued to apply the same 50 percent outlier payment percentage that applies to hospitals to CMHCs and continued to use the existing cutoff point (82 FR 59381). Therefore, for CY 2018, we continued to pay for partial hospitalization services that exceeded 3.4 times the CMHC PHP APC payment rate at 50 percent of the amount of CMHC PHP APC geometric mean per diem costs over the cutoff point. For example, for CY 2018, if a CMHC's cost for partial hospitalization services paid under CMHC PHP APC 5853 exceeds 3.4 times the CY 2018 payment rate for CMHC PHP APC 5853, the outlier payment would be calculated as 50 percent of the amount by which the cost exceeds 3.4 times the CY 2018 payment rate for CMHC PHP APC 5853 [0.50 × (CMHC Cost−(3.4 × APC 5853 rate))].

In this proposed rule, for CY 2019, in accordance with our existing policy, we are proposing to continue to pay for partial hospitalization services that exceed 3.4 times the proposed CMHC PHP APC payment rate at 50 percent of the CMHC PHP APC geometric mean per diem costs over the cutoff point. That is, for CY 2019, if a CMHC's cost for partial hospitalization services paid under CMHC PHP APC 5853 exceeds 3.4 times the proposed payment rate for CMHC APC 5853, the outlier payment would be calculated as [0.50 × (CMHC Cost−(3.4 × APC 5853 rate))].

4. Outlier Reconciliation

In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 through 68599), we established an outlier reconciliation policy to address charging aberrations related to OPPS outlier payments. We addressed vulnerabilities in the OPPS outlier payment system that lead to differences between billed charges and charges included in the overall CCR, which are used to estimate cost and would apply to all hospitals and CMHCs paid under the OPPS. The main vulnerability in the OPPS outlier payment system is the time lag between the update of the CCRs that are based on the latest settled cost report and the current charges that creates the potential for hospitals and CMHCs to set their own charges to exploit the delay in calculating new CCRs. CMS initiated steps to ensure that outlier payments appropriately account for the financial risk when providing an extraordinarily costly and complex service, but are only being made for services that legitimately qualify for the additional payment.

The current outlier reconciliation policy requires that providers whose outlier payments meet a specified threshold (currently $500,000 for hospitals and any outlier payments for CMHCs) and whose overall ancillary CCRs change by plus or minus 10 percentage points or more, are subject to outlier reconciliation, pending approval of the CMS Central Office and Regional Office (73 FR 68596 through 68599). The policy also includes provisions related to CCRs and to calculating the time value of money for reconciled outlier payments due to or due from Medicare, as detailed in the CY 2009 OPPS/ASC final rule with comment period and in the Medicare Claims Processing Manual (73 FR 68595 through 68599 and Medicare Claims Processing internet Only Manual, Chapter 4, Section 10.7.2 and its subsections, available online at: https://www.cms.gov/​Regulations-and-Guidance/​Guidance/​Manuals/​Downloads/​clm104c04.pdf).

In this proposed rule, we are proposing to continue these policies for CY 2019.

5. Outlier Payment Cap

In the CY 2017 OPPS/ASC final rule with comment period, we implemented a CMHC outlier payment cap to be applied at the provider level, such that Start Printed Page 37136in any given year, an individual CMHC will receive no more than a set percentage of its CMHC total per diem payments in outlier payments (81 FR 79692 through 79695). We finalized the CMHC outlier payment cap to be set at 8 percent of the CMHC's total per diem payments (81 FR 79694 through 79695). This outlier payment cap only affects CMHCs, does not affect other provider types (that is, hospital-based PHPs), and is in addition to and separate from the current outlier policy and reconciliation policy in effect. For CY 2018, we continued this policy in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59381).

In this proposed rule, we are proposing to continue this policy for CY 2019, such that the CMHC outlier payment cap would be 8 percent of the CMHC's total per diem payments.

6. Fixed-Dollar Threshold

Finally, in the CY 2018 OPPS/ASC final rule with comment period (82 FR 59267 through 59268), for the hospital outpatient outlier payment policy, we set a fixed-dollar threshold in addition to an APC multiplier threshold. Fixed-dollar thresholds are typically used to drive outlier payments for very costly items or services, such as cardiac pacemaker insertions. CMHC PHP APC 5853 is the only APC for which CMHCs may receive payment under the OPPS, and is for providing a defined set of services that are relatively low cost when compared to other OPPS services. Because of the relatively low cost of CMHC services that are used to comprise the structure of CMHC PHP APC 5853, it is not necessary to also impose a fixed-dollar threshold on CMHCs. Therefore, in the CY 2018 OPPS/ASC final rule with comment period, we did not set a fixed-dollar threshold for CMHC outlier payments (82 FR 59381).

In this proposed rule, we are proposing to continue this policy for CY 2019.

IX. Proposed Procedures That Would Be Paid Only as Inpatient Procedures

A. Background

We refer readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74352 through 74353) for a full historical discussion of our longstanding policies on how we identify procedures that are typically provided only in an inpatient setting (referred to as the inpatient only (IPO) list) and, therefore, will not be paid by Medicare under the OPPS, and on the criteria that we use to review the IPO list each year to determine whether or not any procedures should be removed from the list. The complete list of codes that describe procedures that would be paid by Medicare in CY 2019 as inpatient only procedures is included as Addendum E to this proposed rule (which is available via the internet on the CMS website).

B. Proposed Changes to the Inpatient Only (IPO) List

1. Methodology for Identifying Appropriate Changes to IPO List

In this proposed rule, for CY 2019, we are proposing to use the same methodology (described in the November 15, 2004 final rule with comment period (69 FR 65834)) of reviewing the current list of procedures on the IPO list to identify any procedures that may be removed from the list. We have established five criteria that are part of this methodology. As noted in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74353), we utilize these criteria when reviewing procedures to determine whether or not they should be removed from the IPO list and assigned to an APC group for payment under the OPPS when provided in the hospital outpatient setting. We note that a procedure is not required to meet all of the established criteria to be removed from the IPO list. The criteria include the following:

1. Most outpatient departments are equipped to provide the services to the Medicare population.

2. The simplest procedure described by the code may be performed in most outpatient departments.

3. The procedure is related to codes that we have already removed from the IPO list.

4. A determination is made that the procedure is being performed in numerous hospitals on an outpatient basis.

5. A determination is made that the procedure can be appropriately and safely performed in an ASC, and is on the list of approved ASC procedures or has been proposed by us for addition to the ASC list.

Using the above-listed criteria, for the CY 2019 OPPS, we have identified two procedures described by the following codes that we are proposing to remove from the IPO list for CY 2019: CPT code 31241 (Nasal/sinus endoscopy, surgical; with ligation of sphenopalatine artery) and CPT code 01402 (Anesthesia for open or surgical arthroscopic procedures on knee joint; total knee arthroplasty). We also are proposing to add to the IPO list for CY 2019 the procedure described by HCPCS code C9606 (Percutaneous transluminal revascularization of acute total/subtotal occlusion during acute myocardial infarction, coronary artery or coronary artery bypass graft, any combination of drug-eluting intracoronary stent, atherectomy and angioplasty, including aspiration thrombectomy when performed, single vessel). The procedures that we are proposing to remove from the IPO list for CY 2019 and subsequent years, including the HCPCS codes, long descriptors, and the proposed CY 2019 payment indicators, are displayed in Table 29 of this proposed rule.

As noted earlier, we are proposing to remove the procedure described by CPT code 31241 from the IPO list for CY 2019. After reviewing the clinical characteristics of the procedure described by CPT code 31241 and consulting with stakeholders and our clinical advisors regarding this procedure, we believe that this procedure meets criterion 3—the procedure is related to codes that we have already removed from the IPO list. We are proposing that the procedure described by CPT code 31241 be assigned to C-APC 5153 (Level 3 Airway Endoscopy) with a status indicator of “J1”. We are seeking comment on whether the public believes that the procedure described by CPT code 31241 meets criterion 3 and whether the procedure meets any of the other five criteria for removal from the IPO list.

We also are proposing to remove the procedure described by CPT code 01402 from the IPO list. After reviewing the clinical characteristics of the procedure described by CPT code 01402, we believe that this procedure meets criteria 3 and 4. This procedure is typically billed with the procedure described by CPT code 27447 (Arthroplasty, knee, condyle and plateau; medical and lateral compartments with or without patella resurfacing (total knee arthroplasty)), which was removed from the IPO list for CY 2018 (82 FR 52526). We are seeking public comment on whether the procedure described by CPT code 01402 meets criteria 3 and 4 and whether the procedure meets any of the other five criteria for removal from the IPO list.

In addition, we are proposing to add the procedure described by HCPCS code C9606 (Percutaneous transluminal revascularization of acute total/subtotal occlusion during acute myocardial infarction, coronary artery or coronary artery bypass graft, any combination of drug-eluting intracoronary stent, atherectomy and angioplasty, including aspiration thrombectomy when Start Printed Page 37137performed, single vessel) to the IPO list for CY 2019. The IPO list specifies those procedures and services for which the hospital will be paid only when the procedures are provided in the inpatient setting because of the nature of the procedure, the underlying physical condition of the patient, or the need for at least 24 hours of postoperative recovery time or monitoring before the patient can be safely discharged (76 FR 74353). After evaluating the procedure described by HCPCS code C9606 against the criteria described above, we believe that the procedure should be added to the IPO list because this procedure is performed during acute myocardial infarction and it is similar to the procedure described by CPT code 92941 (Percutaneous transluminal revascularization of acute total/subtotal occlusion during acute myocardial infarction, coronary artery or coronary artery bypass graft, any combination of intracoronary stent, artherectomy and angioplasty, including aspiration thrombectomy when performed, single vessel), which was added to the IPO list for CY 2018 (82 FR 52526). We are seeking public comment on whether the procedure described by HCPCS code C9606 should be added to the IPO list for CY 2019.

2. Solicitation of Public Comments on the Potential Removal of Procedure Described by CPT Code 0266T From the IPO List

CPT code 0266T describes the implantation or replacement of carotid sinus baroreflex activation device; total system (includes generator placement, unilateral or bilateral lead placement, intra-operative interrogation, programming, and repositioning, when performed). The procedure described by CPT code 0266T has been included on the IPO list since the procedure code became effective in CY 2011.

There are several codes that describe procedures that are similar to the procedure described by CPT code 0266T that are not on the IPO list, including: CPT code 0267T (Implantation or replacement of carotid sinus baroreflex activation device; lead only, unilateral (includes intra-operative interrogation, programming, and repositioning, when performed)) and CPT code 0268T (Implantation or replacement of carotid sinus baroreflex activation device; pulse generator only (includes intra-operative interrogation, programming, and repositioning, when performed)). The device that is billed with these two procedures has been granted a Category B Investigational Device Exemption (IDE) from FDA.[32] Currently, there is limited information ava