Final Rule with Comment Period on Medicare OPPS - Ropes & Gray

74122 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2DEPARTMENT OF HEALTH ANDHUMAN SERVICESCenters for Medicare & MedicaidServices42 CFR Parts 410, 411, 416, 419, 489,and 495[CMS–1525–FC]RIN 0938–AQ26Medicare and Medicaid Programs:Hospital Outpatient ProspectivePayment; Ambulatory Surgical CenterPayment; Hospital Value-BasedPurchasing Program; Physician Self-Referral; and Patient NotificationRequirements in Provider AgreementsAGENCY: Centers for Medicare &Medicaid Services (CMS), HHS.ACTION: <strong>Final</strong> rule <strong>with</strong> comment period.SUMMARY: This final rule <strong>with</strong> commentperiod revises the Medicare hospitaloutpatient prospective payment system(OPPS) for CY 2012 to implementapplicable statutory requirements andchanges arising from our continuingexperience <strong>with</strong> this system. In thisfinal rule <strong>with</strong> comment period, wedescribe the changes to the amounts andfactors used to determine the paymentrates for Medicare hospital outpatientservices paid under the OPPS.In addition, this final rule <strong>with</strong>comment period updates the revisedMedicare ambulatory surgical center(ASC) payment system to implementapplicable statutory requirements andchanges arising from our continuingexperience <strong>with</strong> this system. In thisfinal rule <strong>with</strong> comment period, we setforth the relative payment weights andpayment amounts for services furnishedin ASCs, specific HCPCS codes to whichthese changes apply, and otherratesetting information for the CY 2012ASC payment system.We are revising the requirements forthe Hospital Outpatient QualityReporting (OQR) Program, adding newrequirements for ASC Quality ReportingSystem, and making additional changesto provisions of the Hospital InpatientValue-Based Purchasing (VBP) Program.We also are allowing eligible hospitalsand CAHs participating in the MedicareElectronic Health Record (EHR)Incentive Program to meet the clinicalquality measure reporting requirementof the EHR Incentive Program forpayment year 2012 by participating inthe 2012 Medicare EHR IncentiveProgram Electronic Reporting Pilot.<strong>Final</strong>ly, we are making changes to therules governing the whole hospital andrural provider exceptions to thephysician self-referral prohibition forexpansion of facility capacity andchanges to provider agreementregulations on patient notificationrequirements.DATES: Effective Date: This final rule<strong>with</strong> comment period is effective onJanuary 1, 2012.<strong>Comment</strong> <strong>Period</strong>: To be assuredconsideration, comments on thepayment classifications assigned toHCPCS codes identified in Addenda B,AA, and BB of this final rule <strong>with</strong>comment period <strong>with</strong> the ‘‘NI’’comment indicator and on other areasspecified throughout this final rule <strong>with</strong>comment period, and comments on thesuspension of the effective dates of theHospital-Acquired Condition (HAC),Agency for Healthcare Research andQuality (AHRQ), and Medicarespending per beneficiary measuresdiscussed in section XVI.A.2. of thisfinal rule <strong>with</strong> comment period, must bereceived at one of the addressesprovided in the ADDRESSES section nolater than 5 p.m. EST on January 3,2012.Application Deadline—New Class ofNew Technology Intraocular Lenses:Requests for review of applications fora new class of new technologyintraocular lenses must be received by5 p.m. EST on March 2, 2012, at thefollowing address: ASC/NTOL, Divisionof Outpatient Care, Mailstop C4–05–17,Centers for Medicare and MedicaidServices, 7500 Security Boulevard,Baltimore, MD 21244–1850.ADDRESSES: In commenting, please referto file code CMS–1525–FC. Because ofstaff and resource limitations, we cannotaccept comments by facsimile (FAX)transmission.You may submit comments in one offour ways (no duplicates, please):1. Electronically. You may (and weencourage you to) submit electroniccomments on this regulation to http://www.regulations.gov. Follow theinstructions under the ‘‘submit acomment’’ tab.2. By regular mail. You may mailwritten comments to the followingaddress ONLY: Centers for Medicare &Medicaid Services, Department ofHealth and Human Services, Attention:CMS–1525–FC, P.O. Box 8013,Baltimore, MD 21244–1850.Please allow sufficient time for mailedcomments to be received before theclose of the comment period.3. By express or overnight mail. Youmay send written comments via expressor overnight mail to the followingaddress ONLY: Centers for Medicare &Medicaid Services, Department ofHealth and Human Services, Attention:VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00002 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2CMS–1525–FC, Mail Stop C4–26–05,7500 Security Boulevard, Baltimore, MD21244–1850.4. By hand or courier. If you prefer,you may deliver (by hand or courier)your written comments before the closeof the comment period to either of thefollowing addresses:a. For delivery in Washington, DC—Centers for Medicare & MedicaidServices, Department of Health andHuman Services, Room 445–G, HubertH. Humphrey Building, 200Independence Avenue SW.,Washington, DC 20201.Because access to the interior of theHubert H. Humphrey Building is notreadily available to persons <strong>with</strong>outFederal Government identification,commenters are encouraged to leavetheir comments in the CMS drop slotslocated in the main lobby of thebuilding. A stamp-in clock is availablefor persons wishing to retain a proof offiling by stamping in and retaining anextra copy of the comments being filed.b. For delivery in Baltimore, MD—Centers for Medicare & MedicaidServices, Department of Health andHuman Services, 7500 SecurityBoulevard, Baltimore, MD 21244–1850.If you intend to deliver yourcomments to the Baltimore address,please call the telephone number (410)786–7195 in advance to schedule yourarrival <strong>with</strong> one of our staff members.<strong>Comment</strong>s mailed to the addressesindicated as appropriate for hand orcourier delivery may be delayed andreceived after the comment period.For information on viewing publiccomments, we refer readers to thebeginning of the SUPPLEMENTARYINFORMATION section.FOR FURTHER INFORMATION CONTACT:Marjorie Baldo, (410) 786–4617,Hospital outpatient prospectivepayment issues.Char Thompson, (410) 786–2300,Ambulatory surgical center issues.Michele Franklin, (410) 786–4533, andJana Lindquist, (410) 786–4533,Partial hospitalization andcommunity mental health centerissues.James Poyer, (410) 786–2261, Reportingof Hospital Outpatient QualityReporting (OQR) and ASC QualityReporting Program issues.Teresa Schell, (410) 786–8651,Physician Ownership and Investmentin Hospitals issues.Georganne Kuberski, (410) 786–0799,Patient Notification Requirementsissues.James Poyer, (410) 786–2261, andErnessa Brawley (410) 786–2075,Hospital Value-Based Purchasing(VBP) Program issues.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74123jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2SUPPLEMENTARY INFORMATION:Inspection of Public <strong>Comment</strong>s: Allcomments received before the close ofthe comment period are available forviewing by the public, including anypersonally identifiable or confidentialbusiness information that is included ina comment. We post all commentsreceived before the close of thecomment period on the following Website as soon as possible after they havebeen received: http://www.regulations.gov. Follow the searchinstructions on that Web site to viewpublic comments.<strong>Comment</strong>s received timely will alsobe available for public inspection,generally beginning approximately3 weeks after publication of the rule, atthe headquarters of the Centers forMedicare & Medicaid Services, 7500Security Boulevard, Baltimore, MD21244, on Monday through Friday ofeach week from 8:30 a.m. to 4 p.m. EST.To schedule an appointment to viewpublic comments, phone 1–(800) 743–3951.Electronic AccessThis Federal Register document isalso available from the Federal Registeronline database through Federal DigitalSystem (FDsys), a service of the U.S.Government Printing Office. Thisdatabase can be accessed via theinternet at http://www.gpo.gov/fdsys/.Addenda Available Only Through theInternet on the CMS Web SiteIn the past, a majority of the Addendareferred to throughout the preamble ofour OPPS/ASC proposed and final ruleswere published in the Federal Registeras part of the annual rulemakings.However, beginning <strong>with</strong> the CY 2012proposed rule, all of the Addenda willno longer appear in the Federal Registeras part of the annual OPPS/ASCproposed and final rules to decreaseadministrative burden and reduce costsassociated <strong>with</strong> publishing lengthytables. Instead, these Addenda will bepublished and available only on theCMS Web site. The Addenda relating tothe OPPS are available at:http://www.cms.gov/HospitalOutpatientPPS. The Addenda relating tothe ASC payment system are availableat: http://www.cms.gov/ASCPayment/.For complete details on the availabilityof the Addenda referenced in this finalrule <strong>with</strong> comment period, we referreaders to section XVII. Readers whoexperience any problems accessing anyof the Addenda that are posted on theCMS Web site identified above shouldcontact Charles Braver at (410) 786–0378.Alphabetical List of AcronymsAppearing in This Federal RegisterDocumentACEP American College of EmergencyPhysiciansAHA American Hospital AssociationAHIMA American Health InformationManagement AssociationAHRQ Agency for Healthcare Research andQualityAMA American Medical AssociationAMP Average Manufacturer PriceAOA American Osteopathic AssociationAPC Ambulatory Payment ClassificationARRA American Recovery andReinvestment Act of 2009, Public Law111–5ASC Ambulatory Surgical CenterASP Average Sales PriceAWP Average Wholesale PriceBBA Balanced Budget Act of 1997, PublicLaw 105–33BBRAMedicare, Medicaid, and SCHIP[State Children’s Health InsuranceProgram] Balanced Budget Refinement Actof 1999, Public Law 106–113BIPA Medicare, Medicaid, and SCHIPBenefits Improvement and Protection Actof 2000, Public Law 106–554BLS Bureau of Labor StatisticsCAH Critical Access HospitalCAP Competitive Acquisition ProgramCBSA Core-Based Statistical AreaCCN CMS Certification NumberCCR Cost-to-Charge RatioCDC Centers for Disease ControlCERT Comprehensive Error Rate TestingCLFS Clinical Laboratory Fee ScheduleCMHC Community Mental Health CenterCMS Centers for Medicare & MedicaidServicesCPT Current Procedural Terminology(copyrighted by the American MedicalAssociation)CQM Clinical Quality MeasureCR Cardiac RehabilitationCY Calendar YearDFO Designated Federal OfficialDHS Designated Health ServiceDRA Deficit Reduction Act of 2005, PublicLaw 109–171DSH Disproportionate Share HospitalEACH Essential Access CommunityHospitalE/M Evaluation and ManagementEHR Electronic Health RecordESRD End-Stage Renal DiseaseFACA Federal Advisory Committee Act,Public Law 92–463FAR Federal Acquisition RegulationsFDA Food and Drug AdministrationFFS Fee-for-ServiceFSS Federal Supply ScheduleFY Fiscal YearGAO Government Accountability OfficeHAC Hospital-Acquired ConditionHAI Healthcare-Associated InfectionHCAHPS Hospital Consumer Assessment ofHealthcare Providers and SystemsHCERA Health Care and EducationReconciliation Act of 2010, Public Law111–152HCP Healthcare PersonnelHCPCS Healthcare Common ProcedureCoding SystemVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00003 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2HCRIS Hospital Cost Report InformationSystemHHA Home Health AgencyHIPAA Health Insurance Portability andAccountability Act of 1996, Public Law104–191HOPD Hospital Outpatient DepartmentHospital OQR Hospital Outpatient QualityReportingICR Intensive Cardiac RehabilitationIDE Investigational Device ExemptionIHS Indian Health ServiceIQR Inpatient Quality ReportingI/OCE Integrated Outpatient Code EditorIOL Intraocular LensIPPS [Hospital] Inpatient ProspectivePayment SystemMAC Medicare Administrative ContractorMedPAC Medicare Payment AdvisoryCommissionMIEA–TRHCA Medicare Improvements andExtension Act under Division B, Title I ofthe Tax Relief Health Care Act of 2006,Public Law 109–432MIPPA Medicare Improvements for Patientsand Providers Act of 2008, Public Law110–275MMA Medicare Prescription Drug,Improvement, and Modernization Act of2003, Public Law 108–173MMEA Medicare and Medicaid ExtendersAct of 2010, Public Law 111–309MMSEA Medicare, Medicaid, and SCHIPExtension Act of 2007, Public Law 110–173MPFS Medicare Physician Fee ScheduleMSA Metropolitan Statistical AreaNCCI National Correct Coding InitiativeNHSN National Healthcare Safety NetworkNCD National Coverage DeterminationNPP Nonphysician practitionerNQF National Quality ForumNTIOL New Technology Intraocular LensOIG [HHS] Office of the Inspector GeneralOMB Office of Management and BudgetOPD [Hospital] Outpatient DepartmentOPPS [Hospital] Outpatient ProspectivePayment SystemOQR Outpatient Quality ReportingPBD Provider-Based DepartmentPHP Partial Hospitalization ProgramPPI Producer Price IndexPPS Prospective Payment SystemPR Pulmonary RehabilitationPRA Paperwork Reduction ActQAPI Quality Assessment and PerformanceImprovementQIO Quality Improvement OrganizationRAC Recovery Audit ContractorRFA Regulatory Flexibility ActRHHI Regional Home Health IntermediarySBA Small Business AdministrationSCH Sole Community HospitalSDP Single Drug PricerSI Status IndicatorTEP Technical Expert PanelTOPs Transitional Outpatient PaymentsVBP Value-Based PurchasingWAC Wholesale Acquisition CostIn this document, we address twopayment systems under the Medicareprogram: the OPPS and the ASCpayment system. In addition, we aremaking changes to the rules governinglimitations on certain physicianreferrals to hospitals in which

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274124 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsphysicians have an ownership orinvestment interest, the provideragreement regulations on patientnotification requirements, and the rulesgoverning the Hospital Inpatient Value-Based Purchasing (VBP) Program. Theprovisions relating to the OPPS areincluded in sections I. through XII.,section XIV., and sections XVII. throughXXI. of this final rule <strong>with</strong> commentperiod. Addenda A, B, C, D1, D2, E, L,M, and N, which relate to the OPPS, arereferenced in section XVII. of this finalrule <strong>with</strong> comment period and areavailable via the Internet on the CMSWeb site at the URL indicated in sectionXVII. The provisions related to the ASCpayment system are included insections XIII., XIV., and XVII. throughXXI. of this final rule <strong>with</strong> commentperiod. Addenda AA, BB, DD1, DD2,and EE, which relate to the ASCpayment system, are referenced insection XVII. of this final rule <strong>with</strong>comment period and are available viathe Internet on the CMS Web site at theURL indicated in section XVII. Theprovisions relating to physician referralsto hospitals in which physicians havean ownership or investment interest andto the provider agreement regulations onpatient notification requirements areincluded in section XV., and theprovisions relating to the HospitalInpatient VBP Program are included insection XVI. of this final rule <strong>with</strong>comment period.Table of ContentsI. Background and Summary of the CY 2012OPPS/ASC Proposed <strong>Rule</strong> and This <strong>Final</strong><strong>Rule</strong> With <strong>Comment</strong> <strong>Period</strong>A. Legislative and Regulatory Authority forthe Hospital Outpatient PerspectivePayment SystemB. Excluded OPPS Services and HospitalsC. Prior <strong>Rule</strong>makingD. Advisory Panel on Ambulatory PaymentClassification (APC) Groups1. Authority of the APC Panel2. Establishment of the APC Panel3. APC Panel Meetings and OrganizationalStructureE. Summary of the Major Contents of theCY 2012 OPPS/ASC Proposed <strong>Rule</strong>1. Updates Affecting OPPS Payments2. OPPS Ambulatory PaymentClassification (APC) Group Policies3. OPPS Payment for Devices4. OPPS Payment Changes for Drugs,Biologicals, and Radiopharmaceuticals5. Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals,Radiopharmaceuticals, and Devices6. OPPS Payment for Hospital OutpatientVisits7. Payment for Partial HospitalizationServices8. Procedures That Would Be Paid Only asInpatient Procedures9. Policies on Supervision Standards forOutpatient Services in Hospitals andCAHs10. OPPS Payment Status and <strong>Comment</strong>Indicators11. OPPS Policy and PaymentRecommendations12. Updates to the Ambulatory SurgicalCenter (ASC) Payment System13. Reporting Quality Data for AnnualPayment Rate Updates14. Changes to EHR Incentive Program forEligible Hospitals and CAHs RegardingElectronic Submission of ClinicalQuality Measures (CQMs)15. Changes to Provisions Relating toPhysician Self-Referral Prohibition andProvider Agreement Regulations onPatient Notification Requirements16. Additional Changes to the HospitalInpatient VBP Program17. Economic and Federalism AnalysesF. Public <strong>Comment</strong>s Received in Responseto the CY 2012 OPPS/ASC Proposed<strong>Rule</strong>G. Public <strong>Comment</strong>s Received on the CY2011 OPPS/ASC <strong>Final</strong> <strong>Rule</strong> With<strong>Comment</strong> <strong>Period</strong>II. Updates Affecting OPPS PaymentsA. Recalibration of APC Relative Weights1. Database Constructiona. Database Source and Methodologyb. Use of Single and Multiple ProcedureClaimsc. Calculation and Use of Cost-to-ChargeRatios (CCRs)2. Data Development Process andCalculation of Median Costsa. Claims Preparationb. Splitting Claims and Creation of‘‘Pseudo’’ Single Procedure Claims(1) Splitting Claims(2) Creation of ‘‘Pseudo’’ Single ProcedureClaimsc. Completion of Claim Records andMedian Cost Calculationsd. Calculation of Single Procedure APCCriteria-Based Median Costs(1) Device-Dependent APCs(2) Blood and Blood Products(3) Allergy Tests (APCs 0370 and 0381)(4) Hyperbaric Oxygen Therapy (APC 0659)(5) Payment for Ancillary OutpatientServices When Patient Expires (APC0375)(6) Endovascular Revascularization of theLower Extremity (APCs 0083, 0229, and0319)(7) Non-Congenital Cardiac Catheterization(APC 0080)(8) Cranial Neurostimulator and Electrodes(APC 0318)(9) Brachytherapy Sourcese. Calculation of Composite APC Criteria-Based Median Costs(1) Extended Assessment and ManagementComposite APCs (APCs 8002 and 8003)(2) Low Dose Rate (LDR) ProstateBrachytherapy Composite APC (APC8001)(3) Cardiac Electrophysiologic Evaluationand Ablation Composite APC (APC 8000)(4) Mental Health Services Composite APC(APC 0034)(5) Multiple Imaging Composite APCs(APCs 8004, 8005, 8006, 8007, and 8008)VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00004 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2(6) Cardiac Resynchronization TherapyComposite APC (APCs 0108, 0418, 0655,and 8009)3. Changes to Packaged Servicesa. Backgroundb. Packaging Issues(1) CMS Presentation of FindingsRegarding Expanded Packaging at theFebruary 28–March 1, 2011 and August10–12, 2011 APC Panel Meetings(2) Packaging Recommendations of theAPC Panel at Its February 28–March 1,2011 Meeting(3) Packaging Recommendations of theAPC Panel at Its August 2011 Meeting(4) Other Packaging Proposals and Policiesfor CY 20124. Calculation of OPPS Scaled PaymentWeightsB. Conversion Factor UpdateC. Wage Index ChangesD. Statewide Average Default CCRsE. OPPS Payment to Certain Rural andOther Hospitals1. Hold Harmless Transitional PaymentChanges2. Adjustment for Rural SCHs and EACHsUnder Section 1833(t)(13)(B) of the ActF. OPPS Payments to Certain CancerHospitals Described by Section1886(d)(1)(B)(v) of the Act1. Background2. Study of Cancer Hospital Costs Relativeto Other Hospitals3. CY 2011 Proposed Payment Adjustmentfor Certain Cancer Hospitals4. Proposed CY 2011 Cancer HospitalPayment Adjustment That Was Not<strong>Final</strong>ized5. Payment Adjustment for Certain CancerHospitals for CY 2012G. Hospital Outpatient Outlier Payments1. Background2. Proposed Outlier Calculation3. <strong>Final</strong> Outlier Calculation4. Outlier ReconciliationH. Calculation of an Adjusted MedicarePayment From the National UnadjustedMedicare PaymentI. Beneficiary Copayments1. Background2. OPPS Copayment Policy3. Calculation of an Adjusted CopaymentAmount for an APC GroupIII. OPPS Ambulatory Payment Classification(APC) Group PoliciesA. OPPS Treatment of New CPT and LevelII HCPCS Codes1. Treatment of New Level II HCPCS Codesand Category I CPT Vaccine Codes andCategory III CPT Codes for Which WeSolicited Public <strong>Comment</strong>s in the CY2012 Proposed <strong>Rule</strong>2. Process for New Level II HCPCS Codesand Category I and Category III CPTCodes for Which We Are SolicitingPublic <strong>Comment</strong>s on This CY 2012OPPS/ASC <strong>Final</strong> <strong>Rule</strong> With <strong>Comment</strong><strong>Period</strong>B. OPPS Changes—Variations Within APCs1. Background2. Application of the 2 Times <strong>Rule</strong>3. Exceptions to the 2 Times <strong>Rule</strong>C. New Technology APCs1. Background2. Movement of Procedures From NewTechnology APCs to Clinical APCs

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74125jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2D. OPPS APC-Specific Policies1. Cardiovascular Servicesa. Cardiovascular Computed Tomography(CCT) (APCs 0340 and 0383)b. Cardiac Imaging (APC 377)c. Insertion/Replacement/Repair of AICDLeads, Generator, and Pacing Electrodes(APC 0108)d. Implantable Loop Recorder Monitoring(APC 0690)e. Echocardiography (APCs 0128, 0269,0270, and 0697)2. Gastrointestinal Servicesa. Upper Gastrointestinal (GI) Services(APCs 0141, 0419, and 0422)b. Gastrointestinal Transit and PressureMeasurement (APC 0361)3. Genitourinary Servicesa. Laser Lithotripsy (APC 0163)b. Percutaneous Renal Cryoablation (APC0423)4. Nervous System Servicesa. Revision/Removal of NeurotransmitterElectrodes (APCs 0040 and 0687)b. Magnetoencephalography (MEG) (APCs0065, 0066, and 0067)c. Transcranial Magnetic StimulationTherapy (TMS) (APC 0218)5. Ocular and Ophthalmic Servicesa. Placement of Amniotic Membrane (APCs0233 and 0244)b. Insertion of Anterior Segment AqueousDrainage Device (APC 0673)c. Scanning Ophthalmic DiagnosticImaging (APC 0230)d. Intraocular Laser Endoscopy (APC 0233)6. Orthopedic and MusculoskeletalServicesa. Percutaneous Laminotomy/Laminectormy (APC 0208)b. Level II Arthroscopy (APC 0042)c. Closed Treatment Fracture of Finger,Toe, and Trunk (APCs 0129, 0138, and0139)d. Level I and II Strapping and CastApplication (APCs 0058 and 0426)7. Radiology Servicesa. Proton Beam Therapy (APCs 0664 and0667)b. Stereotactic Radiosurgery (SRS)Treatment Delivery Services (APCs 0065,0066, 0067, and 0127)c. Adrenal Imaging (APC 0408)d. Positron Emission Tomography (PET)Imaging (APC 0308) (Created FromMyocardial Positron EmissionTomography (PET) Imaging (APC 0307)and Nonmyocardial Positron EmissionTomography (PET) Imaging (APC 0308))e. Device Construction for IntensityModulated Radiation Therapy (IMRT)(APC 0305)f. Computed Tomography of Abdomen/Pelvic (APCs 0331 and 0334)g. Complex Interstitial Radiation SourceApplication (APC 0651)h. Radioelement Applications (APC 0312)8. Respiratory Servicesa. Pulmonary Rehabilitation (APC 0102)b. Bronchial Thermoplasty (APC 0415)c. Insertion of Bronchial Valve (APC 0415)9. Other Servicesa. Skin Repair (APCs 0133, 0134, and 0135)b. Nasal Sinus Endoscopy (APC 0075)c. Bioimpedance Spectroscopy (APC 0097)d. Autologous Blood Salvage (APC 0345)IV. OPPS Payment for DevicesA. Pass-Through Payments for Devices1. Expiration of Transitional Pass-ThroughPayments for Certain Devicesa. Backgroundb. CY 2012 Policy2. Provisions for Reducing TransitionalPass-Through Payments To Offset CostsPackaged Into APC Groupsa. Backgroundb. CY 2012 PolicyB. Adjustment to OPPS Payment for NoCost/Full Credit and Partial CreditDevices1. Background2. APCs and Devices Subject to theAdjustment PolicyV. OPPS Payment Changes for Drugs,Biologicals, and RadiopharmaceuticalsA. OPPS Transitional Pass-ThroughPayment for Additional Costs of Drugs,Biologicals, and Radiopharmaceuticals1. Background2. Drugs and Biologicals With ExpiringPass-Through Status in CY 20113. Drugs, Biologicals, andRadiopharmaceuticals With New orContinuing Pass-Through Status in CY20124. Provisions for Reducing TransitionalPass-Through Payments for DiagnosticRadiopharmaceuticals and ContrastAgents To Offset Costs Packaged IntoAPC Groupsa. Backgroundb. Payment Offset Policy for DiagnosticRadiopharmaceuticalsc. Payment Offset Policy for ContrastAgentsB. OPPS Payment for Drugs, Biologicals,and Radiopharmaceuticals Without Pass-Through Status1. Background2. Criteria for Packaging Payment forDrugs, Biologicals, andRadiopharmaceuticalsa. Backgroundb. Cost Threshold for Packaging of Paymentfor HCPCS Codes That Describe CertainDrugs, Nonimplantable Biologicals, andTherapeutic Radiopharmaceuticals(‘‘Threshold-Packaged Drugs’’)c. Packaging Determination for HCPCSCodes That Describe the Same Drug orBiological But Different Dosagesd. Packaging of Payment for DiagnosticRadiopharmaceuticals, Contrast Agents,and Implantable Biologicals (‘‘Policy-Packaged’’ Drugs and Devices)3. Payment for Drugs and BiologicalsWithout Pass-Through Status That AreNot Packageda. Payment for Specified CoveredOutpatient Drugs (SCODs) and OtherSeparately Payable and Packaged Drugsand Biologicalsb. CY 2012 Payment Policyc. Payment Policy for TherapeuticRadiopharmaceuticals4. Payment for Blood Clotting Factors5. Payment for Nonpass-Through Drugs,Biologicals, and RadiopharmaceuticalsWith HCPCS Codes, But Without OPPSHospital Claims DataVI. Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals,Radiopharmaceuticals, and DevicesVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00005 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2A. BackgroundB. Estimate of Pass-Through SpendingVII. OPPS Payment for Hospital OutpatientVisitsA. BackgroundB. Policies for Hospital Outpatient Visits1. Clinic Visits: New and EstablishedPatient Visits2. Emergency Department Visits3. Visit Reporting GuidelinesVIII. Payment for Partial HospitalizationServicesA. BackgroundB. PHP APC Update for CY 2012C. Separate Threshold for Outlier Paymentsto CMHCsIX. Procedures That Will Be Paid Only asInpatient ProceduresA. BackgroundB. Changes to the Inpatient ListX. Policies for the Supervision of OutpatientServices in Hospitals and CAHsA. BackgroundB. Issues Regarding the Supervision ofHospital Outpatient TherapeuticServices Raised by Hospitals and OtherStakeholders1. Independent Review Processa. Selection of Review Entityb. Review Processc. Evaluation Criteria2. Conditions of Payment and HospitalOutpatient Therapeutic ServicesDescribed by Different Benefit Categories3. Technical Corrections to the SupervisionStandards for Hospital OutpatientTherapeutic Services Furnished inHospitals or CAHsC. Summary of CY 2012 <strong>Final</strong> Policies onSupervision Standards for OutpatientTherapeutic Services in Hospitals andCAHs1. Independent Review Process2. Conditions of Payment and HospitalOutpatient Therapeutic ServicesDescribed by Different Benefit Categories3. Technical CorrectionsXI. <strong>Final</strong> CY 2012 OPPS Payment Status and<strong>Comment</strong> IndicatorsA. <strong>Final</strong> CY 2012 OPPS Payment StatusIndicator Definitions1. Payment Status Indicators To DesignateServices That Are Paid Under the OPPS2. Payment Status Indicators To DesignateServices That Are Paid Under a PaymentSystem Other Than the OPPS3. Payment Status Indicators to DesignateServices That Are Not Recognized Underthe OPPS But That May Be Recognizedby Other Institutional Providers4. Payment Status Indicators To DesignateServices That Are Not Payable byMedicare on Outpatient ClaimsB. <strong>Final</strong> CY 2012 <strong>Comment</strong> IndicatorDefinitionsXII. OPPS Policy and PaymentRecommendationsA. MedPAC RecommendationsB. APC Panel RecommendationsC. OIG RecommendationsXIII. Updates to the Ambulatory SurgicalCenter (ASC) Payment SystemA. Background1. Legislative Authority for the ASCPayment System2. Prior <strong>Rule</strong>making

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274126 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations3. Policies Governing Changes to the Listsof Codes and Payment Rates for ASCCovered Surgical Procedures andCovered Ancillary ServicesB. Treatment of New Codes1. Process for Recognizing New Category Iand Category III CPT Codes and Level IIHCPCS Codes2. Treatment of New Level II HCPCS Codesand Category III CPT Codes Implementedin April and July 2011 for Which WeSolicited Public <strong>Comment</strong>s in the CY2012 OPPS/ASC Proposed <strong>Rule</strong>3. Process for New Level II HCPCS Codesand Category I and Category III CPTCodes for Which We Are SolicitingPublic <strong>Comment</strong>s in This CY 2012OPPS/ASC <strong>Final</strong> <strong>Rule</strong> With <strong>Comment</strong><strong>Period</strong>C. Update to the Lists of ASC CoveredSurgical Procedures and CoveredAncillary Services1. Covered Surgical Proceduresa. Additions to the List of ASC CoveredSurgical Proceduresb. Covered Surgical Procedures Designatedas Office-Based(1) Background(2) Changes for CY 2012 to CoveredSurgical Procedures Designated asOffice-Basedc. ASC Covered Surgical ProceduresDesignated as Device-Intensive(1) Background(2) Changes to List of Covered SurgicalProcedures Designated as Device-Intensive for CY 2012d. ASC Treatment of Surgical ProceduresRemoved From the OPPS Inpatient Listfor CY 20122. Covered Ancillary ServicesD. ASC Payment for Covered SurgicalProcedures and Covered AncillaryServices1. Payment for Covered SurgicalProceduresa. Backgroundb. Update to ASC-Covered SurgicalProcedure Payment Rates for CY 2012c. Adjustment to ASC Payments for NoCost/Full Credit and Partial CreditDevicesd. Waiver of Coinsurance and Deductiblefor Certain Preventive Servicese. Payment for the CardiacResynchronization Therapy Composite2. Payment for Covered Ancillary Servicesa. Backgroundb. Payment for Covered Ancillary Servicesfor CY 2012E. New Technology Intraocular Lenses(NTIOLs)1. NTIOL Cycle and Evaluation Criteria2. NTIOL Application Process for PaymentAdjustment3. Requests To Establish New NTIOLClasses for CY 20124. Payment Adjustment5. Announcement of CY 2012 Deadline forSubmitting Requests for CMS Review ofAppropriateness of ASC Payment forInsertion of an NTIOL FollowingCataract SurgeryF. ASC Payment and <strong>Comment</strong> Indicators1. Background2. ASC Payment and <strong>Comment</strong> IndicatorsG. ASC Policy and PaymentRecommendationsH. Calculation of the ASC ConversionFactor and the ASC Payment Rates1. Background2. Calculation of the ASC Payment Ratesa. Updating the ASC Relative PaymentWeights for CY 2012 and Future Yearsb. Updating the ASC Conversion Factor3. Display of CY 2012 ASC Payment RatesXIV. Hospital Outpatient Quality ReportingProgram Updates and ASC QualityReportingA. Background1. Overview2. Statutory History of Hospital OutpatientQuality Reporting (Hospital OQR)Program3. Technical Specification Updates andData Publicationa. Maintenance of Technical Specificationsfor Quality Measuresb. Publication of Hospital OQR ProgramDataB. Revision to Measures PreviouslyAdopted for the Hospital OQR Programfor the CY 2013 and CY 2014 PaymentDeterminations1. Background2. Revision to OP–22 Left Without BeingSeenC. New Quality Measures for the CY 2014and CY 2015 Payment Determinations1. Considerations in Expanding andUpdating Quality Measures UnderHospital OQR Program2. New Hospital OQR Program QualityMeasures for the CY 2014 PaymentDeterminationa. New National Healthcare Safety Network(NHSN) Healthcare Associated Infection(HAI) Measure for the CY 2014 PaymentDetermination: Surgical Site Infection(NQF #0299)b. New Chart-Abstracted Measures for theCY 2014 Payment Determinationc. New Structural Measures(1) Safe Surgery Checklist Use Measure(2) Hospital Outpatient DepartmentVolume for Selected Outpatient SurgicalProcedures Measure3. Hospital OQR Program Measures for theCY 2015 Payment Determinationa. Retention of CY 2014 Hospital OQRMeasures for the CY 2015 PaymentDeterminationb. New NHSN HAI Measure for the CY2015 Payment DeterminationD. Possible Quality Measures UnderConsideration for Future Inclusion in theHospital OQR ProgramE. Payment Reduction for Hospitals ThatFail To Meet the Hospital OQRRequirements for the CY 2012 PaymentUpdate1. Background2. Reporting Ratio Application andAssociated Adjustment Policy for CY2012F. Extraordinary Circumstances Extensionor Waiver for CY 2012 and SubsequentYearsG. Requirements for Reporting of HospitalOQR Data for CY 2013 and SubsequentYears1. Administrative Requirements for CY2013 and Subsequent YearsVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00006 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR22. Form, Manner, and Timing of DataSubmission for CY 2013 and SubsequentYearsa. CY 2013 and CY 2014 Data SubmissionRequirements for Chart-AbstractedMeasure Data Submitted Directly to CMSb. Eligibility to Voluntarily Sample andData Submission Exception for LowPatient Volume for CY 2013 andSubsequent Yearsc. Population and Sampling DataRequirements Beginning With the CY2013 Payment Determination and forSubsequent Yearsd. Claims-Based Measure DataRequirements for the CY 2013 and CY2014 Payment Determinationse. Structural Measure Data Requirementsfor the CY 2013 and CY 2014 PaymentDeterminationsf. Data Submission Deadlines for the NHSNHAI Surgical Site Infection Measure forthe CY 2014 Payment Determinationg. Data Submission Requirements for OP–22: ED-Patient Left Before Being Seen forthe CY 2013 and CY 2014 PaymentDeterminations3. Hospital OQR Validation Requirementsfor Chart-Abstracted Measure DataSubmitted Directly to CMS: DataValidation Approach for the CY 2013Payment Determinationa. Randomly Selected Hospitalsb. Use of Targeting Criteria for DataValidation Selection for CY 2013(1) Background(2) Targeting Criteria for Data ValidationSelection for CY 2013c. Encounter Selectiond. Validation Score Calculation4. Additional Data Validation ConditionsUnder Consideration for CY 2014 andSubsequent YearsH. Hospital OQR Reconsideration andAppeals Procedures for CY 2013 andSubsequent YearsI. Electronic Health Records (EHRs)J. 2012 Medicare EHR Incentive ProgramElectronic Reporting Pilot for Hospitalsand CAHs1. Background2. Electronic Reporting Pilot3. CQM Reporting Under the ElectronicReporting PilotK. ASC Quality Reporting Program1. Background2. ASC Quality Reporting Program MeasureSelectiona. Timetable for Selecting ASC QualityMeasuresb. Considerations in the Selection ofMeasures for the ASC Quality ReportingProgram3. ASC Quality Measures for the CY 2014Payment Determinationa. Claims-Based Measures RequiringSubmission of Quality Data Codes(QDCs) Beginning January 1, 2012(1) Patient Burns (NQF #0263)(2) Patient Falls (NQF #0266)(3) Wrong Site, Wrong Side, Wrong Patient,Wrong Procedure, Wrong Implant (NQF#0267)(4) Hospital Transfer/Admission (NQF#0265)(5) Prophylactic Intravenous (IV) AntibioticTiming (NQF #0264)

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74127jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2(6) Ambulatory Patient With AppropriateMethod of Surgical Hair Removal (NQF#0515)(7) Selection of Prophylactic Antibiotic:First OR Second GenerationCephalosporin (NQF #0268)b. Surgical Site Infection Rate (NQF #0299)4. ASC Quality Measures for the CY 2015Payment Determinationa. Retention of Measures Adopted for theCY 2014 Payment Determination in theCY 2015 Payment Determinationb. Structural Measures for the CY 2015Payment Determination(1) Safe Surgery Checklist Use(2) ASC Facility Volume Data on SelectedASC Surgical Procedures5. ASC Quality Measures for the CY 2016Payment Determinationa. Retention of Measures Adopted for theCY 2015 Payment Determination in theCY 2016 Payment Determinationb. HAI Measure: Influenza VaccinationCoverage Among Healthcare Personnel(HCP) (NQF #0431)6. ASC Measure Topics for FutureConsideration7. Technical Specification Updates andData Publication for the CY 2014Payment Determinationa. Maintenance of Technical Specificationsfor Quality Measuresb. Publication of ASC Quality ReportingProgram Data8. Requirements for Reporting of ASCQuality Data for the CY 2014 PaymentDeterminationa. Data Collection and SubmissionRequirements for the Claims-BasedMeasuresb. Data Submission Deadlines for theSurgical Site Infection Rate MeasureXV. Changes to Whole Hospital and RuralProvider Exceptions to the PhysicianSelf-Referral Prohibition: Exception forExpansion of Facility Capacity; andChanges to Provider AgreementRegulations on Patient NotificationRequirementsA. BackgroundB. Changes Made by the Affordable CareAct1. Provisions Relating to Exception toOwnership and Investment Prohibition(Section 6001(a) of the Affordable CareAct)2. Provisions of Section 6001(a)(3) of theAffordable Care ActC. Process for Requesting an Exception tothe Prohibition on Expansion of FacilityCapacity1. General <strong>Comment</strong>s2. Applicable Hospitala. Percentage Increase in Populationb. Inpatient Admissionsc. Nondiscriminationd. Bed Capacitye. Bed Occupancy3. High Medicaid Facilitya. Number of Hospitals in Countyb. Inpatient Admissionsc. Nondiscrimination4. Procedures for Submitting a Request5. Community Input6. Permitted Increasea. Amount of Permitted Increaseb. Location of Permitted Increase7. Decisions8. Limitation on Review9. Frequency of RequestD. Changes Related to Provider AgreementRegulations on Patient NotificationRequirementsXVI. Additional Hospital Value-BasedPurchasing (Hospital VBP) ProgramPoliciesA. Hospital VBP Program1. Legislative Background2. Overview of the Hospital Inpatient VBPProgram <strong>Final</strong> <strong>Rule</strong>3. Additional FY 2014 Hospital VBPProgram Measures4. Minimum Number of Cases andMeasures for the Outcome Domain forthe FY 2014 Hospital VBP Programa. Backgroundb. Minimum Number of Cases for MortalityMeasures, AHRQ Composite Measures,and HAC Measuresc. Minimum Number of Measures forOutcome Domain5. Performance <strong>Period</strong>s and Baseline<strong>Period</strong>s for FY 2014 Measuresa. Clinical Process of Care Domain andPatient Experience of Care DomainPerformance <strong>Period</strong> and Baseline <strong>Period</strong>b. Outcome Domain Performance <strong>Period</strong>sand Baseline <strong>Period</strong>s6. Performance Standards for the FY 2014Hospital VBP Programa. Backgroundb. Mortality Measuresc. Clinical Process of Care and PatientExperience of Care FY 2014 PerformanceStandardsd. AHRQ Measurese. HAC Measures7. FY 2014 Hospital VBP Program ScoringMethodologya. FY 2014 Domain Scoring Methodologyb. HAC Measures Scoring Methodology8. Ensuring HAC Reporting Accuracy9. Domain Weighting for FY 2014 HospitalVBP ProgramB. Review and Correction Process Underthe Hospital VBP Program1. Background2. Review and Correction of DataSubmitted to the QIO ClinicalWarehouse on Chart-Abstracted Processof Care Measures and Measure Rates3. Review and Correction Process forHospital Consumer Assessment ofHealthcare Providers and Systems(HCAHPS) Dataa. Phase One: Review and Correction ofHCAHPS Data Submitted to the QIOClinical Warehouseb. Phase Two: Review and Correction ofthe HCAHPS Scores for the Hospital VBPProgramXVII. Files Available to the Public via theInternetA. Information in Addenda Related to the<strong>Final</strong> CY 2012 Hospital OPPSB. Information in Addenda Related to the<strong>Final</strong> CY 2012 ASC Payment SystemXVIII. Collection of InformationRequirementsA. Legislative Requirements forSolicitation of <strong>Comment</strong>sB. Requirements in Regulation TextVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR21. ICRs Regarding Basic Commitments ofProviders (§ 489.20)2. ICRs Regarding Exceptions ProcessRelated to the Prohibition of Expansionof Facility Capacity (§ 411.362)C. Associated Information Collections NotSpecified in Regulatory Text1. Hospital Outpatient Quality Reporting(Hospital OQR) Program2. Hospital OQR Program Measures for theCY 2012, CY 2013, CY 2014, and CY2015 Payment Determinationsa. Previously Adopted Hospital OQRProgram Measures for the CY 2012, CY2013, and CY 2014 PaymentDeterminationsb. Additional Hospital OQR ProgramMeasures for CY 2014c. Hospital OQR Program Measures for CY20153. Hospital OQR Program ValidationRequirements for CY 20134. Hospital OQR Program Reconsiderationand Appeals Procedures5. ASC Quality Reporting Program6. 2012 Medicare EHR Incentive ProgramElectronic Reporting Pilot for Hospitalsand CAHs7. Additional TopicsXIX. Response to <strong>Comment</strong>sXX. Economic AnalysesA. Regulatory Impact Analysis1. Introduction2. Statement of Need3. Overall Impacts for OPPS and ASCProvisions4. Detailed Economic Analysesa. Effects of OPPS Changes in This <strong>Final</strong><strong>Rule</strong> With <strong>Comment</strong> <strong>Period</strong>(1) Limitations of Our Analysis(2) Estimated Effects of This <strong>Final</strong> <strong>Rule</strong>With <strong>Comment</strong> <strong>Period</strong> on Hospitals(3) Estimated Effects of This <strong>Final</strong> <strong>Rule</strong>With <strong>Comment</strong> <strong>Period</strong> on CMHCs(4) Estimated Effect of This <strong>Final</strong> <strong>Rule</strong>With <strong>Comment</strong> <strong>Period</strong> on Beneficiaries(5) Effects on Other Providers(6) Effects on the Medicare and MedicaidPrograms(7) Alternatives Consideredb. Effects of ASC Payment System Changesin This <strong>Final</strong> <strong>Rule</strong> With <strong>Comment</strong> <strong>Period</strong>(1) Limitations of Our Analysis(2) Estimated Effects of This <strong>Final</strong> <strong>Rule</strong>With <strong>Comment</strong> <strong>Period</strong> on Payments toASCs(3) Estimated Effects of This <strong>Final</strong> <strong>Rule</strong>With <strong>Comment</strong> <strong>Period</strong> on Beneficiaries(4) Alternatives Consideredc. Accounting Statements and Tablesd. Effects of Requirements for the HospitalOutpatient Quality Reporting (OQR)Programe. Effects of Changes to Physician Self-Referral Regulationsf. Effects of Changes to Provider AgreementRegulations on Patient NotificationRequirementsg. Effects of Additional Hospital VBPProgram Requirementsh. Effects of the 2012 Electronic ReportingPilotB. Regulatory Flexibility Act (RFA)AnalysisC. Unfunded Mandates Reform ActAnalysis

74128 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2D. ConclusionXXI. Federalism AnalysisRegulation TextI. Background and Summary of the CY2012 OPPS/ASC Proposed <strong>Rule</strong> andThis <strong>Final</strong> <strong>Rule</strong> With <strong>Comment</strong> <strong>Period</strong>A. Legislative and Regulatory Authorityfor the Hospital Outpatient ProspectivePayment SystemWhen Title XVIII of the SocialSecurity Act (the Act) was enacted,Medicare payment for hospitaloutpatient services was based onhospital-specific costs. In an effort toensure that Medicare and itsbeneficiaries pay appropriately forservices and to encourage more efficientdelivery of care, the Congress mandatedreplacement of the reasonable costbasedpayment methodology <strong>with</strong> aprospective payment system (PPS). TheBalanced Budget Act of 1997 (BBA)(Pub. L. 105–33) added section 1833(t)to the Act authorizing implementationof a PPS for hospital outpatient services.The OPPS was first implemented forservices furnished on or after August 1,2000. Implementing regulations for theOPPS are located at 42 CFR Part 419.The Medicare, Medicaid, and SCHIPBalanced Budget Refinement Act of1999 (BBRA) (Pub. L. 106–113) mademajor changes in the hospital OPPS.The following Acts made additionalchanges to the OPPS: the Medicare,Medicaid, and SCHIP BenefitsImprovement and Protection Act of2000 (BIPA) (Pub. L. 106–554); theMedicare Prescription Drug,Improvement, and Modernization Act of2003 (MMA) (Pub. L. 108–173); theDeficit Reduction Act of 2005 (DRA)(Pub. L. 109–171), enacted on February8, 2006; the Medicare Improvementsand Extension Act under Division B ofTitle I of the Tax Relief and Health CareAct of 2006 (MIEA–TRHCA) (Pub. L.109–432), enacted on December 20,2006; the Medicare, Medicaid, andSCHIP Extension Act of 2007 (MMSEA)(Pub. L. 110–173), enacted on December29, 2007; the Medicare Improvementsfor Patients and Providers Act of 2008(MIPPA) (Pub. L. 110–275), enacted onJuly 15, 2008; the Patient Protection andAffordable Care Act (Pub. L. 111–148),enacted on March 23, 2010, as amendedby the Health Care and EducationReconciliation Act of 2010 (Pub. L. 111–152), enacted on March 30, 2010 (Thesetwo public laws are collectively knownas the Affordable Care Act.); and mostrecently the Medicare and MedicaidExtenders Act of 2010 (MMEA, Pub. L.111–309).Under the OPPS, we pay for hospitaloutpatient services on a rate-per-servicebasis that varies according to theambulatory payment classification(APC) group to which the service isassigned. We use the HealthcareCommon Procedure Coding System(HCPCS) (which includes certainCurrent Procedural Terminology (CPT)codes) to identify and group the services<strong>with</strong>in each APC group. The OPPSincludes payment for most hospitaloutpatient services, except thoseidentified in section I.B. of this finalrule <strong>with</strong> comment period. Section1833(t)(1)(B) of the Act provides forpayment under the OPPS for hospitaloutpatient services designated by theSecretary (which includes partialhospitalization services furnished bycommunity mental health centers(CMHCs)) and hospital outpatientservices that are furnished to inpatientswho have exhausted their Part Abenefits, or who are otherwise not in acovered Part A stay.The OPPS rate is an unadjustednational payment amount that includesthe Medicare payment and thebeneficiary copayment. This rate isdivided into a labor-related amount anda nonlabor-related amount. The laborrelatedamount is adjusted for area wagedifferences using the hospital inpatientwage index value for the locality inwhich the hospital or CMHC is located.All services and items <strong>with</strong>in an APCgroup are comparable clinically and<strong>with</strong> respect to resource use (section1833(t)(2)(B) of the Act). In accordance<strong>with</strong> section 1833(t)(2) of the Act,subject to certain exceptions, items andservices <strong>with</strong>in an APC group cannot beconsidered comparable <strong>with</strong> respect tothe use of resources if the highestmedian cost (or mean cost, if elected bythe Secretary) for an item or service inthe APC group is more than 2 timesgreater than the lowest median cost foran item or service <strong>with</strong>in the same APCgroup (referred to as the ‘‘2 times rule’’).In implementing this provision, wegenerally use the median cost of theitem or service assigned to an APCgroup.For new technology items andservices, special payments under theOPPS may be made in one of two ways.Section 1833(t)(6) of the Act providesfor temporary additional payments,which we refer to as ‘‘transitional passthroughpayments,’’ for at least 2 but notmore than 3 years for certain drugs,biological agents, brachytherapy devicesused for the treatment of cancer, andcategories of other medical devices. Fornew technology services that are noteligible for transitional pass-throughpayments, and for which we lacksufficient data to appropriately assignthem to a clinical APC group, we haveestablished special APC groups basedVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2on costs, which we refer to as NewTechnology APCs. These NewTechnology APCs are designated by costbands which allow us to provideappropriate and consistent payment fordesignated new procedures that are notyet reflected in our claims data. Similarto pass-through payments, anassignment to a New Technology APC istemporary; that is, we retain a service<strong>with</strong>in a New Technology APC until weacquire sufficient data to assign it to aclinically appropriate APC group.B. Excluded OPPS Services andHospitalsSection 1833(t)(1)(B)(i) of the Actauthorizes the Secretary to designate thehospital outpatient services that arepaid under the OPPS. While mosthospital outpatient services are payableunder the OPPS, section1833(t)(1)(B)(iv) of the Act excludespayment for ambulance, physical andoccupational therapy, and speechlanguagepathology services, for whichpayment is made under a fee schedule.It also excludes screeningmammography, diagnosticmammography, and effective January 1,2011, an annual wellness visit providingpersonalized prevention plan services.The Secretary exercised the authoritygranted under the statute to also excludefrom the OPPS those services that arepaid under fee schedules or otherpayment systems. Such excludedservices include, for example, theprofessional services of physicians andnonphysician practitioners paid underthe Medicare Physician Fee Schedule(MPFS); laboratory services paid underthe Clinical Laboratory Fee Schedule(CLFS); services for beneficiaries <strong>with</strong>end-stage renal disease (ESRD) that arepaid under the ESRD composite rate;and services and procedures that requirean inpatient stay that are paid under thehospital inpatient prospective paymentsystem (IPPS). We set forth the servicesthat are excluded from payment underthe OPPS in 42 CFR 419.22 of theregulations.Under § 419.20(b) of the regulations,we specify the types of hospitals andentities that are excluded from paymentunder the OPPS. These excludedentities include: Maryland hospitals, butonly for services that are paid under acost containment waiver in accordance<strong>with</strong> section 1814(b)(3) of the Act;critical access hospitals (CAHs);hospitals located outside of the 50States, the District of Columbia, andPuerto Rico; and Indian Health Service(IHS) hospitals.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74129jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2C. Prior <strong>Rule</strong>makingOn April 7, 2000, we published in theFederal Register a final rule <strong>with</strong>comment period (65 FR 18434) toimplement a prospective paymentsystem for hospital outpatient services.The hospital OPPS was firstimplemented for services furnished onor after August 1, 2000. Section1833(t)(9) of the Act requires theSecretary to review certain componentsof the OPPS, not less often thanannually, and to revise the groups,relative payment weights, and otheradjustments that take into accountchanges in medical practices, changes intechnologies, and the addition of newservices, new cost data, and otherrelevant information and factors.Since initially implementing theOPPS, we have published final rules inthe Federal Register annually toimplement statutory requirements andchanges arising from our continuingexperience <strong>with</strong> this system. These rulescan be viewed on the CMS Web site at:http://www.cms.gov/HospitalOutpatientPPS/. The CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period appearsin the November 24, 2010 FederalRegister (75 FR 71800). In that final rule<strong>with</strong> comment period, we revised theOPPS to update the payment weightsand conversion factor for servicespayable under the CY 2011 OPPS on thebasis of claims data from January 1,2009, through December 31, 2009, andto implement certain provisions of theAffordable Care Act. In addition, weresponded to public comments receivedon the provisions of the CY 2010 finalrule <strong>with</strong> comment period (74 FR60316) pertaining to the APCassignment of HCPCS codes identifiedin Addendum B to that rule <strong>with</strong> thenew interim (‘‘NI’’) comment indicator,and public comments received on theAugust 3, 2010 OPPS/ASC proposedrule for CY 2011 (75 FR 46170).On July 18, 2011, the CY 2012 OPPS/ASC proposed rule appeared in theFederal Register (76 FR 42170). Thisproposed rule, <strong>with</strong> a 60-day commentperiod that ended on August 30, 2011,proposed to revise the Medicare OPPSand the ASC payment system toimplement applicable statutoryrequirements and changes arising fromour continuing experience <strong>with</strong> thesesystems.D. Advisory Panel on AmbulatoryPayment Classification (APC) Groups1. Authority of the Advisory Panel onAmbulatory Payment Classification(APC) Groups (the APC Panel)Section 1833(t)(9)(A) of the Act, asamended by section 201(h) of PublicLaw 106–113, and redesignated bysection 202(a)(2) of Public Law 106–113,requires that we consult <strong>with</strong> an outsidepanel of experts to review the clinicalintegrity of the payment groups andtheir weights under the OPPS. The Actfurther specifies that the panel will actin an advisory capacity. The APC Panel,discussed under section I.D.2. of thisfinal rule, fulfills these requirements.The APC Panel is not restricted to usingdata compiled by CMS, and it may usedata collected or developed byorganizations outside the Department inconducting its review.2. Establishment of the APC PanelOn November 21, 2000, the Secretarysigned the initial charter establishingthe APC Panel. This expert panel, whichmay be composed of up to 15representatives of providers (currentlyemployed full-time, not as consultants,in their respective areas of expertise)subject to the OPPS, reviews clinicaldata and advises CMS about the clinicalintegrity of the APC groups and theirpayment weights. The APC Panel istechnical in nature, and it is governedby the provisions of the FederalAdvisory Committee Act (FACA). Sinceits initial chartering, the Secretary hasrenewed the APC Panel’s charter fivetimes: on November 1, 2002; onNovember 1, 2004; on November 21,2006; on November 2, 2008 andNovember 12, 2010. The current charterspecifies, among other requirements,that: the APC Panel continues to betechnical in nature; is governed by theprovisions of the FACA; may conveneup to three meetings per year; has aDesignated Federal Official (DFO); andis chaired by a Federal Officialdesignated by the Secretary.The current APC Panel membershipand other information pertaining to theAPC Panel, including its charter,Federal Register notices, membership,meeting dates, agenda topics, andmeeting reports, can be viewed on theCMS Web site at: http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.3. APC Panel Meetings andOrganizational StructureThe APC Panel first met on February27 through March 1, 2001. Since theinitial meeting, the APC Panel has heldmultiple meetings, <strong>with</strong> the last meetingtaking place on August 10–12, 2011.Prior to each meeting, we publish anotice in the Federal Register toannounce the meeting and, whennecessary, to solicit nominations forAPC Panel membership and toannounce new members.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00009 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2The APC Panel has established anoperational structure that, in part,currently includes the use of threesubcommittees to facilitate its requiredAPC review process. The three currentsubcommittees are the DataSubcommittee, the Visits andObservation Subcommittee, and theSubcommittee for APC Groups andStatus Indicator (SI) Assignments(previously known as the PackagingSubcommittee).The Data Subcommittee is responsiblefor studying the data issues confrontingthe APC Panel and for recommendingoptions for resolving them. The Visitsand Observation Subcommittee reviewsand makes recommendations to the APCPanel on all technical issues pertainingto observation services and hospitaloutpatient visits paid under the OPPS(for example, APC configurations andAPC payment weights). TheSubcommittee for APC Groups and SIAssignments advises the Panel on thefollowing issues: the appropriate SIs tobe assigned to HCPCS codes, includingbut not limited to whether a HCPCScode or a category of codes should bepackaged or separately paid; and theappropriate APCs to be assigned toHCPCS codes regarding services forwhich separate payment is made.Each of these subcommittees wasestablished by a majority vote from thefull APC Panel during a scheduled APCPanel meeting, and the APC Panelrecommended that the subcommitteescontinue at the August 2011 APC Panelmeeting. We accept thoserecommendations of the APC Panel. Allsubcommittee recommendations arediscussed and voted upon by the fullAPC Panel.Discussions of the otherrecommendations made by the APCPanel at the February/March 2011 andAugust 2011 APC Panel meetings areincluded in the sections of this finalrule <strong>with</strong> comment period that arespecific to each recommendation. Fordiscussions of earlier APC Panelmeetings and recommendations, werefer readers to previously publishedhospital OPPS/ASC proposed and finalrules, the CMS Web site mentionedearlier in this section, and the FACAdatabase at: http://fido.gov/facadatabase/public.asp.E. Summary of the Major Contents of theCY 2012 OPPS/ASC Proposed <strong>Rule</strong>In the CY 2012 OPPS/ASC proposedrule that appeared in the FederalRegister on July 18, 2011 (76 FR 42170),we set forth proposed changes to theMedicare hospital OPPS for CY 2012 toimplement statutory requirements andchanges arising from our continuing

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274130 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsexperience <strong>with</strong> the system. In addition,we set forth proposed changes to therevised Medicare ASC payment systemfor CY 2012, including proposedupdated payment weights, coveredsurgical procedures, and coveredancillary items and services based onthe proposed OPPS update. In addition,we proposed to make changes to therules governing limitations on certainphysician referrals to hospitals in whichphysicians have an ownership orinvestment interest, provider agreementregulations on patient notificationrequirements, and the rules governingthe Hospital Inpatient Value-BasedPurchasing (VBP) Program.The following is a summary of themajor changes that we proposed to makefor CY 2012:1. Updates Affecting OPPS PaymentsIn section II. of the proposed rule, weset forth—• The methodology used torecalibrate the proposed APC relativepayment weights.• The proposed changes to packagedservices.• The proposed update to theconversion factor used to determinepayment rates under the OPPS. In thissection, we proposed changes in theamounts and factors for calculating thefull annual update increase to theconversion factor.• The proposed consideration ofadopting a policy that would addresssituations where IPPS wage indexadjustments result in significantfluctuations in the wage index.• The proposed update of statewideaverage default CCRs.• The proposed application of holdharmless transitional outpatientpayments (TOPs) for certain small ruralhospitals, extended by section 3121 ofthe Affordable Care Act.• The proposed payment adjustmentfor rural SCHs.• The proposed payment adjustmentfor cancer hospitals.• The proposed calculation of thehospital outpatient outlier payment.• The calculation of the proposednational unadjusted Medicare OPPSpayment.• The proposed beneficiarycopayments for OPPS services.2. OPPS Ambulatory PaymentClassification (APC) Group PoliciesIn section III. of the proposed rule, wediscussed—• The proposed additions of newHCPCS codes to APCs.• The proposed establishment of anumber of new APCs.• Our analyses of Medicare claimsdata and certain recommendations ofthe APC Panel.• The application of the 2 times ruleand proposed exceptions to it.• The proposed changes to specificAPCs.• The proposed movement ofprocedures from New Technology APCsto clinical APCs.3. OPPS Payment for DevicesIn section IV. of the proposed rule, wediscussed the proposed pass-throughpayment for specific categories ofdevices and the proposed adjustment fordevices furnished at no cost or <strong>with</strong>partial or full credit.4. OPPS Payment Changes for Drugs,Biologicals, and RadiopharmaceuticalsIn section V. of the proposed rule, wediscussed the proposed CY 2012 OPPSpayment for drugs, biologicals, andradiopharmaceuticals, including theproposed payment for drugs,biologicals, and radiopharmaceuticals<strong>with</strong> and <strong>with</strong>out pass-through status.5. Estimate of OPPS Transitional Pass-Through Spending for Drugs,Biologicals, Radiopharmaceuticals, andDevicesIn section VI. of the proposed rule, wediscussed the estimate of CY 2012 OPPStransitional pass-through spending fordrugs, biologicals, and devices.6. OPPS Payment for HospitalOutpatient VisitsIn section VII. of the proposed rule,we set forth our proposed policies forthe payment of clinic and emergencydepartment visits and critical careservices based on claims data.7. Payment for Partial HospitalizationServicesIn section VIII. of the proposed rule,we set forth our proposed payment forpartial hospitalization services,including the proposed separatethreshold for outlier payments forCMHCs.8. Procedures That Would Be Paid Onlyas Inpatient ProceduresIn section IX. of the proposed rule, wediscussed the procedures that weproposed to remove from the inpatientlist and assign to APCs for paymentunder the OPPS.9. Policies on Supervision Standards forOutpatient Services in Hospitals andCAHsIn section X. of the proposed rule, wediscussed proposed policy changesrelating to the supervision of outpatientVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2services furnished in hospitals andCAHs.10. OPPS Payment Status and <strong>Comment</strong>IndicatorsIn section XI. of the proposed rule, wediscussed our proposed changes to thedefinitions of status indicators assignedto APCs and presented our proposedcomment indicators.11. OPPS Policy and PaymentRecommendationsIn section XII. of the proposed rule,we addressed recommendations madeby the Medicare Payment AdvisoryCommission (MedPAC) in its March2011 report to Congress, by the Office ofInspector General (OIG), and by the APCPanel regarding the OPPS for CY 2012.12. Updates to the Ambulatory SurgicalCenter (ASC) Payment SystemIn section XIII. of the proposed rule,we discussed the proposed updates ofthe revised ASC payment system andpayment rates for CY 2012.13. Reporting Quality Data for AnnualPayment Rate UpdatesIn section XIV. of the proposed rule,we discussed the proposed measures forreporting hospital outpatient qualitydata for the OPD fee schedule increasefactor for CY 2013 and subsequentcalendar years; set forth therequirements for data collection andsubmission; and discuss the reductionto the OPPS OPD fee schedule increasefactor for hospitals that fail to meet theHospital OQR Program requirements.We also discussed proposed measuresfor reporting ASC quality data for theannual payment update factor for CYs2014, 2015, and 2016; and set forth therequirements for data collection andsubmission for the annual paymentupdate.14. Changes to EHR Incentive Programfor Eligible Hospitals and CAHsRegarding Electronic Submission ofClinical Quality Measures (CQMs)In section XIV.J. of the proposed rule,we proposed to allow eligible hospitalsand CAHs participating in the MedicareEHR Incentive Program to meet theCQM reporting requirement of the EHRIncentive Program for payment year2012 by participating in the 2012Medicare EHR Incentive ProgramElectronic Reporting Pilot.15. Changes to Provisions Relating toPhysician Self-Referral Prohibition andProvider Agreement Regulations onPatient Notification RequirementsIn section XV. of the proposed rule,we presented our proposed exception

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74131jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2process for expansion of facilitycapacity under the whole hospital andrural provider exceptions to thephysician self-referral law, andproposed changes to the provideragreement regulations on patientnotification requirements.16. Additional Changes Relating to theHospital Inpatient VBP ProgramIn section XVI. of the proposed rule,we presented our proposedrequirements for the FY 2014 HospitalInpatient VBP Program.17. Economic and Federalism AnalysesIn sections XX. and XXI. of theproposed rule, we set forth an analysisof the regulatory and federalism impactsthat the proposed changes would haveon affected entities and beneficiaries.F. Public <strong>Comment</strong>s Received inResponse to the CY 2012 OPPS/ASCProposed <strong>Rule</strong>We received approximately 1,356timely pieces of correspondencecontaining multiple comments on theCY 2012 OPPS/ASC proposed rule thatappeared in the Federal Register on July18, 2011. We note that we receivedsome public comments that wereoutside the scope of the CY 2012 OPPS/ASC proposed rule. Out of scope publiccomments are not addressed in this CY2012 OPPS/ASC final rule <strong>with</strong>comment period. Summaries of thepublic comments that are <strong>with</strong>in thescope of the proposed rule and ourresponses are set forth in the varioussections of this final rule <strong>with</strong> commentperiod under the appropriate headings.G. Public <strong>Comment</strong>s Received on the CY2011 OPPS/ASC <strong>Final</strong> <strong>Rule</strong> With<strong>Comment</strong> <strong>Period</strong>We received approximately 43 timelypieces of correspondence on the CY2011 OPPS/ASC final rule <strong>with</strong>comment period that appeared in theFederal Register on November 24, 2010(75 FR 71800), some of which containedmultiple comments on the interim APCassignments and/or status indicators ofHCPCS codes identified <strong>with</strong> commentindicator ‘‘NI’’ in Addendum B to thatfinal rule <strong>with</strong> comment period.Summaries of those public commentson topics open to comment in the CY2012 OPPS/ASC final rule <strong>with</strong>comment period and our responses tothem are set forth in various sections ofthis final rule <strong>with</strong> comment periodunder the appropriate headings.II. Updates Affecting OPPS PaymentsA. Recalibration of APC RelativeWeights1. Database Constructiona. Database Source and MethodologySection 1833(t)(9)(A) of the Actrequires that the Secretary review notless often than annually and revise therelative payment weights for APCs. Inthe April 7, 2000 OPPS final rule <strong>with</strong>comment period (65 FR 18482), weexplained in detail how we calculatedthe relative payment weights that wereimplemented on August 1, 2000 for eachAPC group.In the CY 2012 OPPS/ASC proposedrule (76 FR 42179), for the CY 2012OPPS, we proposed to recalibrate theAPC relative payment weights forservices furnished on or after January 1,2012, and before January 1, 2013 (CY2012), using the same basicmethodology that we described in theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period. That is, we proposedto recalibrate the relative paymentweights for each APC based on claimsand cost report data for hospitaloutpatient department (HOPD) services,using the most recent available data toconstruct a database for calculating APCgroup weights. Therefore, for thepurpose of recalibrating the proposedAPC relative payment weights for CY2012, we used approximately 138million final action claims (claims forwhich all disputes and adjustmentshave been resolved and payment hasbeen made) for hospital outpatientdepartment services furnished on orafter January 1, 2010, and before January1, 2011. For this final rule <strong>with</strong>comment period, for the purpose ofrecalibrating the final APC relativepayment weights for CY 2012, we usedapproximately 148 million final actionclaims (claims for which all disputesand adjustments have been resolved andpayment has been made) for hospitaloutpatient department servicesfurnished on or after January 1, 2010,and before January 1, 2011. (For exactcounts of claims used, we refer readersto the claims accounting narrative undersupporting documentation for theproposed rule and this final rule <strong>with</strong>comment period on the CMS Web siteat: http://www.cms.gov/HospitalOutpatientPPS/HORD/.)Of the 148 million final action claimsfor services provided in hospitaloutpatient settings used to calculate thefinal CY 2012 OPPS payment rates forthis final rule <strong>with</strong> comment period,approximately 112 million claims werethe type of bill potentially appropriatefor use in setting rates for OPPS servicesVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00011 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2(but did not necessarily contain servicespayable under the OPPS). Of the 112million claims, approximately 3 millionclaims were not for services paid underthe OPPS or were excluded as notappropriate for use (for example,erroneous cost-to-charge ratios (CCRs) orno HCPCS codes reported on the claim).From the remaining approximately 109million claims, we createdapproximately 110 million singlerecords, of which approximately 75million were ‘‘pseudo’’ single or ‘‘singlesession’’ claims (created fromapproximately 25 million multipleprocedure claims using the process wediscuss later in this section).Approximately 888,000 claims weretrimmed out on cost or units in excessof +/¥3 standard deviations from thegeometric mean, yielding approximately108 million single bills for mediansetting. As described in section II.A.2. ofthis final rule <strong>with</strong> comment period, ourdata development process is designed<strong>with</strong> the goal of using appropriate costinformation in setting the APC relativeweights. The bypass process isdescribed in section II.A.1.b. of thisfinal rule <strong>with</strong> comment period. Thissection discusses how we develop‘‘pseudo’’ single procedure claims (asdefined below), <strong>with</strong> the intention ofusing more appropriate data from theavailable claims. In some cases, thebypass process allows us to use someportion of the submitted claim for costestimation purposes, while theremaining information on the claimcontinues to be unusable. Consistent<strong>with</strong> the goal of using appropriateinformation in our data developmentprocess, we only use claims (or portionsof each claim) that are appropriate forratesetting purposes. Ultimately, wewere able to use for CY 2012 ratesettingsome portion of approximately 94percent of the CY 2010 claimscontaining services payable under theOPPS.The final APC relative weights andpayments for CY 2012 in Addenda Aand B to this final rule <strong>with</strong> commentperiod (which are referenced in sectionXVII. of this final rule <strong>with</strong> commentperiod and available via the Internet onthe CMS Web site) were calculatedusing claims from CY 2010 that wereprocessed before July 1, 2011, andcontinue to be based on the medianhospital costs for services in the APCgroups. Under the methodology we areadopting in this final rule <strong>with</strong>comment period, we select claims forservices paid under the OPPS andmatch these claims to the most recentcost report filed by the individualhospitals represented in our claims data.

74132 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2We continue to believe that it isappropriate to use the most current fullcalendar year claims data and the mostrecently submitted cost reports tocalculate the median costsunderpinning the APC relative paymentweights and the CY 2012 payment rates.b. Use of Single and Multiple ProcedureClaimsFor CY 2012, in general, we proposedto continue to use single procedureclaims to set the medians on which theAPC relative payment weights would bebased, <strong>with</strong> some exceptions asdiscussed below in this section. Wegenerally use single procedure claims toset the median costs for APCs becausewe believe that the OPPS relativeweights on which payment rates arebased should be derived from the costsof furnishing one unit of one procedureand because, in many circumstances, weare unable to ensure that packaged costscan be appropriately allocated acrossmultiple procedures performed on thesame date of service.It is generally desirable to use the datafrom as many claims as possible torecalibrate the APC relative paymentweights, including those claims formultiple procedures. As we have forseveral years, we proposed to continueto use date of service stratification anda list of codes to be bypassed to convertmultiple procedure claims to ‘‘pseudo’’single procedure claims. Throughbypassing specified codes that webelieve do not have significant packagedcosts, we are able to use more data frommultiple procedure claims. In manycases, this enabled us to create multiple‘‘pseudo’’ single procedure claims fromclaims that were submitted as multipleprocedure claims spanning multipledates of service, or claims thatcontained numerous separately paidprocedures reported on the same dateon one claim. We refer to these newlycreated single procedure claims as‘‘pseudo’’ single procedure claims. Thehistory of our use of a bypass list togenerate ‘‘pseudo’’ single procedureclaims is well documented, mostrecently in the CY 2011 OPPS/ASC finalrule <strong>with</strong> comment period (75 FR 71811through 71822). In addition, for CY2008, we increased packaging andcreated the first composite APCs. Wehave continued our packaging policiesand the creation of composite APCs forCYs 2009, 2010, and 2011, and weproposed to continue them for CY 2012.Increased packaging and creation ofcomposite APCs also increased thenumber of bills that we were able to usefor median calculation by enabling us touse claims that contained multiplemajor procedures that previously wouldnot have been usable. Further, for CY2009, we expanded the composite APCmodel to one additional clinical area,multiple imaging services (73 FR 68559through 68569), which also increasedthe number of bills we were able to useto calculate APC median costs. We havecontinued the composite APCs formultiple imaging services for CYs 2010and 2011, and we proposed to continueto create them for CY 2012. We referreaders to section II.A.2.e. of theproposed rule and this final rule <strong>with</strong>comment period for a discussion of theuse of claims to establish median costsfor composite APCs.We proposed to continue to applythese processes to enable us to use asmuch claims data as possible forratesetting for the CY 2012 OPPS. Thismethodology enabled us to create, forthe proposed rule, approximately 67million ‘‘pseudo’’ single procedureclaims, including multiple imagingcomposite ‘‘single session’’ bills (werefer readers to section II.A.2.e.(5) of theproposed rule for further discussion), toadd to the approximately 33 million‘‘natural’’ single procedure claims. Forthe proposed rule, ‘‘pseudo’’ singleprocedure and ‘‘single session’’procedure bills representedapproximately 67 percent of all singleprocedure bills used to calculate mediancosts.For CY 2012, we proposed to bypass460 HCPCS codes for CY 2012 that wereidentified in Addendum N to theproposed rule (which is available viathe Internet on the CMS Web site). Sincethe inception of the bypass list, whichis the list of codes to be bypassed toconvert multiple procedure claims to‘‘pseudo’’ single procedure claims, wehave calculated the percent of ‘‘natural’’single bills that contained packaging foreach HCPCS code and the amount ofpackaging on each ‘‘natural’’ single billfor each code. Each year, we generallyretain the codes on the previous year’sbypass list and use the updated year’sdata (for CY 2012, data available for theFebruary 28–March 1, 2011 APC Panelmeeting from CY 2010 claims processedthrough September 30, 2010, and CY2009 claims data processed throughJune 30, 2010, used to model thepayment rates for CY 2011) to determinewhether it would be appropriate topropose to add additional codes to theprevious year’s bypass list. For CY 2012,we proposed to continue to bypass allof the HCPCS codes on the CY 2011OPPS bypass list. We updated HCPCScodes on the CY 2011 bypass list thatwere mapped to new HCPCS codes forCY 2012 ratesetting by evaluating datafor the replacement codes under theempirical criteria described below andVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2also removing the HCPCS codes that weproposed to be deleted for CY 2012,which were listed in Table 1 of theproposed rule. We also proposed toremove HCPCS codes that were notseparately paid under the OPPS becausethe purpose of the bypass list is toobtain more data for those codesrelevant to ratesetting. None of thesedeleted codes were ‘‘overlap bypasscodes’’ (those HCPCS codes that areboth on the bypass list and are membersof the multiple imaging compositeAPCs). We also proposed to add to thebypass list for CY 2012 all HCPCS codesnot on the CY 2011 bypass list that,using either the CY 2011 final rule data(CY 2009 claims) or the February 28–March 1, 2011 APC Panel data (first 9months of CY 2010 claims), met theempirical criteria for the bypass list thatare summarized below. The entire listproposed for CY 2012 (including thecodes that remain on the bypass listfrom prior years) was open to publiccomment. Because we must make someassumptions about packaging in themultiple procedure claims in order toassess a HCPCS code for addition to thebypass list, we assumed that therepresentation of packaging on‘‘natural’’ single procedure claims forany given code is comparable topackaging for that code in the multipleprocedure claims. The proposed criteriafor the bypass list were:• There are 100 or more ‘‘natural’’single procedure claims for the code.This number of single procedure claimsensures that observed outcomes aresufficiently representative of packagingthat might occur in the multiple claims.• Five percent or fewer of the‘‘natural’’ single procedure claims forthe code have packaged costs on thatsingle procedure claim for the code.This criterion results in limiting theamount of packaging being redistributedto the separately payable proceduresremaining on the claim after the bypasscode is removed and ensures that thecosts associated <strong>with</strong> the bypass coderepresent the cost of the bypassedservice.• The median cost of packagingobserved in the ‘‘natural’’ singleprocedure claims is equal to or less than$55. This criterion also limits theamount of error in redistributed costs.During the assessment of claims againstthe bypass criteria, we do not know thedollar value of the packaged cost thatshould be appropriately attributed to theother procedures on the claim.Therefore, ensuring that redistributedcosts associated <strong>with</strong> a bypass code aresmall in amount and volume protectsthe validity of cost estimates for low

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74133jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2cost services billed <strong>with</strong> the bypassedservice.In response to comments to the CY2010 OPPS/ASC proposed rulerequesting that the packaged costthreshold be updated, we consideredwhether it would be appropriate toupdate the $50 packaged cost thresholdfor inflation when examining potentialbypass list additions. As discussed inthe CY 2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60328), the realvalue of this packaged cost thresholdcriterion has declined due to inflation,making the packaged cost thresholdmore restrictive over time whenconsidering additions to the bypass list.Therefore, adjusting the threshold bythe market basket increase wouldprevent continuing decline in thethreshold’s real value. For CY 2011,based on CY 2009 claims data, weproposed to apply the final marketbasket increase of 3.6 percent publishedin the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period (73 FR 26584) tothe $50 packaged cost threshold used inthe CY 2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60325). Thiscalculation led us to a proposedpackaged cost threshold for bypass listadditions for CY 2011 of $50 ($51.80rounded to $50). We stated that webelieve that applying the market basketincrease from the year of claims data tothe packaged cost threshold, rounded tothe nearest $5 increment, wouldappropriately account for the effects ofinflation when considering additions tothe bypass list because the marketbasket increase reflects the extent towhich the price of inputs for hospitalservices is expected to increasecompared to the price of inputs forhospital services in the prior year. Weproposed for CY 2012, based on thesame rationale described for the CY2011 OPPS/ASC final rule <strong>with</strong>comment period (75 CFR 71812), tocontinue to update the packaged costthreshold by the market basket increase.By applying the final CY 2011 marketbasket increase of 1.85 percent to theprior non-rounded dollar threshold of$51.80 (75 FR 71812), we determinedthat the threshold increases for CY 2012to $55 ($52.76 rounded to $55, thenearest $5 increment). Therefore, weproposed to set the median packagedcost threshold on the CY 2010 claims at$55 for a code to be considered foraddition to the CY 2012 OPPS bypasslist.• The code is not a code for anunlisted service.In addition, we proposed to continueto include, on the bypass list, HCPCScodes that CMS medical advisorsbelieve have minimal associatedpackaging based on their clinicalassessment of the complete CY 2012OPPS proposal. Some of these codeswere identified by CMS medicaladvisors and some were identified inprior years by commenters <strong>with</strong>specialized knowledge of the packagingassociated <strong>with</strong> specific services. Wealso proposed to continue to include onthe bypass list certain HCPCS codes inorder to purposefully direct theassignment of packaged costs to acompanion code where services alwaysappear together and where there wouldotherwise be few single procedureclaims available for ratesetting. Forexample, we have previously discussedour reasoning for adding HCPCS codeG0390 (Trauma response teamassociated <strong>with</strong> hospital critical careservice) and the CPT codes foradditional hours of drug administrationto the bypass list (73 FR 68513 and 71FR 68117 through 68118).As a result of the multiple imagingcomposite APCs that we established inCY 2009, the program logic for creating‘‘pseudo’’ single procedure claims frombypassed codes that are also members ofmultiple imaging composite APCschanged. When creating the set of‘‘pseudo’’ single procedure claims,claims that contain ‘‘overlap bypasscodes’’ (those HCPCS codes that areboth on the bypass list and are membersof the multiple imaging compositeAPCs) were identified first. TheseHCPCS codes were then processed tocreate multiple imaging composite‘‘single session’’ bills, that is, claimscontaining HCPCS codes from only oneimaging family, thus suppressing theinitial use of these codes as bypasscodes. However, these ‘‘overlap bypasscodes’’ were retained on the bypass listbecause, at the end of the ‘‘pseudo’’single processing logic, we reassessedthe claims <strong>with</strong>out suppression of the‘‘overlap bypass codes’’ under ourlongstanding ‘‘pseudo’’ single process todetermine whether we could convertadditional claims to ‘‘pseudo’’ singleprocedure claims. (We refer readers tosection II.A.2.b. of the proposed ruleand this final rule <strong>with</strong> comment periodfor further discussion of the treatment of‘‘overlap bypass codes.’’) This processalso created multiple imaging composite‘‘single session’’ bills that could be usedfor calculating composite APC mediancosts. ‘‘Overlap bypass codes’’ that aremembers of the proposed multipleimaging composite APCs wereidentified by asterisks (*) in AddendumN to the proposed rule (which isavailable via the Internet on the CMSWeb site).Addendum N to the proposed ruleincluded the proposed list of bypassVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00013 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2codes for CY 2012. The list of bypasscodes contains codes that were reportedon claims for services in CY 2010 and,therefore, includes codes that were ineffect in 2010 and used for billing butwere deleted for CY 2011. We retainedthese deleted bypass codes on theproposed CY 2012 bypass list becausethese codes existed in CY 2010 andwere covered OPD services in thatperiod, and CY 2010 claims data areused to calculate CY 2012 paymentrates. Keeping these deleted bypasscodes on the bypass list potentiallyallowed us to create more ‘‘pseudo’’single procedure claims for ratesettingpurposes. ‘‘Overlap bypass codes’’ thatwere members of the proposed multipleimaging composite APCs wereidentified by asterisks (*) in the thirdcolumn of Addendum N to the proposedrule. HCPCS codes that we proposed toadd for CY 2012 were identified byasterisks (*) in the fourth column ofAddendum N.<strong>Comment</strong>: One commenterrecommended that CMS add CPT code77332 (Treatment devices, design andconstruction; simple (simple block,simple bolus)) to the bypass list in orderto yield additional claims for ratesettingfor composite APC 8001 (LDR ProstateBrachytherapy Composite). Thecommenter’s analysis showed thatbypassing the code would yield asignificant increase in the number ofclaims to set the composite rate.Response: As discussed above, weperform an analysis on the naturalsingle major claims to determinepossible additions to the bypass list. Indoing so, we apply a set of empiricalcriteria to identify codes that would beappropriate for addition to the bypasslist, based on how well they representthe clinical use of the service as well asthe limited packaging impact ofbypassing those codes. These criteria areconsistent <strong>with</strong> the goal of usingappropriate data for ratesetting. Thecommenter suggested that bypassing thecode would be appropriate because itwould yield additional claims <strong>with</strong>out adiscussion of the impact of bypassingthe code. In the APC Panel 2012 dataused to create the bypass list proposal,the code failed to meet the empiricalcriteria. Of the 134 available naturalsingle major claims, 117 (87 percent) ofthose claims contained packaging,which exceeds the 5 percent limit for acode to be placed on the bypass list.Additionally, the median cost ofpackaging on those claims was $200.23,which exceeds the $55 limit for the codeto be placed on the bypass list. Thesedata suggest that bypassing the codemay potentially and relatively often,distribute packaged costs, where it

74134 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsmight not be appropriate. For example,where CPT code 77332 is furnished onthe day on which a visit was the onlyother payable service, if CPT code 77332were on the bypass list, the packagingwould be associated <strong>with</strong> the visit, not<strong>with</strong> CPT code 77332, because we usethe line-item costs for codes on thebypass list <strong>with</strong>out their attendantpackaging to establish the median costfor the bypass code. This wouldinappropriately reduce the median costfor CPT code 77332. While we seek touse as much available information aspossible that is available in the OPPSclaims data set, we do so <strong>with</strong> the goalof using appropriate cost information insetting the APC relative weights. In thiscase, we believe that adding the CPTcode 77332 to the bypass list wouldcreate considerable risk in assigningpackaging that rightfully should beassociated <strong>with</strong> CPT code 77332 to otherservices. Therefore we are not addingCPT code 77332 to the bypass list for CY2012.<strong>Comment</strong>: One commenterrecommended that CMS continue toexplore additional methodologies toincrease the number of procedureclaims used for rate setting, includingexpanding the criteria for inclusion onthe bypass list.Response: We are always seekingadditional methodologies that wouldenable us to increase the number ofprocedure claims used for rate setting.However, it is important to us that weensure that any new methodology orchange to current methodology orcriteria would not result in costs that areappropriately packaged into a servicebeing inappropriately assigned toanother service, as, for example, webelieve would be the case if we were toplace CPT code 77332 on the bypasslist.After consideration of the publiccomments we received, we are adoptingas final the proposed ‘‘pseudo’’ singleclaims process and the final CY 2012bypass list of 460 HCPCS codes, asdisplayed in Addendum N of this finalrule <strong>with</strong> comment period (available viathe Internet on the CMS Web site). Table1 below contains the list of codes thatwe are removing from the CY 2012bypass list because these codes wereeither deleted from the HCPCS beforeCY 2010 (and therefore were notcovered OPD services in CY 2010) orwere not separately payable codes underthe CY 2012 OPPS because these codesare not used for ratesetting (andtherefore would not need to bebypassed). None of these deleted codeswere ‘‘overlap bypass’’ codes.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2c. Calculation and Use of Cost-to-ChargeRatios (CCRs)In the CY 2012 OPPS/ASC proposedrule (76 FR 42181), for CY 2012, weproposed to continue to use thehospital-specific overall ancillary anddepartmental CCRs to convert charges toestimated costs through application of arevenue code-to-cost center crosswalk.To calculate the APC median costs onwhich the proposed CY 2012 APCpayment rates were based, wecalculated hospital-specific overallancillary CCRs and hospital-specificdepartmental CCRs for each hospital forwhich we had CY 2010 claims data fromthe most recent available hospital costreports, in most cases, cost reportsbeginning in CY 2009. For the CY 2012OPPS proposed rates, we used the set ofclaims processed during CY 2010. Weapplied the hospital-specific CCR to thehospital’s charges at the most detailedlevel possible, based on a revenue codeto-costcenter crosswalk that contains ahierarchy of CCRs used to estimate costsfrom charges for each revenue code.That crosswalk is available for reviewand continuous comment on the CMSWeb site at: http://www.cms.gov/HospitalOutpatientPPS/03_crosswalk.asp#TopOfPage.To ensure the completeness of therevenue code-to-cost center crosswalk,we reviewed changes to the list ofrevenue codes for CY 2010 (the year ofVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00014 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2the claims data we used to calculate theproposed CY 2012 OPPS payment rates).For CY 2010, the National UniformBilling Committee added revenue codes860 (Magnetoencephalography (MEG);general classification) and 861(Magnetoencephalography (MEG)). Forpurposes of applying a CCR to chargesreported under revenue codes 860 and861, we proposed to use nonstandardMedicare cost report cost center 3280(Electrocardiogram (EKG) andElectroencephalography (EEG)) as theprimary cost center and to use standardcost center 5400(Electroencephalography (EEG)) as thesecondary cost center. We believe thatMEG, which evaluates brain activity, isER30NO11.000

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74135jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2similar to EEG, which also evaluatesbrain activity, and that the few hospitalsthat furnish MEG are likely to furnish itin the same department of the hospitalin which they furnish EEG services.Therefore, we believe that the CCRs thatwe apply to the EEG revenue codes aremore likely to result in a more accurateestimated cost for MEG than would theapplication of the hospital-specificoverall ancillary CCR. For hospitals thatreport charges under revenue code 860or 861 but do not report costs on theircost report under cost center 3280 or5400, we proposed to apply thehospital-specific overall CCR to thecharges reported under revenue code860 or 861 for purposes of estimatingthe cost of these services. We discussMEG, including the issue of the CCR tobe applied to charges for MEG, insection III.D. of this final rule <strong>with</strong>comment period. We note that revenuecodes <strong>with</strong> effective dates in CY 2011are not relevant to this process becausethese new revenue codes were notapplicable to claims for servicesfurnished during CY 2010.In accordance <strong>with</strong> our longstandingpolicy, we calculated CCRs for thestandard and nonstandard cost centersaccepted by the electronic cost reportdatabase. In general, the most detailedlevel at which we calculated CCRs wasthe hospital-specific departmental level.For a discussion of the hospital-specificoverall ancillary CCR calculation, werefer readers to the CY 2007 OPPS/ASCfinal rule <strong>with</strong> comment period (71 FR67983 through 67985). Onelongstanding exception to this generalmethodology for calculation of CCRsused for converting charges to costs oneach claim is the calculation of medianblood costs, as discussed in sectionII.A.2.d.(2) of the proposed rule and thisfinal rule <strong>with</strong> comment period andwhich has been our standard policysince the CY 2005 OPPS.For the CCR calculation process, weused the same general approach that weused in developing the final APC ratesfor CY 2007 and thereafter, using therevised CCR calculation that excludedthe costs of paramedical educationprograms and weighted the outpatientcharges by the volume of outpatientservices furnished by the hospital. Werefer readers to the CY 2007 OPPS/ASCfinal rule <strong>with</strong> comment period for moreinformation (71 FR 67983 through67985). We first limited the populationof cost reports to only those forhospitals that filed outpatient claims inCY 2010 before determining whether theCCRs for such hospitals were valid.We then calculated the CCRs for eachcost center and the overall ancillaryCCR for each hospital for which we hadclaims data. We did this using hospitalspecificdata from the Hospital CostReport Information System (HCRIS). Weused the most recent available costreport data, in most cases, cost reports<strong>with</strong> cost reporting periods beginning inCY 2009. For the proposed rule, weused the most recently submitted costreports to calculate the CCRs to be usedto calculate median costs for theproposed CY 2012 OPPS payment rates.If the most recent available cost reportwas submitted but not settled, welooked at the last settled cost report todetermine the ratio of submitted tosettled cost using the overall ancillaryCCR, and we then adjusted the mostrecent available submitted, but notsettled, cost report using that ratio. Wethen calculated both an overall ancillaryCCR and cost center-specific CCRs foreach hospital. We used the overallancillary CCR referenced in sectionII.A.1.c. of the proposed rule for allpurposes that require use of an overallancillary CCR. We proposed to continuethis longstanding methodology for thecalculation of median costs for CY 2012.Since the implementation of theOPPS, some commenters have raisedconcerns about potential bias in theOPPS cost-based weights due to ‘‘chargecompression,’’ which is the practice ofapplying a lower charge markup tohigher cost services and a higher chargemarkup to lower cost services. As aresult, the cost-based weights mayreflect some aggregation bias,undervaluing high-cost items andovervaluing low-cost items when anestimate of average markup, embodiedin a single CCR, is applied to items ofwidely varying costs in the same costcenter.To explore this issue, in August 2006,we awarded a contract to RTIInternational (RTI) to study the effects ofcharge compression in calculating theIPPS cost-based relative weights,particularly <strong>with</strong> regard to the impacton inpatient diagnosis-related group(DRG) payments, and to considermethods to better capture the variationin cost and charges for individualservices when calculating costs for theIPPS relative weights across services inthe same cost center. RTI issued a reportin March 2007 <strong>with</strong> its findings oncharge compression, which is availableon the CMS Web site at: http://www.cms.gov/reports/downloads/Dalton.pdf.Although this report was focused largelyon charge compression in the context ofthe IPPS cost-based relative weights,because several of the findings wererelevant to the OPPS, we discussed thatreport in the CY 2008 OPPS/ASCproposed rule (72 FR 42641 through42643) and discussed those findingsVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00015 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2again in the CY 2008 OPPS/ASC finalrule <strong>with</strong> comment period (72 FR 66599through 66602).In August 2007, we contracted <strong>with</strong>RTI to evaluate the cost estimationprocess for the OPPS relative weightsbecause its 2007 report hadconcentrated on IPPS DRG cost-basedrelative weights. The results of RTI’sanalyses had implications for both theOPPS APC cost-based relative weightsand the IPPS MS–DRG (Medicareseverity) cost-based relative weights.The RTI final report can be found onRTI’s Web site at: http://www.rti.org/reports/cms/HHSM–500–2005–0029I/PDF/Refining_Cost_to_Charge_Ratios_200807_<strong>Final</strong>.pdf. For a completediscussion of the RTI recommendations,public comments, and our responses,we refer readers to the CY 2009 OPPS/ASC final rule <strong>with</strong> comment period (73FR 68519 through 68527).We addressed the RTI finding thatthere was aggregation bias in both theIPPS and the OPPS cost estimation ofexpensive and inexpensive medicalsupplies in the FY 2009 IPPS final rule.Specifically, we finalized our proposalfor both the OPPS and IPPS to createone cost center for ‘‘Medical SuppliesCharged to Patients’’ and one cost centerfor ‘‘Implantable Devices Charged toPatients,’’ essentially splitting the thencurrent CCR for ‘‘Medical Supplies andEquipment’’ into one CCR for low-costmedical supplies and another CCR forhigh-cost implantable devices in orderto mitigate some of the effects of chargecompression. Accordingly, inTransmittal 20 of the ProviderReimbursement Manual, Part II (PRM–II), Chapter 36, Form CMS–2552–96,which was issued in July 2009, wecreated a new subscripted Line 55.01 onWorksheet A for the ‘‘ImplantableDevices Charged to Patients’’ costcenter. This new subscripted costcenter, placed under the standard linefor ‘‘Medical Supplies Charged toPatients,’’ is available for use for costreporting periods beginning on or afterMay 1, 2009. A subscripted cost centeris the addition of a separate new costcenter line and description which bearsa logical relationship to the standardcost center line and is locatedimmediately following a standard costcenter line. Subscripting a cost centerline adds flexibility and cost centerexpansion capability to the cost report.For example, Line 55 of Worksheet A onForm CMS 2552–96 (the Medicarehospital cost report) is ‘‘MedicalSupplies Charged to Patients.’’ Theadditional cost center, which isolatesthe costs of ‘‘Implantable MedicalSupplies Charged to Patients’’, wascreated by adding subscripted Line

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274136 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations55.01 to Worksheet A and is defined ascapturing the costs and charges billed<strong>with</strong> the following UB–04 revenuecodes: 0275 (Pacemaker); 0276(Intraocular lens); 0278 (other implants);and 0624 (FDA investigations devices)(73 FR 48458).In preparation for the FY 2012 IPPSproposed rule and the CY 2012 OPPSproposed rule, we assessed theavailability of data in the ‘‘ImplantableDevices Charged to Patients’’ costcenter. In order to develop a robustanalysis regarding the use of cost datafrom the ‘‘Implantable Devices Chargedto Patients’’ cost center, we believe thatit is necessary to have a critical mass ofcost reports filed <strong>with</strong> data in this costcenter. The cost center for ‘‘ImplantableDevices Charged to Patients’’ is effectivefor cost reporting periods beginning onor after May 1, 2009. We checked theavailability of CY 2009 cost reports inthe December 31, 2010 quarter endingupdate of HCRIS, which is the latestupload of CY 2009 cost report data thatwe could use for the proposed rule. Wedetermined that there were only 437hospitals that had completed the‘‘Implantable Devices Charged toPatients’’ cost center (out ofapproximately 3,500 IPPS hospitals).We stated in the proposed rule that wedo not believe this is a sufficientamount of data from which to generatea meaningful analysis. Therefore, wedid not propose to use data from the‘‘Implantable Devices Charged toPatients’’ cost center to create a distinctCCR for Implantable Devices Charged toPatients for use in calculating the OPPSrelative weights for CY 2012. We statedthat we would reassess the availabilityof data for the ‘‘Implantable DevicesCharged to Patients’’ cost center for theCY 2013 OPPS rulemaking cycle.Because there is approximately a 3-yearlag in the availability of cost report datafor IPPS and OPPS ratesetting purposesin a given calendar year, we believe wemay be able to use data from the revisedMedicare hospital cost report form toestimate costs from charges forimplantable devices for the CY 2013OPPS relative weights. For a completediscussion of the rationale for thecreation of the new cost center for‘‘Implantable Devices Charged toPatients,’’ public comments, and ourresponses, we refer readers to the FY2009 IPPS final rule (73 FR 48458through 45467).In the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period, we indicated thatwe would be making some other OPPSspecificchanges in response to the RTIreport recommendations. Specifically,these changes included modifications tothe cost reporting software and theaddition of three new nonstandard costcenters. With regard to modifying thecost reporting preparation software inorder to offer additional descriptions fornonstandard cost centers to improve theaccuracy of reporting for nonstandardcost centers, we indicated that thechange would be made for the nextrelease of the cost report software. Thesechanges have been made to the costreporting software <strong>with</strong> theimplementation of CMS Transmittal 21,under Chapter 36 of the PRM–II,available on the CMS Web site at:http://www.cms.gov/Manuals/PBM/,which is effective for cost reportingperiods ending on or after October 1,2009.We also indicated that we intended toadd new nonstandard cost centers for‘‘Cardiac Rehabilitation,’’ ‘‘HyperbaricOxygen Therapy,’’ and ‘‘Lithotripsy.’’We note that, in January 2010, CMSissued Transmittal 21 which updatedthe PRM–II, Chapter 36, Form CMS–2552–96. One of the updates in thistransmittal established nonstandard costcenters for ‘‘Cardiac Rehabilitation,’’‘‘Hyperbaric Oxygen Therapy,’’ and‘‘Lithotripsy’’ for use on Worksheet A.These three new nonstandard costcenters became available for costreporting periods ending on or afterOctober 1, 2009, and are included in therevenue code to cost center crosswalkwe proposed to use for calculatingpayment rates for the CY 2012 OPPS (76FR 42183). Specifically, thenonstandard cost centers are: 3120(Cardiac Catheterization Laboratory);3230 (CAT Scan); 3430 (MagneticResonance Imaging (MRI)). The revenuecode to cost center crosswalk that weproposed to use for purposes ofestimating the median costs of itemsand services for the CY 2012 OPPS isavailable for review and continuouscomment (outside of comment on thisfinal rule <strong>with</strong> comment period) on theCMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/03_crosswalk.asp#TopOfPage.Furthermore, in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50075through 50080), we finalized ourproposal to create new standard costcenters for ‘‘Computed Tomography(CT),’’ ‘‘Magnetic Resonance Imaging(MRI),’’ and ‘‘Cardiac Catheterization,’’and to require that hospitals report thecosts and charges for these servicesunder new cost centers on the revisedMedicare cost report Form CMS 2552–10. As we discussed in the FY 2009IPPS/LTCH PPS and CY 2009 OPPS/ASC proposed and final rules, RTIfound that the costs and charges of CTscans, MRI, and cardiac catheterizationdiffer significantly from the costs andVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2charges of other services included in thestandard associated cost center. RTI alsoconcluded that both the IPPS and OPPSrelative weights would better estimatethe costs of those services if CMS wereto add standard costs centers for CTscans, MRI, and cardiac catheterizationin order for hospitals to reportseparately the costs and charges forthose services and in order for CMS tocalculate unique CCRs to estimate thecost from charges on claims data. (Werefer readers to the FY 2011 IPPS/LTCHPPS final rule (75 FR 50075 through50080) for a more detailed discussion onthe reasons for the creation of standardcost centers for CT scans, MRI, andcardiac catheterization.) The newstandard cost centers for MRI, CT scans,and cardiac catheterization are effectivefor cost report periods beginning on orafter May 1, 2010, on the revised costreport Form CMS–2552–10. CMS issuedthe new hospital cost report Form CMS–2552–10 on December 30, 2010. Thenew cost report form can be accessed atthe CMS Web site at: https://www.cms.gov/Manuals/PBM/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=1&sortOrder=ascending&itemID=CMS021935&intNumPerPage=10. Onceat this Web site, users should doubleclick on ‘‘Chapter 40.’’We believe that improved cost reportsoftware, the incorporation of newstandard and nonstandard cost centers,and the elimination of outdatedrequirements will improve the accuracyof the cost data contained in theelectronic cost report data files and,therefore, the accuracy of our costestimation processes for the OPPSrelative weights. We will continue ourstandard practice of examining ways inwhich we can improve the accuracy ofour cost estimation processes.<strong>Comment</strong>: <strong>Comment</strong>ers requested thatCMS reconsider its position to not usethe data from the implantable devicecost center to calculate the APC relativeweights for CY 2012. <strong>Comment</strong>ers notedthat in the FY 2012 IPPS proposed rule,CMS found that only 437 hospitals outof approximately 3,500 IPPS hospitalsreported data in the ‘‘ImplantableDevices Charged to Patients’’ cost centerof the Medicare hospital cost reportbased on the December 2010 update ofFY 2009 HCRIS. Several commenterssaid that an analysis by their contractoridentified nearly 800 hospitals using thenew cost center in the April 2011 HCRISupdate and estimated that 1000hospitals would be using the new costcenter by August 2011. Therefore, thecommenters believed there is now asufficient amount of data to use theimplantable device CCR to calculate therelative weights and improve the

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74137jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2accuracy of the payment rates.<strong>Comment</strong>ers also suggested that becausethe IPPS and OPPS use CCRs calculatedat different levels, the analysis ofrobustness for the new cost center is lesssignificant in the OPPS than in the IPPS,and should not be necessary beforeadopting the CCRs from the ImplantableDevice cost center. One commentersuggested that the only justifiable reasonto not implement the new CCR wouldbe for issues related to suspect data, andthat the limited use of the cost centershould not delay implementation of thenew Implantable Medical Device costcenter CCR. One commenter suggestedthat, should the available data bedeemed insufficient, CMS shouldprovide additional analysis justifyingwhy that data were insufficient, providedata on the representativeness of thehospitals reporting under theimplantable medical device cost centerand explore other alternatives inaddressing charge compression.Response: In the CY 2012 OPPS/ASCproposed rule, we indicated that we didnot have sufficient cost report data todevelop the kind of robust analysis thatwe assured the public we wouldprovide prior to implementing a newCCR for implantable medical devices.Therefore, we stated that we wouldreassess the availability of data for CY2013. We have reviewed the availabilityof FY 2009 cost reports in the June 30,2011 quarter ending update of HCRIS,which is the latest upload of FY 2009cost report data that we currently haveavailable. We have determined that, forcost reporting periods beginning on orafter May 1, 2009, the effective date ofline 55.30 (Implantable Devices Chargedto Patients), there were 363 hospitalspaid under the OPPS whose claims wereused for the calculation of median costsin the CY 2012 OPPS/ASC proposedrule (out of approximately 4,000 OPPShospitals) that have completed the‘‘Implantable Devices Charged toPatients’’ cost center in the HCRIS datafor the quarter ending December 31,2010. In contrast, we found that therewere 1,689 OPPS hospitals that reportedcosts in the implantable device costcenter in the HCRIS data for the quarterending June 30, 2011, that were used tocalculate the median costs that are thebasis for the CY 2012 payment ratesestablished in this final rule <strong>with</strong> publiccomment period.We agree that there are differencesbetween the OPPS and IPPS in thecalculation of the CCRs and their use inestablishing estimated costs. However,we believe that it is important toanalyze the CCRs used for calculation ofthe median costs for procedures that useimplantable devices and the impact ofchanges in these median costs onpayments for all services before the newCCRs for implantable devices areadopted. Such analysis is importantbecause it allows the opportunity for thepublic to provide comment on theimpact of the adoption of those CCRs onpayment for services that do not useimplantable devices. In a budget neutralpayment system, payment for servicesthat do not require implantable deviceswould be reduced as a result ofincreases in payment for services thatuse implantable devices. QuarterlyHCRIS updates and the commentersthemselves indicate that hundreds ofhospitals would report cost report datafor the new implantable device costcenter in the HCRIS data used for thisfinal rule <strong>with</strong> comment period,although such data was not available forthe proposed rule. This would create thepossibility that changes to payments forservices that include implantabledevices that appear in the final rule<strong>with</strong> comment period could be vastlydifferent from the proposed paymentsfor those services in the CY 2012proposed rule. Similarly, if we were touse the CCRs for implantable devices inthe calculation of the median costs forthis final rule <strong>with</strong> comment period, thepublic would not have had anopportunity to comment on the impactof their use on payments for servicesthat do not use implantable devices.We are not finalizing relative paymentweights based on the new CCR forimplantable devices charged to patientsfor CY 2012 because we believe that thetransition in reporting charges and costsfor implantable medical devices fromthe general medical supplies costcenters to a highly specialized costcenter for high cost items means that thefinal rule relative weights wouldotherwise be very different from theproposed rule relative weights. In theproposed rule cost report data, 363hospitals reported approximately $4.9billion in costs in the implantablemedical device cost center in WorksheetA. In the final rule cost report data,1,689 hospitals reported approximately$20.7 billion in costs in the implantablemedical device cost center onWorksheet A. Therefore, it was notpossible to calculate proposed paymentrates that would reflect the same use ofthe implantable medical device CCR aswould be used for the final rule due tothe transition. To the extent that the useof a CCR for implantable medicaldevices in the final rule might createmedian costs for services that requirehigh cost implantable medical devicesthat differ significantly from those weestimated for the proposed rule, theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00017 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2public would not have had anopportunity to comment on theunexpected changes to payments for allother services that would occur as aresult of using the CCR for implantablemedical devices.We believe that it is more appropriateto wait until CY 2013, when we expectto provide an impact analysis thatenables the public to assess the fullimpact of the use of the new CCR thatis specific to implantable devices onpayments for all services. Therefore, weare not using the CCRs that are specificto implantable devices in calculating theAPC relative weights for CY 2012.<strong>Comment</strong>: <strong>Comment</strong>ers urged CMS toincrease education efforts to encouragefaster hospital adoption of the use of theimplantable medical device cost center.One commenter suggested that morewidespread use of the implantabledevice cost center would improve thevalidity of payment weights based onthose estimated costs.Response: We agree that it isimportant that hospitals understandhow to accurately report data in the‘‘Implantable Devices Charged toPatients’’ cost center, and we haveworked to add more clarity to the costreport instructions. In addition, we alsobelieve that the December 31, 2010update of HCRIS reflected relatively fewentries for this cost center because thecorresponding cost center line was onlyavailable for use for cost reportingperiods beginning on or after May 1,2009. This timing of this effective datemeant that hospital data for this costcenter line would not be evident to CMSuntil the March 31, 2011 HCRIS update.However, this update occurred after theDecember 31, 2010 HCRIS update weused when we prepared the proposedrule.<strong>Comment</strong>: <strong>Comment</strong>ers suggested thatCMS monitor the accuracy of the datareported in the implantable device costcenter on the Medicare hospital costreport. <strong>Comment</strong>ers urged CMS toimpress upon the MedicareAdministrative Contractors (MACs) theimportance of establishing a mechanismto audit the implantable device costcenter to ensure that the costs andcharges are appropriately reported. Inaddition, one commenter suggested thatthe cost reporting software be modifiedto create a level 1 error in the casewhere no data is reported on line 55.30(Implantable Devices Charged toPatients) to compel hospitals to reportthat information.Response: We agree <strong>with</strong> thecommenters that the cost reportinglines, whether they are for implantabledevices charged to patients, MRI, CTscans, cardiac catheterization, or any

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274138 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsothers, should be subject to greater auditscrutiny from the Medicare contractors.The new Medicare cost report formCMS–2552–10, on line 121 ofWorksheet S–2, Part I, asks ‘‘Did thisfacility incur and report costs forimplantable devices charged to apatient? Enter in column 1 ‘Y’ for yes or‘N’ for no.’’ All hospital types, includingnon-IPPS hospitals, CAHs, andMaryland inpatient short-term acutehospitals, are required to properlyreport their costs and charges, and if theanswer to this question is ‘‘Y’’ for anytype of hospital, then line 72, column26, of Worksheet B, Part I must begreater than 0, <strong>with</strong> an accurate amountthat reflects the hospital’s costs forimplantable devices charged to patients.In addition, we note that a Level 1 editon the CMS–2552–10 form alreadyexists that ensures that line 72, column26, of Worksheet B, Part I (ImplantableDevices Charged to Patients onWorksheet A of the CMS–2552–10 form)is greater than 0 if Worksheet S–2, PartI, line 121 is ‘‘Y.’’ The edit is also setup for the reverse scenario; that is, ifthere is an amount on Worksheet B, PartI, line 72, column 26, then the responseon Worksheet S–2, Part I, line 121 mustbe ‘‘Y.’’ We do not agree <strong>with</strong>commenters that a level 1 error shouldbe established to force hospitals toreport costs on line 55.30 because it ispossible that some hospitals do notprovide services for which charges arereported in the revenue codes thatcorrespond to the costs that are to bereported on line 55.30 (for example,psychiatric hospitals).<strong>Comment</strong>: One commenter believedthat the standard cost centers forComputed Tomography and MagneticResonance Imaging would be artificiallylow due to hospital allocation of capitalcosts across the hospital rather than toparticular cost centers, and suggestedthat payments based on these CCRswould not accurately reflect theresources used in providing thoseservices. As a result, the commenterrecommended that CMS exercise asimilar degree of caution as that in theapproach for the new ‘‘ImplantableDevices Charged to Patients’’ cost centerCCRs before using any data based on thenew CT and MRI cost centers.Response: We provided backgroundon the creation of the new standard costcenters in the proposed rule and willreassess the availability of data for the‘‘Implantable Devices Charged toPatients’’ cost center, and the ‘‘MRI, CTScans, and Cardiac Catheterization’’ costcenters, for the CY 2013 OPPSrulemaking cycle. If appropriate, wewill propose to create distinct CCRs forthese cost centers at that time.<strong>Comment</strong>: <strong>Comment</strong>ers asked thatCMS create a new cost centerexclusively for the costs of MEG so thatthe calculation of the median cost forMEG would more accurately reflect theexpense of the equipment, maintenancecontract and dedicated staff necessary tofurnish the service. Several commenterssuggested that cost center 5400 shouldbe the primary cost center assignmentand 3280 should be the secondary costcenter assignment for revenue codes0860 (Magnetoencephalography(MEG)—General Classification) and0861 Magnoetoecnephalography (MEG).This would reverse the current costcenter assignments for these revenuecodes. Some commenters asked thatCMS adopt the non-standardsubscripted cost center assignment thatone MAC had allowed for its hospitalsthat furnish MEG.Response: In the absence ofrecommendations for use of otherexisting cost center’s CCRs, we continueto believe that for revenue codes 0860and 0861 nonstandard cost center 3280‘‘EKG and EEG’’ is an appropriateprimary cost center mapping and costcenter 5400 ‘‘Electroencephalography’’is an appropriate secondary cost centermapping. We welcomerecommendations on more suitablecurrently existing standard ornonstandard cost center CCRs. We willalso discuss the issue <strong>with</strong> the APCPanel.With regard to the request to create anew cost center exclusive to the costs ofMEG, as we stated in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod, we do not believe a new costcenter is needed to capture the costs ofMEG. Over the past several years, wehave either proposed or discussedpotential new standard and nonstandardcost centers for the Medicare hospitalcost report in our 2008, 2009, 2010,2011 hospital inpatient and outpatientfinal rules. All of the potential costcenters that we have discussed foraddition to the cost report, whetherstandard or nonstandard, havedemonstrated volume in the electronichospital cost report data. In its July 2008report on using cost report data toestimate costs for both the IPPS andOPPS (http://www.rti.org/reports/cms/),RTI International examined theelectronic hospital cost report databaseand recommended new standard andnonstandard cost centers on the basis ofreporting volume across hospitals. RTIInternational typically identified nofewer than 200 institutions reporting aspecific service category, such ascardiac catheterization or cardiacrehabilitation, in subscripted or otherlines for the new nonstandard andVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00018 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2standard cost centers. Historically, ourrationale for adding an officialnonstandard cost center to the costreport has been at the request ofMedicare contractors experiencing asignificant volume of requests for a costcenter for a specific type of service.In contrast, the volume of MEGservices has been and continues to beextremely low. In the hospitaloutpatient CY 2010 OPPS claims data,hospitals reported 150 units of MEGspread among the three CPT codes forMEG: 75 units of CPT code 95965(Magnetoencephalography (MEG),recording and analysis; for spontaneousbrain magnetic activity (e.g. epilepticcerebral cortex localization)); 38 units ofCPT code 95966(Magnetoencephalography (MEG),recording and analysis; for spontaneousbrain magnetic activity (e.g. epilepticcerebral cortex localization) for evokedmagnetic fields, single modality (e.g.sensory, motor, language or visualcortex localization)); and 37 units ofCPT code 95967(Magnetoencephalography (MEG),recording and analysis; for spontaneousbrain magnetic activity (e.g. epilepticcerebral cortex localization), for evokedmagnetic fields, each additionalmodality (e.g. sensory, motor language,or visual cortex localization (Listseparately in addition to code forprimary procedure))). This continuesthe pattern of very low volumes of thetotal of the 3 MEG codes that have beenreported in the outpatient setting sincethe creation of the codes in CY 2005 (39units in CY 2005, 75 units in CY 2006,102 units in CY 2007, 75 units in 2008,131 units in 2009, and 150 units in CY2010). Therefore, we continue to believethat a specific cost center is notappropriate for MEG, given thelongstanding low volume of this service.For a discussion of the APC Panelrecommendation on the final paymentpolicy for MEG, we refer readers tosection III.D. of this final rule <strong>with</strong>comment period.<strong>Comment</strong>: <strong>Comment</strong>ers requested thatCMS outline a method by which morediscrete cost center lines could berequested for capital-expensive serviceshaving their own NUBC revenue codes.Response: The process by which ahospital may request permission to usea subscripted line on a cost report isfound in the Provider ReimbursementManual, Part II (PRM–II), Chapter 40.Contractor approval is not necessary tosubscript lines on the cost report for usein reporting nonstandard cost centers, aslong as hospitals follow the Medicareguidelines in the PRM. However, asdiscussed above <strong>with</strong> regard to creationof national cost centers, we have either

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74139jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2proposed or discussed potential newstandard and nonstandard cost centersfor the Medicare hospital cost report incases where doing so would providemore accurate information that wouldjustify the resources and costsassociated <strong>with</strong> doing so. For example,we have proposed and finalizednonstandard cost centers such as thosefor Cardiac Rehabilitation, HyperbaricOxygen Therapy, and Lithotripsy (74 FR60344) as well as standard cost centersfor Implantable Medical DevicesCharged to Patients, CardiacCatheterization, ComputedTomography, and Magnetic ResonanceImaging through the annual rulemakingprocess.<strong>Comment</strong>: Several commentersrequested that CMS modify the revenuecode-to-cost center crosswalk to includedata on the number of providers billingusing each revenue code in the claimsdata whose cost reports contain theassociated cost center under eachmapping.Response: All of the data that arerequired to perform this analysis isavailable to the public. The HCRIS data,which include information from thehospital cost reports, are available onthe CMS Web site at http://www.cms.gov/CostReports/CostReportsFY/list.asp#TopOfPage,while our CMS Web site, http://www.cms.gov/HospitalOutpatientPPS,includes information about purchasingthe ‘‘OPPS Limited Data Set’’. TheHCRIS data can be used to extract thecost center information the commentersrequest while the claims data in theOPPS Limited Data Set include therevenue codes and HCPCS on the claimsbilled by each OPPS provider.2. Data Development Process andCalculation of Median CostsIn this section of this final rule <strong>with</strong>comment period, we discuss the use ofclaims to calculate OPPS payment ratesfor CY 2012. The hospital OPPS page onthe CMS Web site on which this finalrule <strong>with</strong> comment period is postedprovides an accounting of claims usedin the development of the final paymentrates at: http://www.cms.gov/HospitalOutpatientPPS. The accountingof claims used in the development ofthis final rule <strong>with</strong> comment period isincluded on the CMS Web site undersupplemental materials for this CY 2012OPPS/ASC final rule <strong>with</strong> commentperiod. That accounting providesadditional detail regarding the numberof claims derived at each stage of theprocess. In addition, below in thissection we discuss the file of claims thatcomprises the data set that is availablefor purchase under a CMS data useagreement. Our CMS Web site, http://www.cms.gov/HospitalOutpatientPPS,includes information about purchasingthe ‘‘OPPS Limited Data Set,’’ whichnow includes the additional variablespreviously available only in the OPPSIdentifiable Data Set, including ICD–9–CM diagnosis codes and revenue codepayment amounts. This file is derivedfrom the CY 2010 claims that were usedto calculate the proposed and finalpayment rates for the CY 2012 OPPS.We used the methodology describedin sections II.A.2.a. through II.A.2.e. ofthis final rule <strong>with</strong> comment period tocalculate the median costs we use toestablish the relative weights used incalculating the OPPS payment rates forCY 2012 shown in Addenda A and B tothe this rule <strong>with</strong> comment period(which are available via the Internet onthe CMS Web site). We refer readers tosection II.A.4. of the proposed rule andthis final rule <strong>with</strong> comment period fora discussion of the conversion of APCmedian costs to scaled paymentweights.<strong>Comment</strong>: <strong>Comment</strong>ers expressedconcern <strong>with</strong> respect to the volatility ofthe OPPS payment rates from year toyear. One commenter suggested a‘‘stability policy’’ that the median costsfrom claims be adjusted to limit changesfrom year to year and asked that CMSlimit any decreases in paymentcompared to the prior year to no morethan a 5-percent decline.Response: As previously discussed inthe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period (FR 75 71833), thereare a number of factors that contributeto median costs fluctuations from oneyear to the next including (but notlimited to) hospital behavior inadjusting mix of services, hospital costsand charges changes each year resultingin changes to the CCRs, reassignmentsof HCPCS codes, changes to OPPSpayment policy (for example, changes topackaging), and implementation ofcomposite APCs. We cannot stabilizehospital-driven fundamental inputs tothe calculation of OPPS payment rates.However, we have strived to resolvesome of the other potential reasons forinstability from year to year.Specifically, we continue to seek waysto use more claims data so that we havefewer APCs for which there are smallnumbers of single bills used to set theAPC median costs. Moreover, we havetried to eliminate APCs <strong>with</strong> very smallnumbers of single bills where we coulddo so. We recognize that changes topayment policies, such as the packagingof payment for ancillary and supportiveservices and the implementation ofcomposite APCs, may contribute tovolatility in payment rates in the shortVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00019 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2term. However, we believe that largerpayment packages and bundles shouldhelp to stabilize payments in the longterm by enabling us to use more claimsdata and by establishing payments forlarger groups of services. Further, inseeking to mitigate fluctuations in theOPPS, implementing such a systemwould make payments less reflective ofthe true service costs. Limitingdecreases to payments across all APCsin a budget neutral payment systemcould unfairly reduce the payments forother services due to the effects of thescaling that is necessary to maintainbudget neutrality and would distort therelativity of payment that is based onthe cost of all services.<strong>Comment</strong>: Several commentersexpressed concerns over the paymentreductions for device-dependent APCs,blood and blood products, multipleimaging composites, and packagedservices citing impact to beneficiaryaccess to necessary procedures andpatient safety. The commenters werealso concerned that payments do notaccurately reflect the costs of providingthe procedures.Response: We discuss the publiccomments we received on the paymentfor particular services throughout thisfinal rule <strong>with</strong> comment period.However, in general, we believe that ourmethodology for calculating thepayments made for services furnished inhospital outpatient departmentscomports <strong>with</strong> the statutoryrequirements and results in paymentsthat reflect the relative cost of theseservices <strong>with</strong>in the statutory constraintsof a budget neutral system. Indeed, ourdata show significant increase inpayment as a percentage of cost sincethe inception of the OPPS.a. Claims PreparationFor this final rule <strong>with</strong> commentperiod, we used the CY 2010 hospitaloutpatient claims processed before July1, 2011, to calculate the median costs ofAPCs that underpin the relative weightsfor CY 2012. To begin the calculation ofthe relative weights for CY 2012, wepulled all claims for outpatient servicesfurnished in CY 2010 from the nationalclaims history file. This is not thepopulation of claims paid under theOPPS, but all outpatient claims(including, for example, critical accesshospital (CAH) claims and hospitalclaims for clinical laboratory servicesfor persons who are neither inpatientsnor outpatients of the hospital).We then excluded claims <strong>with</strong>condition codes 04, 20, 21, and 77because these are claims that providerssubmitted to Medicare knowing that nopayment would be made. For example,

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274140 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsproviders submit claims <strong>with</strong> acondition code 21 to elicit an officialdenial notice from Medicare anddocument that a service is not covered.We then excluded claims for servicesfurnished in Maryland, Guam, the U.S.Virgin Islands, American Samoa, andthe Northern Mariana Islands becausehospitals in those geographic areas arenot paid under the OPPS, and, therefore,we do not use claims for servicesfurnished in these areas in ratesetting.We divided the remaining claims intothe three groups shown below. Groups2 and 3 comprise the 112 million claimsthat contain hospital bill types paidunder the OPPS.1. Claims that were not bill types 12X(Hospital Inpatient (Medicare Part Bonly)), 13X (Hospital Outpatient), 14x(Hospital—Laboratory ServicesProvided to Nonpatients), or 76X(Clinic—Community Mental HealthCenter). Other bill types are not paidunder the OPPS; therefore, these claimswere not used to set OPPS payment.2. Claims that were bill types 12X,13X or 14X. Claims <strong>with</strong> bill types 12Xand 13X are hospital outpatient claims.Claims <strong>with</strong> bill type 14X are laboratoryspecimen claims, of which we use asubset for the limited number ofservices in these claims that are paidunder the OPPS.3. Claims that were bill type 76X(CMHC).To convert charges on the claims toestimated cost, we multiplied thecharges on each claim by theappropriate hospital-specific CCRassociated <strong>with</strong> the revenue code for thecharge as discussed in section II.A.1.c.of this final rule <strong>with</strong> comment period.We then flagged and excluded CAHclaims (which are not paid under theOPPS) and claims from hospitals <strong>with</strong>invalid CCRs. The latter included claimsfrom hospitals <strong>with</strong>out a CCR; thosefrom hospitals paid an all-inclusive rate;those from hospitals <strong>with</strong> obviouslyerroneous CCRs (greater than 90 or lessthan 0.0001); and those from hospitals<strong>with</strong> overall ancillary CCRs that wereidentified as outliers (that exceeded+/¥3 standard deviations from thegeometric mean after removing errorCCRs). In addition, we trimmed theCCRs at the cost center (that is,departmental) level by removing theCCRs for each cost center as outliers ifthey exceeded+/¥ 3 standard deviations from thegeometric mean. We used a four-tieredhierarchy of cost center CCRs, which isthe revenue code-to-cost centercrosswalk, to match a cost center toevery possible revenue code appearingin the outpatient claims that is relevantto OPPS services, <strong>with</strong> the top tier beingthe most common cost center and thelast tier being the default CCR. If ahospital’s cost center CCR was deletedby trimming, we set the CCR for thatcost center to ‘‘missing’’ so that anothercost center CCR in the revenue centerhierarchy could apply. If no other costcenter CCR could apply to the revenuecode on the claim, we used thehospital’s overall ancillary CCR for therevenue code in question as the defaultCCR. For example, if a visit wasreported under the clinic revenue codebut the hospital did not have a cliniccost center, we mapped the hospitalspecificoverall ancillary CCR to theclinic revenue code. The revenue codeto-costcenter crosswalk is available forinspection and comment on the CMSWeb site: http://www.cms.gov/HospitalOutpatientPPS. Revenue codesthat we do not use to set medians or tomodel impacts are identified <strong>with</strong> an‘‘N’’ in the revenue code-to-cost centercrosswalk.We applied the CCRs as describedabove to claims <strong>with</strong> bill type 12X, 13X,or 14X, excluding all claims from CAHsand hospitals in Maryland, Guam, theU.S. Virgin Islands, American Samoa,and the Northern Mariana Islands andclaims from all hospitals for whichCCRs were flagged as invalid.We identified claims <strong>with</strong> conditioncode 41 as partial hospitalizationservices of hospitals and moved them toanother file. We note that the separatefile containing partial hospitalizationclaims is included in the files that areavailable for purchase as discussedabove.We then excluded claims <strong>with</strong>out aHCPCS code. We moved to another fileclaims that contained nothing butinfluenza and pneumococcalpneumonia (PPV) vaccines. Influenzaand PPV vaccines are paid at reasonablecost and, therefore, these claims are notused to set OPPS rates.We next copied line-item costs fordrugs, blood, and brachytherapy sourcesto a separate file (the lines stay on theclaim, but are copied onto another file).No claims were deleted when we copiedthese lines onto another file. These lineitemsare used to calculate a per unitmean and median cost and a per daymean and median cost for drugs andnonimplantable biologicals, therapeuticradiopharmaceutical agents, andbrachytherapy sources, as well as otherinformation used to set payment rates,such as a unit-to-day ratio for drugs.In the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period (74 FR 60517), wefirst adopted a policy to redistributesome portion of total cost of packageddrugs and biologicals to the separatelypayable drugs and biologicals asVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00020 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2acquisition and pharmacy overhead andhandling costs. As discussed further insection V.B.3. of this final rule <strong>with</strong>comment, as we proposed, we arecontinuing this policy for CY 2012.Therefore, we used the line-item costdata for drugs and biologicals for whichwe had a HCPCS code <strong>with</strong> ASP pricinginformation to calculate the ASP+Xvalues, first for all drugs and biologicals<strong>with</strong> HCPCS codes, whether separatelypaid or packaged, and then forseparately payable drugs and biologicalsand for packaged drugs and biologicals,respectively, by taking the ratio of totalclaim cost for each group relative tototal ASP dollars (per unit of each drugor biological HCPCS code’s July 2011ASP amount multiplied by total unitsfor each drug or biological in the CY2010 claims data). These values areASP+9 percent (for all drugs andbiologicals <strong>with</strong> HCPCS codes, whetherseparately paid or packaged), ASP–2percent (for drugs and biologicals thatare separately paid), and ASP+192percent (for drugs and biologicals thathave HCPCS codes and that arepackaged), respectively. As we discussin section V.B.3. of this final rule <strong>with</strong>comment period, and as we proposed,we are redistributing $169 million of thetotal cost in our claims data for codedpackaged drugs and biologicals <strong>with</strong> anASP to payment for separately payabledrugs and biologicals. We also areredistributing an additional $71.3million from the cost of uncodedpackaged drugs billed under pharmacyrevenue code series 025X (Pharmacy)and 026X (IV Therapy). This totalexcludes the cost of diagnostic andtherapeutic radiopharmaceuticalsbecause they are not reported underpharmacy revenue codes or under thepharmacy cost center on the hospitalcost report. Our CY 2012 redistributionof $240.3 million in estimated costsfrom coded and uncoded packageddrugs to separately payable drugsrepresents the $200 million in totalpackaged drug costs redistributed fromthe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 71967), updatedby the PPI for Pharmaceuticals forHuman Use, to derive a proportion ofredistributed costs to total costs. Wethen updated our analysis for this CY2012 OPPS/ASC final rule <strong>with</strong>comment period, holding the proportionof redistributed pharmacy overhead andhandling cost constant, both forpackaged coded drugs (35 percent) andfor packaged uncoded drugs (10.7percent), constant between the proposedrule and the final rule <strong>with</strong> commentperiod. This allowed us to keep theproportion of redistributed costs (and

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74141jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2thus the ASP+X percent) stable betweenthe proposed rule and the final rule<strong>with</strong> comment period. Redistributing atotal of $240.3 million in pharmacyoverhead cost from packaged drugs andbiologicals reduces the $1.4 billion costof packaged drugs and biologicals <strong>with</strong>HCPCS codes and ASPs to $1.16 billion,approximately a 17-percent reduction.Redistributing $71.3 million from thecost of uncoded packaged drugs andbiologicals reduces the $666 millioncost of uncoded drugs and biologicals to$594.7 million, approximately an 11-percent reduction. To implement ourCY 2012 policy to redistribute $169million from the pharmacy overheadcost of coded packaged drugs andbiologicals to separately payable drugsand biologicals and $71.3 million fromthe cost of uncoded packaged drugs, wemultiplied the cost of each packageddrug or biological <strong>with</strong> a HCPCS codeand ASP pricing information in our CY2010 claims data by 0.77, and wemultiplied all uncoded packagedpharmacy drug costs in our CY 2010claims data, excluding those fordiagnostic radiopharmaceuticals, by0.89. We also added the redistributed$240.3 million to the total cost ofseparately payable drugs and biologicalsin our CY 2010 claims data, whichincreased the relationship between thetotal cost for separately payable drugsand biologicals and ASP dollars for thesame drugs and biologicals from ASP–2 percent to ASP+4 percent. We referreaders to section V.B.3. of this finalrule <strong>with</strong> comment period for acomplete discussion of our policy to payfor separately paid drugs and biologicalsand pharmacy overhead for CY 2012.We then removed line-items that werenot paid during claim processing,presumably for a line-item rejection ordenial. The number of edits for validOPPS payment in the IntegratedOutpatient Code Editor (I/OCE) andelsewhere has grown significantly in thepast few years, especially <strong>with</strong> theimplementation of the full spectrum ofNational Correct Coding Initiative(NCCI) edits. To ensure that we areusing valid claims that represent thecost of payable services to set paymentrates, we removed line-items <strong>with</strong> anOPPS status indicator that were not paidduring claims processing in the claimyear, but have a status indicator of ‘‘S,’’‘‘T,’’ ‘‘V,’’ or ‘‘X’’ in the prospectiveyear’s payment system. This logicpreserves charges for services thatwould not have been paid in the claimyear but for which some estimate of costis needed for the prospective year, suchas services newly proposed to come offthe inpatient list for CY 2011 that wereassigned status indicator ‘‘C’’ in theclaim year. It also preserves charges forpackaged services so that the costs canbe included in the cost of the services<strong>with</strong> which they are reported, even ifthe CPT codes for the packaged serviceswere not paid because the service is partof another service that was reported onthe same claim or the code otherwiseviolates claims processing edits.For CY 2012, we proposed to continuethe policy we implemented for CY 2011to exclude line-item data for passthroughdrugs and biologicals (statusindicator ‘‘G’’ for CY 2010) andnonpass-through drugs and biologicals(status indicator ‘‘K’’ for CY 2010)where the charges reported on the claimfor the line were either denied orrejected during claims processing.Removing lines that were eligible forpayment but were not paid ensures thatwe are using appropriate data. The trimavoids using cost data on lines that webelieve were defective or invalidbecause those rejected or denied linesdid not meet the Medicare requirementsfor payment. For example, edits mayreject a line for a separately paid drugbecause the number of units billedexceeded the number of units thatwould be reasonable and, therefore, islikely a billing error (for example, a linereporting 55 units of a drug for which5 units is known to be a fatal dose). As<strong>with</strong> our trimming in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 71828) of line-items <strong>with</strong>a status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or‘‘X,’’ we believe that unpaid line-itemsrepresent services that are invalidlyreported and, therefore, should not beused for ratesetting. We believe thatremoving lines <strong>with</strong> valid statusindicators that were edited and not paidduring claims processing increases theaccuracy of the single bills used todetermine the mean unit costs for use inthe ASP+X calculation described insection V.B.3. of this final rule <strong>with</strong>comment period.b. Splitting Claims and Creation of‘‘Pseudo’’ Single Procedure Claims(1) Splitting ClaimsAs we proposed, for this CY 2012final rule <strong>with</strong> comment period, we thensplit the remaining claims into fivegroups: single majors; multiple majors;single minors; multiple minors; andother claims. (Specific definitions ofthese groups follow below.) For CY2012, we proposed to continue ourcurrent policy of defining majorprocedures as any HCPCS code havinga status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or‘‘X;’’ defining minor procedures as anycode having a status indicator of ‘‘F,’’VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00021 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2‘‘G,’’ ‘‘H,’’ ‘‘K,’’ ‘‘L,’’ ‘‘R,’’ ‘‘U,’’ or ‘‘N,’’and classifying ‘‘other’’ procedures asany code having a status indicator otherthan one that we have classified asmajor or minor. For CY 2012, weproposed to continue assigning statusindicator ‘‘R’’ to blood and bloodproducts; status indicator ‘‘U’’ tobrachytherapy sources; status indicator‘‘Q1’’ to all ‘‘STVX-packaged codes;’’status indicator ‘‘Q2’’ to all ‘‘T-packagedcodes;’’ and status indicator ‘‘Q3’’ to allcodes that may be paid through acomposite APC based on compositespecificcriteria or paid separatelythrough single code APCs when thecriteria are not met. As discussed in theCY 2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68709), weestablished status indicators ‘‘Q1,’’‘‘Q2,’’ and ‘‘Q3’’ to facilitateidentification of the different categoriesof codes. We proposed to treat thesecodes in the same manner for datapurposes for CY 2012 as we have treatedthem since CY 2008. Specifically, weproposed to continue to evaluatewhether the criteria for separatepayment of codes <strong>with</strong> status indicator‘‘Q1’’ or ‘‘Q2’’ are met in determiningwhether they are treated as major orminor codes. Codes <strong>with</strong> statusindicator ‘‘Q1’’ or ‘‘Q2’’ are carriedthrough the data either <strong>with</strong> statusindicator ‘‘N’’ as packaged or, if theymeet the criteria for separate payment,they are given the status indicator of theAPC to which they are assigned and areconsidered as ‘‘pseudo’’ singleprocedure claims for major codes. Codesassigned status indicator ‘‘Q3’’ are paidunder individual APCs unless theyoccur in the combinations that qualifyfor payment as composite APCs and,therefore, they carry the status indicatorof the individual APC to which they areassigned through the data process andare treated as major codes during boththe split and ‘‘pseudo’’ single creationprocess. The calculation of the mediancosts for composite APCs from multipleprocedure major claims is discussed insection II.A.2.e. of this final rule <strong>with</strong>comment period.Specifically, we divided theremaining claims into the following fivegroups:1. Single Procedure Major Claims:Claims <strong>with</strong> a single separately payableprocedure (that is, status indicator ‘‘S,’’‘‘T,’’ ‘‘V,’’ or ‘‘X,’’ which includes codes<strong>with</strong> status indicator ‘‘Q3’’); claims <strong>with</strong>one unit of a status indicator ‘‘Q1’’ code(‘‘STVX-packaged’’) where there was nocode <strong>with</strong> status indicator ‘‘S,’’ ‘‘T,’’‘‘V,’’ or ‘‘X’’ on the same claim on thesame date; or claims <strong>with</strong> one unit of astatus indicator ‘‘Q2’’ code (‘‘Tpackaged’’)where there was no code

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274142 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations<strong>with</strong> a status indicator ‘‘T’’ on the sameclaim on the same date.2. Multiple Procedure Major Claims:Claims <strong>with</strong> more than one separatelypayable procedure (that is, statusindicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X,’’ whichincludes codes <strong>with</strong> status indicator‘‘Q3’’), or multiple units of one payableprocedure. These claims include thosecodes <strong>with</strong> a status indicator ‘‘Q2’’ code(‘‘T-packaged’’) where there was noprocedure <strong>with</strong> a status indicator ‘‘T’’on the same claim on the same date ofservice but where there was anotherseparately paid procedure on the sameclaim <strong>with</strong> the same date of service (thatis, another code <strong>with</strong> status indicator‘‘S,’’ ‘‘V,’’ or ‘‘X’’). We also include, inthis set, claims that contained one unitof one code when the bilateral modifierwas appended to the code and the codewas conditionally or independentlybilateral. In these cases, the claimsrepresented more than one unit of theservice described by the code,not<strong>with</strong>standing that only one unit wasbilled.3. Single Procedure Minor Claims:Claims <strong>with</strong> a single HCPCS code thatwas assigned status indicator ‘‘F,’’ ‘‘G,’’‘‘H,’’ ‘‘K,’’ ‘‘L,’’ ‘‘R,’’ ‘‘U,’’ or ‘‘N’’ andnot status indicator ‘‘Q1’’ (‘‘STVXpackaged’’)or status indicator ‘‘Q2’’ (‘‘Tpackaged’’)code.4. Multiple Procedure Minor Claims:Claims <strong>with</strong> multiple HCPCS codes thatare assigned status indicator ‘‘F,’’ ‘‘G,’’‘‘H,’’ ‘‘K,’’ ‘‘L,’’ ‘‘R,’’ ‘‘U,’’ or ‘‘N;’’ claimsthat contain more than one code <strong>with</strong>status indicator ‘‘Q1’’ (‘‘STVXpackaged’’)or more than one unit of acode <strong>with</strong> status indicator ‘‘Q1’’ but nocodes <strong>with</strong> status indicator ‘‘S,’’ ‘‘T,’’‘‘V,’’ or ‘‘X’’ on the same date of service;or claims that contain more than onecode <strong>with</strong> status indicator ‘‘Q2’’ (Tpackaged),or ‘‘Q2’’ and ‘‘Q1,’’ or morethan one unit of a code <strong>with</strong> statusindicator ‘‘Q2’’ but no code <strong>with</strong> statusindicator ‘‘T’’ on the same date ofservice.5. Non-OPPS Claims: Claims thatcontain no services payable under theOPPS (that is, all status indicators otherthan those listed for major or minorstatus). These claims were excludedfrom the files used for the OPPS. Non-OPPS claims have codes paid underother fee schedules, for example,durable medical equipment or clinicallaboratory tests, and do not contain acode for a separately payable orpackaged OPPS service. Non-OPPSclaims include claims for therapyservices paid sometimes under theOPPS but billed, in these non-OPPScases, <strong>with</strong> revenue codes indicatingthat the therapy services would be paidunder the Medicare Physician FeeSchedule (MPFS).The claims listed in numbers 1, 2, 3,and 4 above are included in the data filethat can be purchased as describedabove. Claims that contain codes towhich we have assigned statusindicators ‘‘Q1’’ (‘‘STVX-packaged’’)and ‘‘Q2’’ (‘‘T-packaged’’) appear in thedata for the single major file, themultiple major file, and the multipleminor file used for ratesetting. Claimsthat contain codes to which we haveassigned status indicator ‘‘Q3’’(composite APC members) appear inboth the data of the single and multiplemajor files used in this final rule <strong>with</strong>comment period, depending on thespecific composite calculation.We did not receive any publiccomments on our proposed process oforganizing claims by type. Therefore, forthe reasons set forth in the proposedrule (76 FR 42185 through 41286), weare finalizing our CY 2012 proposal<strong>with</strong>out modification. (2) Creation of‘‘Pseudo’’ Single Procedure ClaimsAs we proposed, to develop ‘‘pseudo’’single procedure claims for this finalrule <strong>with</strong> comment period, weexamined both the multiple proceduremajor claims and the multipleprocedure minor claims. We firstexamined the multiple major procedureclaims for dates of service to determineif we could break them into ‘‘pseudo’’single procedure claims using the datesof service for all lines on the claim. Ifwe could create claims <strong>with</strong> singlemajor procedures by using dates ofservice, we created a single procedureclaim record for each separately payableprocedure on a different date of service(that is, a ‘‘pseudo’’ single).As we proposed, for this final rule<strong>with</strong> comment period, we also used thebypass codes listed in Addendum N tothis final rule <strong>with</strong> comment period(which is referenced in section XVII. ofthis final rule <strong>with</strong> comment period andavailable via the Internet on the CMSWeb site) and discussed in sectionII.A.1.b. of this final rule <strong>with</strong> commentperiod to remove separately payableprocedures which we determinedcontained limited or no packaged costsor that were otherwise suitable forinclusion on the bypass list from amultiple procedure bill. As discussedabove, we ignore the ‘‘overlap bypasscodes,’’ that is, those HCPCS codes thatare both on the bypass list and aremembers of the multiple imagingcomposite APCs, in this initialassessment for ‘‘pseudo’’ singleprocedure claims. The CY 2012‘‘overlap bypass codes’’ are listed inAddendum N to this final rule <strong>with</strong>comment period (which is available viaVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00022 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2the Internet on the CMS Web site).When one of the two separately payableprocedures on a multiple procedureclaim was on the bypass list, we splitthe claim into two ‘‘pseudo’’ singleprocedure claim records. The singleprocedure claim record that containedthe bypass code did not retain packagedservices. The single procedure claimrecord that contained the otherseparately payable procedure (but nobypass code) retained the packagedrevenue code charges and the packagedHCPCS code charges. We also removedlines that contained multiple units ofcodes on the bypass list and treatedthem as ‘‘pseudo’’ single procedureclaims by dividing the cost for themultiple units by the number of unitson the line. Where one unit of a single,separately payable procedure coderemained on the claim after removal ofthe multiple units of the bypass code,we created a ‘‘pseudo’’ single procedureclaim from that residual claim record,which retained the costs of packagedrevenue codes and packaged HCPCScodes. This enabled us to use claimsthat would otherwise be multipleprocedure claims and could not be used.As we proposed, for this final rule<strong>with</strong> comment period, we then assessedthe claims to determine if the criteria forthe multiple imaging composite APCs,discussed in section II.A.2.e.(5) of thisfinal rule <strong>with</strong> comment period, weremet. Where the criteria for the imagingcomposite APCs were met, we created a‘‘single session’’ claim for the applicableimaging composite service anddetermined whether we could use theclaim in ratesetting. For HCPCS codesthat are both conditionally packagedand are members of a multiple imagingcomposite APC, we first assessedwhether the code would be packagedand, if so, the code ceased to beavailable for further assessment as partof the composite APC. Because thepackaged code would not be aseparately payable procedure, weconsidered it to be unavailable for usein setting the composite APC mediancost. Having identified ‘‘single session’’claims for the imaging composite APCs,we reassessed the claim to determine if,after removal of all lines for bypasscodes, including the ‘‘overlap bypasscodes,’’ a single unit of a singleseparately payable code remained onthe claim. If so, we attributed thepackaged costs on the claim to thesingle unit of the single remainingseparately payable code other than thebypass code to create a ‘‘pseudo’’ singleprocedure claim. We also identifiedline-items of overlap bypass codes as a‘‘pseudo’’ single procedure claim. This

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74143jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2allowed us to use more claims data forratesetting purposes.As we proposed, for this final rule<strong>with</strong> comment period, we alsoexamined the multiple procedure minorclaims to determine whether we couldcreate ‘‘pseudo’’ single procedureclaims. Specifically, where the claimcontained multiple codes <strong>with</strong> statusindicator ‘‘Q1’’ (‘‘STVX-packaged’’) onthe same date of service or containedmultiple units of a single code <strong>with</strong>status indicator ‘‘Q1,’’ we selected thestatus indicator ‘‘Q1’’ HCPCS code thathad the highest CY 2011 relative weight,set the units to one on that HCPCS codeto reflect our policy of paying only oneunit of a code <strong>with</strong> a status indicator of‘‘Q1.’’ We then packaged all costs for thefollowing into a single cost for the ‘‘Q1’’HCPCS code that had the highest CY2011 relative weight to create a‘‘pseudo’’ single procedure claim forthat code: additional units of the statusindicator ‘‘Q1’’ HCPCS code <strong>with</strong> thehighest CY 2011 relative weight; othercodes <strong>with</strong> status indicator ‘‘Q1’’; andall other packaged HCPCS codes andpackaged revenue code costs. Wechanged the status indicator for theselected code from the data statusindicator of ‘‘N’’ to the status indicatorof the APC to which the selectedprocedure was assigned for further dataprocessing and considered this claim asa major procedure claim. We used thisclaim in the calculation of the APCmedian cost for the status indicator‘‘Q1’’ HCPCS code.Similarly, as we proposed, for thisfinal rule <strong>with</strong> comment period, wherea multiple procedure minor claimcontained multiple codes <strong>with</strong> statusindicator ‘‘Q2’’ (‘‘T-packaged’’) ormultiple units of a single code <strong>with</strong>status indicator ‘‘Q2,’’ we selected thestatus indicator ‘‘Q2’’ HCPCS code thathad the highest CY 2011 relative weight,set the units to one on that HCPCS codeto reflect our policy of paying only oneunit of a code <strong>with</strong> a status indicator of‘‘Q2.’’ We then packaged all costs for thefollowing into a single cost for the ‘‘Q2’’HCPCS code that had the highest CY2011 relative weight to create a‘‘pseudo’’ single procedure claim forthat code: additional units of the statusindicator ‘‘Q2’’ HCPCS code <strong>with</strong> thehighest CY 2011 relative weight; othercodes <strong>with</strong> status indicator ‘‘Q2’’; andother packaged HCPCS codes andpackaged revenue code costs. Wechanged the status indicator for theselected code from a data statusindicator of ‘‘N’’ to the status indicatorof the APC to which the selected codewas assigned, and we considered thisclaim as a major procedure claim.As we proposed, for this final rule<strong>with</strong> comment period, where a multipleprocedure minor claim containedmultiple codes <strong>with</strong> status indicator‘‘Q2’’ (‘‘T-packaged’’) and statusindicator ‘‘Q1’’ (‘‘STVX-packaged’’), weselected the T-packaged status indicator‘‘Q2’’ HCPCS code that had the highestrelative weight for CY 2011 and set theunits to one on that HCPCS code toreflect our policy of paying only oneunit of a code <strong>with</strong> a status indicator of‘‘Q2.’’ We then packaged all costs for thefollowing into a single cost for theselected (‘‘T packaged’’) HCPCS code tocreate a ‘‘pseudo’’ single procedureclaim for that code: additional units ofthe status indicator ‘‘Q2’’ HCPCS code<strong>with</strong> the highest CY 2011 relativeweight; other codes <strong>with</strong> statusindicator ‘‘Q2’’; codes <strong>with</strong> statusindicator ‘‘Q1’’ (‘‘STVX-packaged’’); andother packaged HCPCS codes andpackaged revenue code costs. We favorstatus indicator ‘‘Q2’’ over ‘‘Q1’’ HCPCScodes because ‘‘Q2’’ HCPCS codes havehigher CY 2011 relative weights. If astatus indicator ‘‘Q1’’ HCPCS code hada higher CY 2011 relative weight, itwould become the primary code for thesimulated single bill process. Wechanged the status indicator for theselected status indicator ‘‘Q2’’ (‘‘Tpackaged’’)code from a data statusindicator of ‘‘N’’ to the status indicatorof the APC to which the selected codewas assigned and we considered thisclaim as a major procedure claim.We then applied our process forcreating ‘‘pseudo’’ single procedureclaims to the conditionally packagedcodes that do not meet the criteria forpackaging, which enabled us to createsingle procedure claims from them,where they meet the criteria for singleprocedure claims. Conditionallypackaged codes are identified usingstatus indicators ‘‘Q1’’ and ‘‘Q2,’’ andare described in section XI.A.1. of thisfinal rule <strong>with</strong> comment period.Lastly, as we proposed, for this finalrule <strong>with</strong> comment period, we excludedthose claims that we were not able toconvert to single procedure claims evenafter applying all of the techniques forcreation of ‘‘pseudo’’ single procedureclaims to multiple procedure majorclaims and to multiple procedure minorclaims. As has been our practice inrecent years, we also excluded claimsthat contained codes that were viewedas independently or conditionallybilateral and that contained the bilateralmodifier (Modifier 50 (Bilateralprocedure)) because the line-item costfor the code represented the cost of twounits of the procedure, not<strong>with</strong>standingthat hospitals billed the code <strong>with</strong> a unitof one.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00023 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2<strong>Comment</strong>: <strong>Comment</strong>ers supported theproposed process for creating pseudosingle procedure claims.Response: We appreciate thecommenters’ support and will continueto look for ways to refine the process tosecure more claims data for use incalculating median costs.After consideration of the publiccomments we received, as we proposed,we are continuing to apply the proposedmethodology described above for thepurpose of creating pseudo singleprocedure claims for the CY 2012 OPPS.c. Completion of Claim Records andMedian Cost Calculations(1) General ProcessAs we proposed, for this final rule<strong>with</strong> comment period, we thenpackaged the costs of packaged HCPCScodes (codes <strong>with</strong> status indicator ‘‘N’’listed in Addendum B to this final rule<strong>with</strong> comment period (which isreferenced in section XVII. of this finalrule <strong>with</strong> comment period and availablevia the Internet on the CMS Web site)and the costs of those lines for codes<strong>with</strong> status indicator ‘‘Q1’’ or ‘‘Q2’’when they are not separately paid), andthe costs of the services reported underpackaged revenue codes in Table 2below that appeared on the claim<strong>with</strong>out a HCPCS code into the cost ofthe single major procedure remaining onthe claim.As noted in the CY 2008 OPPS/ASCfinal rule <strong>with</strong> comment period (72 FR66606), for the CY 2008 OPPS, weadopted an APC Panel recommendationthat CMS should review the final list ofpackaged revenue codes for consistency<strong>with</strong> OPPS policy and ensure that futureversions of the I/OCE edit accordingly.As we have in the past, we willcontinue to compare the final list ofpackaged revenue codes that we adoptfor CY 2012 to the revenue codes thatthe I/OCE will package for CY 2012 toensure consistency.In the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period (73 FR 68531), wereplaced the NUBC standardabbreviations for the revenue codeslisted in Table 2 of the CY 2009 OPPS/ASC proposed rule <strong>with</strong> the mostcurrent NUBC descriptions of therevenue code categories andsubcategories to better articulate themeanings of the revenue codes <strong>with</strong>outchanging the proposed list of revenuecodes. In the CY 2010 OPPS/ASC finalrule <strong>with</strong> comment period (74 FR 60362through 60363), we finalized changes tothe packaged revenue code list based onour examination of the updated NUBCcodes and public comment to the CY2010 proposed list of packaged revenue

74144 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationscodes. For CY 2012, as we did for CY2011, we reviewed the changes torevenue codes that were effective duringCY 2010 for purposes of determining thecharges reported <strong>with</strong> revenue codes but<strong>with</strong>out HCPCS codes that we wouldpropose to package for the CY 2012OPPS. We believe that the chargesreported under the revenue codes listedin Table 2 below continue to reflectancillary and supportive services forwhich hospitals report charges <strong>with</strong>outHCPCS codes. Therefore, for CY 2012,as we proposed, we are continuing topackage the costs that we derive fromthe charges reported <strong>with</strong>out HCPCScode under the revenue codes displayedin Table 2 below for purposes ofcalculating the median costs on whichthe CY 2012 OPPS are based.We did not receive any publiccomments on our proposed list ofpackaged revenue codes. Therefore, forthe reasons set forth in the proposedrule (76 FR 42187 through 42188), weare finalizing the proposed packagedrevenue codes for CY 2012, <strong>with</strong>outmodification, which are identified inTable 2 below. We note that theserevenue codes include only revenuecodes that were in effect in CY 2010, theyear of the claims data on which the CY2012 OPPS payment rates are based.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00024 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74145jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00025 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.001

74146 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–CIn accordance <strong>with</strong> our longstandingpolicy, as we proposed, we arecontinuing to exclude: (1) Claims thathad zero costs after summing all costson the claim; and (2) claims containingpackaging flag number 3. Effective forservices furnished on or after July 1,2004, the I/OCE assigned packaging flagnumber 3 to claims on which hospitalssubmitted token charges less than $1.01for a service <strong>with</strong> status indicator ‘‘S’’ or‘‘T’’ (a major separately payable serviceunder the OPPS) for which the fiscalintermediary or MAC was required toallocate the sum of charges for services<strong>with</strong> a status indicator equaling ‘‘S’’ or‘‘T’’ based on the relative weight of theAPC to which each code was assigned.We do not believe that these charges,which were token charges as submittedby the hospital, are valid reflections ofhospital resources. Therefore, wedeleted these claims. We also deletedclaims for which the charges equaledthe revenue center payment (that is, theMedicare payment) on the assumptionthat, where the charge equaled thepayment, to apply a CCR to the chargewould not yield a valid estimate ofVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00026 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2relative provider cost. We arecontinuing these processes for the CY2012 OPPS.As we proposed, for this final rule<strong>with</strong> comment period, for the remainingclaims, we then standardized 60 percentof the costs of the claim (which we havepreviously determined to be the laborrelatedportion) for geographicdifferences in labor input costs. Wemade this adjustment by determiningthe wage index that applied to thehospital that furnished the service anddividing the cost for the separately paidHCPCS code furnished by the hospitalER30NO11.002

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74147jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2by that wage index. The claimsaccounting that we provide for theproposed and final rule contains theformula we use to standardize the totalcost for the effects of the wage index. Ashas been our policy since the inceptionof the OPPS, we proposed to use thepre-reclassified wage indices forstandardization because we believe thatthey better reflect the true costs of itemsand services in the area in which thehospital is located than the postreclassificationwage indices and,therefore, would result in the mostaccurate unadjusted median costs.In accordance <strong>with</strong> our longstandingpractice, as proposed, for this final rule<strong>with</strong> comment period, we also excludedsingle and pseudo single procedureclaims for which the total cost on theclaim was outside 3 standard deviationsfrom the geometric mean of units foreach HCPCS code on the bypass list(because, as discussed above, we usedclaims that contain multiple units of thebypass codes).After removing claims for hospitals<strong>with</strong> error CCRs, claims <strong>with</strong>out HCPCScodes, claims for immunizations notcovered under the OPPS, and claims forservices not paid under the OPPS,approximately 109 million claims wereleft. Using these 109 million claims, wecreated approximately 110 millionsingle and ‘‘pseudo’’ single procedureclaims, of which we used slightly morethan 108 million single bills (aftertrimming out approximately 888,000claims as discussed in section II.A.1.a.of this final rule <strong>with</strong> comment period)in the CY 2012 median developmentand ratesetting.We used these claims to calculate thefinal CY 2012 median costs for eachseparately payable HCPCS code andeach APC. The comparison of HCPCScode-specific and APC mediansdetermines the applicability of the 2times rule. Section 1833(t)(2) of the Actprovides that, subject to certainexceptions, the items and services<strong>with</strong>in an APC group cannot beconsidered comparable <strong>with</strong> respect tothe use of resources if the highestmedian (or mean cost, if elected by theSecretary) for an item or service in thegroup is more than 2 times greater thanthe lowest median cost for an item orservice <strong>with</strong>in the same group (the 2times rule). We note that, for purposesof identifying significant HCPCS forexamination in the 2 times rule, weconsider codes that have more than1,000 single major claims or codes thathave both greater than 99 single majorclaims and contribute at least 2 percentof the single major claims used toestablish the APC median cost to besignificant (75 FR 71832). Thislongstanding definition of when aHCPCS code is significant for purposesof the 2 times rule was selected becausewe believe that a subset of 1,000 claimsis negligible <strong>with</strong>in the set ofapproximately 100 million singleprocedure or single session claims weuse for establishing median costs.Similarly, a HCPCS code for whichthere are fewer than 99 single bills andwhich comprises less than 2 percent ofthe single major claims <strong>with</strong>in an APCwill have a negligible impact on theAPC median. Unlisted codes are notused in establishing the percent ofclaims contributing to the APC, nor aretheir costs used in the calculation of theAPC median. <strong>Final</strong>ly, we reviewed themedian costs for the services for whichwe are proposing to pay separatelyunder this final rule <strong>with</strong> commentperiod, and we reassigned HCPCS codesto different APCs where it wasnecessary to ensure clinical andresource homogeneity <strong>with</strong>in the APCs.Section III. of this final rule <strong>with</strong>comment period includes a discussionof many of the HCPCS code assignmentchanges that resulted from examinationof the median costs and for otherreasons. The APC medians wererecalculated after we reassigned theaffected HCPCS codes. Both the HCPCScode-specific medians and the APCmedians were weighted to account forthe inclusion of multiple units of thebypass codes in the creation of‘‘pseudo’’ single procedure claims.As we discuss in sections II.A.2.d.and II.A.2.e. and in section VIII.B. ofthis final rule <strong>with</strong> comment period, insome cases, APC median costs arecalculated using variations of theprocess outlined above. Specifically,section II.A.2.d. of this final rule <strong>with</strong>comment period addresses thecalculation of single APC criteria-basedmedian costs. Section II.A.2.e. of thisfinal rule <strong>with</strong> comment perioddiscusses the calculation of compositeAPC criteria-based median costs.Section VIII.B. of this final rule <strong>with</strong>comment period addresses themethodology for calculating the mediancosts for partial hospitalization services.We did not receive any publiccomments on this aspect of the mediancalculation process that we proposed forCY 2012. Therefore, we are adopting itas final.After consideration of the publiccomments we received, we arefinalizing our proposed methodology forcalculating median costs for purposes ofcreating payment weights andsubsequent payment rates for the CY2012 OPPS.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2(2) APC Panel RecommendationsRegarding Data DevelopmentAt the February 28–March 1, 2011APC Panel Meeting, we provided theAPC Panel Data Subcommittee <strong>with</strong> alist of all APCs fluctuating by greaterthan 10 percent when comparing the CY2011 OPPS final rule median costsbased on CY 2009 claims processedthrough June 30, 2010, to those based onCY 2010 OPPS/ASC final rule data (CY2008 claims processed through June 30,2009). We included explanatory datawhere possible to allow the DataSubcommittee to focus on APC medianchanges that required moreinvestigation, based on its request (75FR 71834). The APC Panel DataSubcommittee reviewed the fluctuationsin the APC median costs but did notexpress particular concerns <strong>with</strong> themedian cost changes.We also provided the APC Panel DataSubcommittee <strong>with</strong> a summary of costand CCR data related to the MyocardialPositron Emission Tomography (PET)imaging APC, APC 0307, as well as theassociated diagnosticradiopharmaceutical, Rb82 rubidium,based on a request for data related to thedecline in the APC median cost from theCY 2010 OPPS final rule to the CY 2011OPPS proposed rule. The DataSubcommittee noted a decline in theCCRs associated <strong>with</strong> the HCPCS codesin APC 0307, as well as declines in theline-item costs of the associateddiagnostic radiopharmaceutical.At the February 28–March 1, 2011APC Panel Meeting, the APC Panelmade a number of recommendationsrelated to the data process. The Panel’srecommendations and our responsesfollow.Recommendation 1: The Panelcommends the CMS staff for respondingto the data requests of the DataSubcommittee.CMS Response to Recommendation 1:We appreciate this recommendation.Recommendation 2: The Panelrecommends that the work of the DataSubcommittee continue.CMS Response to Recommendation 2:We are accepting this recommendation.Recommendation 3: The Panelrecommends that Agatha Nolen, D.Ph.,M.S., F.A.S.H.P., serve as actingchairperson for the winter 2011 meetingof the Data Subcommittee.CMS Response to Recommendation 3:We are accepting this recommendation.At the August 10–12, 2011 APC PanelMeeting, CMS again provided the APCPanel Data Subcommittee <strong>with</strong> a list ofall APCs fluctuating by greater than 10percent when comparing the CY 2012OPPS proposed rule median costs based

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274148 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationson CY 2010 claims processed throughDecember 21, 2010, to those based onCY 2011 OPPS/ASC final rule data (CY2009 claims processed through June 30,2010). We also gave an overview of theASP+X calculation and the CY 2012proposal for separately paid drugs, andan overview of the proposed payment(<strong>with</strong> DRG Cap) for CardiacResynchronization Therapy-Defibrillator(CRT–D) composite. The APC Panelmade a number of recommendationsrelated to specific services.Recommendations (4–9) are discussedas part of the discussion of the specificservice to which they pertain.Recommendation 10: The Panelrecommends that the work of the DataSubcommittee continue.CMS Response to Recommendation10: We are accepting thisrecommendation.Recommendation 14: The Panelrecommends that Daniel J. Pothen, M.S.,R.H.I.A, C.H.P.S., C.P.H.I.M.S., C.C.S.,C.C.S.-P., C.H.C., be named the chair ofthe Data SubcommitteeCMS Response to Recommendation14: We are accepting thisrecommendation.d. Calculation of Single Procedure APCCriteria-Based Median Costs(1) Device-Dependent APCsDevice-dependent APCs arepopulated by HCPCS codes that usually,but not always, require that a device beimplanted or used to perform theprocedure. For a full history of how wehave calculated payment rates fordevice-dependent APCs in previousyears and a detailed discussion of howwe developed the standard devicedependentAPC ratesettingmethodology, we refer readers to the CY2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66739 through66742). Overviews of the procedure-todeviceedits and device-to-procedureedits used in ratesetting for devicedependentAPCs are available in the CY2005 OPPS final rule <strong>with</strong> commentperiod (69 FR 65761 through 65763) andthe CY 2007 OPPS/ASC final rule <strong>with</strong>comment period (71 FR 68070 through68071).In the CY 2012 OPPS/ASC proposedrule (76 FR 42190), for CY 2012, weproposed to use the standardmethodology for calculating mediancosts for device-dependent APCs thatwas finalized in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71834 through 71837). (We referredreaders to section II.D.6. and II.A.e.6. ofthe proposed rule for detailedexplanations of the proposednonstandard methodology regardingcardiac resynchronization therapy). Thismethodology utilizes claims data thatgenerally represent the full cost of therequired device. Specifically, weproposed to calculate the median costsfor device-dependent APCs for CY 2012using only the subset of singleprocedure claims from CY 2010 claimsdata that pass the procedure-to-deviceand device-to-procedure edits; do notcontain token charges (less than $1.01)for devices; do not contain the ‘‘FB’’modifier signifying that the device wasfurnished <strong>with</strong>out cost to the provider,supplier, or practitioner, or where a fullcredit was received; and do not containthe ‘‘FC’’ modifier signifying that thehospital received partial credit for thedevice. The procedure-to-device editsrequire that when a particularprocedural HCPCS code is billed, theclaim must also contain an appropriatedevice code, while the device-toprocedureedits require that a claim thatcontains one of a specified set of devicecodes also contain an appropriateprocedure code. We stated in theproposed rule that we continue tobelieve the standard methodology forcalculating median costs for devicedependentAPCs gives us the mostappropriate median costs for devicedependentAPCs in which the hospitalincurs the full cost of the device.Table 3 of the proposed rule (76 FR42191) listed the APCs for which weproposed to use our standard devicedependentAPC ratesetting methodology(as explained in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71834 through 71837)) for CY 2012. Inthe proposed rule, we noted that thereare five proposed device-dependentAPC title changes and one proposeddeletion for CY 2012. As discussed indetail in section II.A.2.d.(6) of theproposed rule, we proposed to changethe title of APC 0083 from ‘‘Coronary orNon-Coronary Angioplasty andPercutaneous Valvuloplasty’’ to ‘‘Level IEndovascular Revascularization of theLower Extremity’’; the title of APC 0229from ‘‘Transcatheter Placement ofIntravascular Shunt and Stents’’ to‘‘Level II EndovascularRevascularization of the LowerExtremity’’; and the title of APC 0319from ‘‘Endovascular Revascularizationof the Lower Extremity’’ to ‘‘Level IIIEndovascular Revascularization of theLower Extremity.’’ We also proposed tochange the title of APC 0040 from‘‘Percutaneous Implantation ofNeurostimulator Electrodes’’ to ‘‘Level IImplantation/Revision/Replacement ofNeurostimulator Electrodes,’’ and thetitle of APC 0061 from ‘‘Laminectomy,Laparoscopy, or Incision forVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00028 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Implantation of NeurostimulatorElectrodes’’ to ‘‘Level II Implantation/Revision/Replacement ofNeurostimulator Electrodes,’’ asdiscussed in section III.D.1. of theproposed rule. In addition, as discussedin section II.A.2.e.(6) of the proposedrule, we proposed to delete APC 0418(Insertion of Left Ventricular PacingElectrode) for CY 2012. As we discussedin detail in section III.D.6. of theproposed rule, we proposed to limit thepayment for services that are assigned toAPC 0108 to the proposed IPPSstandardized payment amount for MS–DRG 227 (Cardiac Defibrillator Implant<strong>with</strong>out Cardiac Catheterization and<strong>with</strong>out Medical Complications andComorbidities), and we proposed tocontinue to apply the device edits andother standard features of the devicedependentAPCs to APC 0108. <strong>Final</strong>ly,we referred readers to Addendum A tothe proposed rule for the proposedpayment rates for device-dependentAPCs for CY 2012.<strong>Comment</strong>: Several commenterssupported CMS’ proposal to continueusing the standard methodology forcalculating median costs for devicedependentAPCs as well as thecontinued use of device coding edits toensure that hospitals are reportingcharges for implanted devices. Somecommenters recommended that CMScontinue examining and refining theratesetting methodology for proceduresinvolving devices in order to encouragethe continued development andproliferation of new technology, andthat CMS further improve the accuracyof estimates for the costs of devicesincluded in multiple procedure claimsused for the purpose of setting relativeweights. Some commenters asked forcontinued focus on coding education,particularly as it impacts the use ofproper HCPCS supply codes, so thatthese codes are appropriately reportedby hospital coders. Other commenterssupported the mandatory reporting ofall device HCPCS codes.Response: We appreciate thecommenters’ support of the continueduse of the standard device-dependentAPC ratesetting methodology and theprocedure-to-device and device-toprocedureedits. As we have stated inthe past (75 FR 71835 and 74 FR 60367),we agree <strong>with</strong> the commenters that weshould continue to encourage thedevelopment and proliferation of newtechnology under the OPPS. We havespecial mechanisms to provide paymentfor new technologies and services underthe OPPS, including new technologyAPCs and transitional pass-throughpayments devices. We refer readers tosections III.C. and IV.A., respectively, of

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74149this final rule <strong>with</strong> comment period formore information on these paymentmethodologies. For all OPPS services,we continue our efforts to use the datafrom as many claims as possible,through approaches such as use of thebypass list and date splitting of claimsas described further in section II.A. ofthis final rule <strong>with</strong> comment period,and through methodologies such asincreased packaging and compositeAPCs.As we have stated in the past (73 FR68535 through 68536 and 74 FR 60367),we agree that accurate reporting ofdevice, supply, and technology chargeswill help to ensure that these items areappropriately accounted for in futureyears’ OPPS payment rates. Weencourage stakeholders to carefullyreview HCPCS code descriptors, as wellas any guidance CMS may haveprovided for specific HCPCS codes. Inaddition, we have provided furtherinstructions on the billing of medicaland surgical supplies in the October2008 OPPS update (Transmittal 1599,Change Request 6196, dated September19, 2008) and the April 2009 OPPSupdate (Transmittal 1702, ChangeRequest 6416, dated March 13, 2009).For HCPCS codes that are paid underthe OPPS, providers may also submitinquiries to the AHA Central Office onHCPCS, which serves as a clearinghouseon the proper use of Level I HCPCScodes for hospitals and certain Level IIHCPCS codes for hospitals, physicians,and other health professionals. Inquiriesmust be submitted using the approvedform, which may be downloaded fromthe AHA Web site (http://www.ahacentraloffice.org) and eitherfaxed to (312) 422–4583 or maileddirectly to the AHA Central Office:Central Office on HCPCS, AmericanHospital Association, One NorthFranklin, Floor 29, Chicago, IL 60606.<strong>Comment</strong>: Some commentersconcurred <strong>with</strong> CMS’ proposeddetermination that APC 0385 (Level IProsthetic Urological Procedures) andAPC 0386 (Level II Prosthetic UrologicalProcedures) should be categorized asdevice-dependent APCs. Othercommenters expressed appreciation forthe proposed increase in payment forAPC 0425 (Level II Arthroplasty orImplantation <strong>with</strong> Prosthesis).Response: We appreciate thecommenters’ support of the designationof APC 0385 and APC 0386 as devicedependentAPCs and the proposedpayment increase for APC 0425.<strong>Comment</strong>: Several commentersexpressed concern that the proposed CY2012 payment rate for the implantationof cochlear implants, described by CPTcode 69930 (cochlear deviceimplantation, <strong>with</strong> or <strong>with</strong>outmastoidectomy) which is assigned toAPC 0259 (Level VII ENT Procedures),decreased by approximately 12 percentfrom that in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period.According to commenters, this paymentrate is inconsistent <strong>with</strong> the averagedecrease in proposed payment of allOPPS APCs relative to CY 2011 ofapproximately 6 percent and isinsufficient to cover hospitals’ costs forproviding this service and ensure thatbeneficiaries will continue to haveaccess to cochlear implants. Thecommenters observed, based on theiranalysis of Medicare claims data, thatwhile the overall median cost of APC0259 decreased, the component parts ofthe APC (that is, the device, theprocedure, and the other bundledsupplies and services) either remainedthe same or increased. The commentersrequested that CMS evaluate the dataupon which the proposed CY 2012payment rate for APC 0259 is based inorder to ensure its validity.Response: We appreciate thecommenters’ concerns regarding theproposed payment rate for proceduresinvolving cochlear implants. Under thestandard device-dependent APCratesetting methodology, the mediancost for APC 0259 is calculated usingonly those single bills that reflect thefull cost of the cochlear implant device.While we will monitor the changes inAPC 0259 over time, we believe that thepayment rate for this service, calculatedaccording to the standard devicedependentAPC ratesetting methodologyfor the proposed rule and this final rule<strong>with</strong> comment period, appropriatelyreflects hospitals’ relative costs forproviding this procedure as reported tous in the claims and cost report data.We note that the median cost for CPTcode 69930 calculated from the CY 2010hospital claims and cost report dataavailable for this final rule <strong>with</strong>comment is $28,892, approximately 6percent less than the median cost of$30,730 calculated from the CY 2009hospital claims and cost report dataupon which the final CY 2011 paymentrate was calculated.After consideration of the publiccomments we received, we arefinalizing our proposed CY 2012payment policies for device-dependentAPCs <strong>with</strong> modification. The CY 2012OPPS payment rates for devicedependentAPCs are based on theirmedian costs calculated from CY 2010claims and the most recent cost reportdata, using only single procedure claimsthat pass the procedure-to-device anddevice-to-procedure edits, do notcontain token charges for devices (lessthan $1.01), do not have an ‘‘FB’’modifier signifying that the device wasfurnished <strong>with</strong>out cost or <strong>with</strong> fullcredit, and do not contain an ‘‘FC’’modifier signifying that the hospitalreceived partial credit for the device.We continue to believe that the mediancosts calculated from the single claimsthat meet these criteria represent themost valid estimated relative costs ofthese services to hospitals when theyincur the full cost of the devicesrequired to perform the procedures.Table 3 below lists the APCs forwhich we used our standard devicedependentAPC ratesetting methodologyfor CY 2012. We note that we are notfinalizing our proposal to limit thepayment for services that are assigned toAPC 0108 to the IPPS standardizedpayment amount for MS–DRG 227, andthat we are continuing to apply thedevice edits and other standard featuresof the device-dependent APCs to thisAPC for CY 2012. We also are deletingAPC 0418 and changing the titles ofAPC 0108 and 0655 as we proposed. Werefer readers to section II.A.2.e.(6) ofthis final rule <strong>with</strong> comment period fora detailed discussion of these finalpolicies. We also note that we arerevising the APC titles for APC 0083,0229, and 0319 for CY 2012, as wediscuss in section II.A.2.d.(6) of thisfinal rule <strong>with</strong> comment period and thatwe are changing the APC titles for APC0040 and APC 0061 as discussed insection III.D.4.a. of this final rule <strong>with</strong>comment period. We refer readers toAddendum A to this final rule <strong>with</strong>comment period (which is available viathe Internet on the CMS Web site) forthe final payment rates for these APCsfor CY 2012.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00029 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74150 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00030 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.004

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74151jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–C(2) Blood and Blood ProductsSince the implementation of the OPPSin August 2000, we have made separatepayments for blood and blood productsthrough APCs rather than packagingpayment for them into payments for theprocedures <strong>with</strong> which they areadministered. Hospital payments for thecosts of blood and blood products, aswell as for the costs of collecting,processing, and storing blood and bloodproducts, are made through the OPPSpayments for specific blood productAPCs.In the CY 2012 OPPS/ASC proposedrule (76 FR 42191 through 42192), weproposed to continue to establishpayment rates for blood and bloodproducts using our blood-specific CCRmethodology, which utilizes actual orsimulated CCRs from the most recentlyavailable hospital cost reports to converthospital charges for blood and bloodproducts to costs. This methodology hasbeen our standard ratesettingmethodology for blood and bloodproducts since CY 2005. It wasdeveloped in response to data analysisindicating that there was a significantdifference in CCRs for those hospitals<strong>with</strong> and <strong>with</strong>out blood-specific costcenters, and past public commentsindicating that the former OPPS policyof defaulting to the overall hospital CCRfor hospitals not reporting a bloodspecificcost center often resulted in anunderestimation of the true hospitalcosts for blood and blood products.Specifically, in order to address thedifferences in CCRs and to better reflecthospitals’ costs, we proposed tocontinue to simulate blood CCRs foreach hospital that does not report ablood cost center by calculating the ratioof the blood-specific CCRs to hospitals’overall CCRs for those hospitals that doreport costs and charges for blood costcenters. We would then apply this meanratio to the overall CCRs of hospitals notreporting costs and charges for bloodcost centers on their cost reports inorder to simulate blood-specific CCRsfor those hospitals. We calculated themedian costs upon which the proposedCY 2012 payment rates for blood andblood products are based using theactual blood-specific CCR for hospitalsthat reported costs and charges for aVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00031 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2blood cost center and a hospital-specificsimulated blood-specific CCR forhospitals that did not report costs andcharges for a blood cost center.As we stated in the proposed rule (76FR 42192), we continue to believe thehospital-specific, blood-specific CCRmethodology best responds to theabsence of a blood-specific CCR for ahospital than alternative methodologies,such as defaulting to the overall hospitalCCR or applying an average bloodspecificCCR across hospitals. Becausethis methodology takes into account theunique charging and cost accountingstructure of each hospital, we believethat it yields more accurate estimatedcosts for these products. We believe thatcontinuing <strong>with</strong> this methodology in CY2012 would result in median costs forblood and blood products thatappropriately reflect the relativeestimated costs of these products forhospitals <strong>with</strong>out blood cost centersand, therefore, for these blood productsin general.<strong>Comment</strong>: Some commenters assertedthat there is a gap between CMS’proposed payments for blood and bloodproducts and the costs incurred byER30NO11.005

74152 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2hospitals for the acquisition,management, and processing of bloodand blood products, including highvolume products such as leukocytereduced red blood cells, described byHCPCS codes P9016 (Red blood cells,leukocytes reduced, each unit), P9021(Red blood cells unit), and P9040 (Redblood cells, leukoreduced irradiated).These commenters stated that CMSshould implement appropriate paymentpolicies, such as paying no less than thepayment rates in effect for CY 2011 forindividual blood products in CY 2012,to close the gap between OPPS paymentand the costs of blood and bloodproducts and to ensure continuedbeneficiary access. They stated that thisaction is crucial, given that those costscontinue to rise for a variety of reasons.For example, one commenter citedfederally mandated requirements andrecommendations by the U.S. Food andDrug Administration (FDA) as having asignificant impact on the increasingcosts of blood products, while anothercommenter noted that transfusion safetyofficers are being hired in most majorhospitals to address impropertransfusion and inappropriate use ofblood. The commenters argued that,given the 2-year lag inherent inavailable claims data in the OPPSratesetting process, the use of hospitalclaims data <strong>with</strong>out adjustments likelywill not reflect these rising costs in atimely manner.Response: As we indicated in the CY2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 71838 through71839), we continue to believe thatusing blood-specific CCRs applied tohospital claims data results in paymentsthat appropriately reflect hospitals’relative costs of providing blood andblood products as reported to us byhospitals, which would reflecthospitals’ changing costs due to factorscited by the commenters, such as FDArequirements, to the extent that theseare affecting blood costs. We annuallyupdate payment groups and paymentweights using the most recentlyavailable hospital claims and cost reportdata. This process allows us torecalibrate the payment groups andpayment weights in response to changesin hospitals’ costs from year to year inthe most timely manner possible. Afundamental principle of the OPPS isthat it is based on relative weights, andas we have stated in the past (73 FR68541), it is the relativity of the costs toone another, rather than absolute cost,that is important in setting paymentrates. To deviate from our standardOPPS ratesetting methodology bypaying no less than the payment rates ineffect for CY 2011 for individual bloodproducts in CY 2012 would skew thisrelativity. We also note that the mediancosts per unit (calculated using theblood-specific CCR methodology) forthis final rule <strong>with</strong> comment periodincrease for the majority of the mostcommonly provided blood and bloodproducts (including the highest volumeblood and blood product, described byHCPCS code P9016) compared to the CY2011 median costs. For all APCs whosepayment rates are based upon relativepayment weights, we note that thequality and accuracy of reported unitsand charges significantly influence themedian costs that are the basis for ourpayment rates, especially for lowvolume items and services.After consideration of the publiccomments we received, we arefinalizing, <strong>with</strong>out modification, our CY2012 proposal to calculate median costsupon which the CY 2012 payments ratesfor blood and blood products are basedusing our blood-specific CCRmethodology, which utilizes actual orsimulated CCRs from the most recentlyavailable hospital cost reports to converthospital charges for blood and bloodproducts to costs (the methodology wehave utilized since CY 2005). Webelieve that continuing thismethodology in CY 2012 results inmedian costs for blood and bloodproducts that appropriately reflect therelative estimated costs of theseproducts for hospitals <strong>with</strong>out bloodcost centers and, therefore, for theseproducts in general.We refer readers to Addendum B tothis final rule <strong>with</strong> comment period(which is available via the Internet onthe CMS Web site) for the final CY 2012payment rates for blood and bloodproducts (which are identified <strong>with</strong>status indicator ‘‘R’’). For a moredetailed discussion of the blood-specificCCR methodology, we refer readers tothe CY 2005 OPPS proposed rule (69 FR50524 through 50525). For a full historyof OPPS payment for blood and bloodproducts, we refer readers to the CY2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66807 through66810).(3) Allergy Tests (APCs 0370 and 0381)In the CY 2006 OPPS final rule <strong>with</strong>comment period (70 FR 68610), wediscussed the confusion raised by anumber of providers related to thereporting of units for single andmultiple allergy tests described by CPTcodes 95004 through 95078. Accordingto the providers, while some of thesecodes instruct providers to specify thenumber of tests or use the singular word‘‘tests’’ or ‘‘testing’’ in their descriptors,VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00032 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2others do not contain such instructionor do not contain ‘‘tests’’ or ‘‘testing’’ intheir descriptors. In light of the variablehospital billing that may be inconsistent<strong>with</strong> the CPT code descriptors, asdiscussed in detail in the CY 2006 OPPSfinal rule <strong>with</strong> comment period (70 FR68610), we examined CY 2004 claimsand determined that the chargesreported on many single procedureclaims represent a ‘‘per visit’’ charge,rather than a ‘‘per test’’ charge,including claims for the allergy testcodes that instruct providers to specifythe number of tests. As a result of ouranalysis of our claims data, wedifferentiated single allergy tests (‘‘pertest’’ from multiple allergy tests (‘‘pervisit’’) by placing these services in twodifferent APCs. We believed that makingthis distinction clarified billing for theseservices and more accurately placedthem <strong>with</strong> like services sharing similarresource costs. We also provided billingguidance in CY 2006 in Transmittal 804(issued on January 3, 2006) specificallyclarifying that hospitals should reportcharges for the CPT codes that describesingle allergy tests to reflect charges‘‘per test’’ rather than ‘‘per visit’’ andshould bill the appropriate number ofunits (as defined in the CPT codedescriptor) of these CPT codes todescribe all of the tests provided. Since2006, we have analyzed our claims datato determine whether the reporting ofthese services has improved.In the CY 2012 OPPS/ASC proposedrule (76 FR 42192), we proposed tocontinue to use our methodology ofdifferentiating single allergy tests (‘‘pertest’’) from multiple allergy tests (‘‘pervisit’’) by assigning these services to twodifferent APCs to provide accuratepayments for these tests in CY 2012.Specifically, services proposed to beassigned to APC 0381 (Single AllergyTests) reflect the CPT codes thatdescribe single allergy tests in whichCPT instructions direct providers tospecify the number of tests performed.Alternatively, the procedures proposedfor assignment to APC 0370 (AllergyTests) describe multiple allergy tests perencounter; therefore, for theseprocedures, only one unit of the serviceis billed even if multiple tests areperformed.As discussed in the CY 2012 OPPS/ASC proposed rule (76 FR 42192), ouranalysis of the CY 2010 claims dataavailable for the proposed rule for thesingle allergy tests, specifically thoseservices assigned to APC 0381, did notreflect improved and more consistenthospital billing practices of ‘‘per test’’for single allergy tests. The median costof APC 0381 calculated for the proposedrule according to the standard single

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74153jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2claims OPPS methodology wasapproximately $51, significantly higherthan the CY 2011 OPPS/ASC final rulemedian cost of approximately $33 thatwas calculated according to the ‘‘perunit’’ methodology, and greater than wewould expect for these procedures thatare to be reported ‘‘per test’’ <strong>with</strong> theappropriate number of units. Someclaims for single allergy tests stillappear to provide charges that representa ‘‘per visit’’ charge, rather than a ‘‘pertest’’ charge. Therefore, consistent <strong>with</strong>our payment policy for single allergytests since CY 2006, we calculated aproposed ‘‘per unit’’ median cost forAPC 0381, based upon 601 claimscontaining multiple units or multipleoccurrences of a single CPT code. Theproposed CY 2012 median cost for APC0381 using the ‘‘per unit’’ methodologywas approximately $34. For a fulldiscussion of the ‘‘per unit’’methodology for APC 0381, we referreaders to the CY 2008 OPPS/ASC finalrule <strong>with</strong> comment period (72 FR66737).In addition, we proposed thatmultiple allergy tests continue to beassigned to APC 0370 <strong>with</strong> a mediancost calculation based on the standardOPPS methodology for CY 2012. Thisresulted in a proposed APC median costof approximately $97 based on 283claims.We did not receive any publiccomments on our CY 2012 proposal forpayment of single or multiple allergytests. We are finalizing our CY 2012proposal, <strong>with</strong>out modification, tocalculate a ‘‘per unit’’ median cost forAPC 0381 as described above in thissection. The final CY 2012 median costof APC 0381 is approximately $31.Furthermore, we also are finalizingour CY 2012 proposal, <strong>with</strong>outmodification, to use the standard OPPSmethodology to set the APC paymentrate for APC 0370. We are revising thetitle of APC 0370 from ‘‘Allergy Tests’’to ‘‘Multiple Allergy Tests’’ so that theAPC title more accurately describes allthe services assigned to the APC. Thefinal CY 2012 median cost of APC 0370is approximately $80 based on 306claims.(4) Hyperbaric Oxygen Therapy (APC0659)Since the implementation of OPPS inAugust 2000, the OPPS has recognizedHCPCS code C1300 (Hyperbaric oxygenunder pressure, full body chamber, per30 minute interval) for hyperbaricoxygen (HBOT) provided in the hospitaloutpatient setting. In the CY 2005 finalrule <strong>with</strong> comment period (69 FR 65758through 65759), we finalized a ‘‘perunit’’ median cost calculation for APC0659 (Hyperbaric Oxygen) using onlyclaims <strong>with</strong> multiple units or multipleoccurrences of HCPCS code C1300because delivery of a typical HBOTservice requires more than 30 minutes.We observed that claims <strong>with</strong> only asingle occurrence of the code wereanomalies, either because they reflectedterminated sessions or because theywere incorrectly coded <strong>with</strong> a singleunit. In the same rule, we alsoestablished that HBOT would notgenerally be furnished <strong>with</strong> additionalservices that might be packaged underthe standard OPPS APC median costmethodology. This enabled us to useclaims <strong>with</strong> multiple units or multipleoccurrences. <strong>Final</strong>ly, we also used eachhospital’s overall CCR to estimate costsfor HCPCS code C1300 from billedcharges rather than the CCR for therespiratory therapy or otherdepartmental cost centers. Our rationalefor using the hospital’s overall CCR canbe found in the CY 2005 OPPS final rule<strong>with</strong> comment period (69 FR 65758through 65759). The public commentson the CY 2005 OPPS proposed ruleeffectively demonstrated that hospitalsreport the costs and charges for HBOTin a wide variety of cost centers. SinceCY 2005, we have used thismethodology to estimate the mediancost for HBOT. The median costs ofHBOT using this methodology havebeen relatively stable for several years.In the CY 2012 OPPS/ASC proposedrule (76 FR 42192), we proposed tocontinue using the same methodology toestimate a ‘‘per unit’’ median cost forHCPCS code C1300 for CY 2012. Thismethodology resulted in a proposedAPC median cost of approximately $107using 370,519 claims <strong>with</strong> multipleunits or multiple occurrences forHCPCS code C1300 for CY 2012.We did not receive any publiccomments on our proposal to continueto use our established ratesettingmethodology for calculating the mediancost of APC 0659 for payment of HBOTfor CY 2012. We are finalizing our CY2012 proposal, <strong>with</strong>out modification, tocontinue to use our establishedratesetting methodology for calculatingthe median cost of APC 0659 forpayment of HBOT, <strong>with</strong> a final CY 2012median cost of approximately $105.(5) Payment for Ancillary OutpatientServices When Patient Expires (APC0375)In the November 1, 2002 final rule<strong>with</strong> comment period (67 FR 66798), wediscussed the creation of the newHCPCS modifier ‘‘–CA’’ to addresssituations where a procedure on theOPPS inpatient list must be performedto resuscitate or stabilize a patientVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00033 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2(whose status is that of an outpatient)<strong>with</strong> an emergent, life-threateningcondition, and the patient dies beforebeing admitted as an inpatient. HCPCSmodifier ‘‘CA’’ is defined as a procedurepayable only in the inpatient settingwhen performed emergently on anoutpatient who expires prior toadmission. In Transmittal A–02–129,issued on January 3, 2003, we instructedhospitals on the use of this modifier. Fora complete description of the history ofthe policy and the development of thepayment methodology for theseservices, we refer readers to the CY 2007OPPS final rule <strong>with</strong> comment period(71 FR 68157 through 68158).In the CY 2012 OPPS/ASC proposedrule (76 FR 42192 through 42193), weproposed to continue to use ourestablished ratesetting methodology forcalculating the median cost of APC 0375(Ancillary Outpatient Services WhenPatient Expires) and to continue to makeone payment under APC 0375 for theservices that meet the specificconditions for using HCPCS modifier ‘‘–CA.’’ That is, we proposed to calculatethe relative payment weight for APC0375 by using all claims reporting astatus indicator ‘‘C’’ (inpatientprocedures) appended <strong>with</strong> HCPCSmodifier ‘‘–CA.’’ For the history anddetailed explanation of themethodology, we refer readers to the CY2004 OPPS final rule (68 FR 63467through 63468). We stated in theproposed rule that we continue tobelieve that this established ratesettingmethodology results in the mostappropriate aggregate median cost forthe ancillary services provided in theseunusual clinical situations.We stated that we believe thathospitals are reporting the HCPCSmodifier ‘‘–CA’’ according to the policyinitially established in CY 2003. Wenoted that the claims frequency for APC0375 has been relatively stable over thepast few years. We noted that themedian cost for APC 0375 has decreasedbased on the CY 2010 OPPS claims dataused for the development of theproposed rates for CY 2012 compared tothat for CY 2011. Variation in themedian cost for APC 0375 is expectedbecause of the small number of claimsand because the specific cases aregrouped by the presence of the HCPCSmodifier ‘‘–CA’’ appended to aninpatient only procedure and notaccording to the standard APC criteriaof clinical and resource homogeneity.Cost variation for APC 0375 from yearto year is anticipated and acceptable aslong as hospitals continue judiciousreporting of the HCPCS modifier ‘‘–CA.’’Table 4 of the proposed rule showed thenumber of claims and the median costs

74154 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsfor APC 0375 for CYs 2007, 2008, 2009,2010, and 2011, and the proposedmedian cost for APC 0375 for CY 2012.For CY 2012, we proposed a mediancost of approximately $5,711 for APC0375 based on 155 claims.We did not receive any publiccomments regarding this proposal. Forthe reasons explained in the CY 2012OPPS/ASC proposed rule, we arefinalizing our CY 2012 proposal,<strong>with</strong>out modification, to continue to useour established ratesetting methodologyfor calculating the median cost of APC0375, which has a final CY 2012 APCmedian cost of approximately $6,039.Table 4 below shows the number ofclaims and the final median costs forAPC 0375 for CYs 2007, 2008, 2009,2010, 2011, and 2012.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2(6) Endovascular Revascularization ofthe Lower Extremity (APCs 0083, 0229,and 0319)For the CY 2011 update, the AMA’sCPT Editorial Panel created 16 new CPTcodes in the EndovascularRevascularization section of the 2011CPT code book to describe endovascularrevascularization procedures of thelower extremity performed for occlusivedisease. In the CY 2011 OPPS/ASC finalrule <strong>with</strong> comment period (75 FR 71841through 71845), we discussed theprocess and methodology by which weassigned the new CY 2011 endovascularrevascularization CPT codes to APCsthat we believe are comparable <strong>with</strong>respect to clinical characteristics andresources required to furnish theservices. Specifically, we were able touse the existing CY 2009 hospitaloutpatient claims data and most recentcost report data to create simulatedmedians for 12 of the 16 new separatelypayable codes for CY 2011. Because theendovascular revascularization CPTcodes are new for CY 2011, we used ourCY 2009 single and ‘‘pseudo’’ singleclaims data to simulate the new CY2011 CPT code definitions. As shown inTable 7 of the CY 2011 OPPS/ASC finalrule <strong>with</strong> comment period (75 FR71844), many of the new endovascularrevascularization CPT codes werepreviously reported using a combinationof CY 2009 CPT codes. In order tosimulate median costs, we selectedclaims that we believe meet thedefinition for each of the newendovascular revascularization CPTcodes. Table 7 showed the criteria weapplied to select a claim to be used inthe calculation of the median cost forthe new codes (shown in Column A). Aswe stated in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71842), we developed these criteriabased on our clinicians’ understandingof services that were reported by CY2009 CPT codes that, in variouscombinations, reflect the servicesprovided that are described by the newCPT codes for CY 2011.After determining the simulatedmedian costs for the procedures, weassigned each CPT code to appropriateAPCs based on their clinicalhomogeneity and resource use. Of the16 new codes, we assigned 9 CPT codesto APC 0083 (Coronary or Non-CoronaryAngioplasty and PercutaneousValvuloplasty) and 5 CPT codes to APC0229 (Transcatheter Placement ofIntravascular Shunts), and created newAPC 0319 (EndovascularRevascularization of the LowerExtremity) for 2 CPT codes. Table 8 ofthe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period displayed their finalCY 2011 APC assignments and CPTmedian costs (75 FR 71845). We notedthat because these CPT codes are newfor CY 2011, they are identified <strong>with</strong>comment indicator ‘‘NI’’ in AddendumB to the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period to identify themas a new interim APC assignment for thenew year and subject to publiccomment. We specifically requestedpublic comment on our methodology forVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00034 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2simulating the median costs for thesenew CY 2011 CPT codes in addition topublic comments on the payment ratesthemselves (75 FR 71845).At its February 28–March 1, 2011meeting, the APC Panel recommendedthat CMS provide data to allow thePanel to investigate and monitor theAPC weights for the lower extremityrevascularization procedures in light ofCPT coding changes for CY 2011. In theCY 2012 OPPS/ASC proposed rule, weindicated that we were accepting theAPC Panel’s recommendation and willprovide additional data to the Panel atan upcoming meeting.In the CY 2012 OPPS/ASC proposedrule (76 FR 42190), we proposed tocontinue <strong>with</strong> the CY 2011 methodologythat was described previously in thissection in determining the APCassignments for the CPT codes thatdescribe endovascular revascularizationof the lower extremity. The predecessorendovascular revascularization CPTcodes were in existence prior to CY2011 and were assigned to APCs basedon claims data and cost report data.Given that these data are available forthe services described by thepredecessor endovascularrevascularization CPT codes, weproposed to continue for CY 2012 to usethe existing hospital outpatient claimsand cost report data from the previousendovascular revascularization CPTcodes to simulate an estimated mediancost for the new endovascularrevascularization CPT codes indetermining the appropriate APCER30NO11.006

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74155jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2assignments. As has been our practicesince the implementation of the OPPSin 2000, we review our latest claimsdata for ratesetting and, if necessary,revise the APC assignments for theupcoming year. In this case, review ofthe procedures <strong>with</strong> significant claimsdata in APC 0083 showed a 2 times ruleviolation. Specifically, APC 0083, as itwas initially configured, showed thatthe range of the CPT median costs forthe procedures <strong>with</strong> significant claimsdata was approximately between $3,252(for CPT code 35476 (Transluminalballoon angioplasty, percutaneous;venous)) and $7,174 (for CPT code37221 (Revascularization, endovascular,open or percutaneous, iliac artery,unilateral, initial vessel; <strong>with</strong>transluminal stent placement(s),includes angioplasty <strong>with</strong>in the samevessel, when performed)), resulting in a2 times rule violation. Because of itsmedian cost, we stated that we believethat CPT code 37221 would be moreappropriately placed in APC 0229,which had an initial estimated mediancost of approximately $8,606, based onthe clinical and resource characteristicsof other procedures also assigned toAPC 0229. Therefore, for CY 2012, weproposed to revise the APC assignmentfor CPT code 37221, from APC 0083 toAPC 0229, to accurately reflect the costand clinical features of the procedure.This proposed reassignment of CPTcode 37221 from APC 0083 to APC 0029would eliminate the 2 times ruleviolation for APC 0083 noted above.Based on this reconfiguration, the CY2010 claims data available for theproposed rule were used to calculate amedian cost of approximately $4,683 forAPC 0083, approximately $8,218 forAPC 0229, and approximately $14,556for APC 0319. All three proposedmedian costs for CY 2012 weresignificantly greater than the CY 2011OPPS/ASC final rule median costs ofapproximately $3,740 for APC 0083,approximately $7,940 for APC 0229, andapproximately $13,751 for APC 0319.In addition, we proposed to revise theAPC titles for APCs 0083, 0229, and0319 to better describe the proceduresassigned to these APCs. Specifically, weproposed to revise the APC title for APC0083 from ‘‘Coronary or Non-CoronaryAngioplasty and PercutaneousValvuloplasty’’ to ‘‘Level I EndovascularRevascularization of the LowerExtremity’’; for APC 0229, from‘‘Transcatheter Placement ofIntravascular Shunt and Stents’’ to‘‘Level II EndovascularRevascularization of the LowerExtremity’’; and for APC 0319, from‘‘Endovascular Revascularization of theLower Extremity’’ to ‘‘Level IIIEndovascular Revascularization of theLower Extremity.’’We solicited public comments on theproposed status indicators and APCassignments for the endovascularrevascularization of the lower extremityCPT codes for CY 2012. Table 5 of theproposed rule listed the endovascularrevascularization of the lower extremityCPT codes along <strong>with</strong> their proposedstatus indicator and APC assignmentsfor CY 2012. As noted previously,because these CPT codes are new for CY2011, they are identified <strong>with</strong> commentindicator ‘‘NI’’ in Addendum B to theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period to identify them as anew interim APC assignment for thenew year and subject to publiccomment. We specifically requestedpublic comment on our methodology forsimulating the median costs for thesenew CY 2011 CPT codes in addition topublic comments on the payment ratesthemselves (75 FR 71845). We respondto any public comments received on theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period and the CY 2012OPPS/ASC proposed rule below.At its August 10–12, 2011 meeting,the APC Panel supported CMS’ proposalto move HCPCS code 37221(Revascularization, endovascular, openor percutaneous, iliac artery, unilateral,initial vessel; <strong>with</strong> transluminal stentplacement(s), includes angioplasty<strong>with</strong>in the same vessel, whenperformed) to APC 0229.<strong>Comment</strong>: Several commenterssupported the CY 2012 proposal torename APCs 0083, 0229, and 0319 tobetter describe the procedures assignedto these APCs, and requested that CMSfinalize these changes. The commentersalso supported the proposed statusindicator assignments of ‘‘T’’ for each ofthese APCs. One commenter agreed<strong>with</strong> the proposed renaming of APC0229 and 0319 but asked that CMSchange the APC title of APC 0038 to‘‘Coronary Angioplasty, Valvuloplasty,and Level I EndovascularRevascularization of the LowerExtremity’’ in order to reflect thecoronary as well as endovascularprocedures assigned to that APC.Response: We appreciate thecommenters’ support of our proposal torevise the titles for APCs 0083, 0229,and 0319. We agree <strong>with</strong> the commenterthat a title of ‘‘Coronary Angioplasty,Valvuloplasty, and Level I EndovascularRevascularization of the LowerExtremity’’ would more accuratelydescribe the procedures assigned to APC0083. Therefore, we are finalizing ourCY 2012 proposal, <strong>with</strong> modification, torevise the APC title for APC 0083 fromVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00035 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2‘‘Coronary or Non-Coronary Angioplastyand Percutaneous Valvuloplasty’’ to‘‘Coronary Angioplasty, Valvuloplasty,and Level I EndovascularRevascularization of the LowerExtremity’’; for APC 0229, from‘‘Transcatheter Placement ofIntravascular Shunt and Stents’’ to‘‘Level II EndovascularRevascularization of the LowerExtremity’’; and for APC 0319, from‘‘Endovascular Revascularization of theLower Extremity’’ to ‘‘Level IIIEndovascular Revascularization of theLower Extremity.’’ We also arefinalizing our proposal, <strong>with</strong>outmodification, to continue to assignstatus indicator ‘‘T’’ to each of theseAPCs.<strong>Comment</strong>: Many commenterssupported our overall methodology forcalculating simulated medians for theendovascular revascularization CPTcodes established for 2011 and agreed<strong>with</strong> the APC reassignment for CPTcode 37221 from APC 0083 to APC0229. A few commenters cited that,during the August 2011 APC Panelmeeting, the APC Panel recommendedthat CMS finalize this proposal.Response: We appreciate thecommenters’ support of our overallmethodology for calculating simulatedmedians for the endovascularrevascularization CPT codes establishedfor 2011. Based on our analysis of thehospital claims and cost report dataavailable for this final rule <strong>with</strong>comment period, and in accordance<strong>with</strong> the feedback we received frommany commenters, we continue tobelieve that CPT code 37221 is moreappropriately placed in APC 0229 thanin APC 0083. Our data shows 4,673simulated single claims (out of 4,710total claims) for CPT code 37221 <strong>with</strong> aCPT median cost of approximately$7,053, which is closer to the APCmedian cost of approximately $8,088 forAPC 0229 than to the APC 0083 mediancost of approximately $4,611.28. Wealso note that if CPT code 37221 wereassigned to APC 0083, a 2 timesviolation would likely result. Therefore,after consideration of the publiccomments received and the APC Panelrecommendation at its August 2011meeting, we are finalizing our proposal,<strong>with</strong>out modification, to assign CPTcode 37221 to APC 0229, which has afinal CY 2012 median cost ofapproximately $8,088.<strong>Comment</strong>: Several commentersdisagreed <strong>with</strong> the continued APCassignment for CPT code 37223(Revascularization, endovascular, openor percutaneous, iliac artery, eachadditional ipsilateral iliac vessel; <strong>with</strong>transluminal stent placement(s),

74156 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2includes angioplasty <strong>with</strong>in the samevessel, when performed) in APC 0083.They stated that the service describedby CPT code 37223 is more similarclinically and in terms of resourceutilization to the procedures assigned toAPC 0229 because this service involvesstent placement. The commenters alsoargued that CPT code 37223 is an addoncode to CPT code 37221, and shouldbe assigned to APC 0229, which is theAPC to which CPT code 37221 isassigned. They pointed out that CPTcodes 37206 (Transcatheter placementof an intravascular stent(s) (exceptcoronary, carotid, and vertebral vessel,and lower extremity arteries),percutaneous; each additional vessel)and 37208 (Transcatheter placement ofan intravascular stent(s) (non-coronaryvessel other than iliac and lowerextremity arteries), open; eachadditional vessel) are also add-on CPTcodes, and that they are assigned to thesame APC as the primary codes <strong>with</strong>which they are billed (that is, APC0229). The commenters further addedthat CPT code 37223, like CPT code37221, requires the use of animplantable endovascular stent, andthat the CY 2012 OPPS proposedpayment rate of approximately $4,520for CPT code 37223 does not take thecost of the device into consideration.They noted that any efficiencies to begained by performing the proceduredescribed by CPT code 37223 at thesame time as the procedure described byCPT code 37223 would be capturedappropriately in the multiple procedurediscount that would apply as a result ofboth procedures being assigned statusindicator ‘‘T.’’Response: We are unable to simulatea median cost for CPT code 37223 usingthe CY 2010 claims data available forthis final rule <strong>with</strong> comment periodbecause we have no single serviceclaims data that appropriately describethe procedure associated <strong>with</strong> CPT code37223. Therefore, analysis of ourhospital outpatient claims data does notsupport an APC reassignment for CPTcode 37223 from APC 0083 to APC 0229based on resource homogeneity, and webelieve that the service described byCPT code 37223 is clinically similar toprocedures in APC 0083. We note thatwe will have CY 2011 hospital claimsavailable for CPT code 37223 and theother new endovascularrevascularization CPT codes for the firsttime for CY 2013 OPPS ratesetting, andthat we will closely monitor our data toensure that the APC placementsappropriately reflect hospitals’ costs forthese procedures.We also note that when hospitalsreport CPT code 37223, we expect themto also report one of the followingdevice HCPCS C-codes for theimplantable stent used in thoseprocedures:• C1874 (Stent, coated/covered, <strong>with</strong>delivery system)• C1875 (Stent, coated/covered,<strong>with</strong>out delivery system)• C1876 (Stent, non-coated/noncovered,<strong>with</strong> delivery system)• C1877 (Stent, non-coated/noncovered,<strong>with</strong>out delivery system)• C2617 (Stent, non-coronary,temporary, <strong>with</strong>out delivery system)• C2625 (Stent, non-coronary,temporary, <strong>with</strong> delivery system)These HCPCS C-codes were madeeffective April 1, 2001, and are a part ofthe procedure-to-device edits for CPTcode 37223. Procedure-to-device edits,which have been in place for manyprocedures since 2005, require thatwhen a particular service or proceduralCPT or Level II HCPCS code is billed,the claim must also contain anappropriate device code.After analysis of our claims data andconsideration of the public commentsreceived, we are finalizing our proposal,<strong>with</strong>out modification, to continue toassign CPT code 37223 to APC 0083,which has a final CY 2012 median costof approximately $4,611.<strong>Comment</strong>: Some commentersdisagreed <strong>with</strong> the APC assignment forCPT codes 37224 (Revascularization,endovascular, open or percutaneous,femoral/popliteal artery(s), unilateral;<strong>with</strong> transluminal angioplasty) and37235 (Revascularization, endovascular,open or percutaneous, tibial/peronealartery, unilateral, each additional vessel;<strong>with</strong> transluminal stent placement(s)and atherectomy, includes angioplasty<strong>with</strong>in the same vessel, whenperformed) to APC 0083, and stated thatboth procedures would be moreappropriately placed in APC 0229 basedon the economic and clinical coherenceto other procedures already assigned toAPC 0229.Response: Analysis of our hospitaloutpatient claims shows 4,288simulated single claims (out of 4,320total claims) <strong>with</strong> a median cost ofVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00036 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2approximately $5,418 for CPT code37224, while there were no claimssubmitted upon which we couldsimulate a median cost for CPT code37235. The range of the median costs forAPC 0083 <strong>with</strong> significant claims data isapproximately between $3,230 toapproximately $5,766, which is in line<strong>with</strong> the median cost of approximately$5,418 for CPT code 37224. Based onour claims data, we believe that CPTcode 37224 is appropriately placed inAPC 0083 which has a final median costis approximately $4,611. As is the case<strong>with</strong> CPT code 37223, we do not haveclaims data to support the reassignmentof CPT code 37235 to a different APC.We also believe that CPT codes 37224and 37235 are sufficiently similarclinically to the other procedures inAPC 0083 to warrant their continuedplacement in that APC. Therefore, wewill continue to assign CPT codes 37224and 37235 to APC 0083 for CY 2012.We note that, similar to CPT code37223, both CPT codes 37224 and 37235are included as part of the procedure-todeviceedits, and hospitals are remindedto refer to the latest edits on the CMSOPPS Web site. The updated lists ofedits can be found under ‘‘Device,Radiolabeled Product, and ProcedureEdits’’ at http://www.cms.gov/HospitalOutpatientPPS/.After consideration of the publiccomments received on the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod and the CY 2012 OPPS/ASCproposed rule and review of our claimsdata, we are finalizing our CY 2012proposal, <strong>with</strong>out modification, tocontinue <strong>with</strong> the CY 2011 methodologythat we described in the CY 2012 OPPS/ASC proposed rule (76 FR 42193through 42194) in determining the APCassignments for the CPT codes thatdescribe endovascular revascularizationof the lower extremity for the reasonsset forth above. We also are finalizingour CY 2012 proposal, <strong>with</strong>outmodification, to revise the APCassignment for CPT code 37221, fromAPC 0083 to APC 0229. We arefinalizing our CY 2012 proposal, <strong>with</strong>modification, to revise the APC titles forAPCs 0083, 0229, and 0319 as describedpreviously. Table 5 below lists theendovascular revascularization of thelower extremity CPT codes along <strong>with</strong>their final status indicator and APCassignments for CY 2012.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74157jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2(7) Non-Congenital CardiacCatheterization (APC 0080)For CY 2011, the AMA CPT EditorialPanel deleted 19 non-congenital cardiaccatheterization-related CPT codes andreplaced them <strong>with</strong> 20 new CPT codesin the Cardiac Catheterization andInjection-Related section of the 2011CPT Code Book to describe moreprecisely the specific services providedduring cardiac catheterizationprocedures. In particular, the CPTEditorial Panel deleted 19 noncongenitalcardiac catheterizationrelatedCPT codes from the 93500 seriesand created 14 new CPT codes in the93400 series and 6 in the 93500 series.We discussed these coding changes indetail in the CY 2011 OPPS/ASC finalrule <strong>with</strong> comment period, along <strong>with</strong>the process by which we assigned thenew CPT codes to APCs that we believeare comparable <strong>with</strong> respect to clinicalcharacteristics and resources required tofurnish the cardiac catheterizationservices described by the new CPTcodes (75 FR 71846 through 71849). Asdiscussed in the final rule <strong>with</strong>comment period, we were able to usethe existing CY 2009 hospital outpatientclaims data and the most recent costreport data to create simulated mediansfor the new separately payable CPTcodes for CY 2011. Specifically, toestimate the hospital costs associated<strong>with</strong> the 20 new non-congenital cardiaccatheterization-related CPT codes basedon their CY 2011 descriptors, we usedclaims and cost report data from CY2009. Because of the substantive codingchanges associated <strong>with</strong> the new noncongenitalcardiac catheterizationrelatedCPT codes for CY 2011, we usedour CY 2009 single and ‘‘pseudo’’ singleclaims data to simulate the new CY2011 CPT code definitions. We statedthat many of the new CPT codes werepreviously reported using multiple CY2009 CPT codes, and we provided acrosswalk of the new CY 2011 cardiaccatheterization CPT codes mapped tothe CY 2009 cardiac catheterization CPTcodes in Table 11 of the CY 2011 OPPS/ASC final rule <strong>with</strong> comment period (75VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2FR 71849). Table 11 showed the criteriawe applied to select a claim to be usedin the calculation of the median cost forthe new codes (shown in column A). Aswe stated in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71847 through 71848), we developedthese criteria based on our clinicians’understanding of services that werereported by CY 2009 CPT codes that, invarious combinations, reflect theservices provided that are described inthe new CPT codes. We usedapproximately 175,000 claims for thenew non-congenital catheterizationrelatedCPT codes, together <strong>with</strong> thesingle and ‘‘pseudo’’ single procedureclaims for the remaining congenitalcatheterization-related CPT codes inAPC 0080, to calculate CPT levelmedian costs and the median cost forAPC 0080 of approximately $2,698. Wenoted that, because the CPT codes listedin Table 11 are new for CY 2011, theywere identified <strong>with</strong> comment indicator‘‘NI’’ in Addendum B of that final rule<strong>with</strong> comment period to identify themER30NO11.007

74158 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsas subject to public comment. Wespecifically requested public commenton our methodology for simulating themedian costs for these new CY 2011CPT codes, in addition to publiccomments on the payment ratesthemselves (75 FR 71848).In the CY 2012 OPPS/ASC proposedrule (76 FR 42195), for CY 2012, weproposed to continue to use the CY 2011methodology in determining the APCassignments for the cardiaccatheterization CPT codes. Thepredecessor cardiac catheterization CPTcodes were in existence prior to CY2011 and were assigned to APC 0080based on claims data and cost reportdata. Given that these data are availablefor the services described by thepredecessor cardiac catheterization CPTcodes, we proposed for CY 2012 tocontinue to use the existing hospitaloutpatient claims and cost report datafrom the predecessor cardiaccatheterization CPT codes to simulatean estimated median cost for the newcardiac catheterization CPT codes indetermining the appropriate APCassignments. As has been our practicesince the implementation of the OPPSin 2000, we review our latest claimsdata for ratesetting and, if necessary,revise the APC assignments for theupcoming year. Based on analysis of theCY 2010 claims data available for theproposed rule, the proposed mediancost for APC 0080 was approximately$2,822 for CY 2012, which was slightlygreater than the median cost ofapproximately $2,698 for the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod. For CY 2012, we did notpropose any changes to the CY 2011APC assignments of any of the codesassigned to APC 0080 because theclaims data available for the proposedrule support continuation of these APCassignments.We solicited public comments on theproposed status indicators and the APCassignments for CY 2012 for the cardiaccatheterization CPT codes. Table 6 ofthe proposed rule listed the new CY2011 cardiac catheterization CPT codesalong <strong>with</strong> their proposed statusindicators and APC assignments for CY2012.<strong>Comment</strong>: Some commenterssupported our CY 2012 proposal forpayment of non-congenital cardiaccatheterization.Response: We appreciate thecommenters’ support of our paymentmethodology for the non-congenitalcardiac catheterization procedures.Therefore, consistent <strong>with</strong> our rationaleset forth above, we are finalizing our CY2012 proposal, <strong>with</strong>out modification, tocontinue <strong>with</strong> the CY 2011 methodologyin determining the APC assignments forthe non-congenital cardiaccatheterization CPT codes. The final CY2012 median cost for APC 0080 isapproximately $2,721.Table 6 below lists the CY 2012cardiac catheterization CPT codes along<strong>with</strong> their final status indicators andAPC assignments for CY 2012.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74159jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2(8) Cranial Neurostimulator andElectrodes (APC 0318)For CY 2011, the AMA CPT EditorialPanel created a new CPT code 64568(Incision for implantation of cranialnerve (e.g., vagus nerve)neurostimulator electrode array andpulse generator) and indicated that itdescribes the services formerly includedin the combinations of (1) CPT code64573 (Incision for implantation ofneurostimulator electrodes; cranialnerve) and CPT code 61885 (Insertion orreplacement of cranial neurostimulatorpulse generator or receiver, direct orinductive coupling; <strong>with</strong> connection toa single electrode array); or (2) CPT code64573 and CPT code 61886 (Insertion orreplacement of cranial neurostimulatorpulse generator or receiver, direct orinductive coupling; <strong>with</strong> connection totwo or more electrode arrays). As wediscussed in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71850), our standard process forassigning new CPT codes to APCs is toassign the code to the APC that webelieve contains services that arecomparable <strong>with</strong> respect to clinicalcharacteristics and resources required tofurnish the service. A new CPT code isgiven a comment indicator of ‘‘NI’’ toidentify it as a new interim APCassignment for the first year and theAPC assignment for the new code isthen open to public comment. In some,but not all, cases, we are able to use theexisting data from established codes tosimulate an estimated median cost forthe new code to guide us in theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2assignment of the new code to an APC.For CY 2011, in the case of the newneurostimulator electrode and pulsegenerator implantation CPT code, wewere able to use the existing CY 2009claims and most current cost report datato create a simulated median cost.Specifically, to estimate the hospitalcosts of CPT code 64568 based on its CY2011 descriptor, we used CY 2009claims and the most recent cost reportdata, using the single and ‘‘pseudo’’single claims <strong>with</strong>in this data set tosimulate the definition of this service.We selected claims <strong>with</strong> CPT code64573 on which CPT code 61885 or61886 was also present and consistent<strong>with</strong> the description of the new CPTcode 64568. We treated the summedcosts on these claims as if they were aER30NO11.008

74160 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2single procedure claim for CPT code64568. We created an estimated mediancost of approximately $22,562 for CPTcode 64568 from 298 single claims to seta final payment rate for CY 2011 for thenew code. We created APC 0318(Implantation of CranialNeurostimulator Pulse Generator andElectrode) for CY 2011, to which CPTcode 64568 is the only procedureassigned. APC 0225 (Implantation ofNeurostimulator Electrodes, CranialNerve), which contained only thepredecessor CPT code 64573, wasdeleted effective January 1, 2011. Wenoted that, because CPT code 64568 isnew for CY 2011, it was identified <strong>with</strong>comment indicator ‘‘NI’’ in AddendumB of the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period to identify it assubject to public comment. Wespecifically requested public commenton our methodology for simulating themedian costs for this new CY 2011 CPTcode, in addition to public comments onthe payment rate itself (75 FR 71850).In the CY 2012 OPPS/ASC proposedrule (76 FR 42195 through 42196), weproposed to use the same methodologywe used in CY 2011 to estimate thehospital costs of CPT code 64568 and tocontinue to maintain CPT code 64568 asthe only code assigned to APC 0318 forCY 2012.<strong>Comment</strong>: One commenter on the CY2011 OPPS final rule <strong>with</strong> commentperiod expressed appreciation for CMS’efforts to establish APC 0318.Response: We appreciate thecommenters’ support for the creation ofAPC 0318.We did not receive any publiccomments on our proposals for costestimation or APC assignment of CPTcode 64568 for CY 2012. We arefinalizing our CY 2012 proposal,<strong>with</strong>out modification, to use the samemethodology we used in CY 2011 toestimate hospital costs of CPT code64568. For this final rule <strong>with</strong> commentperiod, we created an estimated mediancost of approximately $24,262 for CPTcode 64568 from 455 single claims to seta payment rate for APC 0318 for CY2012. We are maintaining CPT code64568 as the only code assigned to APC0318 for CY 2012.(9) Brachytherapy Sources(A) BackgroundSection 1833(t)(2)(H) of the Act, asadded by section 621(b)(2)(C) of Pub. L.108–173 (MMA), mandated the creationof additional groups of covered OPDservices that classify devices ofbrachytherapy consisting of a seed orseeds (or radioactive source)(‘‘brachytherapy sources’’) separatelyfrom other services or groups ofservices. The additional groups mustreflect the number, isotope, andradioactive intensity of thebrachytherapy sources furnished andinclude separate groups for palladium-103 and iodine-125 sources.Section 1833(t)(16)(C) of the Act, asadded by section 621(b)(1) of PublicLaw 108–173, established payment forbrachytherapy sources furnished fromJanuary 1, 2004 through December 31,2006, based on a hospital’s charges foreach brachytherapy source furnishedadjusted to cost. Under section1833(t)(16)(C) of the Act, charges for thebrachytherapy sources may not be usedin determining any outlier paymentsunder the OPPS for that period in whichpayment is based on charges adjusted tocost. Consistent <strong>with</strong> our practice underthe OPPS to exclude items paid at costfrom budget neutrality consideration,these items were excluded from budgetneutrality for that time period as well.Subsequent to the MMA, variousamendments to the Act were made thatresulted in the extension of the paymentperiod for brachytherapy sources basedon a hospital’s charges adjusted to costthrough December 31, 2009. The CY2011 OPPS/ASC final rule <strong>with</strong>comment period summarizes theseamendments to the Act and ourproposals to pay for brachytherapysources at prospective payment ratesbased on their source specific mediancosts from CY 2007 through CY 2009 (75FR 71977 through 71981).In the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period (74 FR 60533through 60537), we adopted for CY 2010the general OPPS prospective paymentmethodology for brachytherapy sources,consistent <strong>with</strong> section 1833(t)(2)(C) ofthe Act, <strong>with</strong> payment rates based onsource-specific median costs. For CY2011, we continued to use the generalOPPS prospective paymentmethodology for brachytherapy sources,consistent <strong>with</strong> section 1833(t)(2)(C) ofthe Act (75 FR 71980). We also finalizedour proposals to continue the policy wefirst implemented in the CY 2010 OPPS/ASC final rule <strong>with</strong> comment period (74FR 60537 and 75 FR 71980) regardingpayment for new brachytherapy sourcesfor which we have no claims data, basedon the same reasons we discussed in the2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66786; whichwas superseded by section 142 of Pub.L. 110–275). That policy is intended toenable us to assign future new HCPCScodes for new brachytherapy sources totheir own APCs, <strong>with</strong> prospectivepayment rates based on ourconsideration of external data and otherrelevant information regarding theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2expected costs of the sources tohospitals.Consistent <strong>with</strong> our policy regardingAPC payments made on a prospectivebasis, for CYs 2010 and 2011, wefinalized proposals to subjectbrachytherapy sources to outlierpayments under section 1833(t)(5) of theAct, and also to subject brachytherapysource payment weights to scaling forpurposes of budget neutrality (75 FR71980 through 71981 and 75 FR 60537).Hospitals could receive outlierpayments for brachytherapy sources ifthe costs of furnishing brachytherapysources meet the criteria for outlierpayment. In addition, as noted in the CY2010 and CY 2011 OPPS/ASC final rules<strong>with</strong> comment period (74 FR 60534 and75 FR 71978 and 71979, respectively),implementation of prospectivepayments for brachytherapy sourcesprovided opportunities for eligiblehospitals to receive additional paymentsin CY 2010 and CY 2011 under certaincircumstances through the 7.1 percentrural adjustment, as described in sectionII.E. of this final rule <strong>with</strong> commentperiod.(B) OPPS Payment PolicyAs we have stated previously (72 FR66780, 73 FR 41502, 74 FR 60533through 60534, and 75 FR 71978), webelieve that adopting the general OPPSprospective payment methodology forbrachytherapy sources is appropriate fora number of reasons. The general OPPSpayment methodology uses mediancosts based on claims data to set therelative payment weights for hospitaloutpatient services. This paymentmethodology results in more consistent,predictable, and equitable paymentamounts per source across hospitals byeliminating some of the extremely highand low payment amounts resultingfrom payment based on hospitals’charges adjusted to cost. We believe thatthe OPPS prospective paymentmethodology, as opposed to paymentbased on hospitals’ charges adjusted tocost, would also provide hospitals <strong>with</strong>incentives for efficiency in the provisionof brachytherapy services to Medicarebeneficiaries. Moreover, this approach isconsistent <strong>with</strong> our paymentmethodology for the vast majority ofitems and services paid under the OPPS.In the CY 2012 OPPS/ASC proposedrule (76 FR 42196 through 42197), weproposed to use the median costs fromCY 2010 claims data for setting theproposed CY 2012 payment rates forbrachytherapy sources, as we proposedfor most other items and services thatwill be paid under the CY 2012 OPPS.We proposed to continue the otherpayment policies for brachytherapy

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74161jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2sources we finalized and firstimplemented in the CY 2010 OPPS/ASCfinal rule <strong>with</strong> comment period (74 FR60537). We proposed to pay for thestranded and non-stranded NOS codes,HCPCS codes C2698 and C2699, at arate equal to the lowest stranded or nonstrandedprospective payment rate forsuch sources, respectively, on a persource basis (as opposed, for example,to a per mCi), which is based on thepolicy we established in the CY 2008OPPS/ASC final rule <strong>with</strong> commentperiod (72 FR 66785). The proposedpayment methodology for NOS sourceswould provide payment to a hospital fornew sources and, at the same time,encourage interested parties to quicklybring new sources to our attention sothat specific coding and payment couldbe established.We also proposed to continue thepolicy we first implemented in the CY2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60537)regarding payment for newbrachytherapy sources for which wehave no claims data, based on the samereasons we discussed in the CY 2008OPPS/ASC final rule <strong>with</strong> commentperiod (72 FR 66786; which wassuperseded for a period of time bysection 142 of Pub. L. 110–275). Thatpolicy is intended to enable us to assignnew HCPCS codes for newbrachytherapy sources to their ownAPCs, <strong>with</strong> prospective payment ratesset based on our consideration ofexternal data and other relevantinformation regarding the expectedcosts of the sources to hospitals.Consistent <strong>with</strong> our policy regardingAPC payments made on a prospectivebasis, as we did for CY 2011, weproposed to subject brachytherapysources to outlier payments undersection 1833(t)(5) of the Act, and also tosubject brachytherapy source paymentweights to scaling for purposes ofbudget neutrality. Hospitals can receiveoutlier payments for brachytherapysources if the costs of furnishingbrachytherapy sources meet the criteriafor outlier payment. In addition, asnoted in the CY 2010 and CY 2011OPPS/ASC final rules <strong>with</strong> commentperiod (74 FR 60534 and 75 FR 71978through 71979, respectively),implementation of prospectivepayments for brachytherapy sourceswould provide opportunities for eligiblehospitals to receive additional paymentsin CY 2012 under certain circumstancesthrough the 7.1 percent ruraladjustment, as described in section II.E.of the proposed rule.Therefore, we proposed to pay forbrachytherapy sources at prospectivepayment rates based on their source-specific median costs for CY 2012. Wereferred readers to Addendum B to theproposed rule (which is available viathe Internet on the CMS Web site) forthe proposed CY 2012 payment rates forbrachytherapy sources, identified <strong>with</strong>status indicator ‘‘U.’’ For more detaileddiscussion of the legislative historysurrounding brachytherapy sources andour proposed and final policies for CY2004 through CY 2011, we refer readersto the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period (75 FR 71977through 71981).<strong>Comment</strong>: Some commentersrequested that CMS discard itsprospective payment methodology forbrachytherapy sources based on sourcespecificmedian costs, and revert topayments based on brachytherapycharges adjusted to costs, for a varietyof reasons. The commenters claimedthat the claims data show a hugevariation in costs per unit; that therecontinues to be, in the CY 2012proposed rule data, longstandinginstability and fluctuation of costs; thatmore than one half of the currentbrachytherapy sources have proposedpayment rates based on 50 or fewerhospitals (a number that a commenterreported has declined from 2010 to2012); and that proposed payment ratesare unstable and fluctuate significantly.The commenters were also concernedthat rank order anomalies continue toexist in proposed source payment rates,such as between C2635, high activitypalladium, and C2640 and C2641,which represent forms of low activitypalladium. The commenters alsoclaimed that the charges adjusted to costmethod would cost the Medicareprogram approximately $10.8 millionless than the prospective paymentmethodology based on median cost persource. The commenters claimed thatthe number of hospitals providingbrachytherapy treatment and thenumber of beneficiaries treated <strong>with</strong>brachytherapy have declined from 2010to 2011 because some hospitals cannotrecover their costs under theprospective payment rates adopted inCY 2010. The commenters also pointedout that High Dose Rate (HDR) Iridium-192 may treat multiple patients over a90-day source life, making its true costdependent on the number of patientstreated, and thus making fairprospective payment difficult toachieve.Response: As we stated previously (72FR 66782; 74 FR 60534; 75 FR 71979),we believe that median costs based onhospital claims data for brachytherapysources have produced reasonablyconsistent per-source cost estimatesover the past several years, comparableVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2to the patterns we have observed formany other OPPS services whosepayments are set based upon relativepayment weights from claims data. Webelieve that our per-source paymentmethodology specific to each source’sradioisotope, radioactive intensity, andstranded or non-stranded configuration,supplemented by payment based on thenumber of sources used in a specificclinical case, adequately accounts forthe major expected sources of variabilityacross treatments. As we also explainedpreviously (72 FR 66782; 74 FR 60535;75 FR 71979), a prospective paymentsystem such as the OPPS relies on theconcept of averaging, where thepayment may be more or less than theestimated cost of providing a service fora particular patient, but <strong>with</strong> theexception of outlier cases, it is adequateto ensure access to appropriate care. Inthe case of brachytherapy sources forwhich the law requires separatepayment groups, <strong>with</strong>out packaging, thecosts of these individual items could beexpected to show greater variation thansome other APCs under the OPPSbecause higher variability in costs forsome component items and services isnot balanced <strong>with</strong> lower variability forothers and because relative weights aretypically estimated using a smaller setof claims. Nevertheless, we believe thatprospective payment for brachytherapysources based on median costs fromclaims calculated according to thestandard OPPS methodology isappropriate and provides hospitals <strong>with</strong>the greatest incentives for efficiency infurnishing brachytherapy treatment.As we have stated previously (75 FR71979), under the budget neutralprovision for the OPPS, it is therelativity of costs of services, not theirabsolute costs, that is important, and webelieve that brachytherapy sources areappropriately paid according to thestandard OPPS payment approach.Furthermore, we are not concerned thatsome sources may have median costsand payment rates based on 50 or fewerproviders, because it is not uncommonfor OPPS prospective payment rates tobe based on claims from a relativelysmall number of hospitals thatfurnished the service in the year ofclaims data available for the OPPSupdate year. Fifty hospitals may reporthundreds of brachytherapy sourceclaims for many cases and comprise theuniverse of providers using particularlow volume sources, for which we arerequired to pay separately by statute.Further, our methodology for estimatingmedian costs for brachytherapy sourcesutilizes all line-item charges for thosesources, which allows us to use all

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274162 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationshospital reported charge and estimatedcost information to set payment rates forthese items. Therefore, nobrachytherapy source claims are lost.We have no reason to believe thatprospective payment rates based onclaims from those providers furnishinga particular source do not appropriatelyreflect the cost of that source tohospitals.In the case of high and low activityiodine-125 sources, our claims datashow that the cost of the high activitysource is greater than the low activitysources, as we have noticed in the past.However, this relationship is reversedfor palladium-103 sources, as onecommenter pointed out. As we havestated in the past (75 FR 71979), wehave no information about the expectedcost differential between high and lowactivity sources of various isotopesother than what is available in ourclaims and hospital cost report data. Forhigh activity palladium-103, only 12hospitals reported this service in CY2010, compared to 150 and 211providers for low activity palladiumsources described by HCPCS codesC2640 and C2641, respectively. As westated regarding this issue in the CY2010 and CY 2011 OPPS/ASC final rule<strong>with</strong> comment period (74 FR 60535 and75 FR 71979), it is clear that fewerproviders furnished high activitypalladium-103 sources than low activitypalladium sources, and we expect thatthe hospital cost distribution for thosehospitals could be different than thecost distribution of the large number ofproviders reporting the low activitysources. These varied cost distributionsclearly contribute to the observedrelationship in median costs betweenthe different types of sources. However,we see no reason why our standardratesetting methodology forbrachytherapy sources that relies on allclaims from all hospitals furnishingbrachytherapy sources would not yieldvalid median costs for those hospitalsfurnishing the different brachytherapysources upon which CY 2012prospective payments rates are based.Prospective payment forbrachytherapy sources based on theirmedian costs makes the source paymentan integral part of the OPPS, rather thana separate cost-based paymentmethodology <strong>with</strong>in the OPPS, asindicated previously (75 FR 71980). Webelieve that consistent and predictableprospectively established payment ratesunder the OPPS for brachytherapysources are appropriate because we donot believe that the hospital resourcecosts associated <strong>with</strong> specificbrachytherapy sources would varygreatly across hospitals or clinicalconditions under treatment, other thanthrough differences in the numbers ofsources utilized that would beaccounted for in the standard OPPSpayment methodology we are finalizingfor CY 2012.As we indicated in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 71980), we agree that highdose rate (HDR) brachytherapy sourcessuch as HDR irirdium-192 have a fixedactive life and must be replaced every90 days; as a result, hospitals’ pertreatmentcost for the source would bedependent on the number of treatmentsfurnished per source. The source costmust be amortized over the life of thesource. Therefore, in establishing theircharges for HDR iridium, we expecthospitals to project the number oftreatments that would be provided overthe life of the source and establish theircharges for the source accordingly, aswe have stated previously (72 FR 66783;74 FR 60535; 75 FR 71980). For most ofthese OPPS services, our practice is toestablish prospective payment ratesbased on the median costs fromhospitals’ claims data to provideincentives for efficient and cost-effectivedelivery of these services.We do not agree <strong>with</strong> the commentersthat prospective brachytherapy sourcepayment based on median costs wouldincrease aggregate Medicareexpenditures using the chargesadjusted-to-costmethodology comparedto the proposed prospective paymentmethodology. Our past studies, such asthat discussed in the CY 2010 final rule<strong>with</strong> comment period (74 FR 60535),have shown that payment at chargesadjusted to cost results in higheraggregate payment for brachytherapysources than does prospective payment.As we indicated in the CY 2010 finalrule <strong>with</strong> comment period and the CY2011 final rule <strong>with</strong> comment period (74FR 60535 and 75 FR 71980), we havetraditionally found that charge inflationfor brachytherapy sources appears to behigher than the market basket inflationupdate applicable to prospectivepayments under the OPPS. Therefore,we found that the estimated paymentswe calculated for brachytherapy chargesadjusted to cost were greater than theestimated prospective payment ratesbecause the hospital market basketgrows more slowly than the charges forbrachytherapy sources. The commenterdid not provide its aggregate paymentsstudy in its comment to the CY 2012OPPS/ASC proposed rule, and we donot know whether the commenter’sstudy took into account factors such ascharge inflation. Moreover, the OPPS isa prospective payment system thatensures equitable prospective paymentVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2of services across providers, andefficient use of resources, includingbrachytherapy sources, which since CY2010 are part of OPPS prospectivepayment.Concerning the comment that someproviders may have decided todiscontinue offering brachytherapyservices because the OPPS paymentrates for sources were too low, as wehave noted in the past (75 FR 71980),there are many reasons why someproviders may discontinue services,such as brachytherapy. For example,changes in medical technology oremphasis on different treatment formsfor a medical condition can influencewhether a set of services are continued.In addition, providers accept paymentfrom a number of payers in addition toMedicare, and we believe a global shiftby a provider to discontinue anyservices would be influenced by factorsother than our payment rates alone.<strong>Comment</strong>: One commenter supportedthe proposed payment policy for newbrachytherapy sources for which wehave no claims data, namely, to assignnew HCPCS codes for newbrachytherapy sources to their ownAPCs, <strong>with</strong> prospective payment ratesbased on CMS’ consideration of externaldata and other relevant informationregarding the expected costs of thesources to hospitals.Response: We appreciate thecommenter’s support for this paymentpolicy.After consideration of the publiccomments we received, we arefinalizing our proposal to pay forbrachytherapy sources at prospectivepayment rates based on their sourcespecificmedian costs for CY 2012. Werefer readers to Addendum B to thisfinal rule <strong>with</strong> comment period (whichis available via the Internet on the CMSWeb site) for the final CY 2012 paymentrates for brachytherapy sources,identified <strong>with</strong> status indicator ‘‘U.’’ Wealso are finalizing our proposals tocontinue our policies regarding paymentfor NOS codes for stranded and nonstrandedsources and newbrachytherapy sources for which wehave no claims data. Specifically, we arefinalizing our proposals to continuepayment for stranded and non-strandedNOS codes, HCPCS codes C2698 andC2699, at a rate equal to the loweststranded or non-stranded prospectivepayment for such sources, respectivelyas discussed in the CY 2008 OPPS/ASCfinal rule <strong>with</strong> comment period (72 FR66786); and our proposal to assignHCPCS codes for new brachytherapysources to their own APCs, <strong>with</strong>proposed payment rates based onconsideration of external data and other

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74163jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2relevant information, in the absence ofclaims data. Once claims data areavailable, our standard ratemakingprocess will be applied to thecalculation of the median cost for thenew brachytherapy source.Consistent <strong>with</strong> our policy regardingAPC payments made on a prospectivebasis, we are finalizing our proposal tosubject the cost of brachytherapysources to the outlier provision ofsection 1833(t)(5) of the Act, and also tosubject brachytherapy source paymentweights to scaling for purposes ofbudget neutrality.As stated in the proposed rule (76 FR42197), we continue to invite hospitalsand other parties to submitrecommendations to us for new HCPCScodes to describe new brachytherapysources consisting of a radioactiveisotope, including a detailed rationale tosupport recommended new sources.Such recommendations should bedirected to the Division of OutpatientCare, Mail Stop C4–05–17, Centers forMedicare and Medicaid Services, 7500Security Boulevard, Baltimore, MD21244. We will continue to add newbrachytherapy source codes anddescriptors to our systems for paymenton a quarterly basis.e. Calculation of Composite APCCriteria-Based Median CostsAs discussed in the CY 2008 OPPS/ASC final rule <strong>with</strong> comment period (72FR 66613), we believe it is importantthat the OPPS enhance incentives forhospitals to provide only necessary,high quality care and to provide thatcare as efficiently as possible. For CY2008, we developed composite APCs toprovide a single payment for groups ofservices that are typically performedtogether during a single clinicalencounter and that result in theprovision of a complete service.Combining payment for multipleindependent services into a single OPPSpayment in this way enables hospitalsto manage their resources <strong>with</strong>maximum flexibility by monitoring andadjusting the volume and efficiency ofservices themselves. An additionaladvantage to the composite APC modelis that we can use data from correctlycoded multiple procedure claims tocalculate payment rates for the specifiedcombinations of services, rather thanrelying upon single procedure claimswhich may be low in volume and/orincorrectly coded. Under the OPPS, wecurrently have composite APC policiesfor extended assessment andmanagement services, low dose rate(LDR) prostate brachytherapy, cardiacelectrophysiologic evaluation andablation services, mental healthservices, and multiple imaging services.We refer readers to the CY 2008 OPPS/ASC final rule <strong>with</strong> comment period fora full discussion of the development ofthe composite APC methodology (72 FR66611 through 66614 and 66650 through66652).In the CY 2012 OPPS/ASC proposedrule (76 FR 42197), for CY 2012, weproposed to continue, <strong>with</strong> somemodifications, our establishedcomposite APC policies for extendedassessment and management, LDRprostate brachytherapy, cardiacelectrophysiologic evaluation andablation, mental health services, andmultiple imaging services, as discussedin sections II.A.2.e.(1), II.A.2.e.(2),II.A.2.e.(3), II.A.2.e.(4), and II.A.2.e.(5),respectively, of the proposed rule. Wealso proposed to create a new compositeAPC for cardiac resynchronizationtherapy services, as discussed in sectionII.A.2.e.(6) of the proposed rule.After consideration of the publiccomments we received as discussedbelow, for CY 2012, we are finalizing,<strong>with</strong>out modification, our proposal tomodify some aspects of our establishedcomposite APC policies for extendedassessment and management, LDRprostate brachytherapy, cardiacelectrophysiologic evaluation andablation, mental health services, andmultiple imaging services, as discussedin sections II.A.2.e.(1), II.A.2.e.(2),II.A.2.e.(3), II.A.2.e.(4), and II.A.2.e.(5),respectively, of this final rule <strong>with</strong>comment period. We also are finalizing,<strong>with</strong> modification, our proposal tocreate a new composite APC for cardiacresynchronization therapy services, asdiscussed in section II.A.2.e.(6) of thisfinal rule <strong>with</strong> comment period.(1) Extended Assessment andManagement Composite APCs (APCs8002 and 8003)In the CY 2012 OPPS/ASC proposedrule (76 FR 42197 through 42198), forCY 2012, we proposed to continue toinclude composite APC 8002 (Level IExtended Assessment and ManagementComposite) and composite APC 8003(Level II Extended Assessment andManagement Composite) in the OPPSfor CY 2012. For CY 2008, we createdthese two composite APCs to providepayment to hospitals in certaincircumstances when extendedassessment and management of a patientoccur (an extended visit). In mostcircumstances, observation services aresupportive and ancillary to the otherservices provided to a patient. In thecircumstances when observation care isprovided in conjunction <strong>with</strong> a highlevel visit or direct referral and is anintegral part of a patient’s extendedVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2encounter of care, payment is made forthe entire care encounter through one oftwo composite APCs as appropriate.As defined for the CY 2008 OPPS,composite APC 8002 describes anencounter for care provided to a patientthat includes a high level (Level 5)clinic visit or direct referral forobservation services in conjunction <strong>with</strong>observation services of substantialduration (72 FR 66648 through 66649).Composite APC 8003 describes anencounter for care provided to a patientthat includes a high level (Level 4 or 5)Type A emergency department visit, ahigh level (Level 5) Type B emergencydepartment visit, or critical care servicesin conjunction <strong>with</strong> observation servicesof substantial duration. HCPCS codeG0378 (Observation services, per hour)is assigned status indicator ‘‘N,’’signifying that its payment is alwayspackaged. As noted in the CY 2008OPPS/ASC final rule <strong>with</strong> commentperiod (72 FR 66648 through 66649), theIntegrated Outpatient Code Editor (I/OCE) evaluates every claim received todetermine if payment through acomposite APC is appropriate. Ifpayment through a composite APC isinappropriate, the I/OCE, in conjunction<strong>with</strong> the OPPS Pricer, determines theappropriate status indicator, APC, andpayment for every code on a claim. Thespecific criteria that must be met for thetwo extended assessment andmanagement composite APCs to be paidare provided below in the description ofthe claims that were selected for thecalculation of the proposed CY 2012median costs for these composite APCs.We did not propose to change thesecriteria for the CY 2012 OPPS.When we created composite APCs8002 and 8003 for CY 2008, we retainedas general reporting requirements for allobservation services those criteriarelated to physician order andevaluation, documentation, andobservation beginning and ending timeas listed in the CY 2008 OPPS/ASC finalrule <strong>with</strong> comment period (72 FR66812). These are more generalrequirements that encourage hospitals toprovide medically reasonable andnecessary care and help to ensure theproper reporting of observation serviceson correctly coded hospital claims thatreflect the full charges associated <strong>with</strong>all hospital resources utilized to providethe reported services. We also issuedguidance clarifying the correct methodfor reporting the starting time forobservation services (sections 290.2.2through 290.5 in the Medicare ClaimsProcessing Manual (Pub. 100–4),Chapter 4, through Transmittal 1745,Change Request 6492, issued May 22,2009 and implemented July 6, 2009).

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274164 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and RegulationsWe did not propose to change thesereporting requirements for the CY 2012OPPS.For CY 2012, we proposed to continuethe extended assessment andmanagement composite APC paymentmethodology for APCs 8002 and 8003(76 FR 42198). We stated that wecontinue to believe that the compositeAPCs 8002 and 8003 and relatedpolicies provide the most appropriatemeans of paying for these services. Weproposed to calculate the median costsfor APCs 8002 and 8003 using all singleand ‘‘pseudo’’ single procedure claimsfor CY 2010 that meet the criteria forpayment of each composite APC.Specifically, to calculate the proposedmedian costs for composite APCs 8002and 8003, we selected single and‘‘pseudo’’ single procedure claims thatmet each of the following criteria:1. Did not contain a HCPCS code towhich we have assigned status indicator‘‘T’’ that is reported <strong>with</strong> a date ofservice 1 day earlier than the date ofservice associated <strong>with</strong> HCPCS codeG0378. (By selecting these claims fromsingle and ‘‘pseudo’’ single claims, wealready assure that they would notcontain a code for a service <strong>with</strong> statusindicator ‘‘T’’ on the same date ofservice.);2. Contained eight or more units ofHCPCS code G0378; and3. Contained one of the followingcodes:• In the case of composite APC 8002,HCPCS code G0379 (Direct referral ofpatient for hospital observation care) onthe same date of service as HCPCS codeG0378; or CPT code 99205 (Office orother outpatient visit for the evaluationand management of a new patient (Level5)); or CPT code 99215 (Office or otheroutpatient visit for the evaluation andmanagement of an established patient(Level 5)) provided on the same date ofservice or one day before the date ofservice for HCPCS code G0378.• In the case of composite APC 8003,CPT code 99284 (Emergency departmentvisit for the evaluation and managementof a patient (Level 4)); CPT code 99285(Emergency department visit for theevaluation and management of a patient(Level 5)); CPT code 99291 (Criticalcare, evaluation and management of thecritically ill or critically injured patient;first 30–74 minutes); or HCPCS codeG0384 (Level 5 hospital emergencydepartment visit provided in a Type Bemergency department) provided on thesame date of service or one day beforethe date of service for HCPCS codeG0378. (As discussed in detail in the CY2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68684), weadded HCPCS code G0384 to theeligibility criteria for composite APC8003 for CY 2009.)As discussed further in section VII. ofthe proposed rule and this final rule<strong>with</strong> comment period, and consistent<strong>with</strong> our CY 2008, CY 2009, CY 2010,and CY 2011 final policies (as discussedin section IX. of the final rules <strong>with</strong>comment period for these calendaryears), when calculating the mediancosts for the clinic, Type A emergencydepartment visit, Type B emergencydepartment visit, and critical care APCs(0604 through 0617 and 0626 through0630), we utilize our methodology thatexcludes those claims for visits that areeligible for payment through the twoextended assessment and managementcomposite APCs, that is APC 8002 orAPC 8003. We believe that thisapproach results in the most accuratecost estimates for APCs 0604 through0617 and 0626 through 0630 for CY2012.At its February 28–March 1, 2011meeting, the APC Panel recommendedthat CMS consider expanding theextended assessment and managementcomposite APCs for CY 2012. In theproposed rule, we indicated that we areaccepting this recommendation.As discussed in the CY 2012 OPPS/ASC proposed rule (76 FR 42198),consistent <strong>with</strong> our decision to acceptthe APC Panel’s recommendation, wehave examined various ways ofpotentially expanding the currentextended assessment and managementcomposite APCs to further limit thepossibility that total beneficiarycopayments would exceed the inpatientdeductible during extended observationencounters. We did not propose for CY2012 the expanded extended assessmentand management composite APCs thatwe analyzed because, while thecomposites that we modeled wouldserve to further limit the number ofbeneficiaries <strong>with</strong> copayments thatexceeded the inpatient deductible, themodeled composites also had the effectof possibly increasing copayments by asmall amount for the majority ofbeneficiaries undergoing extendedobservation. In addition, expandedassessment and management compositeAPCs do not address certain concernsabout extended observation servicesraised by stakeholders at CMS’observation listening session last year(that is, observation time not countingtowards the 3-day prior hospitalizationrequirement for the skilled nursingfacility benefit). As we stated in theproposed rule, we will continue ourefforts to model other compositestructures for a possible new extendedassessment and management compositestructure for CY 2013.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2In summary, for CY 2012, weproposed to continue to includecomposite APCs 8002 and 8003 in theOPPS. We proposed to continue theextended assessment and managementcomposite APC payment methodologyand criteria that we finalized for CYs2009, 2010, and 2011. We also proposedto calculate the median costs for APCs8002 and 8003 using the samemethodology that we used to calculatethe medians for composite APCs 8002and 8003 for the CY 2008 OPPS (72 FR66649). That is, we used all single and‘‘pseudo’’ single procedure claims fromCY 2010 that met the criteria forpayment of each composite APC andapplied the standard packaging andtrimming rules to the claims beforecalculating the proposed CY 2012median costs. The proposed CY 2012median cost resulting from thismethodology for composite APC 8002was approximately $395, which wascalculated from 16,770 single and‘‘pseudo’’ single bills that met therequired criteria. The proposed CY 2012median cost for composite APC 8003was approximately $735, which wascalculated from 225,874 single and‘‘pseudo’’ single bills that met therequired criteria.<strong>Comment</strong>: <strong>Comment</strong>ers supportedCMS’ policy to package payment forobservation care and to not provideadditional payment through anextended assessment and managementcomposite APC payment whenobservation services are billed <strong>with</strong>significant surgical procedures. Onecommenter stated that the observationservices in such cases are most likelyrelated to post-procedural recovery, andthus no additional payment iswarranted. The commenter argued,however, that when observation servicesare billed along <strong>with</strong> minor surgicalprocedures, the observation servicesshould be paid separately. Thecommenter suggested that CMS utilizethe MPFS definition of minor surgicalprocedures and reassign the codescurrently assigned status indicator ‘‘T’’to two newly created status indicators‘‘T1’’(for general surgical procedures)and ‘‘T2’’ (for minor surgical procedureas defined in MPFS) in order to allowobservation services to be paidseparately when provided <strong>with</strong> a minorsurgical procedure <strong>with</strong> the suggestedstatus indicator ’’T2.’’Response: We appreciate thecommenters’ support of our policy notto allow payment of APC 8002 or 8003for claims that include a HCPCS code towhich we have assigned status indicator‘‘T’’ that is reported <strong>with</strong> a date ofservice on the same day as or one dayprior to the date of the service

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74165jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2associated <strong>with</strong> HCPCS code G0378. Weagree <strong>with</strong> the commenters thatpayment for such services is included inthe payment for the surgical procedure.We appreciate the commenter’ssuggestions to define minor surgicalprocedures and to develop new statusindicators to allow for separate paymentfor observation services when billed<strong>with</strong> a minor surgical procedure andwill take these suggestions intoconsideration for possible futurerulemaking. At this time, we have notproposed to make any policy changes toallow for separate payment forobservation services when billed <strong>with</strong> aminor surgical procedure, nor have weproposed to create new status indicatorsfor CY 2012. Therefore, we are notmaking any such changes in this finalrule <strong>with</strong> comment period.After consideration of the publiccomments we received, we are adoptingas final, <strong>with</strong>out modification, our CY2012 proposal to continue to includecomposite APCs 8002 and 8003 in theOPPS and to continue the extendedassessment and management compositeAPC payment methodology and criteriathat we finalized for CYs 2009 through2011. We applied the standardpackaging and trimming rules to theclaims and calculated the median costsfor APCs 8002 and 8003 using all singleand ‘‘psuedo’’ single procedure claimsfrom CY 2010 that meet the criteria forpayment of each composite APC. Thefinal CY 2012 median cost resultingfrom this methodology for APC 8002 isapproximately $393, which wascalculated from 18,447 single and‘‘psuedo’’ single bills that met therequired criteria. The final CY 2012median cost for composite APC 8003 isapproximately $721, which wascalculated from 247,334 single and‘‘psuedo’’ single bills that met therequired criteria.(2) Low Dose Rate (LDR) ProstateBrachytherapy Composite APC (APC8001)LDR prostate brachytherapy is atreatment for prostate cancer in whichhollow needles or catheters are insertedinto the prostate, followed bypermanent implantation of radioactivesources into the prostate through theneedles/catheters. At least two CPTcodes are used to report the compositetreatment service because there areseparate codes that describe placementof the needles/catheters and theapplication of the brachytherapysources: CPT code 55875 (Transperinealplacement of needles or catheters intoprostate for interstitial radioelementapplication, <strong>with</strong> or <strong>with</strong>out cystoscopy)and CPT code 77778 (Interstitialradiation source application; complex).Generally, the component servicesrepresented by both codes are providedin the same operative session in thesame hospital on the same date ofservice to the Medicare beneficiarybeing treated <strong>with</strong> LDR brachytherapyfor prostate cancer. As discussed in theCY 2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66653), OPPSpayment rates for CPT code 77778, inparticular, had fluctuated over the years.We were frequently informed by thepublic that reliance on single procedureclaims to set the median costs for theseservices resulted in use of mainlyincorrectly coded claims for LDRprostate brachytherapy because acorrectly coded claim should include,for the same date of service, CPT codesfor both needle/catheter placement andapplication of radiation sources, as wellas separately coded imaging andradiation therapy planning services (thatis, a multiple procedure claim).In order to base payment on claims forthe most common clinical scenario, andto further our goal of providing paymentunder the OPPS for a larger bundle ofcomponent services provided in a singlehospital encounter, beginning in CY2008, we began providing a singlepayment for LDR prostate brachytherapywhen the composite service, reported asCPT codes 55875 and 77778, isfurnished in a single hospital encounter.We based the payment for compositeAPC 8001 (LDR Prostate BrachytherapyComposite) on the median cost derivedfrom claims for the same date of servicethat contain both CPT codes 55875 and77778 and that do not contain otherseparately paid codes that are not on thebypass list. In uncommon occurrencesin which the services are billedindividually, hospitals have continuedto receive separate payments for theindividual services. We refer readers tothe CY 2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66652 through66655) for a full history of OPPSpayment for LDR prostate brachytherapyand a detailed description of how wedeveloped the LDR prostatebrachytherapy composite APC.In the CY 2012 OPPS/ASC proposedrule (76 FR 42199), we proposed tocontinue paying for LDR prostatebrachytherapy services using thecomposite APC methodology proposedand implemented for CY 2008 throughCY 2011. That is, we proposed to useCY 2010 claims on which both CPTcodes 55875 and 77778 were billed onthe same date of service <strong>with</strong> no otherseparately paid procedure codes (otherthan those on the bypass list) tocalculate the payment rate for compositeAPC 8001. Consistent <strong>with</strong> our CY 2008VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00045 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2through CY 2011 practice, we proposednot to use the claims that meet thesecriteria in the calculation of the mediancosts for APCs 0163 (Level IVCystourethroscopy and OtherGenitourinary Procedures) and 0651(Complex Interstitial Radiation SourceApplication), the APCs to which CPTcodes 55875 and 77778 are assigned,respectively. We proposed that themedian costs for APCs 0163 and 0651would continue to be calculated usingsingle and ‘‘pseudo’’ single procedureclaims. We stated that we believe thatthis composite APC contributes to ourgoal of creating hospital incentives forefficiency and cost containment, whileproviding hospitals <strong>with</strong> the mostflexibility to manage their resources. Wealso continue to believe that data fromclaims reporting both services requiredfor LDR prostate brachytherapy providethe most accurate median cost uponwhich to base the composite APCpayment rate.Using a partial year of CY 2010 claimsdata available for the CY 2012 proposedrule, we were able to use 556 claims thatcontained both CPT codes 55875 and77778 to calculate the median cost uponwhich the proposed CY 2012 paymentfor composite APC 8001 is based. Theproposed median cost for compositeAPC 8001 for CY 2012 wasapproximately $3,364. This was anincrease compared to the CY 2011 finalmedian cost for this composite APC ofapproximately $3,195 based on 849single bill claims from a full year of CY2009 claims data. The proposed CY2012 median cost for this compositeAPC was slightly less than $3,555, thesum of the proposed median costs forAPCs 0163 and 0651 ($2,658 + $897),the APCs to which CPT codes 55875and 77778 map if one service is billedon a claim <strong>with</strong>out the other. We statedthat we believe the proposed CY 2012median cost for composite APC 8001 ofapproximately $3,364, calculated fromclaims we believe to be correctly coded,would result in a reasonable andappropriate payment rate for this servicein CY 2012.<strong>Comment</strong>: One commenter expressedconcern <strong>with</strong> CMS’ methodology to useclaims for median cost calculation forAPC 8001 <strong>with</strong> both CPT codes 55875and 77778 on the same date of serviceand no other separately paid servicesthat are not on the bypass list, whichresulted in 556 CY 2012 proposed ruleclaims. The commenter noted that thisis only 12 percent of all CY 2012proposed rule claims containing CPTcodes 55875 and 77778. The commenterstated that its analysis of commonlyincluded procedure codes <strong>with</strong> LDRprocedures would include CPT code

74166 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES277332 (Treatment devices, design andconstruction; simple (simple block,simple bolus)), which the commenterrecommended be added to the bypasslist. This would add 406 claims to themedian cost calculation based on thecommenter’s analysis of CY 2012proposed rule claims.Response: We disagree <strong>with</strong> thecommenter that 556 claims is not arobust number of single claims forratesetting purposes. There are manyservices for which we have mediancosts based on hundreds of single and‘‘pseudo’’ single claims. Moreover, theCY 2012 proposed rule median cost ofapproximately $3,364, the CY 2012 finalmedian cost of approximately $3,340,and the CY 2011 final median cost ofapproximately $3,195 all comparefavorably and show stability in themedian cost calculation for APC 8001.We do not believe the median costwould remain stable to such a degree ifthe claims used in ratesetting forcomposite APC 8001 were inadequate orinaccurately reflected hospitals’ costsfor providing the service described byCPT codes 55875 and 77778. We also donot believe it is appropriate to includeCPT code 77332 on the bypass list forthe reasons discussed in section II.A.1.b.of this final rule <strong>with</strong> comment period.<strong>Comment</strong>: One commenter requestedthat CMS implement the proposed CY2012 payment rate for composite APC8001, due to the increased median costfor APC 8001.Response: We appreciate thecommenter’s support for our proposedpayment rate for composite APC 8001.We note that we base final OPPS rateson median costs calculated using a fullyear of hospital claims and cost reportdata rather than a partial year’s data,which were the data available for theproposed rule.After consideration of the publiccomments we received, we arefinalizing, <strong>with</strong>out modification, ourproposal to continue paying for LDRprostate brachytherapy services usingthe composite APC methodologyimplemented for CYs 2008, 2009, 2010,and 2011 described above in thissection. The final CY 2012 median costfor composite APC 8001 isapproximately $3,340, calculated from595 single bills.(3) Cardiac ElectrophysiologicEvaluation and Ablation CompositeAPC (APC 8000)Cardiac electrophysiologic evaluationand ablation services frequently areperformed in varying combinations <strong>with</strong>one another during a single episode ofcare in the hospital outpatient setting.Therefore, correctly coded claims forthese services often include multiplecodes for component services that arereported <strong>with</strong> different CPT codes andthat, prior to CY 2008, were always paidseparately through different APCs(specifically, APC 0085 (Level IIElectrophysiologic Evaluation), APC0086 (Ablate Heart Dysrhythm Focus),and APC 0087 (CardiacElectrophysiologic Recording/Mapping)). As a result, there wouldnever be many single bills for cardiacelectrophysiologic evaluation andablation services, and those that arereported as single bills would oftenrepresent atypical cases or incorrectlycoded claims. As described in the CY2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66655 through66659), the APC Panel and the publicexpressed persistent concerns regardingthe limited and reportedlyunrepresentative single bills availablefor use in calculating the median costsfor these services according to ourstandard OPPS methodology.Effective January 1, 2008, weestablished APC 8000 (CardiacElectrophysiologic Evaluation andAblation Composite) to pay for acomposite service made up of at leastone specified electrophysiologicevaluation service and one specifiedelectrophysiologic ablation service.Calculating a composite APC for theseservices allowed us to utilize manymore claims than were available toestablish the individual APC mediancosts for these services, and we also sawthis composite APC as an opportunity toadvance our stated goal of promotinghospital efficiency through largerpayment bundles. In order to calculatethe median cost upon which thepayment rate for composite APC 8000 isbased, we used multiple procedureclaims that contained at least one CPTcode from group A for evaluationservices and at least one CPT code fromgroup B for ablation services reportedon the same date of service on anindividual claim. Table 9 in the CY2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66656)identified the CPT codes that areassigned to groups A and B. For a fulldiscussion of how we identified thegroup A and group B procedures andestablished the payment rate for thecardiac electrophysiologic evaluationand ablation composite APC, we referreaders to the CY 2008 OPPS/ASC finalrule <strong>with</strong> comment period (72 FR 66655through 66659). Where a service ingroup A is furnished on a date of servicethat is different from the date of servicefor a code in group B for the samebeneficiary, payments are made underVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00046 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2the appropriate single procedure APCsand the composite APC does not apply.In the CY 2012 OPPS/ASC proposedrule (76 FR 42200), we proposed tocontinue to pay for cardiacelectrophysiologic evaluation andablation services using the compositeAPC methodology proposed andimplemented for CY 2008 through CY2011. Consistent <strong>with</strong> our CY 2008through CY 2011 practice, we proposednot to use the claims that meet thecomposite payment criteria in thecalculation of the median costs for APC0085 and APC 0086, to which the CPTcodes in both groups A and B forcomposite APC 8000 are otherwiseassigned. Median costs for APCs 0085and 0086 would continue to becalculated using single procedureclaims. We stated that we continue tobelieve that the composite APCmethodology for cardiacelectrophysiologic evaluation andablation services is the most efficientand effective way to use the claims datafor the majority of these services andbest represents the hospital resourcesassociated <strong>with</strong> performing the commoncombinations of these services that areclinically typical. Furthermore, thisapproach creates incentives forefficiency by providing a singlepayment for a larger bundle of majorprocedures when they are performedtogether, in contrast to continuedseparate payment for each of theindividual procedures.For CY 2012, using a partial year ofCY 2010 claims data available for theproposed rule, we were able to use11,156 claims containing a combinationof group A and group B codes andcalculated a proposed median cost ofapproximately $11,598 for compositeAPC 8000. This was an increasecompared to the CY 2011 final mediancost for this composite APC ofapproximately $10,673 based on a fullyear of CY 2009 claims data. We statedin the CY 2012 OPPS/ASC proposedrule (76 FR 42200) that we believe theproposed median cost of $11,598calculated from a high volume ofcorrectly coded multiple procedureclaims would result in an accurate andappropriate proposed payment forcardiac electrophysiologic evaluationand ablation services when at least oneevaluation service is furnished duringthe same clinical encounter as at leastone ablation service.<strong>Comment</strong>: One commenter supportedCMS’ proposal to continue its currentcomposite methodology for cardiacelectrophysiologic evaluation andablation services, stating that it is themost efficient and effective method touse claims data for most of the cardiac

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74167electrophysiologic services, and bestrepresents the resources associated <strong>with</strong>the combined services.Response: We appreciate thecommenter’s support.We are finalizing our proposal for CY2012, <strong>with</strong>out modification, to continueto pay for cardiac electrophysiologicevaluation and ablation services usingthe composite APC methodologyimplemented for CY 2008 through CY2011. For this final rule <strong>with</strong> commentperiod, we were able to use 11,706claims from CY 2010 containing acombination of group A and group Bcodes and calculated a final CY 2012median cost of approximately $11,313for composite APC 8000. Table 7 belowlist the groups of procedures uponwhich we based composite APC 8000for CY 2012.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00047 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.009

74168 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2(4) Mental Health Services CompositeAPC (APC 0034)In the CY 2012 OPPS/ASC proposedrule (76 FR 42200 through 42201), forCY 2012, we proposed to continue ourlongstanding policy of limiting theaggregate payment for specified lessresource-intensive mental healthservices furnished on the same date tothe payment for a day of partialhospitalization, which we consider to bethe most resource-intensive of alloutpatient mental health treatment forCY 2012. We refer readers to the April7, 2000 OPPS final rule <strong>with</strong> commentperiod (65 FR 18452 through 18455) forthe initial discussion of thislongstanding policy. We stated that wecontinue to believe that the costsassociated <strong>with</strong> administering a partialhospitalization program represent themost resource-intensive of all outpatientmental health treatment. Therefore, wedid not believe that we should pay morefor a day of individual mental healthservices under the OPPS than the partialhospitalization per diem payment.As discussed in detail in section VIII.of the proposed rule, for CY 2012, weproposed to continue using a providerspecifictwo tiered payment approachfor partial hospitalization services thatdistinguishes payment made for servicesfurnished in a CMHC from paymentmade for services furnished in ahospital. Specifically, we proposed oneAPC for partial hospitalization programdays <strong>with</strong> three services furnished in aCMHC (APC 0172 (Level I PartialHospitalization (3 services) for CMHCs))and one APC for days <strong>with</strong> four or moreservices furnished in a CMHC (APC0173 (Level II Partial Hospitalization (4or more services) for CMHCs)). Weproposed that the payment rates forthese two APCs be based upon themedian per diem costs calculated usingdata only from CMHCs. Similarly, weproposed one APC for partialhospitalization program days <strong>with</strong> threeservices furnished in a hospital (APC0175, Level I Partial Hospitalization (3services) for Hospital-Based PHPs), andone APC for days <strong>with</strong> four or moreservices furnished in a hospital (APC0176, Level II Partial Hospitalization (4or more services) for Hospital-BasedPHPs). We proposed that the paymentrates for these two APCs be based on themedian per diem costs calculated usingdata only from hospitals.Because our longstanding policy oflimiting the aggregate payment forspecified less resource-intensive mentalhealth services furnished on the samedate to the payment rate for the mostresource-intensive of all outpatientmental health treatment, for CY 2012,we proposed to continue to set thepayment rate for APC 0034 (MentalHealth Services Composite) at the samerate as we proposed for APC 0176,which is the maximum partialhospitalization per diem payment. Aswe stated in the CY 2012 OPPS/ASCproposed rule (76 FR 42201), we believethis APC payment rate would providethe most appropriate payment forcomposite APC 0034, taking intoconsideration the intensity of the mentalhealth services and the differences inthe HCPCS codes for mental healthservices that could be paid through thiscomposite APC compared <strong>with</strong> theHCPCS codes that could be paidthrough partial hospitalization APC0176. When the aggregate payment forspecified mental health servicesprovided by one hospital to a singlebeneficiary on one date of service basedon the payment rates associated <strong>with</strong>the APCs for the individual servicesexceeds the maximum per diem partialhospitalization payment, we proposedthat those specified mental healthservices would be assigned to APC0034. We proposed that APC 0034would have the same payment rate asAPC 0176 and that the hospital wouldcontinue to be paid one unit of APC0034. The I/OCE currently determineswhether to pay these specified mentalhealth services individually or to makea single payment at the same rate as theAPC 0176 per diem rate for partialhospitalization for all of the specifiedmental health services furnished by thehospital on that single date of service,and we proposed for CY 2012 that itwould continue to determine this.We did not receive any comments onthis proposal. We continue to believethat the costs associated <strong>with</strong>administering a partial hospitalizationprogram represent the most resourceintensive of all outpatient mental healthtreatment, and we do not believe thatCMS should pay more for a day ofindividual mental health services underthe OPPS than the partialhospitalization per diem payment.Therefore, we are finalizing our CY 2012proposal, <strong>with</strong>out modification, to limitthe aggregate payment for specified lessintensive outpatient mental healthservices furnished on the same date bya hospital to the payment for a day ofpartial hospitalization, specifically APC0176.(5) Multiple Imaging Composite APCs(APCs 8004, 8005, 8006, 8007, and8008)Prior to CY 2009, hospitals received afull APC payment for each imagingservice on a claim, regardless of howmany procedures were performedVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00048 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2during a single session using the sameimaging modality. Based on extensivedata analysis, we determined that thispractice neither reflected nor promotedthe efficiencies hospitals can achievewhen performing multiple imagingprocedures during a single session (73FR 41448 through 41450). As a result ofour data analysis, and in response toongoing recommendations fromMedPAC to improve payment accuracyfor imaging services under the OPPS, weexpanded the composite APC modeldeveloped in CY 2008 to multipleimaging services. Effective January 1,2009, we provide a single payment eachtime a hospital bills more than oneimaging procedure <strong>with</strong>in an imagingfamily on the same date of service. Weutilize three imaging families based onimaging modality for purposes of thismethodology: (1) Ultrasound; (2)computed tomography (CT) andcomputed tomographic angiography(CTA); and (3) magnetic resonanceimaging (MRI) and magnetic resonanceangiography (MRA). The HCPCS codessubject to the multiple imagingcomposite policy and their respectivefamilies are listed in Table 13 of the CY2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 71859 through71860).While there are three imagingfamilies, there are five multiple imagingcomposite APCs due to the statutoryrequirement at section 1833(t)(2)(G) ofthe Act that we differentiate paymentfor OPPS imaging services provided<strong>with</strong> and <strong>with</strong>out contrast. While theultrasound procedures included in thepolicy do not involve contrast, both CT/CTA and MRI/MRA scans can beprovided either <strong>with</strong> or <strong>with</strong>outcontrast. The five multiple imagingcomposite APCs established in CY 2009are:• APC 8004 (Ultrasound Composite);• APC 8005 (CT and CTA <strong>with</strong>outContrast Composite);• APC 8006 (CT and CTA <strong>with</strong>Contrast Composite);• APC 8007 (MRI and MRA <strong>with</strong>outContrast Composite); and• APC 8008 (MRI and MRA <strong>with</strong>Contrast Composite).We define the single imaging sessionfor the ‘‘<strong>with</strong> contrast’’ composite APCsas having at least one or more imagingprocedures from the same familyperformed <strong>with</strong> contrast on the samedate of service. For example, if thehospital performs an MRI <strong>with</strong>outcontrast during the same session as atleast one other MRI <strong>with</strong> contrast, thehospital will receive payment for APC8008, the ‘‘<strong>with</strong> contrast’’ compositeAPC.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74169jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Hospitals continue to use the sameHCPCS codes to report imagingprocedures, and the I/OCE determineswhen combinations of imagingprocedures qualify for composite APCpayment or map to standard (soleservice) APCs for payment. We make asingle payment for those imagingprocedures that qualify for compositeAPC payment, as well as any packagedservices furnished on the same date ofservice. The standard (noncomposite)APC assignments continue to apply forsingle imaging procedures and multipleimaging procedures performed acrossfamilies. For a full discussion of thedevelopment of the multiple imagingcomposite APC methodology, we referreaders to the CY 2009 OPPS/ASC finalrule <strong>with</strong> comment period (73 FR 68559through 68569).At its February 2010 meeting, the APCPanel recommended that CMS continueproviding analysis on an ongoing basisof the impact on beneficiaries of themultiple imaging composite APCs asdata become available. In the CY 2011OPPS/ASC proposed rule, we indicatedthat we were accepting thisrecommendation and would provide therequested analysis to the APC Panel ata future meeting (75 FR 46212). As wediscuss in the CY 2012 OPPS/ASCproposed rule, at the February 28–March 1, 2011 APC Panel meeting, CMSstaff provided an updated analysis ofthe multiple imaging composite APCs tothe Panel, comparing partial year CY2010 imaging composite cost andutilization data to comparable CY 2009data in order to meet the APC Panelrequest that we provide analysis of theimpact on beneficiaries of the multipleimaging composite APCs (76 FR 42201).In the CY 2012 OPPS/ASC proposedrule (76 FR 42201), for CY 2012, weproposed to continue paying for allmultiple imaging procedures <strong>with</strong>in animaging family performed on the samedate of service using the multipleimaging composite paymentmethodology. The proposed CY 2012payment rates for the five multipleimaging composite APCs (APC 8004,APC 8005, APC 8006, APC 8007, andAPC 8008) were based on median costscalculated from a partial year of CY2010 claims available for the CY 2012OPPS/ASC proposed rule that qualifiedfor composite payment under thecurrent policy (that is, those claims <strong>with</strong>more than one procedure <strong>with</strong>in thesame family on a single date of service).To calculate the proposed median costs,we used the same methodology that weused to calculate the final CY 2011median costs for these composite APCs.That is, we removed any HCPCS codesin the OPPS imaging families thatoverlapped <strong>with</strong> codes on our bypasslist (‘‘overlap bypass codes’’) to avoidsplitting claims <strong>with</strong> multiple units ormultiple occurrences of codes in anOPPS imaging family into new‘‘pseudo’’ single claims. The imagingHCPCS codes that we removed from thebypass list for purposes of calculatingthe proposed multiple imagingcomposite APC median costs appear inTable 9 of the CY 2012 OPPS/ASCproposed rule. (We noted that,consistent <strong>with</strong> our proposal in sectionII.A.1.b. of the CY 2012 proposed ruleto add CPT code 71550 (Magneticresonance (eg, proton) imaging, chest(eg, for evaluation of hilar andmediastinal lymphadenopathy); <strong>with</strong>outcontrast material(s)) to the list of bypasscodes for CY 2012, we also proposed toadd CPT code 71550 to the list ofproposed OPPS imaging family servicesoverlapping <strong>with</strong> HCPCS codes on theproposed CY 2012 bypass list (76 FR42201 through 42202). We integratedthe identification of imaging composite‘‘single session’’ claims, that is, claims<strong>with</strong> multiple imaging procedures<strong>with</strong>in the same family on the same dateof service, into the creation of ‘‘pseudo’’single procedure claims to ensure thatclaims were split in the ‘‘pseudo’’ singleprocess into accurate reflections ofeither a composite ‘‘single session’’imaging service or a standard soleimaging service resource cost. Like allsingle bills, the new composite ‘‘singlesession’’ claims were for the same dateof service and contained no otherseparately paid services in order toisolate the session imaging costs. Ourlast step after processing all claimsthrough the ‘‘pseudo’’ single processwas to reassess the remaining multipleprocedure claims using the full bypasslist and bypass process in order todetermine if we could make other‘‘pseudo’’ single bills. That is, weassessed whether a single separatelypaid service remained on the claim afterremoving line-items for the ‘‘overlapbypass codes.’’As discussed in detail in sectionIII.D.2. of the CY 2012 OPPS/ASCproposed rule, we proposed to establishtwo APCs to which we would proposeto assign the codes created for CY 2011by the AMA’s CPT Editorial Board forcombined abdominal and pelvis CTservices (76 FR 42235). Specifically, weproposed to create new APC 0331(Combined Abdominal and Pelvis CTWithout Contrast), to which weproposed to assign CPT code 74176(Computed tomography, abdomen andpelvis; <strong>with</strong>out contrast material); andwe proposed to create new APC 0334(Combined Abdominal and Pelvis CTVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2With Contrast), to which we proposed toassign CPT codes 74177 (Computedtomography, abdomen and pelvis; <strong>with</strong>contrast material(s)) and 74178(Computed tomography, abdomen andpelvis; <strong>with</strong>out contrast material in oneor both body regions, followed bycontrast material(s) and further sectionsin one or both body regions) for the CY2012 OPPS. As noted and listed insection III.D.2. of the proposed rule, weselected claims of predecessor codes ofnew CPT codes 74176, 74177, and74178 to calculate the costs of proposednew APCs 0331 and 0334, respectively(76 FR 42235). Therefore, we proposednot to use those claims listed in Table21 in section III.D.2. of the proposedrule in calculating the costs of APCs8005 and 8006.We were able to identify 1 million‘‘single session’’ claims out of anestimated 2 million potential compositecases from our ratesetting claims data,or approximately half of all eligibleclaims, to calculate the proposed CY2012 median costs for the multipleimaging composite APCs. We listed inTable 8 of the proposed rule the HCPCScodes that would be subject to theproposed multiple imaging compositepolicy, the approximate proposedmedian costs for the imaging compositeAPCs, and their respective families forCY 2012. The HCPCS codes listed inTable 8 were assigned status indicator‘‘Q3’’’ in Addendum B to the proposedrule (which is available via the Interneton the CMS Web site) to identify theirstatus as potentially payable through acomposite APC. Their proposedcomposite APC assignment wasidentified in Addendum M to theproposed rule (which is available viathe Internet on the CMS Web site). Table9 of the proposed rule listed the OPPSimaging family services that overlap<strong>with</strong> HCPCS codes on the proposed CY2012 bypass list.<strong>Comment</strong>: Some commentersrequested that CMS provide separateAPC payment when multiple imagingservices are provided on the same dateof service but at different times,because, according to the commenters,services at different times requireadditional resources than servicesperformed together. The commentersindicated that hospitals providingemergent services are more likely thanother hospitals to provide multipleimaging services, some of which areprovided in the same day but atdifferent times. The commenters statedthat when imaging services are notprovided at the same encounter, thesame economies of scale are not realizedas when imaging services are providedtogether. For example, cases in which it

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274170 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsis necessary to perform CT scans of thechest, abdomen, and pelvis, and also aCT scan of the brain and/or soft tissuesof the neck, must be split into twoseparate encounters separated by aperiod of time, due to requiredrepositioning of the patient, and safetyrequirements. One commenter requestedthat hospitals report a modifier orcondition code to report situations inwhich multiple imaging services areprovided on the same date but atdifferent times, in order to affordadditional payment in thosecircumstances. The commenter furtheropined that the fact that CMS allowsseparate payment for multiple E/Mservices on the same date of serviceshows that CMS recognizes thatresources are expended for each clinicvisit, and that this is an identicalconcept to multiple imaging services onthe same date but at differing sessions.Response: As we stated in the CY2010 and CY 2011 final rules <strong>with</strong>comment period (74 FR 60399 and 75FR 71858 through 71859), we do notagree <strong>with</strong> the commenters that multipleimaging procedures of the samemodality provided on the same date ofservice but at different times should beexempt from the multiple imagingcomposite payment methodology. As weindicated in the CY 2009 through CY2011 OPPS/ASC final rules <strong>with</strong>comment period (73 FR 68565; 74 FR60399; 75 FR 71859), we believe thatcomposite payment is appropriate evenwhen procedures are provided on thesame date of service but at differenttimes because hospitals do not expendthe same facility resources each andevery time a patient is seen for a distinctimaging service in a separate imagingsession. In most cases, we expect thatpatients in these circumstances wouldreceive imaging procedures at differenttimes during a single prolonged hospitaloutpatient encounter. The efficienciesthat may be gained from providingmultiple imaging procedures during asingle session are achieved in waysother than merely not having toreposition the patient. Even if the samelevel of efficiencies could not be gainedfor multiple imaging proceduresperformed on the same date of servicebut at different times, we expect thatany higher costs associated <strong>with</strong> thesecases would be reflected in the claimsdata and cost reports we use to calculatethe median costs for the multipleimaging composite APCs and, therefore,in the payment rates for the multipleimaging composite APCs. Therefore, wedo not believe it is necessary orappropriate for hospitals to reportimaging procedures provided on thesame date of service but during differentsittings any differently than they wouldreport imaging procedures performedconsecutively in one sitting <strong>with</strong> notime in between the imaging services. Inaddition, for the above reasons, we donot believe it is necessary to implementa modifier or condition code todistinguish between such cases. Webelieve that the comparison to our E/Mvisit policy of providing separatepayments to separate clinic visits on thesame day is not relevant because, unlikeradiology departments, clinics oftenoperate independently from each otherin different parts of the hospital <strong>with</strong>separate staffs providing differentservices.<strong>Comment</strong>: A few commenters, whoexpressed concern that providers mayreceive inadequate compensation and aresulting decrease in beneficiary access,stated that CMS should continue toprovide analyses to the APC Panel of theimpact of its imaging composite APCpolicy on payment and usage of imagingservices. One commenter noted theupdated analysis that CMS staffprovided at the February 28–March 1,2011 APC Panel meeting. Thecommenter appreciated the sharedinformation, and recommended thatCMS continue to monitor costs, provideinformation on the impact of multipleimaging composite APCs, and use theinformation learned to ensurebeneficiary access, as well as to evaluatewhether the existing multiple imagingcomposite APC methodology accuratelyreflects all costs of proving the services.Other commenters agreed <strong>with</strong> CMS’decision not to propose any expansionof imaging composite APCs, opiningthat no expansion of the imagingcomposite APCs should be considereduntil robust data on the current policyis available for public review andcomment. One commenter expressedconcern <strong>with</strong> CMS’ proposal to createtwo additional multiple imagingcomposite APCs.Response: We will continue tomonitor the multiple imaging compositeAPC rate methodology and the cost ofproviding imaging services. We willreport any information to the APC Paneland the public, as appropriate. Anyexpansion to the multiple imagingcomposite APCs would be subject tonotice and comment rulemaking. Wenote that we did not propose to createtwo additional multiple imagingcomposite APCs for CY 2012 as onecommenter indicated.<strong>Comment</strong>: Some commenters statedthat, while they understood the multipleimaging composite APCs are intended toencourage efficiencies, they wereconcerned that the methodologyVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00050 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2employs arbitrary reductions absentdata and may adversely affectbeneficiary access to those imagingservices subject to the policy. Othercommenters stated that the efficienciesto be gained from multiple imagingprocedures cannot be extrapolatedacross modalities.Response: The median costs uponwhich the payment rates for themultiple imaging composite APCs arebased are calculated using CY 2010claims that qualified for compositepayment, including those <strong>with</strong> only twoimaging procedures and those <strong>with</strong>substantially higher numbers of imagingprocedures. Therefore, because thepayment rates reflect actual hospitals’actual costs for providing multipleimaging services during a single session,we do not agree <strong>with</strong> the commenterthat the policy employs arbitraryreductions. As we have stated in thepast (75 FR 71858 and 74 FR 60400), wedo not agree that the composite APCpayment rates are insufficient to reflectthe current costs of diagnostic imagingprocedures when more than twoimaging procedures are performed, andwe do not believe that, in aggregate,OPPS payment for multiple imagingservices will be inadequate so as to limitbeneficiary access. We note that themultiple imaging composite APCmethodology is applied only whenmultiple imaging procedures of thesame imaging modality are performedduring the same session, and is notapplied across imaging modalities.After consideration of the publiccomments we received, we are adoptingour CY 2012 proposal, <strong>with</strong>outmodification, to continue paying for allmultiple imaging procedures <strong>with</strong>in animaging family performed on the samedate of service using the multipleimaging composite paymentmethodology. The CY 2012 paymentrates for the five multiple imagingcomposite APCs (APC 8004, APC 8005,APC 8006, APC 8007, and APC 8008)are based on median costs calculatedfrom the CY 2010 claims that wouldhave qualified for composite paymentunder the current policy (that is, thoseclaims <strong>with</strong> more than one procedure<strong>with</strong>in the same family on a single dateof service). Using the same ratesettingmethodology described in the CY 2012OPPS/ASC proposed rule (76 FR 42202),we were able to identify approximately1.1 million ‘‘single session’’ claims outof an estimated 2.2 million potentialcomposite cases from our ratesettingclaims data, or approximately half of alleligible claims, to calculate the final CY2012 median costs for the multipleimaging composite APCs.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74171Table 8 below lists the HCPCS codesthat will be subject to the multipleimaging composite policy and theirrespective families and approximatecomposite APC median costs for CY2012. Table 9 below lists the OPPSimaging family services that overlap<strong>with</strong> HCPCS codes on the CY 2012bypass list.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00051 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.010

74172 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00052 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.011

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74173jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00053 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.012

74174 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00054 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.013

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74175jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–CVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00055 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.014

74176 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations(6) Cardiac Resynchronization TherapyComposite APC (APCs 0108, 0418, 0655,and 8009)Cardiac resynchronization therapy(CRT) uses electronic devices tosequentially pace both sides of the heartto improve its output. CRT utilizes apacing electrode implanted incombination <strong>with</strong> either a pacemaker oran implantable cardioverter defibrillator(ICD). CRT performed by theimplantation of an ICD along <strong>with</strong> apacing electrode is referred to as ‘‘CRT–D.’’ CRT performed by the implantationof a pacemaker along <strong>with</strong> a pacingelectrode is referred to as ‘‘CRT–P.’’CRT–D services are described bycombinations of CPT codes for theinsertion of pulse generators and theinsertion of the leads associated <strong>with</strong>ICDs, along <strong>with</strong> the insertion of thepacing electrode. For the implantationof a pulse generator, hospitals may useCPT code 33240 (Insertion of single ordual chamber pacing cardioverterdefibrillatorpulse generator), which isthe only CPT code assigned to APC 0107(Insertion of Cardioverter-Defibrillator)for CY 2011, in combination <strong>with</strong> CPTcode 33225 (Insertion of pacingelectrode, cardiac venous system, forleft ventricular pacing, at time ofinsertion of pacing cardioverterdefibrillatoror pacemaker pulsegenerator (including upgrade to dualchamber system)), which is assigned toAPC 0418 (Insertion of Left VentricularPacing Electrode) for CY 2011. For theimplantation of a pulse generator andleads, hospitals may use CPT code33249 (Insertion or repositioning ofelectrode lead(s) for single or dualchamber pacing cardioverterdefibrillatorand insertion of pulsegenerator), which is the only CPT codeassigned to APC 0108 (Insertion/Replacement/Repair of Cardioverter-Defibrillator Leads) for CY 2011, incombination <strong>with</strong> CPT code 33225.For CRT–P services, hospitals mayuse CPT codes 33206 (Insertion orreplacement of permanent pacemaker<strong>with</strong> transvenous electrode(s); atrial)and 33207 (Insertion or replacement ofpermanent pacemaker <strong>with</strong> transvenouselectrode(s); ventricular), which areassigned to APC 0089 (Insertion/Replacement of Permanent Pacemakerand Electrodes) for CY 2011, incombination <strong>with</strong> CPT code 33225.Hospitals also may use CPT code 33208(Insertion or replacement of permanentpacemaker <strong>with</strong> transvenouselectrode(s); atrial and ventricular), forthe implantation of a pacemaker <strong>with</strong>leads, which is assigned to APC 0655(Insertion/Replacement/Conversion of aPermanent Dual Chamber Pacemaker),in combination <strong>with</strong> CPT code 33225.A number of commenters whoresponded to prior OPPS proposedrules, as well as public presenters to theAPC Panel, have recommended thatCMS establish new composite APCs forCRT–D services, citing significantfluctuations in the median cost for CPTcode 33225 and the payment rate forAPC 0418. The commenters andpresenters have pointed out that,because the definition of CPT code33225 specifies that the pacing electrodeis inserted at the same time as an ICDor pacemaker, CMS would not havemany valid single or pseudo singleclaims upon which to calculate anaccurate median cost. Thesecommenters and presenters alsoasserted that claims data for theseservices demonstrate that the percentageof single claims available for use in CRTratesetting is very low compared to thetotal number of claims submitted forCRT–D or CRT–P services. The APCPanel at its February and August 2009meetings recommended that CMSevaluate the implications of the creationof a new composite APC for CRT–Dservices and recommended that CMSreconsider creating a composite APC ora group of composite APCs for CRT–Dand CRT–P services. While we did notpropose to create any new compositeAPCs for CY 2010 or CY 2011, weaccepted both of these APC Panelrecommendations (75 FR 71852).As described in the CY 2012 OPPS/ASC proposed rule (76 FR 42203through 42206), in response to the APCPanel recommendations and thecomments we received, we evaluatedthe implications of creating fourcomposite APCs for CRT services,which would include the ICD andpacemaker insertion procedures listedpreviously in this section (described byCPT codes 33240, 33249, 33206, 33207,and 33208) performed in combination<strong>with</strong> the insertion of a pacing electrode(described by CPT code 33225). Table10 of the proposed rule and Table 10below outline the four potentialcomposite APCs that we modeled.Specifically, we provide a description ofeach potential composite APC, thecombination of CPT codes that we usedto define the potential composite APC,the frequency of claims that met thedefinition of the potential compositeAPC that could be used to calculate amedian cost for the potential compositeAPC, and the median cost calculated forthe potential composite APC using CY2010 claims data available for theproposed rule, that is, those claimsprocessed between January 1 andDecember 31, 2010.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00056 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74177jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2For CY 2012, under the authority ofsection 1833(t)(1)(B) of the Act, weproposed to create a new compositeAPC 8009 (Cardiac ResynchronizationTherapy <strong>with</strong> Defibrillator Composite),listed as potential composite APC ‘‘B’’in Table 10 above, for CRT–D services.This proposed composite APC was theonly modeled composite in the study<strong>with</strong> significant claims volume, asshown above in Table 10, and wouldprovide a single payment for aprocedure currently assigned to APC0418 together <strong>with</strong> a procedurecurrently assigned to APC 0108(Insertion/Replacement/Repair ofCardioverter-Defibrillator Leads) whenperformed on the same date of service.Specifically, we proposed to createcomposite APC 8009, which would beused when the procedures described byCPT code 33225 and CPT code 33249are performed on the same day, in orderto recognize the inherent challenges incalculating accurate median costs forCPT code 33225 based on singleprocedure claims utilized in thestandard OPPS ratesetting methodology,and to address the public commenters’concerns regarding the fluctuations inmedian costs for APC 0418. We statedthat we believe a composite paymentmethodology is appropriate for theseservices and would result in moreaccurate payment for these servicesbecause such a methodology isVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00057 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2specifically designed to providepayment for two or more procedureswhen they are provided in the sameencounter, thus enabling us to use moreclaims data to calculate median costs,and to use claims data that moreaccurately represents the full cost of theservices when they are furnished in thesame encounter. We also stated that webelieve that there is sufficient claimsvolume for CPT code 33225 and CPTcode 33249 provided in the sameencounter to warrant creation of thecomposite APC. In addition, weindicated that we believe the claimsvolume for CPT 33225 and CPT 33249is sufficient to demonstrate that theseservices are commonly performedER30NO11.016

74178 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2together. While the other combinationsof CRT procedures listed in Table 10may also be performed together, we didnot propose to implement compositeAPCs for these services because of thelow frequency <strong>with</strong> which CPT code33225 was reported in the claims datain combination <strong>with</strong> other CPT codesthat describe the insertion of an ICD anda pacemaker. As we have statedpreviously (74 FR 60392), because of thecomplex claims processing andratesetting logic involved, in the past,we have explored composite APCs onlyfor combinations of services that arecommonly performed together. Becauseof the low frequency of the othercombinations of CRT procedures listedin Table 10 above, we did not considerthem to be commonly performedtogether.Under the authority of section1833(t)(2)(E) of the Act, we alsoproposed to cap the payment rate forcomposite APC 8009 at the mostcomparable Medicare-severitydiagnosis-related group (MS–DRG)payment rate established under the IPPSthat would be provided to acute carehospitals for providing CRT–D servicesto hospital inpatients. Specifically, weproposed a payment rate for APC 8009as the lesser of the APC 8009 mediancost or the IPPS payment rate for MS–DRG 227 (Cardiac Defibrillator Implant<strong>with</strong>out Cardiac Catheterization <strong>with</strong>outMajor Complication or Comorbidity), asadopted in the FY 2012 IPPS/LTCH PPSfinal rule. We stated that we wouldestablish the OPPS payment amount asthe FY 2012 IPPS standardized paymentamount for MS–DRG 227 under thisproposal. In the FY 2012 IPPS/LTCHproposed rule, this amount was$26,364.93. We calculated thestandardized payment rate for MS–DRG227 ($26,364.93) by multiplying thenormalized weight from Table 5 of theFY 2012 IPPS/LTCH proposed rule(5.1370) by the sum of the non-labor andlabor-related shares of the proposed FY2012 IPPS operating standardizedamount (nonwage-adjusted) ($5,132.36),which were obtained from Table 1B ofthe FY 2012 IPPS/LTCH proposed rule.For further detail on the calculation ofthe IPPS proposed FY 2012 paymentsrates, we refer readers to the FY 2012IPPS/LTCH PPS proposed rule (76 FR26028 through 26029).We stated that we consider thestandardized payment rate for MS–DRG227 to represent appropriate paymentfor a comparable package of servicesfurnished to outpatients. We also statedthat we believe that, because this MS–DRG includes defibrillator implantationfor those inpatients <strong>with</strong>out majorcomplications or comorbidities, itrepresents the payment made forhospital inpatients who are most similarto patients who would receive CRT–Dservices on an outpatient basis becausehospital outpatients are generally lesssick than hospital inpatients andbecause patients who havecomplications or comorbitities would bemost likely to be admitted to inpatientstatus to receive CRT–D services.Similar to the proposed payment rate forcomposite APC 8009, the proposedpayment rate for MS–DRG 227 includedthe device costs associated <strong>with</strong> CRT–Dservices, along <strong>with</strong> the service costsassociated <strong>with</strong> CPT codes 33225 and33249, which are the procedures thatare reported for implanting thosedevices. We stated that we believe thatwe should not pay more for theseservices under the proposed OPPScomposite APC payment than under theIPPS because the OPPS payment would,by definition, include fewer items andservices than the corresponding IPPSMS–DRG payment. For example, theIPPS MS–DRG payment includespayment for drugs and diagnostic teststhat would be separately payable underthe OPPS. We explained that a paymentcap is necessary, therefore, to ensurethat we do not create an inappropriatepayment incentive to provide CRT–Dservices in one setting of care asopposed to another by paying more forCRT–D services in the outpatient settingcompared to the inpatient setting. Wealso explained that we believe thatlimiting payment for CRT–D servicesunder the OPPS to the IPPS MS–DRGpayment will ensure appropriate andequitable payment to hospitals becausepatients who receive these services inthe hospital outpatient setting are not assick as patients who have been admittedto receive this same service in thehospital inpatient setting. Therefore, weexpect it would be less costly to providecare for these patients, who would alsospend less time in the facility.In the CY 2012 OPPS/ASC proposedrule (76 FR 42241 through 42242), wealso addressed cases when CPT codes33225 and 33249 are performed ondifferent dates of service. We proposedto retain CPT code 33249 in APC 0108,but to reassign CPT code 33225 to APC0108 on the basis that these codes aresimilar in clinical characteristics andmedian cost. We proposed to revise thetitle of APC 0108 to read ‘‘Insertion/Replacement/Repair of AICD Leads,Generator, and Pacing Electrodes’’ forCY 2012. We also proposed to reassignCPT code 33224 (Insertion of pacingelectrode, cardiac venous system, forleft ventricular pacing, <strong>with</strong> attachmentto previously placed pacemaker orVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00058 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2pacing cardioverter-defibrillator pulsegenerator (including revision of pocket,removal, insertion, and/or replacementof generator)) from APC 0418 to APC0655, and to change the title of APC0655 from ‘‘Insertion/Replacement/Conversion of a Permanent DualChamber Pacemaker’’ to ‘‘Insertion/Replacement/Conversion of aPermanent Dual Chamber Pacemaker orPacing Electrode.’’ In the CY 2012OPPS/ASC proposed rule (76 FR 42205),we stated that we believe thatreassigning CPT code 33224 to APC0655 will promote stability in paymentfor CPT code 33224 because CPT code33224 would then be assigned to anAPC <strong>with</strong> similar median costs, but <strong>with</strong>a higher volume of services and,therefore, will benefit from the stabilityin APC median costs and payment ratesthat generally result as the volume ofservices <strong>with</strong>in an APC increases.Because these proposed actions wouldresult in APC 0418 containing no CPTcodes, we proposed to delete APC 0418.In addition, as <strong>with</strong> composite APC8009 and under the authority of section1833(t)(2)(E) of the Act, we proposed tolimit the payment for services assignedto APC 0108 to the IPPS standardizedpayment amount for MS–DRG 227. Inother words, we proposed a paymentrate for APC 0108 as the lesser of theAPC 0108 median cost or the IPPSstandardized payment rate for MS–DRG227. We stated that we believe that MS–DRG 227 is the most comparable DRG toAPC 0108 because, like APC 0108, MS–DRG 227 includes implantation of adefibrillator in patients who do not havemedical complications or comorbidities.If we were to base payment for APC0108 on our calculated median cost ofapproximately $27,361, it would resultin a payment under the CY 2012 OPPSthat would exceed our proposedstandardized payment under the IPPSfor MS–DRG 227 of $26,364.93. Westated that we do not believe that itwould be equitable to pay more for theimplantation of a cardioverterdefibrillator or implantation of a leftventricular pacing electrode for anoutpatient encounter, which, bydefinition, includes fewer items andservices than an inpatient stay duringwhich the patient has the sameprocedure.In order to ensure that hospitalscorrectly code for CRT services in thefuture, we proposed to create claimprocessing edits that would returnclaims to providers unless CPT code33225 is billed in conjunction <strong>with</strong> oneof the following CPT codes, as specifiedby the AMA in the CPT code book:

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74179jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2• 33206 (Insertion or replacement ofpermanent pacemaker <strong>with</strong> transvenouselectrode(s); atrial);• 33207 (Insertion or replacement ofpermanent pacemaker <strong>with</strong> transvenouselectrode(s); ventricular);• 33208 (Insertion or replacement ofpermanent pacemaker <strong>with</strong> transvenouselectrode(s); atrial and ventricular);• 33212 (Insertion or replacement ofpacemaker pulse generator only; singlechamber, atrial or ventricular);• 33213 (Insertion or replacement ofpacemaker pulse generator only; dualchamber, atrial or ventricular);• 33214 (Upgrade of implantedpacemaker system, conversion of singlechamber system to dual chamber system(includes removal of previously placedpulse generator, testing of existing lead,insertion of new lead, insertion of newpulse generator));• 33216 (Insertion of a singletransvenous electrode, permanentpacemaker or cardioverter-defibrillator);• 33217 (Insertion of 2 transvenouselectrodes, permanent pacemaker orcardioverter-defibrillator);• 33222 (Revision or relocation ofskin pocket for pacemaker);• 33233 (Removal of permanentpacemaker pulse generator);• 33234 (Removal of transvenouspacemaker electrode(s); single leadsystem, atrial or ventricular);• 33235 (Removal of transvenouspacemaker electrode(s); dual leadsystem, atrial or ventricular);• 33240 (Insertion of single or dualchamber pacing cardioverterdefibrillatorpulse generator); or• 33249 (Insertion or repositioning ofelectrode lead(s) for single or dualchamber pacing cardioverterdefibrillatorand insertion of pulsegenerator).In summary, for CY 2012, weproposed to create a composite APC forCRT–D services billed <strong>with</strong> CPT code33225 and CPT code 33249 on the samedate of service (Composite APC 8009(Cardiac Resynchronization Therapy—ICD Pulse Generator and Leads)), forwhich we proposed that payment wouldbe capped at the IPPS payment rate forMS–DRG 227. In other words, we wouldcalculate payment for APC 8009 basedon the lesser of the APC 8009 mediancost or the IPPS standardized paymentfor MS–DRG 227. We also proposed toreassign CPT code 33225 to APC 0108and to continue to assign CPT code33249 to APC 0108 when they arefurnished on different dates of service;to calculate payment for APC 0108based on the lesser of the APC 0108median cost or the IPPS standardizedpayment for MS–DRG 227; and to deleteAPC 0418. <strong>Final</strong>ly, we proposed toimplement claims processing edits thatwould return to providers incorrectlycoded claims on which a pacingelectrode insertion (CPT code 33225) isbilled <strong>with</strong>out an ICD or pacemakerinsertion. The proposed changes wouldall be made in a budget neutral manner,in the same way that payment for othercomposite APCs and the reassignmentof codes to APCs are budget neutral<strong>with</strong>in the OPPS.At its August 10–11 meeting, the APCPanel recommended that CMS establishthe payment rates for APC 8009 (CardiacResynchronization Therapy <strong>with</strong>Defibrillator, Composite) and APC 0108(Insertion/Replacement/Repair ofCardioverter-Defibrillator Leads) usingonly outpatient claims data. We areaccepting this recommendation and willuse only outpatient claims data toestablish the payment rates for ICD andCRT–D implantation procedures, asdiscussed in greater detail in responseto comments below.<strong>Comment</strong>: Many commenterssupported the creation of a compositeAPC for CRT–D services, and therestructuring of APC 0108 in order toaddress the median cost fluctuations inAPC 0418. Many commenters objectedto the proposal to cap payments for thecomposite APC 8009 and for APC 0108at the IPPS payment rate for MS–DRG227. While some commentersacknowledged that limiting the paymentfor CRT–D services provided to hospitaloutpatients makes intuitive sense andapplauded CMS for exploring Medicarepayment across payment systems ratherthan limiting policy proposals to <strong>with</strong>ina single payment system, they expressedconcern that CMS had not demonstratedthat the services included in compositeAPC 8009 and APC 0108 are the sameservices included in MS–DRG 227.Many commenters noted that therecould be legitimate explanations for thehigher hospital outpatient cost estimatesfor CRT that would support higherhospital outpatient payments, such asthe inclusion of less expensive ICD-onlycases in the MS–DRG 227 paymentbundle and geographic variations in costfor CRT–D devices provided to hospitalinpatients and hospital outpatients.They asserted that MS–DRG 227 is aninappropriate comparator because itincludes CRT–D implantationprocedures, along <strong>with</strong> less expensiveICD-only cases. Other commentersargued that a payment cap isinappropriate because the proposedpayment rate of approximately $26,365for composite APC 8009 would fail tocover the cost of CRT–D devices used inthe procedures described by CPT codes33225 and 33249 based on CMS’calculation of APC costs associated <strong>with</strong>VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00059 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2devices presented in Table 24 of the CY2012 OPPS/ASC proposed rule.The leading manufacturers of CRTdevices argued that the payment cap isunnecessary, projecting that averageactual payment differences (afteraccounting for wage index adjustments,indirect medical education (IME)payments, and disproportionate sharehospital (DSH) payments) under theCRT–D composite APC (<strong>with</strong> nopayment cap applied) and MS–DRG 227would be unsubstantial and unlikely tocreate inappropriate paymentincentives, indicating that a significantshift in site of care (from hospitalinpatient to hospital outpatient) forimplantable defibrillator implants hasalready been taking place over the pastseveral years despite lower OPPSpayment rates. Other commenters urgedCMS to postpone the proposal to linkIPPS and OPPS payments for CRTservices until data from the new costcenters for implantable devices providesmore accurate information for mediancost development.Many commenters also stated that thecap as described in the proposed rule isnot an accurate reflection of theequivalent IPPS payment for CRT–Dservices because the operating andcapital standardized amounts paid toinpatient hospitals were not included,indicating that, according to the IPPSfinal rule, the total payment cap shouldbe approximately $29,000. Othercommenters added that IME and DSHpayments also should be included in thecap calculation. The commenters urgedCMS to take these MS–DRG paymentadjustments into consideration if anIPPS payment cap were applied tocomposite APC 8009 and APC 0108.Response: We appreciate thecommenters’ suggestions presented inresponse to our proposal to cap theOPPS payment for CRT–D services atthe IPPS payment for MS–DRG 227, andthe commenters’ support for thecreation of a composite APC for CRT–D services. After revisiting this issue, weagree that while MS–DRG 227 includesless expensive ICD-only cases, along<strong>with</strong> CRT–D system implants, proposedAPC 8009 would include only CRT–Dcases (and not ICD-only cases), andtherefore does not represent acomparable package of services.Therefore, because there are significantdifferences in these payment bundles,and because we believe a payment capwould only be appropriate forcomparable packages of services, weagree <strong>with</strong> the commenters that a betterapproach at this time would be torefrain from implementing our CY 2012proposal to cap the hospital outpatientpayment rate for CRT–D services or ICD

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274180 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsimplantation procedures based on theIPPS payment rate for MS–DRG 227.As described in the proposed rule, wecontinue to believe that we shouldrecognize the inherent challenges incalculating accurate median costs forCPT code 33225 based on singleprocedure claims utilized in thestandard OPPS ratesetting methodology,and that we should address thecommenters’ past concerns regardingthe fluctuations in median costs for theAPC to which this service has beenassigned. We also continue to believethat it is important to ensure that we donot create an inappropriate paymentincentive to provide services in onesetting of care as opposed to another,also as stated in the proposal. In light ofthese goals, and taking intoconsideration the commenters’observations that the hospital inpatientand outpatient payment bundles forCRT–D services are different, we aremodifying our proposal to createcomposite APC 8009 for CRT–Dservices. Under this final rule <strong>with</strong>comment period, we will treat CPTcodes 33225 and 33249 as a single,composite service when they areperformed on the same day as proposed,but rather than assigning them tocomposite APC 8009, we are assigningthem to existing APC 0108 for CY 2012.We believe that this APC assignment isappropriate because the CRT–Dprocedure described by the combinationof CPT codes 33225 and 33249 isclinically similar to the basic(nonresynchronization) ICD insertionprocedure described by CPT code 33249when it is performed by itself andassigned to APC 0108. Both proceduresinvolve the insertion of one or moreelectrodes into the heart <strong>with</strong>subsequent connection to a cardiacpacing and defibrillation device. Thedifference between CRT–D and ICDinsertion is the use of an additionalpacing wire, but we note that APC 0108,in general, and CPT code 33249,specifically, already reflect a range ofnumbers of electrodes. We also note thatthe CRT–D procedure and the ICD-onlyprocedure have similar final CY 2012median costs of approximately $38,468(based on 3,145 single claims) and$26,988 (based on 7,910 single claims),respectively, and that the placement ofthese procedures in the same APC doesnot violate the 2 times rule. We also arefinalizing our proposal to change thetitle of APC 0108 to ‘‘Insertion/Replacement/Repair of AICD Leads,Generator, and Pacing Electrodes’’because this APC will provide paymentfor ICD procedures, including CRT–Dservices.In calculating the median costs uponwhich the payment rate for APC 0108 isbased for CY 2012, for this final rule<strong>with</strong> comment period, we includedsingle procedure claims for theindividual services assigned to APC0108, as well as single procedure claimsthat contain the composite CRT–Dservice, defined as the combination ofCPT codes 33225 and 33249 <strong>with</strong> thesame date of service. We were able touse 11,055 single bills from the CY 2012final rule claims data (3,145 compositeCRT–D service claims and 7,910 claimsfor other services assigned to APC 0108)to calculate a median cost ofapproximately $29,839. We note thatunder this policy, hospitals willcontinue to use the same CPT codes toreport CRT–D procedures, and the I/OCE will determine when combinationsof procedures qualify for compositeservice payment or map to standard(sole service) APCs for payment. Wewill make a single payment for thoseprocedures that qualify for compositeservice payment, as well as anypackaged services furnished on thesame date of service. Because CPT codes33225 and 33249 may be treated as acomposite service for paymentpurposes, we are assigning them statusindicator ‘‘Q3’’ (Codes that may be paidthrough a composite APC) inAddendum B to this final rule <strong>with</strong>comment period. The assignment ofCPT codes 33225 and 33249 to APC0108 when treated as a compositeservice also will be reflected inAddendum M to this final rule <strong>with</strong>comment period (which is available viathe Internet on the CMS Web site).By continuing to recognize theseprocedures as a single, compositeservice, we are able to use a highervolume of correctly coded claims forCPT code 33225 and, therefore, toaddress the inherent ratesettingchallenges associated <strong>with</strong> CPT code33225 and stabilize payment for thisservice. We also note that this policy isconsistent <strong>with</strong> the principles of aprospective payment system,specifically to place similar services thatutilize technologies <strong>with</strong> varying costsin the same APC in order to promoteefficiency and decisionmaking based onindividual patient’s clinical needsrather than financial considerations. Bycalculating the median cost for APC0108 using claims from both ICD-onlycases and CRT–D cases, we allow thecosts of each to influence the overallmedian cost for the APC, which will riseor fall in the future depending onhospitals’ utilization patterns. Asindicated earlier, this methodologyallows us to accept the APC Panel’sVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00060 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2recommendation to calculate paymentfor these services using only hospitaloutpatient claims data.<strong>Comment</strong>: A few commentersquestioned CMS’ authority undersection 1833(t)(2)(E) of the Act to capthe payment rate for an OPPS compositeAPC at a comparable MS–DRG paymentrate established under the IPPS, arguingthat they believe this provision of theAct applies only to adjustments made<strong>with</strong>in the OPPS, and does not giveCMS authority to make equitableadjustments across payment systems.Many commenters pointed out thatCMS has held strongly to the principleof setting OPPS payment rates basedonly on hospital outpatient claims andcost report data since the beginning ofthe OPPS, often refusing stakeholders’requests to use external data or makecross-system payment comparisons asthe basis for setting payment rates. Thecommenters stated that for CMS to crosspayment systems and deviate from thislongstanding policy would introduce asignificant level of uncertainty andunpredictability. Other commentersstated that crossing payment systems forthe first time under the OPPS representsa significant departure from thestandard OPPS ratesetting methodology,undermines the integrity of the OPPS,discourages hospitals from providingcare in the most appropriate setting, andadversely affects investment in newtechnologies.Some commenters also argued thatCMS should not assume the hospitalinpatient cost data for CRT–D services ismore valid than hospital outpatient costdata. To the contrary, commenters notedthat there are various mechanisms inplace for hospital outpatient claims,such as the procedure-to-device edits, toensure that hospitals report the fullcosts of devices provided in hospitaloutpatient departments, while there areno similar mechanisms in place fordevices provided in hospital inpatientsettings of care. The commenterspointed out that the OPPS and the IPPShave been designed to be internallyconsistent but not comparable to eachother, noting that the methods used toestablish relative weights in each systemare independent and unrelated.<strong>Comment</strong>ers also stated that if CMSwere to set a precedent for lookingacross payment systems in thiscircumstance, then CMS should beconsistent and make cross-systempayment comparisons for all items andservices, such as separately payabledrugs and biologicals, which are paid ata lower per drug payment rate whenthey are provided in hospital outpatientsettings compared to physician officesettings.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74181jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Response: Although we are notfinalizing our proposal to institute apayment cap for composite APC 8009and APC 0108, we believe we havebroad authority under the statute toimplement a cap on the payment rate foran OPPS APC at a comparable MS–DRGpayment rate established under theIPPS. We also disagree that we cannotexplore this policy option because itwould be unprecedented and involvedata other than data obtained fromhospital outpatient claims. It is notunprecedented for CMS to use data fromone payment system in the calculationsfor another in specific circumstances.For example, as described in detail inthe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 72033) and insection XIII.C.1.b. of this CY 2012OPPS/ASC final rule <strong>with</strong> commentperiod, we use physician claims data indetermining which procedures will bedesignated as ‘‘office-based’’ for the ASClist of covered surgical procedures, andin setting the ASC payment rate, we usethe lower of the MPFS nonfacility PERVU -based amount or the amountcalculated using the ASC standardratesetting methodology for theprocedure. Even if the use of such datawere unprecedented, we do not believethat we should neglect to pursueinnovations and refinements toMedicare payment policy because anysuch innovations and refinementswould be new. We also disagree that apayment policy to create payment paritybetween the IPPS and OPPS in oneclinical area would necessitate thecreation of parity across paymentsystems for all items and services. Wenote that there could be many differentpayment approaches that could bechosen for comparison purposes for anygiven item or service, giving rise toimplementation issues. That is,comparisons could be made between theOPPS and the payment methodologiesfor services furnished in the physician’soffice setting such as the MPFS forphysicians’ services or ASP for certaincovered Part B drugs, as the commentersuggested, or comparisons could bemade between the OPPS and the IPPSor other payment systems, and the‘‘payment parity’’ resulting from thosecomparisons would be vastly different.For example, while the commenters’suggested approach to achieve paymentparity between the hospital outpatientsetting and the physician office settingfor drugs and biologicals would usuallyresult in higher hospital outpatientpayment rates of ASP+ 6 percent, anapproach that would achieve paymentparity between the hospital outpatientsetting and the hospital inpatient settingwould result in payment for most drugsand biologicals being packaged into theassociated APC procedure payment,because payment for most drugs andbiologicals under the IPPS is includedin the MS–DRG payment. In addition,immediately applying such a policyacross all items and services (rather thanincrementally for items and services inone clinical area or a handful of clinicalareas through notice-and-commentrulemaking) may result in paymentinstability as payments wouldpotentially increase and decrease forthousands of services.We note that we may considerexamining the issue of payment parity<strong>with</strong> respect to other payment systems,even when the data upon which the costof a service is calculated are from adifferent source, because such anapproach may deter inappropriatemigration of services to a setting of carebased on financial consideration ratherthan clinical needs.Although we are not implementingour proposal to cap payment for CRT–D services in CY 2012, we will continueto explore methods to ensure ourpayment systems do not provideinappropriate payment incentives toprovide services in one setting of care asopposed to another setting of care.<strong>Comment</strong>: Some commenterscontested the statement in the CY 2012OPPS/ASC proposed rule that hospitaloutpatients are generally less sick thanhospital inpatients, arguing that not allpatients <strong>with</strong> comorbidities areadmitted as inpatients. Severalcommenters stated that CMS has notprovided evidence to support the claimthat CRT–D services on an outpatientbasis would include fewer items andservices than on an inpatient basis.Response: As indicated previously,we are not implementing our proposalto cap payment for CRT–D services atthe IPPS payment rate for MS–DRG 227.We continue to believe, however, thatthe Medicare beneficiaries who receivea service on an outpatient basis wouldgenerally not be expected to be as sickas those who are admitted to thehospital to receive the same service. TheMedicare Benefit Policy Manual (100–02), Chapter 1, Section 10 (available onthe CMS Web site at: http://www.cms.gov/manuals/Downloads/bp102c01.pdf) defines an inpatient as aperson who has been admitted to ahospital for bed occupancy for purposesof receiving inpatient hospital services.As stated in the manual, factors to beconsidered when making the decision toadmit include such things as theseverity of the signs and symptomsexhibited by the patient and the medicalpredictability of something adverseVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00061 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2happening to the patient. We believethis supports our statement that,generally, patients who can receive aservice on an outpatient basis ratherthan be admitted as inpatients are not assick as patients who would need to beadmitted as inpatients to receive thosesame services.We also continue to believe that thecosts of providing a service to a hospitalinpatient, in general, may exceed thecosts for providing the same service onan outpatient basis. In general, paymentfor outpatient care through an APCconsists only of the cost of theprocedure, certain packaged ancillaryservices, and the cost of nursing andother staff care during the immediaterecovery period. Patients are able to gohome quickly (and if they are not ableto go home quickly, they wouldtypically be admitted). In general, thepayment for operating costs of inpatienthospital services under the IPPSincludes similar services that would bepaid under the OPPS through an APC,plus associated diagnostic testing,drugs, laboratory tests, and the cost ofan extended recovery over several days.Inpatient care is typically associated<strong>with</strong> longer periods of recovery, whichmay be triggered by increasedcomplications, increased comorbidity,or increased risk. Although anindividual outpatient case may be moreexpensive than an individual inpatientcase, inpatients, on the average, will besicker and more costly than outpatientsreceiving similar services.<strong>Comment</strong>: A few commentersdisagreed <strong>with</strong> the proposedreassignment of CPT code 33224 to APC0655, and the proposed reassignment ofCPT code 33225 to APC 0108.According to the commenters, theclaims data upon which CMS calculatedthe proposed median cost of CPT code33225 was flawed because it includedmany claims that should have beenrejected if CMS applied its device-toprocedureedits. The commentersprovided data analysis indicating thatthere were only 13 single bills that metthe criteria of the device-dependentAPC ratesetting methodology, and thatthe median cost calculated from those13 single bills is approximately $8,149rather than the median cost ofapproximately $34,018 calculated byCMS using 458 single bills from the dataavailable for the CY 2012 proposed rule.The commenters requested that CMSmaintain APC 0418, and continue toassign to it CPT codes 33224 and 33225,based on their estimated median cost ofapproximately $8,149 for CPT code33225 and CMS’ estimated median costof approximately $12,418 for CPT code33224. The commenters expressed

74182 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2general concern that the device-toprocedureedits were not being appliedcorrectly to hospital outpatient claims.Response: We appreciate thecommenters bringing to our attentionpotential problems <strong>with</strong> the claims usedto calculate the proposed CY 2012median cost for CPT code 33225. We areinvestigating the possibility thaterroneous claims may have made it passthe claims processing logic in place toenforce the device-to-procedure andprocedure-to-device edits, and how theymay have been present in the set ofclaims we used in ratesetting for theproposed rule. We note that we used atotal of 28 single bills for CPT code33225 to calculate a median cost ofapproximately $18,855 for this final rule<strong>with</strong> comment period, which isconsistent <strong>with</strong> the much lower numberof single bills identified by thecommenters in the proposed rule dataset and consistent <strong>with</strong> the number ofsingle bills for this service in prioryears’ hospital outpatient claims data.We will continue to examine this issuein order to ensure that the claims we useto calculate median costs for these CPTcodes, as well as all CPT codes assignedto device-dependent APCs, conform<strong>with</strong> the device-dependent APCratesetting methodology outlined insection II.A.2.d.(1) of this final rule <strong>with</strong>comment period.We do not agree <strong>with</strong> the commentersthat we should maintain APC 0418 forCPT codes 33224 and 33225. Based onthe hospital outpatient claims and costreport data available for this final rule<strong>with</strong> comment period, we calculated afinal median cost of approximately$12,418 using 198 single bills (out of831 total bills) for CPT code 33224, anda final median cost of approximately$18,855 using 28 single bills (out of10,424 total bills) for CPT code 33225.We continue to believe that CPT code33224 appropriately aligns, both interms of clinical characteristics andresource utilization, <strong>with</strong> otherprocedures assigned to APC 0655,which has a final CY 2012 median costof approximately $9,638, because themedian cost of CPT code 33224 isrelatively close to the overall APCmedian cost and APC 0655 includespacemaker insertion procedures.Therefore, we are finalizing ourproposal, <strong>with</strong>out modification, toassign CPT code 33224 to APC 0655.In addition, we agree <strong>with</strong>commenters that CPT code 33225should not be assigned to APC 0108. Webelieve that CPT code 33225 should beassigned to APC 0655, rather than APC0108 or APC 0418, when it is notperformed on the same day as theservice described by CPT code 33249,based upon the median cost calculatedfor CPT code 33225 using data availablefor this final rule <strong>with</strong> comment periodand based upon the commenters’estimates presented in their analysis ofthis CPT code’s cost. While weacknowledge that the final rule mediancost of approximately $18,855 is higherthan the median costs of the otherprocedures assigned to APC 0655, webelieve this is an appropriateassignment for this CPT code from aclinical perspective because theprocedure described by CPT code 33225differs from the procedure described byCPT code 33224 (which is in APC 0655)only in the position of the end of theelectrode <strong>with</strong>in the heart. In addition,CPT code 33225 is also similar to otherprocedures assigned to APC 0655, suchas CPT code 33214 (Upgrade ofimplanted pacemaker system,conversion of single chamber system todual chamber system (includes removalof previously placed pulse generator,testing of existing lead, insertion of newlead, insertion of new pulse generator),which describes the upgrade of apacemaker which generally includesnew hardware and placement of a newelectrodes. We also note that thisassignment does not violate the 2 timesrule. Therefore, for CY 2012, we aremodifying our proposal to reassign CPTcode 33225 to APC 0108 when it isperformed <strong>with</strong>out CPT code 33249.Instead, CPT code 33225 is reassigned toAPC 0655 when it is performed <strong>with</strong>outCPT code 33249. We also are finalizingour proposals to change the title of APC0655 to ‘‘Insertion/Replacement/Conversion of a Permanent DualChamber Pacemaker or PacingElectrode’’ and to delete APC 0418.<strong>Comment</strong>: Many commenterssupported the proposal to implementclaims processing edits that wouldreturn claims to providers unless CPTcode 33225 is billed in conjunction <strong>with</strong>one of the clinically appropriate CPTcodes specified by the AMA in the CPTcode book.Response: We appreciate thecommenters’ support. We areimplementing our CY 2012 proposal,<strong>with</strong>out modification, to create claimsprocessing edits for CPT code 33225that would return claims to providers ifCPT code 33225 is not correctly billedon the claim in conjunction <strong>with</strong> one ofthe clinically appropriate CPT codesspecified by the AMA in the CPT codebook, as described previously in thissection.In summary, after consideration of thepublic comments we received and theAPC Panel recommendation, we are notfinalizing our proposal to implement apayment cap for CRT–D services andVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00062 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2ICD implantation procedures basedupon the payment rate for IPPS MS–DRG 227 as proposed. Instead, we willrecognize CPT codes 33225 and 33249as a single, composite service when theyare performed on the same day asproposed. However, for CY 2012, ratherthan assigning the procedures describedby CPT codes 33225 and 33249 whenthey are performed on the same day tocomposite APC 8009, we are assigningthem to existing APC 0108. We areimplementing our proposal to changethe title of APC 0108 to ‘‘Insertion/Replacement/Repair of AICD Leads,Generator, and Pacing Electrodes’’because this APC will provide paymentfor ICD procedures including CRT–Dservices. Hospitals will continue to usethe same CPT codes to report CRT–Dprocedures and ICD-only procedures,and the I/OCE will identify when thecombination of CPT codes 33225 and33249 on the same day qualify forcomposite service payment. We willmake a single composite payment forsuch cases. When not performed on thesame day as the service described byCPT code 33225, the service describedby CPT code 33249 will continue to beassigned to APC 0108. When notperformed on the same day as theservice described by CPT code 33249,the service described by CPT code33225 will be assigned to APC 0655 (wenote that this is a modification from ourproposal to assign CPT code 33225when it does not appear <strong>with</strong> CPT code33249 to APC 0108). We also arefinalizing our proposals to reassign CPTcode 33224 to APC 0655 for CY 2012,to change the title of APC 0655 from‘‘Insertion/Replacement/Conversion of aPermanent Dual Chamber Pacemaker’’to ‘‘Insertion/Replacement/Conversionof a Permanent Dual ChamberPacemaker or Pacing Electrode,’’ and todelete APC 0418.In addition, we are finalizing ourproposed policy to implement claimsprocessing edits that will return toproviders incorrectly coded claims onwhich a pacing electrode insertion (theprocedure described by CPT code33225) is billed <strong>with</strong>out a procedure toinsert an ICD or pacemaker.3. Changes to Packaged Servicesa. BackgroundThe OPPS, like other prospectivepayment systems, relies on the conceptof averaging, where the payment may bemore or less than the estimated cost ofproviding a service or bundle of servicesfor a particular patient, but <strong>with</strong> theexception of outlier cases, the paymentis adequate to ensure access toappropriate care. Packaging payment for

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74183jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2multiple interrelated services into asingle payment creates incentives forproviders to furnish services in the mostefficient way by enabling hospitals tomanage their resources <strong>with</strong> maximumflexibility, thereby encouraging longtermcost containment. For example,where there are a variety of suppliesthat could be used to furnish a service,some of which are more expensive thanothers, packaging encourages hospitalsto use the least expensive item thatmeets the patient’s needs, rather than toroutinely use a more expensive item.Packaging also encourages hospitals tonegotiate carefully <strong>with</strong> manufacturersand suppliers to reduce the purchaseprice of items and services or to explorealternative group purchasingarrangements, thereby encouraging themost economical health care. Similarly,packaging encourages hospitals toestablish protocols that ensure thatnecessary services are furnished, whilecarefully scrutinizing the servicesordered by practitioners to maximizethe efficient use of hospital resources.Packaging payments into larger paymentbundles promotes the stability ofpayment for services over time. <strong>Final</strong>ly,packaging also may reduce theimportance of refining service specificpayment because there is moreopportunity for hospitals to averagepayment across higher cost casesrequiring many ancillary services andlower cost cases requiring fewerancillary services. For these reasons,packaging payment for services that aretypically ancillary and supportive to aprimary service has been a fundamentalpart of the OPPS since itsimplementation in August 2000.We assign status indicator ‘‘N’’ tothose HCPCS codes that we believe arealways integral to the performance ofthe primary modality; therefore, wealways package their costs into the costsof the separately paid primary services<strong>with</strong> which they are billed. Servicesassigned status indicator ‘‘N’’ areunconditionally packaged.We assign status indicator ‘‘Q1’’(‘‘STVX–Packaged Codes’’), ‘‘Q2’’ (‘‘T–Packaged Codes’’), or ‘‘Q3’’ (Codes thatmay be paid through a composite APC)to each conditionally packaged HCPCScode. An ‘‘STVX-packaged code’’describes a HCPCS code whose paymentis packaged when one or moreseparately paid primary services <strong>with</strong>the status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or‘‘X’’ are furnished in the hospitaloutpatient encounter. A ‘‘T-packagedcode’’ describes a code whose paymentis packaged when one or moreseparately paid surgical procedures <strong>with</strong>the status indicator of ‘‘T’’ are providedduring the hospital outpatientencounter. ‘‘STVX-packaged codes’’ and‘‘T-packaged codes’’ are paid separatelyin those uncommon cases when they donot meet their respective criteria forpackaged payment. ‘‘STVX-packagedcodes’’ and ‘‘T-packaged codes’’ areconditionally packaged. We referreaders to section XI.A.1. of this finalrule <strong>with</strong> comment period and AddendaD1 (which is referenced in section XVII.of this final rule <strong>with</strong> comment periodand available via the Internet on theCMS Web site) <strong>with</strong> other Addenda, fora complete listing of status indicatorsand the meaning of each.We use the term ‘‘dependent service’’to refer to the HCPCS codes thatrepresent services that are typicallyancillary and supportive to a primarydiagnostic or therapeutic modality. Weuse the term ‘‘independent service’’ torefer to the HCPCS codes that representthe primary therapeutic or diagnosticmodality into which we packagepayment for the dependent service. Infuture years, as we consider thedevelopment of larger payment groupsthat more broadly reflect servicesprovided in an encounter or episode ofcare,it is possible that we mightpropose to bundle payment for a servicethat we now refer to as ‘‘independent.’’Hospitals include HCPCS codes andcharges for packaged services on theirclaims, and the estimated costsassociated <strong>with</strong> those packaged servicesare then added to the costs of separatelypayable procedures on the same claimsin establishing payment rates for theseparately payable services. Weencourage hospitals to report all HCPCScodes that describe packaged servicesthat were provided, unless the CPTEditorial Panel or CMS provide otherguidance. The appropriateness of theOPPS payment rates depends on thequality and completeness of the claimsdata that hospitals submit for theservices they furnish to our Medicarebeneficiaries.In the CY 2008 OPPS/ASC final rule<strong>with</strong> comment period (72 FR 66610through 66659), we adopted thepackaging of payment for items andservices in seven categories into thepayment for the primary diagnostic ortherapeutic modality to which webelieve these items and services aretypically ancillary and supportive. Theseven categories are: (1) Guidanceservices; (2) image processing services;(3) intraoperative services; (4) imagingsupervision and interpretation services;(5) diagnostic radiopharmaceuticals; (6)contrast media; and (7) observationservices. We specifically chose thesecategories of HCPCS codes for packagingbecause we believe that the items andservices described by the codes in theseVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00063 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2categories are typically ancillary andsupportive to a primary diagnostic ortherapeutic modality and, in thosecases, are an integral part of the primaryservice they support.In addition, in the CY 2008 OPPS/ASC final rule <strong>with</strong> comment period (72FR 66650 through 66659), we finalizedadditional packaging for the CY 2008OPPS, which included theestablishment of new composite APCsfor CY 2008, specifically APC 8000(Cardiac Electrophysiologic Evaluationand Ablation Composite), APC 8001(LDR Prostate BrachytherapyComposite), APC 8002 (Level I ExtendedAssessment & Management Composite),and APC 8003 (Level II ExtendedAssessment & Management Composite).In the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period (73 FR 68559through 68569), we expanded thecomposite APC model to one newclinical area—multiple imagingservices. We created five multipleimaging composite APCs for payment inCY 2009 that incorporate statutoryrequirements to differentiate betweenimaging services provided <strong>with</strong> contrastand <strong>with</strong>out contrast as required bysection 1833(t)(2)(G) of the Act. Themultiple imaging composite APCs are:(1) APC 8004 (Ultrasound Composite);(2) APC 8005 (CT and CTA <strong>with</strong>outContrast Composite); (3) APC 8006 (CTand CTA <strong>with</strong> Contrast Composite); (4)APC 8007 (MRI and MRA <strong>with</strong>outContrast Composite); and (5) APC 8008(MRI and MRA <strong>with</strong> ContrastComposite). We discuss compositeAPCs in more detail in section II.A.2.e.of this final rule <strong>with</strong> comment period.We recognize that decisions aboutpackaging and bundling paymentinvolve a balance between ensuring thatpayment is adequate to enable thehospital to provide quality care andestablishing incentives for efficiencythrough larger units of payment.Therefore, in the CY 2012 OPPS/ASCproposed rule (76 FR 42206), we invitedpublic comments regarding ourpackaging proposals for the CY 2012OPPS.b. Packaging Issues(1) CMS Presentation of FindingsRegarding Expanded Packaging at theFebruary 28–March 1, 2011 and August10–11, 2011 APC Panel MeetingsIn deciding whether to package aservice or pay for a code separately, wehave historically considered a variety offactors, including whether the service isnormally provided separately or inconjunction <strong>with</strong> other services; howlikely it is for the costs of the packagedcode to be appropriately mapped to the

74184 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2separately payable codes <strong>with</strong> which itwas performed; and whether theexpected cost of the service is relativelylow.As discussed in section I.D. of theproposed rule and this final rule <strong>with</strong>comment period, the APC Panel advisesCMS on the clinical integrity ofpayment groups and their weights, andthe APC Panel has had a PackagingSubcommittee that is now renamed theSubcommittee for APC Groups andStatus Indicator (SI) Assignments toreflect that its function has expanded toinclude assisting CMS <strong>with</strong> assignmentof HCPCS codes to APCs. As part of itsfunction, the APC Panel studies andmakes recommendations on issuespertaining to services that are notseparately payable under the OPPS, butwhose payments are bundled orpackaged into APC payments. The APCPanel has considered packaging issuesat several earlier meetings. Fordiscussions of earlier APC Panelmeetings and recommendations, werefer readers to previously publishedhospital OPPS/ASC proposed and finalrules on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/HORD/list.asp.(2) Packaging Recommendations of theAPC Panel at its February 28–March 1,2011 MeetingDuring the February 28–March 1,2011 APC Panel meeting, the APC Panelaccepted the report of the Subcommitteefor APC Groups and Status Indicator (SI)Assignment, heard several publicpresentations related to packagedservices, discussed the deliberations ofthe subcommittee, and made fiverecommendations related to packagingand to the function of the subcommittee.The Report of the February 28–March 1,2011 meeting of the APC Panel may befound at the CMS Web site at: http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.To summarize, the APC Panel madefive recommendations regarding thepackaging of payment under the CY2012 OPPS. Below we present each ofthese five packaging recommendationsand our responses to thoserecommendations. The first APC Panelrecommendation that relates topackaging and that we discuss in thissection is APC Panel Recommendation4. Two other recommendations,Recommendations 12 and 13, whichevolved from the discussions of the APCGroups and Status IndicatorSubcommittee, are related specificallyto HCPCS codes, were discussed insection III.D. of the proposed rule, andare addressed in section III.D. of thisfinal rule <strong>with</strong> comment period.Recommendation 12 was that CMSreassign HCPCS code 65778 (Placementof amniotic membrane on the ocularsurface for wound healing; selfretaining)and HCPCS code 65779(Placement of amniotic membrane onthe ocular surface for wound healing;single layer, sutured) to APC 0233(Level III Anterior Segment EyeProcedures) and that CMS furnish datawhen data become available for thesetwo codes. Recommendation 13 wasthat CMS create an intermediate-levelupper gastrointestinal procedures APC.APC Panel Recommendation 4: ThatHCPCS code 31627 (Bronchoscopy,rigid or flexible, including fluoroscopicguidance, when performed; <strong>with</strong>computer-assisted, image-guidednavigation (List separately in addition tocode for primary procedure[s])) shouldcontinue to be assigned a statusindicator of ‘‘N.’’ The Panel furtherrecommended that CMS continue tocollect claims data for HCPCS code31627.CMS Response to Recommendation 4:HCPCS code 31627 was new for CY2010, and we assigned a new interimstatus indicator of ‘‘N’’ in our CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod based on our policy of packagingguidance and intraoperative servicesthat are ancillary and dependent uponan independent separately paidprocedure. At the APC Panel’s February2010 meeting, the manufacturer of theelectromagnetic navigationbronchoscopy (ENB) technology, one ofseveral technologies that can be used toperform the service described by HCPCScode 31627, asserted that use of the ENBtechnology during a bronchoscopyprocedure enables access to distallesions that are otherwise not accessible<strong>with</strong>out use of the ENB technology. Themanufacturer also stated that <strong>with</strong>outseparate payment for the ENBtechnology, hospitals would likely notadopt the technology and thepopulation that would likely benefitfrom the ENB technology would nothave access to this technology. Inresponse to the manufacturer’spresentation at the February 2010 Panelmeeting, the APC Panel asked CMS toconsider whether HCPCS code 31627should be packaged or paid separately;and if it should be paid separately, theAPC Panel asked CMS to investigate theappropriate APC assignment. The reportof the February 2010 APC Panel meetingis available at: http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.We stated in the CY 2011 OPPS/ASCproposed rule (75 FR 46223) that weconsidered and analyzed theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00064 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2information available to us for HCPCScode 31627 and believed that the codedescribed a procedure that is supportiveof and ancillary to the primarydiagnostic or therapeutic modality.Therefore, we proposed to packagepayment for HCPCS code 31627. Westated that, by proposing to packagepayment for this procedure, we wouldbe treating it in the same manner assimilar computer assisted, navigationaldiagnostic procedures that aresupportive of and ancillary to a primarydiagnostic or therapeutic modality.At its August 23–24, 2010 meeting,the APC Panel listened to discussionsregarding whether HCPCS code 31627should remain packaged for CY 2011.After hearing presentations from thepublic, the APC Panel recommendedthat CMS continue to package paymentfor HCPCS code 31627 into payment forthe major separately paid procedure<strong>with</strong> which it is performed and askedthat CMS bring claims data on the costof HCPCS code 31627 to the APCPanel’s winter 2011 meeting for review.After consideration of all of theinformation provided by commenters onthis issue, and hearing the discussion ofthe issue by the APC Panel at its August23–24, 2010 meeting, we accepted theAPC Panel’s recommendation tocontinue to package payment for HCPCScode 31627 into the payment for themajor separately paid procedure <strong>with</strong>which it is reported for CY 2011. Inaddition, we also accepted the APCPanel’s recommendation that CMS bringclaims data for HCPCS code 31627 tothe winter 2011 APC Panel meeting. Thereport of the August 2010 APC Panelmeeting is available at: http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.At its meeting on February 28–March1, 2011, the APC Panel listened to apublic presentation in which themanufacturer of the ENB technologyrequested that HCPCS code 31627 bepaid separately on the basis that the costof the technology is substantially higherthan the OPPS payment for APC 0076(Level I Endoscopy Lower Airway), theAPC to which most bronchoscopy codesare assigned and into which paymentfor HCPCS code 31627 is packaged. Themanufacturer stated that if CMS doesnot pay HCPCS code 31627 separately,hospitals will not furnish the procedureto hospital outpatients.In response to the request of the APCPanel at its August 2010 meeting, wepresented the available data on HCPCScode 31627 that could be derived fromthe hospital outpatient claims that werepaid under the OPPS for services on andafter January 1, 2010 through and

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74185jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2including September 30, 2010, asprocessed through the CMS commonworking file by December 31, 2010.Specifically, using the limited set ofAPC Panel data, CMS found that 119hospitals billed for 573 units of HCPCScode 31627, and that HCPCS code 31627had a median cost of approximately$329 per unit. We also found thatHCPCS code 31627 is reported on 0 to4 percent of the claims forbronchoscopy codes <strong>with</strong> which CPTguidance states that it is permissible toreport HCPCS code 31627, <strong>with</strong> theexception of HCPCS code 31626(Bronchoscopy, rigid or flexible,including fluoroscopic guidance, whenperformed; <strong>with</strong> placement of fiducialmarkers, single or multiple). HCPCScode 31627 was reported onapproximately 52 percent of claims forHCPCS code 31626 in the APC Paneldata. The APC Panel considered thisinformation in its formulation ofRecommendation 4 that CMS continueto package payment for HCPCS code31627 into the payment for thebronchoscopy code <strong>with</strong> which HCPCScode 31627 is reported. Subsequent tothe APC Panel meeting, examinationand analysis of the CY 2012 proposedrule data found that 149 hospitalsreported 867 units of HCPCS code31627, and that HCPCS code 31627 hada proposed rule median cost ofapproximately $344 per unit.After considering the publicpresentation and the informationpresented by CMS staff, the APC Panelrecommended that HCPCS code 31627continue to be assigned a statusindicator of ‘‘N.’’ The Panel furtherrecommended that CMS continue tocollect claims data for HCPCS code31627. In the CY 2012 OPPS/ASCproposed rule (76 FR 42208), weproposed to accept both of the APCPanel’s recommendations for the CY2012 OPPS. Specifically, we proposedto assign HCPCS code 31627 to statusindicator ‘‘N’’ for the CY 2012 OPPSand, therefore, proposed to packagepayment for the procedure into paymentfor the bronchoscopy to which webelieve that it is ancillary andsupportive. As <strong>with</strong> all packaged itemsand services, we propose that the costwe calculate for CPT code 31627 wouldbe added to the costs on the single billfor the bronchoscopy code <strong>with</strong> whichthe service reported by CPT code 31627is furnished, and therefore, the cost ofCPT code 31627 would be incorporatedinto the payment for the APC to whichthat bronchoscopy code is assigned. Westated in the proposed rule that wecontinue to believe that HCPCS code31627, for which there are severaldifferent technologies, describes aservice that is supportive and ancillaryto the primary bronchoscopy procedure<strong>with</strong> which it must be reported, asdefined by CPT. HCPCS code 31627describes a computer assisted imageguided navigation service that is notfurnished <strong>with</strong>out a bronchoscopy. Asdefined by CPT, HCPCS code 31627may only be furnished in addition to abronchoscopy service and, therefore, webelieve that it is ancillary andsupportive to the bronchoscopy service<strong>with</strong> which it must be reported. Weagreed to provide further claimsinformation on HCPCS code 31627 tothe APC Panel when it becomesavailable.<strong>Comment</strong>: One commenter supportedthe APC Panel recommendation at itsFebruary 2011 meeting that CMSprovide further claims information onHCPCS code 31627 to the APC Panelwhen it becomes available.Response: We appreciate thecommenter’s support and will furnishfurther information on HCPCS code31627 to the APC Panel at a futuremeeting.For CY 2012, we are continuing topackage payment for HCPCS code 31627into payment for the separately paidprocedure <strong>with</strong> which it is furnishedbecause we continue to believe that it isancillary and supportive to thebronchoscopy <strong>with</strong> which it isperformed, as set forth in the CY 2012proposed rule (76 FR 42207 through42208). Therefore, we have assignedHCPCS code 31627 a status indicator of‘‘N’’ for CY 2012.APC Panel Recommendation 5: ThatCMS consider a more appropriate APCassignment for HCPCS code 31626(Bronchoscopy, rigid or flexible,including fluoroscopic guidance, whenperformed; <strong>with</strong> placement of fiducialmarkers), the most common code <strong>with</strong>which HCPCS code 31627 was billed in2010.CMS Response to Recommendation 5:In the CY 2012 OPPS/ASC proposedrule, we accepted this recommendationand, therefore, proposed to reassignHCPCS code 31626 (which had aproposed CY 2012 APC median cost ofapproximately $2,708) from APC 0076(which had a proposed CY 2012 APCmedian cost of approximately $751) toAPC 0415 (Level II Endoscopy LowerAirway), which had a proposed CY 2012APC median cost of approximately$2,007. We agreed <strong>with</strong> the APC Panelthat it appears that the proposed APCmedian cost of HCPCS code 31626 of$2,708 justified placement in an APCthat has a median cost that is moresimilar to the APC median cost for thiscode. We stated that we believe thatVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00065 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2APC 0415 is the most appropriateclinically similar APC because theproposed CY 2012 median cost for APC0415 of $2,007 is more similar inclinical resource for HCPCS code 31626than the proposed CY 2012 median costfor APC 0076 of $715.<strong>Comment</strong>: <strong>Comment</strong>ers supported ourproposal to move HCPCS code 31626 toAPC 0415 for CY 2012.Response: We appreciate thecommenters’ support and are finalizingour proposal for the reasons set forthabove.For CY 2012, we are moving HCPCScode 31626 from APC 0076 to APC0415, which has a final median cost ofapproximately $2,024.APC Panel Recommendation 6: ThatJudith Kelly, R.H.I.T., R.H.I.A., C.C.S.,continue to chair the APC Groups andStatus Indicator (SI) AssignmentsSubcommittee for 2011.CMS Response to Recommendation 6:In the CY 2012 OPPS/ASC proposedrule, we indicated that we accepted theAPC Panel’s recommendation thatJudith Kelly, R.H.I.T., R.H.I.A., C.C.S.continue to chair the APC Groups andStatus Indicator AssignmentsSubcommittee for 2011.We did not receive any publiccomments on this recommendation. Weappreciate the services of Ms. Kelly aschair of the Subcommittee for CY 2011.APC Panel Recommendation 7: ThatCMS furnish the results of itsinvestigation of claims that contain thefollowing unconditionally packagedcodes <strong>with</strong>out separately paidprocedures:• HCPCS code G0177 (Training andeducational services related to the careand treatment of patient’s disablingmental health problems per session (45minutes or more));• HCPCS code G0378 (Hospitalobservation service, per hour);• HCPCS code 75940 (Percutaneousplacement of IVC filter, radiologicalsupervision and interpretation); and• HCPCS code 76937 (Ultrasoundguidance for vascular access requiringultrasound evaluation of potentialaccess sites, documentation of selectedvessel patency, concurrent realtimeultrasound visualization of vascularneedle entry, <strong>with</strong> permanent recordingand reporting (List separately inaddition to code for primaryprocedure)).CMS Response to Recommendation 7:In the CY 2012 OPPS/ASC proposedrule, we indicated that we accepted theAPC Panel’s recommendation that CMSfurnish the results of its investigation ofclaims that contain the unconditionallypackaged codes, HCPCS code G0177,HCPCS code G0378, HCPCS code 75940,

74186 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2and HCPCS code 76937, at a future APCPanel meeting.<strong>Comment</strong>: One commenter supportedthe APC Panel recommendation thatCMS furnish the results of itsinvestigation of claims that contain thefollowing unconditionally packagedcodes <strong>with</strong>out separately paidprocedures: HCPCS code 75940 andHCPCS code 76937.Response: As we indicated in theproposed rule (76 FR 42208), we willfurnish this information to the APCPanel at a future meeting.APC Panel Recommendation 8: Thatthe work of the APC Groups and StatusIndicator (SI) AssignmentsSubcommittee continue.CMS Response to Recommendation 8:In the CY 2012 OPPS/ASC proposedrule, we indicated that we accepted theAPC Panel’s recommendation that thework of the APC Groups and StatusIndicator Assignments Subcommitteecontinue.We did not receive any publiccomments on this recommendation.(3) Packaging Recommendations of theAPC Panel at Its August 2011 MeetingDuring the August 10–11, 2011 APCPanel meeting, the APC Panel acceptedthe report of the Subcommittee for APCGroups and Status Indicator (SI)Assignments, heard several publicpresentations related to packagedservices, discussed the deliberations ofthe subcommittee, and made threerecommendations related to packagingand to the function of the subcommittee.The subcommittee also maderecommendations <strong>with</strong> regard to APCplacement of specific services that arediscussed in section III.D of this finalrule <strong>with</strong> comment period. The Reportof the August 10–11, 2011 meeting ofthe APC Panel may be found at the CMSWeb site at: http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.Below we present each of the threerecommendations related to packagingand our responses to thoserecommendations. Recommendationsthat evolved from the discussions of theSubcommittee on APC Groups andStatus Indicator Assignments that arespecific to the APC assignment ofHCPCS codes and removal of HCPCScodes from the inpatient only list arediscussed in sections III and IX,respectively, of this final rule <strong>with</strong>comment period.APC Panel Recommendation 9: ThatCMS give HCPCS code 65778(Placement of amniotic membrane onthe ocular surface for wound healing;self-retaining) a status indicator of ‘‘T’’and provide the Panel <strong>with</strong> correlatingclaims data when available.CMS Response to Recommendation 9:We refer readers section III.D.5.a of thisfinal rule <strong>with</strong> comment period fordiscussion of this recommendation.APC Panel Recommendation 11: ThePanel recommends that Judith Kelly,R.H.I.T., R.H.I.A., C.C.S., remain thechair of the APC Groups and SIAssignments Subcommittee.CMS Response to Recommendation11: We accept the recommendation thatJudith Kelly, R.H.I.T., R.H.I.A., C.C.S.,remain the chair of the APC Groups andSI Assignments Subcommittee. Weappreciate Ms. Kelly’s continuingservice in this position.APC Panel Recommendation 12: ThePanel recommends that the work of theAPC Groups and SI AssignmentsSubcommittee continue.CMS Response to Recommendation12: We are accepting the APC Panel’srecommendation that the work of theAPC Groups and SI AssignmentsSubcommittee continue.(4) Other Packaging Proposals andPolicies for CY 2012The HCPCS codes that we proposedbe packaged either unconditionally (forwhich we continue to assign statusindicator ‘‘N’’), or conditionally (forwhich we continue to assign statusindicators ‘‘Q1,’’ ‘‘Q2,’’ or ‘‘Q3’’), weredisplayed in Addendum B of the CY2012 OPPS/ASC proposed rule (76 FR42208). The supporting documents forthe CY 2012 OPPS/ASC proposed rule,including but not limited to AddendumB, are available at the CMS Web site at:www.cms.hhs.gov/HospitalOutpatientPPS/HORD. To viewthe proposed status indicators byHCPCS code in Addendum B, select‘‘CMS 1525–P’’ and then select thefolder labeled ‘‘2012 OPPS Proposed<strong>Rule</strong> Addenda’’ or ‘‘2012 OPPS <strong>Final</strong><strong>Rule</strong> <strong>with</strong> <strong>Comment</strong> <strong>Period</strong> Addenda’’from the list of supporting files. Openthe zipped file and select Addendum B,which is available as both an Excel fileand a text file.<strong>Comment</strong>: <strong>Comment</strong>ers stated thatCMS’ packaging policies would likelylead to less efficient use of resources,limited access to innovative treatmentoptions, and greater instability inpayments because the policies are basedon several flawed assumptions.<strong>Comment</strong>ers believed that, to the extentthat hospitals control the array ofservices they provide, CMS’ packagingpolicies assume that the same incentivesapply to services furnished in hospitaloutpatient departments as to inpatientservices. One commenter stated thatunder the hospital inpatient prospectiveVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00066 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2payment system (IPPS), hospitals havean incentive to provide care, includingadvanced technologies, in an efficientmanner to ensure the lowest cost for thepatient’s diagnosis. In contrast, inhospital outpatient departments,because Medicare payment is based onprocedures rather than diagnoses, thecommenter believed that hospitals havean incentive to provide the lowest costitem or service included in an APC. Thecommenter further believed that if thatservice does not fully address thepatient’s needs, the hospital wouldreceive better payment by bringing thepatient back for a second visit oradmitting the patient for inpatient carethan by providing a more costly option<strong>with</strong>in the same APC.Moreover, the commenters believedthat when an APC’s payment rate issignificantly less than the cost of atechnology, hospitals have a strongdisincentive to use that technology,even if it could reduce the costs of careat a later date. The commenters believedthat CMS’ use of expanded packaginghas the risk of encouraging hospitals toforego performing needed services andusing new technologies that may bemore resource intensive during onevisit, but could save the patient futureoutpatient department visits or inpatientcare.Response: Packaging payment foritems and services that are ancillary toand dependent on the major procedurefor which a payment rate is establishedis a fundamental concept of the OPPS,based in regulation in the definition ofcosts that are included in the nationalpayment rate for a service (42 CFR419.2(b)) and in place since theinception of the OPPS (65 FR 18447).We continue to believe that packagingcreates incentives for hospitals and theirphysician partners to work together toestablish appropriate protocols thateliminate unnecessary services wherethey exist and institutionalizeapproaches to providing necessaryservices more efficiently. With respectto new services or new applications ofexisting technology, we believe thatpackaging payment for ancillary anddependent services creates appropriateincentives for hospitals to seriouslyconsider whether a new service or anew technology offers a benefit that issufficient to justify the cost of the newservice or new technology. Where thisreview results in reductions in servicesthat are only marginally beneficial orinfluences hospitals’ choices to notutilize certain technologies, we believethat these changes could improve, ratherthan harm, the quality of care forMedicare beneficiaries because everyservice furnished in a hospital carries

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74187jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2some level of risk to the patient and thebeneficiary would be spared the riskassociated <strong>with</strong> the additional service ordifferent technology. Moreover, webelieve that hospitals strive to providethe best care they can to the patientsthey serve so that when newtechnologies are proven to improve thequality of care, their utilization willincrease appropriately, whether thepayment for them is packaged or not.While we believe hospitals arecommitted to provide optimal care totheir patients, we are aware that thereare financial pressures on hospitals thatmight motivate some providers to splitservices among different hospitalencounters in such a way as tomaximize payments. While we do notexpect that hospitals would routinelychange the way they furnish services orthe way they bill for services in orderto maximize payment, we recognize thatit would be possible and we considerthat possibility as we annually reviewhospital claims data. We will continueto examine claims data for patterns offragmented care, and if we find a patternin which a hospital appears to bedividing care across multiple days, wewill refer it for investigation to the QIOor to the Program Safeguard Contractor,as appropriate to the circumstances wefind.<strong>Comment</strong>: <strong>Comment</strong>ers asked thatCMS make underlying payment rates forpackaged services, including utilizationrates, estimated median costs, andnumbers of hospitals furnishing variousservices, available to the public. Inaddition, commenters asked that CMSstudy and report annually to the APCPanel and to the public on the impactof packaged payment on beneficiaryaccess to care. One commenter believedthat the APC Panel recommended thatCMS report annually on the impact ofpackaging on net payments for patientcare.Response: Each year, CMS makesavailable an extensive amount of OPPSdata that can be used for any dataanalysis an interested party would careto perform. Specifically, we makeavailable a considerable amount of datafor public analysis each year throughthe supporting data files that are postedon the CMS Web site in association <strong>with</strong>the display of the proposed and finalrules. In addition, as we discuss indetail in section II.A.2. of this final rule<strong>with</strong> comment period, we makeavailable the public use files of claims,including, for CY 2008 and later,supplemental line item cost data forevery HCPCS code under the OPPS, anda detailed narrative description of ourdata process for the annual OPPS/ASCproposed and final rules that the publiccan use to perform any desired analyses.Therefore, commenters are able toexamine and analyze these data todevelop specific information to assessthe impact and effect of packaging forthe services of interest to them. Thisinformation is available to supportpublic requests for changes to paymentsunder the OPPS, whether <strong>with</strong> regard toseparate payment for a packaged serviceor other issues. We understand that theOPPS is a complex payment system andthat it may be difficult to determine thequantitative amount of packaged costincluded in the median cost for everyindependent service. However,commenters routinely provide us <strong>with</strong>meaningful analyses at a very detailedand service-specific level based on theclaims data we make available. Weroutinely receive complex and detailedpublic comments, including extensivecode-specific data analysis on packagedand separately paid codes, using thedata from current and prior proposedand final rules. The APC Panel did notrecommend at either the February 2011or August 2011 meetings that CMSshould report annually on the impact ofpackaging on net payments for patientcare.<strong>Comment</strong>: <strong>Comment</strong>ers stated thatCMS assumes that its packaging policieswill allow it to continue to collect thedata it needs to set appropriate, stablepayment rates in the future, but that thisassumption is flawed. <strong>Comment</strong>ersstated that CMS’ past experience <strong>with</strong>packaging payment for ancillary itemsindicates that hospitals do not submitcodes for services that do not directlyaffect their payment and see no reasonto believe that this will change. Thecommenters asked that CMS requirecomplete and correct coding forpackaged services so that all items andservices that are not individually paidmust be included on the claim toprovide CMS <strong>with</strong> essential data forfuture OPPS updates. <strong>Comment</strong>ersexpressed concern about what theybelieved to be decreases in the numberof hospitals reporting services as a resultof packaging and bundling. Theybelieved that the decline could be dueto one or both of two reasons: Hospitalsmay no longer be providing theseservices; or hospitals could be providingthese services but not reporting codesand charges for them, denying CMSaccurate data for use in rate setting. Thecommenters were concerned thatdecreased reporting of services willresult in the costs of packaged servicesnot being included in the payment forthe independent service <strong>with</strong> whichthey are furnished.Response: We do not believe thatthere has been or will be a significantVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00067 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2change in what hospitals report andcharge for the outpatient services theyfurnish to Medicare beneficiaries andother patients as a result of our currentpackaging methodology. Medicare costreporting standards specify thathospitals must impose the same chargesfor Medicare patients as for otherpatients. We are often told by hospitalsthat many private payers pay based ona percentage of charges and that, inaccordance <strong>with</strong> Medicare costreporting rules and generally acceptedaccounting principles, hospitalchargemasters do not differentiatebetween the charges to Medicarepatients and other patients. Therefore,we have no reason to believe thathospitals will stop reporting HCPCScodes and charges for packaged servicesthey provide to Medicare beneficiaries.As we stated in the CY 2009 OPPS/ASCfinal rule <strong>with</strong> comment period (74 FR68575), we strongly encourage hospitalsto report a charge for each packagedservice they furnish, either by billingthe packaged HCPCS code and a chargefor that service if separate reporting isconsistent <strong>with</strong> CPT and CMSinstructions, by increasing the chargefor the separately paid associatedservice to include the charge for thepackaged service, or by reporting thecharge for the packaged service <strong>with</strong> anappropriate revenue code but <strong>with</strong>out aHCPCS code. Any of these means ofcharging for the packaged service willresult in the cost of the packaged servicebeing incorporated into the cost weestimate for the separately paid service.If a HCPCS code is not reported whena packaged service is provided, weacknowledge that it can be challengingto specifically track the utilizationpatterns and resource cost of thepackaged service itself. However, wehave no reason to believe that hospitalshave not considered the cost of thepackaged service in reporting chargesfor the independent, separately paidservice. We expect that hospitals, asother prudent businesses, have a qualityreview process that ensures that theyaccurately and completely report theservices they furnish, <strong>with</strong> appropriatecharges for those services to Medicareand all other payers. We encouragehospitals to report on their claim forpayment all HCPCS codes that describepackaged services that were furnished,unless the CPT Editorial Panel or CMSprovides other guidance. To the extentthat hospitals include separate chargesfor packaged services on their claims,the estimated costs of those packagedservices are then added to the costs ofseparately paid procedures on the sameclaims and used in establishing

74188 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2payment rates for the separately paidservices. It is impossible to know <strong>with</strong>any certainty whether hospitals arefailing to report HCPCS codes andcharges for services for which thepayment is packaged into payment forthe independent service <strong>with</strong> which thepackaged service is furnished.Moreover, if a hospital fails to report theHCPCS codes and charges for packagedservices, the reason may be that thehospital has chosen to package thecharge for the ancillary and dependentservice into the charge for the service<strong>with</strong> which it is furnished. Although weprefer that hospitals report HCPCScodes and charges for all services theyfurnish, if the hospital’s charge for theindependent service also reflects thecharge for all ancillary and supportiveservices it typically provides, theabsence of HCPCS codes and separatecharges would not result ininappropriately low median cost for theindependent service, although CMSwould not know which specificancillary and supportive services werebeing furnished. If a hospital is nolonger providing a service, there may bemany reasons that a hospital choosesnot to provide a particular service orchooses to cease providing a particularservice, including, but not limited to,because the hospital has determinedthat it is no longer cost effective for thehospital to furnish the service and thatthere may be other hospitals in thecommunity that can furnish the servicemore efficiently.<strong>Comment</strong>: One commenter asked thatCMS reinstate separate payment forradiation oncology guidance proceduresbecause these services are vital to thesafe provision of radiation therapy andunconditionally packaging payment forthem may discourage hospitals fromproviding them.Response: We recognize that radiationoncology guidance services, like mostpackaged services, are important toproviding safe and high quality care topatients. However, we continue tobelieve that hospitals will invest inservices that represent genuinelyincreased value to patient care, and ifhospitals can furnish them efficiently.We will continue to pay separately forinnovative technologies if a devicemeets the conditions for separatepayment as a pass-through device or ifa new procedure meets the criteria forpayment as a new technology APC.After considering the publiccomments we received, for CY 2012, weare continuing to package payment forthe services for which we proposedunconditional or conditional packagedpayment in the proposed rule for thereasons set forth above. The HCPCScodes for which payment will bepackaged into payment for theindependent separately paid procedures<strong>with</strong> which the codes are reported eitherunconditionally (for which we continueto assign status indicator ‘‘N’’), orconditionally (for which we continue toassign status indicators ‘‘Q1’’, ‘‘Q2’’, or‘‘Q3’’) are displayed in Addendum B ofthis final rule <strong>with</strong> comment period(which is referenced in section XVIII. ofthis final rule <strong>with</strong> comment period andavailable via the Internet on the CMSWeb site). The supporting documentsfor this CY 2012 OPPS/ASC final rule<strong>with</strong> comment period, including but notlimited to Addendum B, are available atwww.cms.gov/HospitalOutpatientPPS/HORD. To view the status indicators byHCPCS code in Addendum B, select‘‘CMS 1525–FC’’ and then select thefolder labeled ‘‘2012 OPPS Proposed<strong>Rule</strong> Addenda’’ or ‘‘2012 OPPS <strong>Final</strong><strong>Rule</strong> With <strong>Comment</strong> <strong>Period</strong> Addenda’’from the list of supporting files. Openthe zipped file and select Addendum B,which is available as both an Excel fileand a text file.The continuation of our standardpolicy regarding packaging of drugs andbiologicals, implantable biologicals,contrast agents and diagnosticradiopharmaceuticals is discussed insection V.B. of this final rule <strong>with</strong>comment period. We note that animplantable biological that is surgicallyinserted or implanted through a surgicalincision or a natural orifice iscommonly referred to throughout thisfinal rule <strong>with</strong> comment period as an‘‘implantable biological.’’The creation of a new composite APCfor CY 2012 for payment of the insertionof cardiac resynchronization devices isdiscussed in section II.A.2.e.(6) of thisfinal rule <strong>with</strong> comment period.4. Calculation of OPPS Scaled PaymentWeightsAs we proposed in the CY 2012OPPS/ASC proposed rule (76 FR 42209),using the APC median costs discussedin sections II.A.1. and II.A.2. of thisfinal rule <strong>with</strong> comment period, wecalculated the final relative paymentweights for each APC for CY 2012shown in Addenda A and B to this finalrule <strong>with</strong> comment period (which arereferenced in section XVII. of this finalrule <strong>with</strong> comment period and availablevia the Internet on the CMS Web site).In years prior to CY 2007, westandardized all the relative paymentweights to APC 0601 (Mid Level ClinicVisit) because mid-level clinic visitswere among the most frequentlyperformed services in the hospitaloutpatient setting. We assigned APC0601 a relative payment weight of 1.00VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00068 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2and divided the median cost for eachAPC by the median cost for APC 0601to derive the relative payment weightfor each APC.Beginning <strong>with</strong> the CY 2007 OPPS (71FR 67990), we standardized all of therelative payment weights to APC 0606(Level 3 Clinic Visits) because wedeleted APC 0601 as part of thereconfiguration of the clinic visit APCs.We selected APC 0606 as the basebecause APC 0606 was the mid-levelclinic visit APC (that is, Level 3 of fivelevels). Therefore, in the CY 2012 OPPS/ASC proposed rule (76 FR 42209), forCY 2012, to maintain consistency inusing a median for calculating unscaledweights representing the median cost ofsome of the most frequently providedservices, we proposed to continue to usethe median cost of the mid-level clinicvisit APC (APC 0606) to calculateunscaled weights. Following ourstandard methodology, but using theproposed CY 2012 median cost for APC0606, for CY 2012, we assigned APC0606 a relative payment weight of 1.00and divided the median cost of eachAPC by the proposed median cost forAPC 0606 to derive the proposedunscaled relative payment weight foreach APC. The choice of the APC onwhich to base the proposed relativeweights for all other APCs does notaffect the payments made under theOPPS because we scale the weights forbudget neutrality.Section 1833(t)(9)(B) of the Actrequires that APC reclassification andrecalibration changes, wage indexchanges, and other adjustments be madein a budget neutral manner. Budgetneutrality ensures that the estimatedaggregate weight under the OPPS for CY2012 is neither greater than nor lessthan the estimated aggregate weight thatwould have been made <strong>with</strong>out thechanges. To comply <strong>with</strong> thisrequirement concerning the APCchanges, we proposed to compare theestimated aggregate weight using the CY2011 scaled relative weights to theestimated aggregate weight using theproposed CY 2012 unscaled relativeweights. For CY 2011, we multiplied theCY 2011 scaled APC relative weightapplicable to a service paid under theOPPS by the volume of that service fromCY 2010 claims to calculate the totalweight for each service. We then addedtogether the total weight for each ofthese services in order to calculate anestimated aggregate weight for the year.For CY 2012, we performed the sameprocess using the proposed CY 2012unscaled weights rather than scaledweights. We then calculated the weightscaler by dividing the CY 2011estimated aggregate weight by the

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74189jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2proposed CY 2012 estimated aggregateweight. The service-mix is the same inthe current and prospective yearsbecause we use the same set of claimsfor service volume in calculating theaggregate weight for each year. For adetailed discussion of the weight scalercalculation, we refer readers to theOPPS claims accounting documentavailable on the CMS Web site at:http://www.cms.gov/HospitalOutpatientPPS/. We includedpayments to CMHCs in our comparisonof estimated unscaled weight in CY2012 to estimated total weight in CY2011 using CY 2010 claims data,holding all other components of thepayment system constant to isolatechanges in total weight. Based on thiscomparison, we adjusted the unscaledrelative weights for purposes of budgetneutrality. The proposed CY 2012unscaled relative payment weights wereadjusted by multiplying them by aproposed weight scaler of 1.4647 toensure that the proposed CY 2012relative weights are budget neutral.Section 1833(t)(14) of the Actprovides the payment rates for certain‘‘specified covered outpatient drugs.’’That section states that ‘‘Additionalexpenditures resulting from thisparagraph shall not be taken intoaccount in establishing the conversionfactor, weighting and other adjustmentfactors for 2004 and 2005 underparagraph (9) but shall be taken intoaccount for subsequent years.’’Therefore, the cost of those specifiedcovered outpatient drugs (as discussedin section V.B.3. of the proposed ruleand this final rule <strong>with</strong> commentperiod) was included in the proposedbudget neutrality calculations for the CY2012 OPPS.We did not receive any publiccomments on the proposedmethodology for calculating scaledweights from the median costs for theCY 2012 OPPS. Therefore, for thereasons set forth in the proposed rule(76 FR 42209), we are finalizing ourproposed methodology <strong>with</strong>outmodification, including updating of thebudget neutrality scaler for this finalrule <strong>with</strong> comment period as weproposed. Under this methodology, thefinal unscaled payment weights wereadjusted by a weight scaler of 1.3588 forthis final rule <strong>with</strong> comment period.The final scaled relative paymentweights listed in Addenda A and B tothis final rule <strong>with</strong> comment period(which are referenced in section XVII. ofthis final rule <strong>with</strong> comment period andavailable via the Internet on the CMSWeb site) incorporate the finalrecalibration adjustments discussed insections II.A.1. and II.A.2. of this finalrule <strong>with</strong> comment period.B. Conversion Factor UpdateSection 1833(t)(3)(C)(ii) of the Actrequires us to update the conversionfactor used to determine payment ratesunder the OPPS on an annual basis byapplying the OPD fee schedule increasefactor. For purposes of section1833(t)(3)(C)(iv) of the Act, subject tosections 1833(t)(17) and 1833(t)(3)(F) ofthe Act, the OPD fee schedule increasefactor is equal to the hospital inpatientmarket basket percentage increaseapplicable to hospital discharges undersection 1886(b)(3)(B)(iii) of the Act. Inthe FY 2012 IPPS/LTCH PPS final rule(76 FR 51689), consistent <strong>with</strong> currentlaw, based on IHS Global Insight, Inc.’ssecond quarter 2011 forecast of the FY2012 market basket increase, the FY2012 IPPS market basket update is 3.0percent. However, sections 1833(t)(3)(F)and 1833(t)(3)(G)(ii) of the Act, as addedby section 3401(i) of the Public Law111–148 and as amended by section10319(g) of such law and furtheramended by section 1105(e) of PublicLaw 111–152, provide adjustments tothe OPD fee schedule update for CY2012.Specifically, section 1833(t)(3)(F)requires that the OPD fee scheduleincrease factor under subparagraph(C)(iv) be reduced by the adjustmentsdescribed in section 1833(t)(3)(F) of theAct. Specifically, section 1833(t)(3)(F)(i)of the Act requires that the OPD feeschedule increase factor undersubparagraph (C)(iv) be reduced by theproductivity adjustment described insection 1886(b)(3)(B)(xi)(II) of the Actfor 2012 and subsequent years. Section1886(b)(3)(B)(xi)(II) of the Act definesthe productivity adjustment as equal tothe 10-year moving average of changesin annual economy-wide, privatenonfarm business multifactorproductivity (MFP) (as projected by theSecretary for the 10-year period ending<strong>with</strong> the applicable fiscal year, year,cost reporting period, or other annualperiod) (the ‘‘MFP adjustment’’). Werefer readers to the FY 2012 IPPS/LTCHPPS final rule (76 FR 51690 through51692) for a discussion of thecalculation of the MFP adjustment. Thefinal MFP adjustment for FY 2012 is 1.0percentage point.We proposed that if more recent dataare subsequently available after thepublication of the proposed rule (forexample, a more recent estimate of themarket basket and MFP adjustment), wewould use such data, if appropriate, todetermine the CY 2012 market basketupdate and the MFP adjustment in theCY 2012 final rule. Consistent <strong>with</strong> thisVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00069 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2proposal, in this CY 2012 OPPS/ASCfinal rule <strong>with</strong> comment period, wereduced the OPD fee schedule increasefactor for CY 2012 by the final MFPadjustment of 1.0 percentage point forFY 2012. Because the OPD fee scheduleincrease factor is based on the IPPShospital inpatient market basketpercentage increase, we believe that it isappropriate to apply the same MFPadjustment that is used to reduce theIPPS market basket increase to the OPDfee schedule increase factor. Consistent<strong>with</strong> the FY 2012 IPPS/LTCH PPS finalrule, we applied the updated final FY2012 market basket percentage increaseand the MFP adjustment to the OPD feeschedule increase factor for the CY 2012OPPS. We believe that it is appropriateto apply the MFP adjustment, which iscalculated on a fiscal year basis, to theOPD fee schedule increase factor, whichis used to update the OPPS paymentrates on a calendar year basis, becausewe believe that it is appropriate for thenumbers associated <strong>with</strong> bothcomponents of the calculation (theunderlying OPD fee schedule increasefactor and the productivity adjustment)to be aligned so that changes in marketconditions are aligned.In addition, section 1833(t)(3)(F)(ii) ofthe Act requires that the OPD feeschedule increase factor undersubparagraph (C)(iv) be reduced by theadjustment described in subparagraph(G) for each of 2010 through 2019. ForCY 2012, section 1833(t)(3)(G)(ii) of theAct provides a 0.1 percentage pointreduction to the OPD fee scheduleincrease factor under subparagraph(C)(iv). Therefore, as we proposed, weare applying a 0.1 percentage pointreduction to the OPD fee scheduleincrease factor.We note that section 1833(t)(F) of theAct provides that application of thissubparagraph may result in the increasefactor under subparagraph (C)(iv) beingless than 0.0 for a year, and may resultin payment rates under the paymentsystem under this subsection for a yearbeing less than such payment rates forthe preceding year. As described infurther detail below, we are applying anOPD fee schedule increase factor of 1.9percent for the CY 2012 OPPS (3.0percent, which is the final estimate ofthe hospital market basket increase, lessthe 1.0 percentage point MFPadjustment, less the 0.1 percentagepoint additional adjustment).In the CY 2012 OPPS/ASC proposedrule (76 FR 42210), we proposed torevise 42 CFR 419.32(b)(1)(iv)(B) byadding a new paragraph (3) to reflect therequirement in section 1833(t)(3)(F)(i) ofthe Act that, for CY 2012, we reduce theOPD fee schedule increase factor by the

74190 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2multifactor productivity adjustment asdetermined by CMS, and to reflect therequirement in section 1833(t)(3)(G)(ii)of the Act, as required by section1833(t)(3)(F)(ii) of the Act, that wereduce the OPD fee schedule increasefactor by 0.1 percentage point for CY2012. We also proposed to amend§ 419.32(b)(1)(iv)(A) to indicate that thehospital inpatient market basketpercentage increase applicable undersection 1886(b)(3)(B)(iii) of the Act isfurther reduced by the adjustmentsnecessary to satisfy the requirements insections 1833(t)(3)(F) and (t)(3)(G) of theAct.We did not receive any publiccomments on our proposed adjustmentsto the OPD fee schedule increase factoror on the proposed changes to§ 419.32(b)(1)(iv)(B) to add a newparagraph (3). We also did not receiveany public comments on our proposedchange to § 419.32(b)(1)(iv)(A). For thereasons discussed above, we areadjusting the OPD fee schedule increasefactor and are making the two changesto § 419.32 as proposed.To set the OPPS conversion factor forCY 2012, we increased the CY 2011conversion factor of $68.876 by 1.9percent. In accordance <strong>with</strong> section1833(t)(9)(B) of the Act, we furtheradjusted the conversion factor for CY2012 to ensure that any revisions wemake to the updates for a revised wageindex and rural adjustment are made ona budget neutral basis. We calculated anoverall budget neutrality factor of1.0005 for wage index changes bycomparing total estimated paymentsfrom our simulation model using the FY2012 IPPS final wage indices to thosepayments using the current (FY 2011)IPPS wage indices, as adopted on acalendar year basis for the OPPS.For CY 2012, we are not making achange to our rural adjustment policy.Therefore, the budget neutrality factorfor the rural adjustment is 1.0000.For CY 2012, we are finalizing apayment adjustment policy fordedicated cancer hospitals, as discussedin section II.F. of this final rule <strong>with</strong>comment period. Consistent <strong>with</strong> thefinal cancer hospital paymentadjustment policies discussed in sectionII.F. of this final rule <strong>with</strong> commentperiod, we calculated a CY 2012 budgetneutrality adjustment factor of 0.9978 bycomparing the estimated total paymentsunder section 1833(t) of the Act,including the cancer hospitaladjustment under section 1833(t)(18)(B)and 1833(t)(2)(E) of the Act, to hospitalsdescribed in section 1886(d)(1)(B)(v) ofthe Act to the estimated total paymentsunder section 1833(t) of the Act if therewere no cancer hospital adjustment,including TOPS that would otherwisebe made to hospitals described insection 1886(d)(1)(B)(v) of the Act. Asdiscussed in section II.F. of this finalrule <strong>with</strong> comment period, in terms ofdollars, the budget neutrality paymentreduction is estimated to be $71 millionfor CY 2012; that is, we estimate thattotal payments <strong>with</strong> a cancer hospitalpayment adjustment would increasetotal payments by $71 million and thisamount needs to be offset by adjustingother payments. Therefore, we applied abudget neutrality adjustment factor of0.9978 to the conversion factor to makethe hospital adjustment budget neutral.For this final rule <strong>with</strong> commentperiod, we estimate that pass-throughspending for both drugs and biologicalsand devices for CY 2012 will equalapproximately $89 million, whichrepresents 0.22 percent of totalprojected CY 2012 OPPS spending.Therefore, the conversion factor is alsoadjusted by the difference between the0.15 percent estimate of pass-throughspending for CY 2011 and the 0.22percent estimate of CY 2012 passthroughspending, resulting in anadjustment for CY 2012 of 0.07 percent.<strong>Final</strong>ly, estimated payments for outliersremain at 1.0 percent of total OPPSpayments for CY 2012.The OPD fee schedule increase factorof 1.9 percent for CY 2012 (that is, theestimate of the hospital market basketincrease of 3.0 percent less the 1.0percentage point MFP adjustment andless the 0.1 percentage point adjustmentwhich were necessary in order tocomply <strong>with</strong> the requirements of theAffordable Care Act), the required wageindex budget neutrality adjustment ofapproximately 1.0005, the cancerhospital payment adjustment of 0.9978,and the adjustment of 0.07 percent ofprojected OPPS spending for thedifference in the pass-through spendingresult in a conversion factor for CY 2012of $70.016. This conversion factor forCY 2012 of $70.016 reflects the full OPDfee schedule increase, after includingthe adjustments which were necessaryin order to comply <strong>with</strong> therequirements of the Affordable Care Act.As we stated in the proposed rule,hospitals that fail to meet the reportingrequirements of the Hospital OQRProgram would continue to be subject toa further reduction of additional 2.0percentage points from the OPD feeschedule increase factor adjustment tothe conversion factor that would beused to calculate the OPPS paymentrates made for their services as requiredby section 1833(t)(17) of the Act. For acomplete discussion of the HospitalOQR requirements and the paymentreduction for hospitals that fail to meetVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00070 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2those requirements, we refer readers tosection XIV. E. of the proposed rule andthis final rule <strong>with</strong> comment period. Tocalculate the CY 2012 reduced marketbasket conversion factor for thosehospitals that fail to meet therequirements of the Hospital OQRProgram for the full CY 2012 paymentupdate, we are making all otheradjustments discussed above, but usinga reduced OPD fee schedule updatefactor of ¥0.1 percent (that is, the OPDfee schedule increase factor of 1.9percent further reduced by 2.0percentage points as required by section1833(t)(17)(A)(i) of the Act for failure tocomply <strong>with</strong> the Hospital OQRrequirements). This resulted in areduced conversion factor for CY 2012of $68.616 for those hospitals that fail tomeet the Hospital OQR requirements (adifference of ¥$1.40 in the conversionfactor relative to those hospitals thatmet the Hospital OQR requirements).We did not receive any publiccomments on our proposedmethodology for calculating the CY2012 conversion factor.In summary, for CY 2012, we areusing a final conversion factor of$70.016 in the calculation of thenational unadjusted payment rates forthose items and services for whichpayment rates are calculated usingmedian costs. We did not receive anypublic comments on this proposal.Therefore, for the reasons we discussabove, we are amending§ 419.32(b)(1)(iv)(B) by adding a newparagraph (3) to reflect the reductions tothe OPD fee schedule increase factorthat are required for CY 2012 in orderto satisfy the statutory requirements ofsections 1833(t)(3)(F) and (t)(3)(G)(ii) ofthe Act. We also are amending§ 419.32(b)(1)(iv)(A) to indicate that thehospital inpatient market basketpercentage increase is reduced by theadjustments described in§ 419.32(b)(1)(iv)(B). We are using areduced conversion factor of $68.616 inthe calculation of payments forhospitals that fail to comply <strong>with</strong> theHospital OQR requirements to reflectthe reduction to the OPD fee scheduleincrease factor that is required bysection 1833(t)(17) of the Act for thesehospitals.C. Wage Index ChangesSection 1833(t)(2)(D) of the Actrequires the Secretary to determine awage adjustment factor to adjust, forgeographic wage differences, the portionof the OPPS payment rate, whichincludes the copayment standardizedamount, that is attributable to labor andlabor-related cost. This portion of theOPPS payment rate is called the OPPS

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74191jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2labor-related share. This adjustmentmust be made in a budget neutralmanner and budget neutrality isdiscussed in section II.B. of this finalrule <strong>with</strong> comment period.The OPPS labor-related share is 60percent of the national OPPS payment.This labor-related share is based on aregression analysis that determined that,for all hospitals, approximately 60percent of the costs of services paidunder the OPPS were attributable towage costs. We confirmed that thislabor-related share for outpatientservices is appropriate during ourregression analysis for the paymentadjustment for rural hospitals in the CY2006 OPPS final rule <strong>with</strong> commentperiod (70 FR 68553). Therefore, in theCY 2012 OPPS/ASC proposed rule (76FR42211), we did not propose to revisethis policy for the CY 2012 OPPS. Werefer readers to section II.H. of this finalrule <strong>with</strong> comment period for adescription and example of how thewage index for a particular hospital isused to determine the payment for thehospital.As discussed in section II.A.2.c. ofthis final rule <strong>with</strong> comment period, forestimating national median APC costs,we standardize 60 percent of estimatedclaims costs for geographic area wagevariation using the same FY 2012 prereclassifiedwage index that the IPPSuses to standardize costs. Thisstandardization process removes theeffects of differences in area wage levelsfrom the determination of a nationalunadjusted OPPS payment rate and thecopayment amount.As published in the original OPPSApril 7, 2000 final rule <strong>with</strong> commentperiod (65 FR 18545), the OPPS hasconsistently adopted the final fiscal yearIPPS wage index as the calendar yearwage index for adjusting the OPPSstandard payment amounts for labormarket differences. Thus, the wageindex that applies to a particular acutecare short-stay hospital under the IPPSalso applies to that hospital under theOPPS. As initially explained in theSeptember 8, 1998 OPPS proposed rule,we believed that using the IPPS wageindex as the source of an adjustmentfactor for the OPPS is reasonable andlogical, given the inseparable,subordinate status of the HOPD <strong>with</strong>inthe hospital overall. In accordance <strong>with</strong>section 1886(d)(3)(E) of the Act, theIPPS wage index is updated annually.The Affordable Care Act containsprovisions that affect the final FY 2012IPPS wage index values, includingrevisions to the reclassification wagecomparability criteria that werefinalized in the FY 2009 IPPS final rule(73 FR 48568 through 48570), and theapplication of rural floor budgetneutrality on a national, rather thanState-specific, basis through a uniform,national adjustment to the area wageindex (76 FR 26021). In addition,section 10324 of the Affordable Care Actrequires CMS to establish an adjustmentto create a wage index floor of 1.00 forhospitals located in States determinedto be frontier States.Section 10324 of the Affordable CareAct specifies that, for services furnishedbeginning CY 2011, the wageadjustment factor applicable to anyHOPD that is located in a frontier State(as defined in section1886(d)(3)(E)(iii)(II) of the Act) may notbe less than 1.00. Further, section 10324states that this adjustment to the wageindex for these outpatient departmentsshould not be made in a budget neutralmanner. As such, for the CY 2012 OPPS,as we proposed, we are continuing toadjust the FY 2012 IPPS wage index, asadopted on a calendar year basis for theOPPS, for all hospitals paid under theOPPS, including non-IPPS hospitals(providers that are not paid under theIPPS) located in a frontier State, to 1.00in instances where the FY 2012 wageindex (that reflects Medicare GeographicClassification Review Board (MGCRB)reclassifications, the application of therural floor, and the rural floor budgetneutrality adjustment) for thesehospitals is less than 1.00. Similar toour current policy for HOPDs that areaffiliated <strong>with</strong> multicampus hospitalsystems, we fully expect that the HOPDwill receive a wage index based on thegeographic location of the specificinpatient hospital <strong>with</strong> which it isassociated. Therefore, if the associatedhospital is located in a frontier State, thewage index adjustment applicable forthe hospital will also apply for theaffiliated HOPD. We refer readers to theFY 2011 and FY 2012 IPPS/LTCH PPSfinal rules (75 FR 50160 and 76 FR51581, respectively) for a detaileddiscussion regarding this provision,including our methodology foridentifying which areas meet thedefinition of frontier States as providedfor in section 1886(d)(3)(E)(iii)(II)) of theAct.In addition to the changes required bythe Affordable Care Act, we note thatthe FY 2012 IPPS wage indices continueto reflect a number of adjustmentsimplemented over the past few years,including, but not limited to,reclassification of hospitals to differentgeographic areas, the rural floorprovisions, an adjustment foroccupational mix, and an adjustment tothe wage index based on commutingpatterns of employees (the out-migrationadjustment). We refer readers to the FYVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00071 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR22012 IPPS/LTCH PPS final rule (76 FR51581 through 51605) for a detaileddiscussion of all changes to the FY 2012IPPS wage indices. In addition, we referreaders to the CY 2005 OPPS final rule<strong>with</strong> comment period (69 FR 65842through 65844) and subsequent OPPSrules for a detailed discussion of thehistory of these wage index adjustmentsas applied under the OPPS.Section 3137 of the Affordable CareAct extended, through FY 2010, section508 reclassifications as well as certainspecial exceptions. The most recentextension of the provision was includedin section 102 of the Medicare andMedicaid Extender Act, which extends,through FY 2011, section 508reclassifications as well as certainspecial exceptions. The latest extensionof these provisions expired onSeptember 30, 2011, and is no longerapplicable effective <strong>with</strong> FY 2012. Aswe did for CY 2010, we revised wageindex values for certain specialexception hospitals from January 1,2011 through December 31, 2011, underthe OPPS, in order to give thesehospitals the special exception wageindices under the OPPS for the sametime period as under the IPPS. Inaddition, because the OPPS pays on acalendar year basis, the effective dateunder the OPPS for all other nonsection508 and non-special exceptionproviders was July 1, 2011, instead ofApril 1, 2011, so that these providersalso received a full 6 months of paymentunder the revised wage indexcomparable to the IPPS.For purposes of the OPPS, as weproposed, we are continuing our policyin CY 2012 of allowing non-IPPShospitals paid under the OPPS toqualify for the out-migration adjustmentif they are located in a section 505 outmigrationcounty (section 505 of theMedicare Prescription Drug,Improvement, and Modernization Act of2003 (MMA)). We note that, becausenon-IPPS hospitals cannot reclassify,they are eligible for the out-migrationwage adjustment. Table 4J listed in theFY 2012 IPPS/LTCH PPS final rule (andmade available via the Internet on theCMS Web site at: http://www.cms.gov/AcuteInpatientPPS/01_overview.asp)identifies counties eligible for the outmigrationadjustment and hospitals thatwill receive the adjustment for FY 2012.We note that, beginning <strong>with</strong> FY 2012,under the IPPS, an eligible hospital thatwaives its Lugar status in order toreceive the out-migration adjustmenthas effectively waived its deemed urbanstatus and, thus, is rural for all purposesunder the IPPS, including beingconsidered rural for thedisproportionate share hospital (DSH)

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274192 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationspayment adjustment, effective for thefiscal year in which the hospitalreceives the out-migration adjustment.We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51599) fora more detailed discussion on the Lugarredesignation waiver for the outmigrationadjustment). As we have donein prior years, we are including Table 4Jas Addendum L to this final rule <strong>with</strong>comment period <strong>with</strong> the addition ofnon-IPPS hospitals that will receive thesection 505 out-migration adjustmentunder the CY 2012 OPPS. Addendum Lis referenced in section XVII. of thisfinal rule <strong>with</strong> comment period andavailable via the Internet on the CMSWeb site.As stated earlier in this section, ourlongstanding policy for OPPS has beento adopt the final wage index used inIPPS. Therefore, for calculating OPPSpayments in CY 2012, we used the FY2012 IPPS wage indices. However,section 1833(t)(2)(D) of the Act confersbroad discretionary authority upon theSecretary in determining the wageadjustment factor used under the OPPS.Specifically, this provision providesthat ‘‘subject to paragraph (19), theSecretary shall determine a wageadjustment factor to adjust the portionof payment and coinsurance attributableto labor-related costs for relativedifferences in labor and labor-relatedcosts across geographic regions. * * *’’In other prospective payment systems,we do not adopt the adjustmentsapplied to the IPPS wage index, such asthe out-migration adjustment,reclassifications, and the rural floor. Forthe OPPS, using the IPPS wage index asthe source of an adjustment factor forgeographic wage differences has, in thepast, been both reasonable and logical,given the inseparable, subordinatestatus of the outpatient department<strong>with</strong>in the hospital overall.However, in recent years, we havebecome concerned that hospitalsconverting their status significantlyinflate wage indices across a State. Inthe FY 2008 IPPS final rule (72 FR47324 and 47325), we discussed asituation where a CAH may haveconverted back to IPPS status in orderto increase the rural floor.The FY 2012 IPPS/LTCH PPS finalrule (76 FR 51824) shows the impact ofthis CAH conversion. Hospitals inMassachusetts can expect anapproximate 8.7percent increase in IPPSpayments due to the conversion and theresulting increase of the rural floor. Ourconcern is that the manipulation of therural floor is of sufficient magnitudethat it requires all hospital wage indicesto be reduced approximately 0.62percent as a result of nationwide budgetneutrality for the rural floor (or morethan a 0.4 percent total paymentreduction to all IPPS hospitals).In addition to the CAH conversion,we recently received two requests fromurban hospitals to convert to ruralhospital status under section1886(d)(8)(E) of the Act, which wouldinflate other States’ rural floors, throughthe conversion of what would otherwisebe urban hospitals to rural status. Whilewe recognize that conversions fromurban-to-rural status are permittedunder section 1886(d)(8)(E) of the Act,we are concerned <strong>with</strong> individual urbanto rural conversions allowing paymentredistributions of this magnitude.We believe the above discussionsdemonstrate that the rural floor isresulting in significant disparities inwage index and, in some cases, resultingin situations where all hospitals in aState receive a wage index higher thanthat of the single highest wage indexurban hospital in the State. As statedabove, the statute does not require theSecretary to use the IPPS wageadjustment factor to wage adjust OPPSpayments and copayments, nor to applyto OPPS payment and copaymentcalculations the same wage adjustmentfactor that the law requires be appliedto IPPS payments.In the CY 2012 OPPS/ASC proposedrule (76 FR 42212), we stated that wewere considering the adoption of apolicy that would address situationswhere IPPS wage index adjustments,such as the rural floor, result insignificant fluctuations in the wageindex <strong>with</strong>in a State. One option weproposed would be not to apply therural floor wage index at all in the OPPSwhere the rural floor is set by a smallnumber of hospitals in a State andresults in a rural floor that benefits allhospitals in the State. Alternatively, weproposed that we could apply <strong>with</strong>in-State rural budget neutrality to theOPPS wage index as we did for both theIPPS and OPPS wage index beginning inFY 2009. In the proposed rule, wesought public comment on whether to:(1) Adopt the IPPS wage index for theOPPS in its entirety including the ruralfloor, geographic reclassifications, andall other wage index adjustments (ourcurrent policy); (2) adopt the IPPS wageindex for the OPPS in its entirety exceptwhen a small number of hospitals setthe rural floor for the benefit of all otherhospitals in the State, and, if so, thennot apply the rural floor wage index; (3)adopt the IPPS wage index for the OPPSin its entirety except apply rural floorbudget neutrality <strong>with</strong>in each Stateinstead of nationally; or (4) adoptanother decision rule for when the ruralfloor should not be applied in the OPPSVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00072 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2when we have concerns aboutdisproportionate impact.We also requested public commentson an option that we were consideringadopting for both the IPPS and theOPPS, where we would determine theapplicable rural wage index floor usingonly data from those hospitalsgeographically rural under OMB and theCensus Bureau’s MSA designations, and<strong>with</strong>out including wage data associated<strong>with</strong> hospitals reclassified from urban torural status under section 1886(d)(8)(E)of the Act. Such a policy wouldeliminate the incentive to reclassifyfrom urban to rural status primarily toincrease rural floors across a State, andwould ensure that the rural floor isbased upon hospitals located in ruralareas.<strong>Comment</strong>: <strong>Comment</strong>ers that were infavor of maintaining the current policy(option 1 listed above) of adopting theIPPS wage indices under the OPPS citedseveral different reasons for theirchoice. Several commenters believedthat hospital inpatient and outpatientdepartments are ‘‘inseparable’’ becausethey are subject to the same labor costenvironment, and, therefore, shouldhave the same wage index whereapplicable. Other commenters preferredmaintaining the current wage indexpolicy and implementing wage indexchanges in the context ofcomprehensive wage index reform.These commenters believed that onlycomprehensive wage index reform canrevise the wage index in such as way as‘‘to minimize volatility of the wageindex and remove incentives to gamethe system.’’ <strong>Comment</strong>ers stated that anadditional reason for maintaining thecurrent policy was that different wageindices for inpatient and outpatientpayments would add a level ofadministrative complexity that is overlyburdensome and unnecessary.Several commenters expressed apreference for wage index policy option2 included in the proposed rule (toadopt the IPPS wage index for the OPPSin its entirety except when a smallnumber of hospitals set the rural floorfor the benefit of all other hospitals inthe State, and, if so, then not apply therural floor wage index). Thesecommenters typically viewed thisoption to be the best in terms ofaddressing current inequities. However,some of the commenters requested thatCMS explicitly define a ‘‘small number’’threshold as well as what is consideredas a ‘‘benefit’’ for all other hospitals inthe State. Some commenters thatsupported option 2 preferred option 2 tooption 3 (the adoption of the IPPS wageindex policies but application ofstatewide rather than national budget

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74193jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2neutrality for the rural floor policy).<strong>Comment</strong>ers that preferred option 2rather than option 3 argued that anational level adjustment was inkeeping <strong>with</strong> Congressional intent,especially given that Congress enactedlegislation to establish national budgetneutrality for the rural floor in the IPPSunder the Affordable Care Act (effectivein FY 2011). These commenters alsowere concerned about CMS decidingwhen budget neutrality adjustmentsshould be applied at the State versusnational levels.Several commenters favored option 3because they supported the applicationof statewide level budget neutrality forthe rural floor policy. Thesecommenters favored basing the wageindex on Bureau of Labor Statistics(BLS) data rather than hospital costreports but believed that, in the absenceof broader wage index reform, option 3was the most equitable policy. Onecommenter, although supportive ofsystematic wage index reform, statedthat CMS ‘‘should not wait for reform toaddress obvious and significantimmediate problems’’ and thereforeadvocated for option 3.Instead of recommending other policyoptions, for the fourth potential wageindex policy option (adopting anotherdecision rule), most commenters simplyrequested further detail. Severalcommenters did not exhibit anypreferences for any specific wage indexpolicy options, choosing instead tocomment generally about issues ofconcern. One commenter believed that‘‘looking at one policy in isolationserves only to address one issue whilelikely creating other inequities in thesystem.’’ Another commenter wasconcerned that any new rule couldunnecessarily harm rural providers.Another commenter that supportedsystematic wage index reform advocatednot making changes until reports fromthe Institute of Medicine are completedand the CMS report to Congress, whichis due on December 31, 2011, are fullyanalyzed. <strong>Comment</strong>ers requested furtherdetail to formulate a policy position onthe four options presented and urgedCMS to include impact analyses for thefinal rule.Response: We appreciate the publiccomments. We acknowledge that theremay be inequities in the currentapplication of the wage index policyand its various adjustments. This is whywe described various methods and wageindex options that we might considerunder the OPPS to addressmanipulation of wage index adjustmentpolicies, and, in this specific case, therural floor wage index and its nationallevel budget neutrality.In the CY 2012 OPPS/ASC proposedrule, we referred specifically to theconversion of one CAH to IPPS status toincrease the rural floor for the State,which would increase IPPS and OPPSpayments to that State, while decreasingIPPS and OPPS payments to hospitals inother States, under a policy in whichthe rural floor wage index budgetneutrality was applied at the nationallevel. Similarly, we are aware ofrequests from urban hospitals to convertto rural hospital status, which wouldinflate those States’ rural floors. Whilewe recognize that conversions fromurban-to-rural status are permittedunder section 1886(d)(8)(E) of the Act,we are concerned <strong>with</strong> individualurban-to-rural conversions that wouldresult in payment redistributions of thismagnitude.However, we agree <strong>with</strong> thecommenters that stated that maintainingthe current policy for CY 2012 would bethe best option, given the broader wageindex reform currently underdevelopment and consideration. Thisincludes the Report to Congress <strong>with</strong> aplan for wage index reform, which isdue December 31, 2011, under theAffordable Care Act. We will continueto consider these policy options infuture rulemaking, especially in thecontext of other significant wage indexrevisions. In response to commenters’recommendations that we provide moredetailed impact analysis, we areproviding a State level impact table,similar to the table provided in the FY2012 IPPS/LTCH final rule (76 FR 51824through 51825), that displays the impactof the rural floor and imputed floorpolicies <strong>with</strong> national budget neutralityon OPPS hospitals and their paymentsby State. This table is included insection XX. of this final rule <strong>with</strong>comment period.<strong>Comment</strong>: A few commentersresponded to our request for commentson setting the applicable rural wageindex floor using only data fromhospitals that are geographically ruralaccording to OMB and MSAdesignations, and <strong>with</strong>out includingwage data associated <strong>with</strong> hospitalsreclassified from urban to rural statusunder section 1886(d)(8)(E) of the Act.One commenter opposed using datafrom geographically rural hospitalsalone in setting the rural floor becausereclassified hospitals are consideredrural for all payment policies. Severalcommenters agreed that wage dataassociated <strong>with</strong> hospitals that arereclassified should be excluded fromcalculation of the rural floor. Onecommenter questioned why it isnecessary to maintain the rural floorwage index policy under the OPPS.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00073 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Response: For the reasons statedabove, in this final rule <strong>with</strong> commentperiod, we are adopting the IPPS wageindex and its adjustments for use underthe OPPS. However, in the IPPSproposed rule for FY 2013, we mayaddress the issue of including hospitalsreclassified from urban to rural statusunder section 1886(d)(8)(E) of the Act.<strong>Comment</strong>: One commenter askedwhether an increase similar to the 1.1percent increase included in the FY2012 IPPS/LTCH final rule (76 FR51788) should also apply under theOPPS.Response: The increase cited by thecommenter is limited to IPPS payments.Budget neutrality (including that for therural floor) is calculated prospectivelyeach year under the OPPS. While wehave historically adopted the IPPS wageindex when developing the wageindices for calculating payments underthe OPPS, the budget neutrality factorsthat applied to the standardized amountunder IPPS as a result of the rural floorwere not applied to the OPPSconversion factor, and thus would nothave any effect on OPPS budgetneutrality.After consideration of the publiccomments we received, we arefinalizing our policy to adopt the FY2012 IPPS wage index for the CY 2012OPPS in its entirety including the ruralfloor, geographic reclassifications, andall other wage index adjustments.With the exception of the outmigrationwage adjustment table(Addendum L to this final rule <strong>with</strong>comment period, which is available viathe Internet on the CMS Web site),which includes non-IPPS hospitals paidunder the OPPS, we are not reprintingthe final FY 2012 IPPS wage indicesreferenced in this discussion of thewage index. We refer readers to the CMSWeb site for the OPPS at: http://www.cms.gov/HospitalOutpatientPPS/. Atthis link, readers will find a link to thefinal FY 2012 IPPS wage index tables.D. Statewide Average Default CCRsIn addition to using CCRs to estimatecosts from charges on claims forratesetting, CMS uses overall hospitalspecificCCRs calculated from thehospital’s most recent cost report todetermine outlier payments, paymentsfor pass-through devices, and monthlyinterim transitional corridor paymentsunder the OPPS during the PPS year.Medicare contractors cannot calculate aCCR for some hospitals because there isno cost report available. For thesehospitals, CMS uses the statewideaverage default CCRs to determine thepayments mentioned above until ahospital’s Medicare contractor is able to

74194 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationscalculate the hospital’s actual CCR fromits most recently submitted Medicarecost report. These hospitals include, butare not limited to, hospitals that arenew, have not accepted assignment ofan existing hospital’s provideragreement, and have not yet submitteda cost report. CMS also uses thestatewide average default CCRs todetermine payments for hospitals thatappear to have a biased CCR (that is, theCCR falls outside the predeterminedceiling threshold for a valid CCR) or forhospitals in which the most recent costreport reflects an all-inclusive ratestatus (Medicare Claims ProcessingManual (Pub. 100–04), Chapter 4,Section 10.11). As we proposed in theCY 2012 OPPS/ASC proposed rule (76FR 42213), we are updating the defaultratios for CY 2012 using the most recentcost report data. We discuss our policyfor using default CCRs, including settingthe ceiling threshold for a valid CCR, inthe CY 2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68594 through68599) in the context of our adoption ofan outlier reconciliation policy for costreports beginning on or after January 1,2009.We proposed to continue to use ourstandard methodology of calculating thestatewide average default CCRs usingthe same hospital overall CCRs that weuse to adjust charges to costs on claimsdata for setting the CY 2012 OPPSrelative weights. Table 11 published inthe proposed rule listed the proposedCY 2012 default urban and rural CCRsby State and compared them to lastyear’s default CCRs. These proposedCCRs represented the ratio of total coststo total charges for those cost centersrelevant to outpatient services from eachhospital’s most recently submitted costreport, weighted by Medicare Part Bcharges. We also adjusted ratios fromsubmitted cost reports to reflect finalsettled status by applying thedifferential between settled to submittedoverall CCRs for the cost centersrelevant to outpatient services from themost recent pair of final settled andsubmitted cost reports. We thenweighted each hospital’s CCR by thevolume of separately paid line-items onhospital claims corresponding to theyear of the majority of cost reports usedto calculate the overall CCRs. We referreaders to the CY 2008 OPPS/ASC finalrule <strong>with</strong> comment period (72 FR 66680through 66682) and prior OPPS rules fora more detailed discussion of ourestablished methodology for calculatingthe statewide average default CCRs,including the hospitals used in ourcalculations and our trimming criteria.We did not receive any publiccomments on our CY 2012 proposal. Weare finalizing our proposal to apply ourstandard methodology of calculating thestatewide average default CCRs usingthe same hospital overall CCRs that weused to adjust charges to costs on claimsdata for setting the CY 2012 OPPSrelative weights. We used thismethodology to calculate the statewideaverage default CCRs listed in Table 11below.For this CY 2012 OPPS/ASC final rule<strong>with</strong> comment period, approximately 47percent of the submitted cost reportsutilized in the default ratio calculationsrepresented data for cost reportingperiods ending in CY 2010 and 53percent were for cost reporting periodsending in CY 2009. For Maryland, weused an overall weighted average CCRfor all hospitals in the Nation as asubstitute for Maryland CCRs. Fewhospitals in Maryland are eligible toreceive payment under the OPPS, whichlimits the data available to calculate anaccurate and representative CCR. Theweighted CCR is used for Marylandbecause it takes into account eachhospital’s volume, rather than treatingeach hospital equally. We refer readersto the CY 2005 OPPS final rule <strong>with</strong>comment period (69 FR 65822) forfurther discussion and the rationale forour longstanding policy of using thenational average CCR for Maryland. Ingeneral, observed changes in thestatewide average default CCRs betweenCY 2011 and CY 2012 are modest andthe few significant changes areassociated <strong>with</strong> areas that have a smallnumber of hospitals.Table 11 below lists the finalizedstatewide average default CCRs forOPPS services furnished on or afterJanuary 1, 2012.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00074 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

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74196 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00076 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.018

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74198 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–CE. OPPS Payments to Certain Rural andOther Hospitals1. Hold Harmless Transitional PaymentChangesWhen the OPPS was implemented,every provider was eligible to receive anadditional payment adjustment (calledeither transitional corridor payments ortransitional outpatient payments(TOPs)) if the payments it received forcovered OPD services under the OPPSwere less than the payments it wouldhave received for the same servicesunder the prior reasonable cost-basedsystem (referred to as the pre-BBAamount). Section 1833(t)(7) of the Actprovides that the TOPs were temporarypayments for most providers andintended to ease their transition fromthe prior reasonable cost-based paymentsystem to the OPPS system. There aretwo exceptions to this temporaryprovision, cancer hospitals andchildren’s hospitals. Such a hospitalcould receive TOPs to the extent its PPSamount was less than its pre-BBAamount in the applicable year. Section1833(t)(7)(D)(i) of the Act originallyprovided for TOPs to rural hospitals<strong>with</strong> 100 or fewer beds for covered OPDservices furnished before January 1,2004. However, section 411 of Pub. L.108–173 (the Medicare PrescriptionDrug, Improvement, and ModernizationAct of 2003) amended section1833(t)(7)(D)(i) of the Act to extendthese payments through December 31,2005, for rural hospitals <strong>with</strong> 100 orfewer beds. Section 411 also extendedthe TOPs to sole community hospitals(SCHs) located in rural areas for servicesfurnished during the period that began<strong>with</strong> the provider’s first cost reportingperiod beginning on or after January 1,2004, and ending on December 31, 2005.Accordingly, the authority for makingTOPs under section 1833(t)(7)(D)(i) ofthe Act, as amended by section 411 ofPublic Law 108–173, for rural hospitalshaving 100 or fewer beds and SCHslocated in rural areas expired onDecember 31, 2005.Section 5105 of Public Law 109–171(the Deficit Reduction Act of 2005)extended the TOPs for covered OPDservices furnished on or after January 1,2006, and before January 1, 2009, forrural hospitals having 100 or fewer bedsthat are not SCHs. Section 5105 alsoreduced the TOPs to rural hospitalsfrom 100 percent of the differencebetween the provider’s OPPS paymentsand the pre-BBA amount. When theOPPS payment was less than theprovider’s pre-BBA amount, the amountof payment was increased by 95 percentof the amount of the difference betweenthe two amounts for CY 2006, by 90percent of the amount of that differencefor CY 2007, and by 85 percent of theamount of that difference for CY 2008.For CY 2006, we implemented section5105 of Public Law 109–171 throughTransmittal 877, issued on February 24,2006. In the Transmittal, we did notspecifically address whether TOPsapply to essential access communityhospitals (EACHs), which areconsidered to be SCHs under section1886(d)(5)(D)(iii)(III) of the Act.Accordingly, under the statute, EACHsare treated as SCHs. In the CY 2007OPPS/ASC final rule <strong>with</strong> commentperiod (71 FR 68010), we stated thatEACHs were not eligible for TOPs underPublic Law 109–171. However, westated they were eligible for theadjustment for rural SCHs authorizedunder section 411 of Public Law 108–173. In the CY 2007 OPPS/ASC finalrule <strong>with</strong> comment period (71 FR 68010and 68228), we updated § 419.70(d) ofour regulations to reflect therequirements of Public Law 109–171.In the CY 2009 OPPS/ASC proposedrule (73 FR 41461), we stated that,effective for services provided on orafter January 1, 2009, rural hospitalshaving 100 or fewer beds that are notSCHs would no longer be eligible forTOPs, in accordance <strong>with</strong> section 5105of Public Law 109–171. However,subsequent to issuance of the CY 2009OPPS/ASC proposed rule, section 147 ofPublic Law 110–275 amended section1833(t)(7)(D)(i) of the Act by extendingthe period of TOPs to rural hospitalsVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00078 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2<strong>with</strong> 100 beds or fewer for 1 year, forservices provided before January 1,2010. Section 147 of Public Law 110–275 also extended TOPs to SCHs(including EACHs) <strong>with</strong> 100 or fewerbeds for covered OPD services providedon or after January 1, 2009, and beforeJanuary 1, 2010. In accordance <strong>with</strong>section 147 of Public Law 110–275,when the OPPS payment is less than theprovider’s pre-BBA amount, the amountof payment is increased by 85 percentof the amount of the difference betweenthe two payment amounts for CY 2009.For CY 2009, we revised ourregulations at §§ 419.70(d)(2) and (d)(4)and added a new paragraph (d)(5) toincorporate the provisions of section147 of Public Law 110–275. In addition,we made other technical changes to§ 419.70(d)(2) to more precisely captureour existing policy and to correct aninaccurate cross-reference. We alsomade technical corrections to the crossreferencesin paragraphs (e), (g), and (i)of § 419.70.For CY 2010, we made a technicalcorrection to the heading of§ 419.70(d)(5) to correctly identify thepolicy as described in the subsequentregulation text. The paragraph headingnow indicates that the adjustmentapplies to small SCHs, rather than torural SCHs.In the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period (74 FR 60425), westated that, effective for servicesprovided on or after January 1, 2010,rural hospitals and SCHs (includingEACHs) having 100 or fewer beds wouldno longer be eligible for TOPs, inaccordance <strong>with</strong> section 147 of PublicLaw 110–275. However, subsequent toissuance of the CY 2010 OPPS/ASCfinal rule <strong>with</strong> comment period, section3121(a) of the Affordable Care Actamended section 1833(t)(7)(D)(i)(III) ofthe Act by extending the period of TOPsto rural hospitals that are not SCHs <strong>with</strong>100 beds or fewer for 1 year, for servicesprovided before January 1, 2011. Section3121(a) of the Affordable Care Actamended section 1833(t)(7)(D)(i)(III) ofthe Act and extended the period ofTOPs to SCHs (including EACHs) for 1ER30NO11.020

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74199jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2year, for services provided beforeJanuary 1, 2011, and section 3121(b) ofthe Affordable Care Act removed the100-bed limitation applicable to suchSCHs for covered OPD servicesfurnished on and after January 1, 2010,and before January 1, 2011. Inaccordance <strong>with</strong> section 3121 of theAffordable Care Act, when the OPPSpayment is less than the provider’s pre-BBA amount, the amount of payment isincreased by 85 percent of the amountof the difference between the twopayment amounts for CY 2010.Accordingly, in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71882), we updated § 419.70(d) of theregulations to reflect the TOPsextensions and amendments describedin section 3121 of the Affordable CareAct.Section 108 of the Medicare andMedicaid Extenders Act of 2010(MMEA) (Pub. L. 111–309) extended for1 year the hold harmless provision fora rural hospital <strong>with</strong> 100 or fewer bedsthat is not an SCH (as defined in section1886(d)(5)(D)(iii) of the Act). Therefore,for such a hospital, for servicesfurnished before January 1, 2012, whenthe PPS amount is less than theprovider’s pre-BBA amount, the amountof payment is increased by 85 percentof the amount of the difference betweenthe two payments. In addition, section108 of the MMEA also extended for 1year the hold harmless provision for anSCH (as defined in section1886(d)(5)(D)(iii) of the Act (includingEACHs) and removed the 100-bed limitapplicable to such SCHs for coveredOPD services furnished on or afterJanuary 1, 2010 and before January 1,2012. Therefore, for such hospitals, forservices furnished before January 1,2012, when the PPS amount is less thanthe provider’s pre-BBA amount, theamount of payment is increased by 85percent of the amount of the differencebetween the two payments. Effective forservices provided on or after January 1,2012, a rural hospital <strong>with</strong> 100 or fewerbeds that is not an SCH and an SCH(including EACHs) will no longer beeligible for TOPs, in accordance <strong>with</strong>section 108 of the MMEA. In the CY2012 OPPS/ASC proposed rule (76 FR42216), we proposed to revise ourregulations at § 419.70(d) to conform theregulation text to the self-implementingprovisions of section 108 of the MMEAdescribed above.We did not receive any publiccomments on our proposed policy toupdate the language in § 419.70(d) of theregulations. For the reasons wespecified in the CY 2012 OPPS/ASCproposed rule (76 FR 42215 and 42216),we are finalizing our proposed revisionsof § 419.70(d) <strong>with</strong>out modification.2. Adjustment for Rural SCHs andEACHs Under Section 1833(t)(13)(B) ofthe ActIn the CY 2006 OPPS final rule <strong>with</strong>comment period (70 FR 68556), wefinalized a payment increase for ruralSCHs of 7.1 percent for all services andprocedures paid under the OPPS,excluding drugs, biologicals,brachytherapy sources, and devices paidunder the pass-through payment policyin accordance <strong>with</strong> section1833(t)(13)(B) of the Act, as added bysection 411 of Pub. L. 108–173. Section411 gave the Secretary the authority tomake an adjustment to OPPS paymentsfor rural hospitals, effective January 1,2006, if justified by a study of thedifference in costs by APC betweenhospitals in rural areas and hospitals inurban areas. Our analysis showed adifference in costs for rural SCHs.Therefore, for the CY 2006 OPPS, wefinalized a payment adjustment for ruralSCHs of 7.1 percent for all services andprocedures paid under the OPPS,excluding separately payable drugs andbiologicals, brachytherapy sources, anddevices paid under the pass-throughpayment policy, in accordance <strong>with</strong>section 1833(t)(13)(B) of the Act.In CY 2007, we became aware that wedid not specifically address whether theadjustment applies to EACHs, which areconsidered to be SCHs under section1886(d)(5)(D)(iii)(III) of the Act. Thus,under the statute, EACHs are treated asSCHs. Therefore, in the CY 2007 OPPS/ASC final rule <strong>with</strong> comment period (71FR 68010 and 68227), for purposes ofreceiving this rural adjustment, werevised § 419.43(g) to clarify that EACHsare also eligible to receive the rural SCHadjustment, assuming these entitiesotherwise meet the rural adjustmentcriteria. Currently, three hospitals areclassified as EACHs, and as of CY 1998,under section 4201(c) of Public Law105–33, a hospital can no longer becomenewly classified as an EACH.This adjustment for rural SCHs isbudget neutral and applied beforecalculating outliers and copayment. Aswe stated in the CY 2006 OPPS finalrule <strong>with</strong> comment period (70 FR68560), we would not reestablish theadjustment amount on an annual basis,but we may review the adjustment inthe future and, if appropriate, wouldrevise the adjustment. We provided thesame 7.1 percent adjustment to ruralSCHs, including EACHs, again in CYs2008 through 2011. Further, in the CY2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68590), weupdated the regulations at § 419.43(g)(4)VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00079 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2to specify, in general terms, that itemspaid at charges adjusted to costs byapplication of a hospital-specific CCRare excluded from the 7.1 percentpayment adjustment.For the CY 2012 OPPS, we proposedto continue our policy of a budgetneutral 7.1 percent payment adjustmentfor rural SCHs, including EACHs, for allservices and procedures paid under theOPPS, excluding separately payabledrugs and biologicals, devices paidunder the pass-through payment policy,and items paid at charges reduced tocosts (76 FR 46232). In the CY 2012OPPS/ASC proposed rule, we indicatedthat we intend to reassess the 7.1percent adjustment in the near future byexamining differences between urbanhospitals’ costs and rural hospitals’costs using updated claims data, costreports, and provider information.We did not receive any publiccomments regarding the proposedcontinuation of the 7.1 rural adjustment.We are finalizing our CY 2012 proposal,<strong>with</strong>out modification, to apply the 7.1percent payment adjustment to ruralSCHs, including EACHs, for all servicesand procedures paid under the OPPS inCY 2012, excluding separately payabledrugs and biologicals, devices paidunder the pass-through payment policy,and items paid at charges reduced tocosts because we continue to believethat the adjustment is appropriate forapplication in CY 2012.F. OPPS Payments to Certain CancerHospitals Described by Section1886(d)(1)(B)(v) of the Act1. BackgroundSince the inception of the OPPS,which was authorized by the BalancedBudget Act of 1997 (BBA), Medicare haspaid cancer hospitals identified insection 1886(d)(1)(B)(v) of the Act(cancer hospitals) under the OPPS forcovered outpatient hospital services.There are 11 cancer hospitals that meetthe classification criteria in section1886(d)(1)(B)(v) of the Act. These 11cancer hospitals are exempted frompayment under the IPPS. With theMedicare, Medicaid and SCHIPBalanced Budget Refinement Act of1999, Congress created section1833(t)(7) of the Act, ‘‘TransitionalAdjustment to Limit Decline inPayment,’’ to serve as a permanentpayment floor by limiting cancerhospitals’ potential losses under theOPPS. Through section 1833(t)(7)(D)(ii)of the Act, a cancer hospital receives thefull amount of the difference betweenpayments for covered outpatientservices under the OPPS and a ‘‘pre-BBA’’ amount. That is, cancer hospitals

74200 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2are permanently held harmless to their‘‘pre-BBA’’ amount, and they receivetransitional outpatient payments (TOPs)to ensure that they do not receive apayment that is lower under the OPPSthan the payment they would havereceived before implementation of theOPPS, as set forth in section1833(t)(7)(F) of the Act. The ‘‘pre-BBA’’payment amount is an amount equal tothe product of the reasonable cost of thehospital for covered outpatient servicesfor the portions of the hospital’s costreporting period (or periods) occurringin the current year and the basepayment-to-cost ratio (PCR) for thehospital. The ‘‘pre-BBA’’ amount,including the determination of the basePCR, are defined at 42 CFR 419.70(f).TOPs are calculated on Worksheet E,Part B, of the Hospital and HospitalHealth Care Complex Cost Report (FormCMS–2552–96 or Form CMS–2552–10,as applicable) each year. Section1833(t)(7)(I) of the Act exempts TOPsfrom budget neutrality calculations.Almost all of the 11 cancer hospitalsreceive TOPs each year. The volumeweighted average PCR for the cancerhospitals is 0.83, or the outpatientpayment <strong>with</strong> TOPs to cancer hospitalsis 83 percent of reasonable cost.Section 3138 of the Affordable CareAct amended section 1833(t) of theSocial Security Act by adding a newparagraph (18), which instructs theSecretary to conduct a study todetermine if, under the OPPS,outpatient costs incurred by cancerhospitals described in section1886(d)(1)(B)(v) of the Act <strong>with</strong> respectto APC groups exceed the costs incurredby other hospitals furnishing servicesunder section 1833(t) of the Act, asdetermined appropriate by theSecretary. In addition, section 3138 ofthe Affordable Care Act requires theSecretary to take into consideration thecost of drugs and biologicals incurred bysuch hospitals when studying cancerhospital costliness. Further, section3138 of the Affordable Care Actprovides that if the Secretary determinesthat cancer hospitals’ costs <strong>with</strong> respectto APC groups are determined to begreater than the costs of other hospitalsfurnishing services under section1833(t) of the Act, the Secretary shallprovide an appropriate adjustmentunder section 1833(t)(2)(E) of the Act toreflect these higher costs. Cancerhospitals described in section1886(d)(1)(B)(v) of the Act remaineligible for TOPs (which are not budgetneutral) and outlier payments (whichare budget neutral).2. Study of Cancer Hospitals’ CostsRelative to Other HospitalsIt has been our standard analyticalapproach to use a combination ofexplanatory and payment regressionmodels to assess the costliness of a classof hospitals while controlling for otherlegitimate influences of costliness, suchas ability to achieve economies of scale,to ensure that costliness is due to thetype of hospital and to identifyappropriate payment adjustments. Weused this approach in our CY 2006OPPS final rule <strong>with</strong> comment period toestablish the 7.1 percent paymentadjustment for rural SCHs (70 FR 68556through 68561). In our discussion forthe CY 2006 OPPS proposed rule, westated that a simple comparison of unitcosts would not be sufficient to assessthe costliness of a class of hospitalsbecause the costs faced by individualhospitals, whether urban or rural, are afunction of many varying factors,including local labor supply and thecomplexity and volume of servicesprovided (70 FR 42699).In constructing our analysis of cancerhospitals’ costs <strong>with</strong> respect to APCgroups relative to other hospitals, weconsidered whether our standardanalytical approach to use acombination of explanatory andpayment regression models would leadto valid results for this particular study,or whether we should develop adifferent or modified analytic approach.We note that the analyses presented inthe CY 2006 OPPS proposed and finalrules were designed to establish anadjustment for a large class of ruralhospitals. In contrast, section 3138 ofthe Affordable Care Act is specificallylimited to identifying an adjustment for11 cancer hospitals to the extent theircosts <strong>with</strong> respect to APC groupsexceeded those costs incurred by otherhospitals furnishing services undersection 1833(t) of the Act. With such asmall sample size (11 out ofapproximately 4,000 hospitals paidunder the OPPS), we were concernedthat the standard explanatory andpayment regression models used toestablish the rural hospital adjustmentwould lead to imprecise estimates ofpayment adjustments for this smallgroup of hospitals. Further, section 3138of the Affordable Care Act specifiesexplicitly that cost comparisonsbetween classes of hospitals mustinclude the cost of drugs andbiologicals. In our CY 2006 analysis ofrural hospitals, we excluded the cost ofdrugs and biologicals in our modelbecause the extreme units associated<strong>with</strong> proper billing for some drugs andbiologicals can bias the calculation of aVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00080 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2service mix index, or volume weightedaverage APC relative weight, for eachhospital (70 FR 42698). Therefore, wechose not to pursue our standardcombination of explanatory andpayment regression modeling todetermine a proposed cancer hospitaladjustment.As discussed in the CY 2011 OPPS/ASC proposed rule (75 FR 46235), whilewe chose not to use our standardmodels to calculate a proposed cancerhospital adjustment, we determined itstill would be appropriate to constructour usual provider-level analyticaldataset consisting of variables related toassessing costliness <strong>with</strong> respect to APCgroups, including average cost per unitfor a hospital and the hospital’s averageAPC relative weight as an indicator ofthe hospital’s resource intensity, asmeasured by the APC relative weights.We used these variables to calculateunivariate statistics that describe thecostliness <strong>with</strong> respect to APC groupsand related aspects of cancer hospitalsand other hospitals paid under theOPPS. While descriptive statisticscannot control for the myriad factorsthat contribute to observed costs, webelieved that stark differences in costbetween cancer hospitals and otherhospitals paid under the OPPS thatwould be observable by examiningdescriptive univariate statistics wouldprovide some indication of relativecostliness. We began our analysis of thecancer hospitals by creating ananalytical dataset of hospitals billingunder the OPPS for CY 2009 (a total of3,933) that were included in our claimsdataset for establishing the CY 2011OPPS proposed APC relative weights.This analytical dataset included the3,933 OPPS hospitals’ total estimatedcost (including packaged cost), totallines, total discounted units as modeledfor CY 2011 OPPS payment, and theaverage weight of their separatelypayable services (total APC weightdivided by total units) as modeled forthe CY 2011 OPPS. We thensummarized estimated utilization andpayment for each hospital (‘‘hospitallevel’’).These files consist of hospitallevelaggregate costs (including the costof packaged items and services), totalestimated discounted units under themodeled proposed CY 2011 OPPS, totalestimated volume of number ofoccurrences of separately payableHCPCS codes under the modeledproposed CY 2011 OPPS, and totalrelative weight of separately payableservices under the modeled proposedCY 2011 OPPS. After summarizingmodeled payment to the hospital-level,we removed 48 hospitals in Puerto Rico

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74201from our dataset because we did notbelieve that their cost structure reflectedthe costs of most hospitals paid underthe OPPS and because they could biasthe calculation of hospital-weightedstatistics. We then removed anadditional 66 hospitals <strong>with</strong> a cost perunit of more than 3 standard deviationsfrom the geometric mean (mean of thenatural log) because including outliersin hospital-weighted descriptivestatistics also could bias those statistics.This resulted in a dataset <strong>with</strong> 11 cancerhospitals and 3,808 other hospitals.We included the following standardhospital-level variables that describehospital costliness in our analysis file:Outpatient cost per discounted unitunder the modeled CY 2011 OPPS(substituting a cost per administration,rather than a cost per unit, for drugs andbiologicals); each hospital’s proposedCY 2011 wage index as a measure ofrelative labor cost; the service-mixindex, or volume-weighted averageproposed CY 2011 APC relative weight(including a simulated weight for drugsand biologicals created by dividing theCY 2010 April ASP-based paymentamount at ASP+6 percent appearing inAddendum A and B of the proposedrule by the proposed conversion factorof $68.267); outpatient volume based onnumber of occurrences of HCPCS codesin the CY 2009 claims data; and numberof beds. We used these variablesbecause they are key indicators ofcostliness <strong>with</strong> respect to APC groupsunder the modeled OPPS system, andthey allowed us to assess the relativecostliness of classes of hospitals underthe proposed CY 2011 OPPS. Ahospital’s service mix index is ameasure of resource intensity of theservices provided by the hospital asmeasured by the proposed CY 2011OPPS relative weights, andstandardizing the cost per discountedunit by the service mix index creates anadjusted cost per unit estimate thatreflects the remaining relative costlinessof a hospital remaining after receivingthe estimated payments that weproposed to make under the CY 2011OPPS. In short, if a class of hospitalsdemonstrates higher cost per unit afterstandardization by service mix, it is anearly indication that the class ofhospitals may be significantly morecostly in the regression models. Weused these data to calculate thedescriptive univariate statistics forcancer hospitals appearing in Table 12below. We note that because drugs andbiologicals are such a significant portionof the services that the cancer hospitalsprovide, and because section 3138 of theAffordable Care Act explicitly requiresus to consider the cost of drugs andbiologicals, we included the cost ofthese items in our total cost calculationfor each hospital, counting eachoccurrence of a drug in the modeledproposed CY 2011 data (based on unitsin CY 2009 claims data). That is, wesought to treat each administration of adrug or biological as one unit.In reviewing these descriptivestatistics, we observed that cancerhospitals had a standardized cost perdiscounted unit of $150.12 compared toa standardized cost per discounted unitof $94.14 for all other hospitals. That is,cancer hospitals’ average cost perdiscounted unit remained high evenafter accounting for payment under themodeled proposed CY 2011 paymentsystem, which is not true for all otherhospitals. Observing such differences instandardized cost per discounted unitled us to conclude that cancer hospitalsare more costly <strong>with</strong> respect to APCgroups than other hospitals furnishingservices under the OPPS, even <strong>with</strong>outthe inferential statistical models that wetypically employ.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES23. CY 2011 Proposed PaymentAdjustment for Certain Cancer HospitalsHaving reviewed the cost data fromthe standard analytic database anddetermined that cancer hospitals aremore costly <strong>with</strong> respect to APC groupsthan other hospitals furnishing servicesunder the OPPS system, we decided toexamine hospital cost report data fromWorksheet E, Part B (where TOPs arecalculated on the Hospital and HospitalHealth Care Complex Cost Report eachVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00081 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2year) in order to determine whether ourfindings were further supported by costreport data and to determine anappropriate proposed paymentadjustment methodology for CY 2011based on cost report data. Analyses onER30NO11.021

74202 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2our standard analytic database anddescriptive statistics presented in Table12 above did not consider TOPs inassessing costliness of cancer hospitalsrelative to other hospitals furnishingservices under section 1833(t) of theAct. There were several reasons for this.One reason was that TOPs have noassociated relative weight that could beincluded in an assessment of APC-basedpayment. TOPs are paid at cost reportsettlement on an aggregate basis, not ona per service basis, and we would haveno way to break these payments downinto a relative weight to incorporatethese retrospective aggregate paymentsin the form of a relative weight. The costreport data we selected for the analysiswere limited to the OPPS-specificpayment and cost data available onWorksheet E, Part B. These data includeaggregate OPPS payments, includingoutlier payments and the cost ofmedical and other health services.These aggregate measures of cost andpayment also include the cost andpayment for drugs and biologicals andother adjustments that we typicallyinclude in our regression modeling,including wage index adjustment andrural adjustment, if applicable. Whilethese cost report data cannot provide anestimate of cost per unit aftercontrolling for other potential factorsthat could influence cost per unit, weused this aggregate cost and paymentdata to examine the cancer hospitals’OPPS PCR and compare these to theOPPS PCR for other hospitals. PCRscalculated from the most recent costreport data available at the time of theCY 2011 OPPS/ASC proposed rule alsoindicated that costs relative to paymentsat cancer hospitals were higher thanthose at other hospitals paid under theOPPS (that is, cancer hospitals havelower PCRs). In order to calculate PCRsfor hospitals paid under the OPPS(including cancer hospitals), we usedthe same extract of cost report data fromthe Hospital Cost Report InformationSystem (HCRIS) that we used tocalculate the CCRs that were used toestimate median costs for the CY 2011OPPS. We limited the dataset to thehospitals <strong>with</strong> CY 2009 claims data thatwe used to model the CY 2011 proposedAPC relative weights.We estimated that, on average, theOPPS payments to the 11 cancerhospitals, not including TOPs, wereapproximately 62 percent of reasonablecost (that is, we calculated a PCR of0.615 for the cancer hospitals), whereaswe estimated that, on average, the OPPSpayments to other hospitals furnishingservices under the OPPS wereapproximately 87 percent of reasonablecost (resulting in a PCR of 0.868).Based on our findings that cancerhospitals, as a class, have a significantlylower volume weighted average PCRthan the volume weighted PCR of otherhospitals furnishing services under theOPPS and our findings that the cancerhospitals cost per discounted unitstandardized for service mix remainsmuch higher than the standardized costper discounted unit of all otherhospitals, we proposed an adjustmentfor cancer hospitals to reflect thesehigher costs, effective January 1, 2011.For purposes of calculating a proposedadjustment, we chose to rely on thisstraightforward assessment of paymentsand costs from the cost report databecause of the concerns outlined above<strong>with</strong> respect to the small number ofhospitals, and because of the challengesassociated <strong>with</strong> accurately includingdrug and biological costs in ourstandard regression models. Webelieved that an appropriate adjustmentwould redistribute enough paymentsfrom other hospitals furnishing servicesunder the OPPS to the cancer hospitalsto give cancer hospitals a PCR that wascomparable to the average PCR for otherhospitals furnishing services under theOPPS. Therefore, we proposed ahospital-specific payment adjustmentdetermined as the percentage ofadditional payment needed to raise eachcancer hospital’s PCR to the weightedaverage PCR for other hospitalsfurnishing services under the OPPS(0.868) in the CY 2011 dataset. Thiswould be accomplished by adjustingeach cancer hospital’s OPPS APCpayment by the percentage differencebetween the hospital’s individual PCR(<strong>with</strong>out TOPs) and the weightedaverage PCR of the other hospitalsfurnishing services under the OPPS.This cancer hospital paymentadjustment proposed for CY 2011 wouldhave resulted in an estimated aggregateincrease in OPPS payments to cancerhospitals of 41.2 percent and a netincrease in total payments, includingTOPs, of 5 percent for CY 2011.4. Proposed CY 2011 Cancer HospitalPayment Adjustment Was Not <strong>Final</strong>izedThe public comments associated <strong>with</strong>the cancer hospital adjustment that weproposed for CY 2011 are detailed in theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 71886 through71887). Many commenters urged CMSto consider TOPs when calculating thecancer hospital payment adjustment,stating that the proposed methodologyresults, largely, in a change in the formof outpatient payments to cancerhospitals by shifting payment from holdVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00082 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2harmless payment under the TOPsprovision to APC payments. Noting thatthe majority of cancer care provided inthe country is provided by the noncancerhospitals that would experiencea payment reduction under the CY 2011proposal, commenters also suggestedthat the associated budget neutralpayment reduction of 0.7 percent wasnot appropriate or equitable to otherOPPS hospitals. <strong>Comment</strong>ers alsoexpressed concern that the proposedpayment adjustment would increasebeneficiary copayments. That is, theybelieved that the proposed cancerhospital adjustment would increaseAPC payments and, because beneficiarycopayment is a percentage of the APCpayment, Medicare beneficiaries seekingservices at the 11 designated cancerhospitals would experience highercopayments due to the proposedmethodology. These commentersencouraged CMS to implement theadjustment in a way that does notincrease beneficiary copayments. Asindicated in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71887), because the many publiccomments we received identified abroad range of very important issuesand concerns associated <strong>with</strong> theproposed cancer hospital paymentadjustment, we determined that furtherstudy and deliberation was necessaryand, therefore, we did not finalize theCY 2011 proposed payment adjustmentfor certain cancer hospitals.5. Payment Adjustment for CertainCancer Hospitals for CY 2012After further review and deliberationof the issues associated <strong>with</strong> the cancerhospital payment adjustment, in the CY2012 OPPS/ASC proposed rule, weproposed a cancer hospital paymentadjustment reflecting the same approachas we took in the CY 2011 OPPS/ASCproposed rule, that is, an adjustmentunder which cancer hospitals wouldreceive additional payments (based onestimates) so that each cancer hospital’sPCR would be comparable to theweighted average PCR for otherhospitals furnishing services undersection 1833(t) of the Act. Therefore, forservices furnished on and after January1, 2012, we proposed that, for a cancerhospital <strong>with</strong> an individual PCR belowthe weighted average PCR for otherhospitals furnishing services under theOPPS in the CY 2012 dataset, we wouldmake a hospital-specific paymentadjustment by adjusting the wageadjustedOPPS payment for coveredOPD services (except devices receivingpass-through status because these itemsand services are always paid at theestimated full cost and, therefore, a

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74203jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2payment adjustment above zero percentis unnecessary) furnished on and afterJanuary 1, 2012, by the percentdifference between the hospital’sindividual PCR and the weightedaverage PCR of other hospitalsfurnishing services under the OPPS inthe CY 2012 dataset. This methodologyresulted in estimated percentagepayment adjustments for the 11 cancerhospitals that ranged between 10.1percent and 61.8 percent, <strong>with</strong> anestimated aggregate increase in OPPSpayment to cancer hospitals of 39percent for CY 2012 and an estimatednet increase in total payments,including TOPs, of 9 percent.Because section 7101 of theAffordable Care Act expanded the 340Bdrug program to include certain cancerhospitals, we also proposed that thecancer hospital payment adjustment berecalculated each year. The 340B drugprogram allows certain hospitals topurchase certain outpatient drugs atreduced prices. We understand fromcommenters that, currently, two cancerhospitals participate in the 340Bprogram. However, inclusion of cancerhospitals in the 340B drug programshould lower drug costs at participatingcancer hospitals going forward and,therefore, may cause changes in eachcancer hospital’s PCR compared to theprevious year’s calculation.<strong>Comment</strong>: Many commenters urgedCMS to consider TOPs when calculatingthe cancer hospital payment adjustment.The commenters stated that theproposed methodology to adjust eachcancer hospital’s OPPS payment by thepercentage difference between theirindividual PCR <strong>with</strong>out TOPs and theweighted average PCR of the otherhospitals paid under OPPS results,largely, in a change in the form ofoutpatient payments to cancer hospitalsby shifting payment from hold harmlesspayments under the TOPs provision toAPC payments. This substitution ofTOPs for APC payments, in turn, resultsin savings to the Medicare programwhich, the commenters asserted, is inviolation of the statutory requirementthat the policy be budget neutral. Thecommenters suggested that because theCongressional Budget Office scoring ofsection 3138 of the Affordable Care Actestimates no Federal budgetary impact,Congress did not intend for savingsunder this provision.<strong>Comment</strong>ers also suggested that theassociated budget neutral paymentreduction to other hospitals is notappropriate or equitable to otherhospitals paid under the OPPS. Thecommenters indicated that it was notthe intent of Congress for the provisionto impact the non-cancer hospitals in amanner that is disproportionate to thebenefits obtained by the cancerhospitals. Many commenters noted thatthe majority of cancer care provided inthe country is provided by the noncancerhospitals that would experiencea payment reduction under theproposal.<strong>Comment</strong>ers also expressed concernthat the proposed payment adjustmentwould increase beneficiary copayments.That is, they believed that the proposedcancer hospital adjustment wouldincrease APC payments and, becausebeneficiary copayment is a percentage ofthe APC payment, Medicarebeneficiaries seeking services at the 11designated cancer hospitals willexperience higher copayments due tothe proposed methodology. Thecommenters encouraged CMS toimplement the adjustment in a way thatdoes not increase beneficiarycopayments, such as providing theadjustment amount in aggregate insteadof on a per claim basis throughenhanced APC payments.<strong>Comment</strong>ers indicated that CMSselected an inappropriate benchmarkagainst which to compare each cancerhospital’s PCR. Specifically, thecommenters indicated that CMS shouldhave taken into account theconcentration of outpatient services atthe designated cancer hospitals ascompared to other PPS hospitals andadjust the PCR benchmark higher. Thecommenters argued that other PPShospitals have the ability to improvetheir Medicare margins through otherpayment systems, but that cancerhospitals receive the majority of theirMedicare payments through the OPPS.These commenters asserted that,because concentration of outpatientservices was not considered inestablishing the benchmark, theproposed adjustment was not valid. Thecommenters also indicated that, becauseoutliers were included in thecalculation of hospital PCRs,application of the payment adjustmentto the APC payment amount will resultin PCRs less than the intended target forcancer hospitals <strong>with</strong> relatively largeoutlier payments and suggested that thepayment adjustment be applied tooutlier payments as well as APCpayments. In addition, the commentersopposed annual recalculation of thecancer adjustment stating that CMSshould not expect significant costsavings at the cancer hospitals as aresult of the inclusion of cancerhospitals in the 340B drug program andthat the cancer hospitals requirepayment stability and predictabilityover the long term. Other commenterssupported the proposal to annuallyVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00083 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2recalculate the cancer hospitaladjustment, stating that this will ensuremore equitable payments. In addition,these commenters indicated that CMSmust make the payment adjustmenteffective for services furnished on orafter January 1, 2011, in order to comply<strong>with</strong> section 3138 of the Affordable CareAct.Several commenters addressed CMS’study methodology. One commentersuggested that the CMS analysis isinadequate to conclude that costs arehigher in cancer hospitals and that anadjustment is warranted. Thiscommenter noted that the CMS analysisdid not control for the many factors thatmight explain differences in costlinessor assess to what extent cost differencescould be explained by differences inefficiency. This commenter also assertedthat the exclusion of TOPs from thecomparison of costliness distorts theanalysis and makes the findings invalid.Another commenter suggested that CMSexamine the costs of cancer patientsgenerally for all hospitals and comparethe costs of these 11 hospitals to allhospitals providing cancer care toensure an adjustment does not reinforcehigh-cost characteristics of the 11designated cancer hospitals. Thiscommenter also indicated thatadditional payments to cancer hospitalsshould be guided by quality of care and,because the Affordable Care Actrequires the 11 cancer hospitals to beginsubmitting quality data in fiscal year2014, suggested that the additionalpayments to cancer hospitals be delayeduntil these quality data are available toserve as a basis for the paymentadjustment.Response: We analyzed the variousissues raised by commenters, and in thisfinal rule <strong>with</strong> comment period, we areadopting final policies that reflect anumber of modifications to ourproposed policies. We believe that anumber of points raised by thecommenters have merit and, consistent<strong>with</strong> our broad authority under thestatute, we are adopting some (but notall) of their recommendations.As discussed above, section 3138 ofthe Affordable Care Act added a newsection 1833(t)(18) to the Social SecurityAct, providing for an adjustment undersection 1833(t)(2)(E) of the SocialSecurity Act to address higher costsincurred by cancer hospitals. Section1833(t)(2)(E) of the Act, in turn, directsthe Secretary to establish, ‘‘in a budgetneutral manner,’’ payment ‘‘adjustmentsas determined to be necessary to ensureequitable payments, such asadjustments for certain classes ofhospitals.’’

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274204 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and RegulationsUnder sections 1833(t)(18) and1833(t)(2)(E) of the Social Security Act,the agency’s authority <strong>with</strong> respect tothe cancer hospital adjustment is broad;similarly, under section 1833(t)(2)(E) ofthe Act, the agency’s authority <strong>with</strong>respect to calculating budget neutralityis broad. In contrast, the provision of thestatute for calculating TOPs isprescriptive.<strong>Comment</strong>ers requested that CMSmaintain TOPs at their current level,that is, calculate TOPs by ignoring thecancer hospital payment adjustmentunder sections 1833(t)(18) and1833(t)(2)(E) of the Act. Under thestatute, however, the calculation ofTOPs is directly tied to what is paidunder section 1833(t) of the Act.Specifically, under section1833(t)(7)(D)(ii) of the Act, ‘‘for coveredOPD services for which the PPS amountis less than the pre-BBA amount, theamount of payment under thissubsection [1833(t)] shall be increasedby the amount of such difference.’’ The‘‘PPS amount’’ means, <strong>with</strong> respect tocovered OPD services, ‘‘the amountpayable under this title [Title 18] forsuch services (determined <strong>with</strong>outregard to this paragraph) * * *’’(section 1833(t)(7)(E) of the Act). Underthis provision, the cancer hospitalpayment adjustment is included in thecalculation of the ‘‘PPS amount’’because it is an adjustment undersections 1833(t)(18) and 1833(t) (2)(E) ofthe Act and, therefore, is the ‘‘amountpayable under this title.’’ To the extentthe PPS amount is less than the pre-BBAamount, a cancer hospital would qualifyfor a TOP.With respect to the issue ofestablishing, in a budget neutralmanner, the cancer hospital paymentadjustment, we agree <strong>with</strong> thecommenters that it is appropriate toconsider that, to some extent, the cancerhospital payment adjustment changesthe form of payments (from TOPs tocancer hospital adjustment payments).The cancer hospital paymentadjustment presents a uniquecircumstance insofar as the cancerhospital adjustment can result in lowerTOPs. Consistent <strong>with</strong> section1833(t)(2)(E) of the Act, we agree that,in determining the baseline for thebudget neutrality calculation, it isappropriate to consider TOPs thatwould otherwise be made if there wereno cancer hospital payment adjustment.In determining the budget neutralityadjustment factor, we compareestimated CY 2012 total payments <strong>with</strong>the cancer hospital payment adjustmentunder sections 1833(t)(18) and1833(t)(2)(E) of the Act to estimated CY2012 total payments <strong>with</strong>out a cancerhospital payment adjustment, takinginto account TOPs that would otherwisebe made in the absence of a cancerhospital payment adjustment. Theinclusion of TOPs in the baselinesignificantly increases the baseline, andaccordingly decreases the amount thatother payments need to be reduced tooffset the increased payments resultingfrom the cancer hospital paymentadjustment. The budget neutralityadjustment factor for the cancer hospitalpayment adjustment is 0.9978. Inpercentage terms, the budget neutralityreduction to the conversion factor is 0.2percent in this final rule <strong>with</strong> commentperiod, as opposed to 0.7 percent in theproposed rule. In dollar terms, thebudget neutral payment reductionassociated <strong>with</strong> the cancer hospitalpayment adjustment is an estimated $71million for CY 2012 based on updatedcost report information. That is, thecancer hospital payment adjustment isestimated to increase total payments by$71 million over the baseline (whichaccounts for TOPs) and this amountmust be offset by reductions in otherpayments (resulting in the 0.2 percentreduction to the conversion factor). Forthis final rule <strong>with</strong> comment period, weare adopting the above-describedapproach of calculating budgetneutrality, consistent <strong>with</strong> our broadauthority under the statute, for thereasons stated above and because webelieve it will increase equity tohospitals paid under the OPPS that arenot cancer hospitals, as urged by thecommenters.In response to commenters who urgedus to implement the cancer hospitalpayment adjustment in a manner thatdoes not increase beneficiarycopayments, such as providing theadjustment amount in aggregate insteadof on a per claim basis throughenhanced APC payments, wereexamined the manner in which thecancer hospital payment adjustment isapplied. We have broad discretion indesigning the cancer hospital paymentadjustment under sections1833(t)(18)(B) and 1833(t)(2)(E) of theAct. Consistent <strong>with</strong> this broadauthority, we agree that it is appropriateto make the cancer hospital paymentadjustment through the form of anaggregate payment determined at costreport settlement to each cancerhospital, as opposed to an adjustment atthe APC level, thereby avoiding thehigher copayments for beneficiariesassociated <strong>with</strong> providing theadjustment on a claims basis throughincreased APC payments. Therefore, inorder to implement the cancer hospitalpayment adjustment in a way that doesVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00084 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2not increase beneficiary copayments asurged by commenters, and in light of thediscretion afforded by the statute, weare providing the cancer hospitalpayment adjustment as an aggregatepayment to each cancer hospital at costreport settlement instead of throughenhanced APC payments as proposed.As explained further below, theaggregate adjustment adopted in thisfinal rule <strong>with</strong> comment period (like theproposed APC-level adjustment) isbased on the comparison of each cancerhospital’s PCR to the weighted averagePCR of the other hospitals that furnishservices under the OPPS using the mostrecent submitted or settled cost reportavailable at the time of this final rule<strong>with</strong> comment period.In addition, commenters suggestedthat CMS take into account the cancerhospitals’ significant Medicareoutpatient concentration (which, basedon the comment letter, is the portion ofthe cancer hospitals’ total Medicarepayments that are OPPS payments)when establishing an appropriate PCRbenchmark. In other words, thecommenter argued that CMS shouldtake into account the portion of thecancer hospitals’ total Medicarepayments that are OPPS paymentscompared to the non-cancer hospitals’total Medicare payments that are OPPSpayments. Section 3138 of theAffordable Care Act provides that if theSecretary determines under section1833(t)(18)(A) of the Act that costsincurred by cancer hospitals exceedthose costs of other hospitals furnishingservices under section 1833(t), theSecretary shall provide for anappropriate adjustment to reflect thehigher costs. We are not persuaded thatMedicare outpatient concentration inand of itself has an impact on the costsincurred for providing OPD services atcancer hospitals relative to other OPPShospitals that warrants an adjustment indetermining the cancer hospitaladjustment. Therefore, we are notadopting this suggestion of thecommenters.With respect to commenters thatindicated that because outliers wereincluded in the calculation of hospitalPCRs, application of the paymentadjustment to the APC payment amountwill result in PCRs less than theintended target for cancer hospitals <strong>with</strong>relatively large outlier payments, weexamined this issue and believecommenters made a valid argument thatcancer hospitals <strong>with</strong> relatively largeoutlier payments will be provided lessadditional payment than intendedunder the proposed methodologybecause the payment adjustment wouldbe applied only to the APC portion of

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74205jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2the payment and not to the outlieramounts. If we were to finalize theimplementation of the cancer hospitalpayment adjustment through increasedAPC payments as proposed, the PCRused to determine the amount of theadjustment would need to berecalculated to exclude outlierpayments. This change would provide alarger APC adjustment to cancerhospitals that have large outlierpayments relative to other OPPShospitals. However, because we areproviding the cancer hospital paymentadjustment in aggregate at cost reportsettlement and not through adjustmentsto the APC payment, it is appropriate tocontinue to include outlier payments inthe calculation of the PCRs used todetermine the payment adjustmentamount.In response to the commenters whosuggested that annual recalculation ofthe PCRs for purposes of calculating thecancer hospital payment adjustment isnot necessary because significant costsavings are not expected at the cancerhospitals as a result of the inclusion ofcancer hospitals in the 340B drugprogram, we believe that annualrecalculation of the cancer hospitalpayment adjustment will provide atimely assessment of the changes inOPPS payments relative to costs due toany reason and, therefore, will enableCMS to provide OPPS payments that areaccurate and equitable.With regard to the implementationdate for the cancer hospital paymentadjustment, the agency did not finalizethe proposed cancer hospital adjustmentfor CY 2011 for a variety of reasons, asexplained in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period.Significantly, the majority of allcommenters expressed concerns aboutimplementation of the adjustment and,based on the broad range of importantissues and concerns raised by them, wedid not implement a cancer hospitaladjustment for CY 2011. Moreover, theobligation to provide a cancer hospitalpayment adjustment is triggered onlyinsofar as the Secretary determinesunder section 1833(t)(18)(A) of the Actthat costs incurred by hospitalsdescribed in section 1886(d)(1)(B)(v) ofthe Act exceed those costs incurred byother hospitals furnishing servicesunder this subsection. Severalcommenters raised concerns about theagency’s study of costliness conductedunder section 1833(t)(18)(A) of the Act;for example, a commenter suggestedthat the CMS analysis was inadequate toconclude that costs are higher in cancerhospitals and that an adjustment waswarranted. Given the uncertaintysurrounding these issues as well aspublic comments arguing againstimplementing a cancer hospitalpayment adjustment for CY 2011, wedecided not to do so for CY 2011. Wenote that, insofar as the canceradjustment is budget neutral, the lack ofa cancer hospital payment adjustmentfor CY 2011 also means that otherpayments were not reduced for CY 2011to offset the increased payments fromthe adjustment.Regarding the commenter’s concernsrelated to the agency’s study conductedpursuant to section 1833(t)(18)(A) of theAct, as detailed above and in the CY2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 71883), wedetermined that we could not use ourstandard analytical approach, whichuses a combination of explanatory andpayment regression models whilecontrolling for other legitimateinfluences of costliness, to assess thecostliness of cancer hospitals relative toother OPPS hospitals. Although thiskind of analysis would allow us tocontrol for the many factors that mightexplain differences in costliness, assuggested by the commenter, we believethat this approach would lead toimprecise estimates of costliness due tothe small sample size (11 hospitals).With respect to commenters whosuggested that it would be moreappropriate for the CMS study oncostliness to compare the costs ofproviding OPD services at the 11 cancerhospitals to the costs of providingservices related to cancer care at otherhospitals furnishing services undersection 1833(t) of the Act, we believesuch an approach is not appropriatebecause section 3138 of the AffordableCare Act does not specify that thecomparison be made <strong>with</strong> regard toparticular APC groups related to cancerservices.In addition, <strong>with</strong> respect to thecommenter who believed that theamount of additional payments tocancer hospitals should be guided byquality of care information and,therefore, be delayed until 2014 whenthe cancer hospitals begin to submitquality data to CMS, we note thatsection 1833(t)(18) of the Act did notinclude such a requirement nor did itinclude quality measures as arequirement for the additional paymentsto cancer hospitals. Therefore, we donot believe it is appropriate to delayimplementation of the cancer hospitalpayment adjustment until cancerhospitals have submitted quality data toCMS.After consideration of the publiccomments we received, we are adoptingin this final rule <strong>with</strong> comment perioda number of the commenters’VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00085 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2suggestions and a number of changes toour proposed CY 2012 policiesregarding the cancer hospital paymentadjustment including modifications toour CY 2012 proposal <strong>with</strong> regard to thecalculation of the budget neutralityadjustment associated <strong>with</strong> the cancerhospital payment adjustment. Thebudget neutral payment reduction thatis associated <strong>with</strong> the cancer hospitalpayment adjustment for CY 2012 iscalculated as the difference in estimatedCY 2012 total payments to cancerhospitals, including the cancer hospitalpayment adjustment, and estimated CY2012 total payments to cancer hospitals<strong>with</strong>out the cancer adjustment,including TOPs. Therefore, based onupdated cost report data, the budgetneutrality adjustment to the OPPSconversion factor is 0.9978, a reductionof 0.2 percent (as opposed to a reductionof 0.7 percent in the proposed rule). Inaddition, we are providing the CY 2012cancer hospital payment adjustment tocancer hospitals in the form of anaggregate payment at cost reportsettlement instead of through anincreased adjustment to APC paymentson a claims basis, as was proposed.Consistent <strong>with</strong> the approach in theproposed rule, the CY 2012 cancerhospital payment adjustment adopted inthis final rule <strong>with</strong> comment period isintended to provide additionalpayments to cancer hospitals so that thehospital’s PCR <strong>with</strong> the paymentadjustment is equal to the weightedaverage PCR for other hospitals, whichwe refer to as the ‘‘target PCR.’’ Incontrast to the approach in the proposedrule, however, in this final rule <strong>with</strong>comment period, we are adopting apolicy under which the amount of thepayment adjustment will be made on anaggregate basis at cost report settlement.Under this final rule <strong>with</strong> commentperiod, we will examine each cancerhospital’s data at cost report settlement,determine the cancer hospital’s PCR(before the cancer hospital paymentadjustment), and in turn determine thelump sum amount necessary (if any) tomake the cancer hospital’s PCR equal tothe target PCR. To the extent at costreport settlement a cancer hospital’sPCR (before the cancer hospital paymentadjustment) is above the target PCR, acancer hospital payment adjustment ofzero is given. This is because we believethat this would indicate that the cancerhospital’s costs do not exceed the costsincurred by other hospitals furnishingservices under the OPPS, and thereforea payment adjustment above zero wouldnot be necessary. We are amending areregulations at § 419.43 to capture theabove-described final policy.

74206 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and RegulationsConsistent <strong>with</strong> the approach in theproposed rule, the target PCR is set inadvance and is calculated using themost recent submitted or settled costreport data that are available at the timeof this final rule <strong>with</strong> comment period.For CY 2012, the target PCR forpurposes of the cancer hospital paymentadjustment is 0.91. To calculate thetarget PCR, we used the same extract ofcost report data from HCRIS, asdiscussed in section II.A of this finalrule <strong>with</strong> comment period, used toestimate median costs for the CY 2012OPPS. Using these cost report data, weincluded data from Worksheet E, Part B,for each hospital, using data from eachhospital’s most recent cost report,whether as submitted or settled. Wethen limited the dataset to the hospitals<strong>with</strong> CY 2010 claims data that we useto model the impact of the CY 2012 finalAPC relative weights (4,018 hospitals)because it is appropriate to use the sameset of hospitals that we are using tocalibrate the modeled CY 2012 OPPS.The cancer hospitals in this datasetlargely had cost report data from costreporting periods ending in FY 2010.The cost report data for the otherhospitals were from cost report periods<strong>with</strong> fiscal year ends ranging from 2009to 2010. We then removed the costreport data of the 47 hospitals located inPuerto Rico from our data set becausewe do not believe that their coststructure reflects the costs of mosthospitals paid under the OPPS and,therefore, their inclusion may bias thecalculation of hospital-weightedstatistics. We also removed 223hospitals <strong>with</strong> cost report data that werenot complete (missing aggregate OPPSpayments (which include outliers),missing aggregate cost data, or missingboth), so that all cost reports in thestudy would have both the payment andcost data necessary to calculate a PCRfor each hospital, leading to a finalanalytic file of 3,748 hospitals <strong>with</strong> costreport data. We believe that the costsand PPS payments reported onWorksheet E, Part B, for the hospitalsincluded in our CY 2012 modeling issufficiently accurate for assessinghospital’s relative costliness because allof the key elements that we believe arenecessary for the analysis (payment andcost) are contained on this worksheet.Using this smaller dataset of costreport data, we estimated that, onaverage, the OPPS payments to the 11cancer hospitals, not including TOPs,are approximately 67 percent ofreasonable cost (that is, we calculated aPCR of 0.674 for the cancer hospitals),whereas, we estimated that, on average,the OPPS payments to other hospitalsfurnishing services under the OPPS areapproximately 91 percent of reasonablecost (weighted average PCR of 0.91).Individual cancer hospital’s OPPS PCRsrange from approximately 0.63 toapproximately 0.78. Based on thesedata, a target PCR of 0.91 will be usedto determine the CY 2012 cancerhospital payment adjustment to be paidat cost report settlement. Therefore, thepayment amount associated <strong>with</strong> thecancer hospital adjustment to bedetermined at cost report settlementwill be the additional payment neededto result in a PCR equal to 0.91 for eachcancer hospital.Using the same data described above,we calculated estimates of thepercentage difference between eachcancer hospital’s PCR and the targetPCR. Table 13 below indicates estimatesin percentage terms of the CY 2012payment adjustment for each cancerhospital. The actual amount of the CY2012 cancer hospital paymentadjustment for each cancer hospital willbe determined at cost report settlementand will depend on each hospital’s CY2012 payments and costs. Under thepolicies in this final rule <strong>with</strong> commentperiod, the payment adjustments forcancer hospitals are estimated to resultin an aggregate increase in OPPSpayments to cancer hospitals of 34.5percent for CY 2012 and a net increasein total payment, including TOPs, of 9.5percent. We note that the changes madeby section 1833(t)(18) of the Act do notaffect the existing statutory provisionsthat provide for TOPs for cancerhospitals. The TOPs will be assessed asusual after all payments, including thecancer hospital payment adjustment,have been made for a cost reportingperiod.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00086 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74207jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2G. Hospital Outpatient OutlierPayments1. BackgroundCurrently, the OPPS provides outlierpayments on a service-by-service basis.For CY 2011, the outlier threshold ismet when the cost of furnishing aservice or procedure by a hospitalexceeds 1.75 times the APC paymentamount and exceeds the APC paymentrate plus a $2,025 fixed-dollarthreshold. We introduced a fixed-dollarthreshold in CY 2005, in addition to thetraditional multiple threshold, in orderto better target outliers to those highcost and complex procedures where avery costly service could present ahospital <strong>with</strong> significant financial loss.If the cost of a service meets both ofthese conditions, the multiple thresholdand the fixed-dollar threshold, theoutlier payment is calculated as 50percent of the amount by which the costof furnishing the service exceeds 1.75times the APC payment rate. Before CY2009, this outlier payment hadhistorically been considered a finalpayment by longstanding OPPS policy.We implemented a reconciliationprocess similar to the IPPS outlierreconciliation process for cost reports<strong>with</strong> cost reporting periods beginningon or after January 1, 2009 (73 FR 68594through 68599).It has been our policy for the pastseveral years to report the actual amountof outlier payments as a percent of totalspending in the claims being used tomodel the proposed OPPS. Our currentestimate of total outlier payments as apercent of total CY 2010 OPPS payment,using available CY 2010 claims and therevised OPPS expenditure estimate forthe 2011 Trustee’s Report, isapproximately 1.13 percent of the totalaggregated OPPS payments. Therefore,for CY 2010, we estimate that we paidat 0.13 percent above the CY 2010outlier target of 1.0 percent of totalaggregated OPPS payments.As explained in the CY 2011 OPPS/ASC final rule <strong>with</strong> comment period (75FR 71887 through 71889), we set ourprojected target for aggregate outlierpayments at 1.0 percent of the estimatedaggregate total payments under theOPPS for CY 2011. The outlierthresholds were set so that estimated CY2011 aggregate outlier payments wouldequal 1.0 percent of the total estimatedaggregate payments under the OPPS.Using CY 2010 claims data and CY 2011payment rates, we currently estimateVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00087 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2that the aggregate outlier payments forCY 2011 will be approximately 1.06percent of the total CY 2011 OPPSpayments. The difference between 1.0percent and 1.06 percent is reflected inthe regulatory impact analysis in sectionXX. of this final rule <strong>with</strong> commentperiod. We note that we provideestimated CY 2012 outlier payments forhospitals and CMHCs <strong>with</strong> claimsincluded in the claims data that we usedto model impacts in the Hospital–Specific Impacts—Provider-SpecificData file on the CMS Web site at:http://www.cms.gov/HospitalOutpatientPPS/.2. Proposed Outlier CalculationIn the CY 2012 OPPS/ASC proposedrule (76 FR 42222), we proposed for CY2012 to continue our policy ofestimating outlier payments to be 1.0percent of the estimated aggregate totalpayments under the OPPS for outlierpayments. We proposed that a portionof that 1.0 percent, specifically 0.14percent, would be allocated to CMHCsfor PHP outlier payments. This is theamount of estimated outlier paymentsthat would result from the proposedCMHC outlier threshold as a proportionof total estimated outlier payments. AsER30NO11.022

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274208 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsdiscussed in section VIII.C. of theproposed rule, for CMHCs, we proposedto continue our longstanding policy thatif a CMHC’s cost for partialhospitalization services, paid undereither APC 0172 (Level I PartialHospitalization (3 services) for CMHCs)or APC 0173 (Level II PartialHospitalization (4 or more services) forCMHCs), exceeds 3.40 times thepayment for APC 0173, the outlierpayment would be calculated as 50percent of the amount by which the costexceeds 3.40 times the APC 0173payment rate. For further discussion ofCMHC outlier payments, we referreaders to section VIII.C. of this finalrule <strong>with</strong> comment period.To ensure that the estimated CY 2012aggregate outlier payments would equal1.0 percent of estimated aggregate totalpayments under the OPPS, we proposedthat the hospital outlier threshold be setso that outlier payments would betriggered when the cost of furnishing aservice or procedure by a hospitalexceeds 1.75 times the APC paymentamount and exceeds the APC paymentrate plus a $2,100 fixed-dollarthreshold. This proposed thresholdreflected the methodology discussedbelow in this section, as well as theproposed APC recalibration for CY2012.We calculated the proposed fixeddollarthreshold for the proposed ruleusing largely the same methodology aswe did in CY 2011 (75 FR 71887through 71889). For purposes ofestimating outlier payments for theproposed rule, we used the hospitalspecificoverall ancillary CCRs availablein the April 2011 update to theOutpatient Provider-Specific File(OPSF). The OPSF contains providerspecificdata, such as the most currentCCR, which are maintained by theMedicare contractors and used by theOPPS Pricer to pay claims. The claimsthat we use to model each OPPS updatelag by 2 years. For the proposed rule, weused CY 2010 claims to model the CY2012 OPPS. In order to estimate theproposed CY 2012 hospital outlierpayments for the proposed rule, weinflated the charges on the CY 2010claims using the same inflation factor of1.0908 that we used to estimate the IPPSfixed-dollar outlier threshold for the FY2012 IPPS/LTCH PPS proposed rule (76FR 26024). We used an inflation factorof 1.0444 to estimate CY 2011 chargesfrom the CY 2010 charges reported onCY 2010 claims. The methodology fordetermining this charge inflation factoris discussed in the FY 2012 IPPS/LTCHPPS proposed rule and final rule (76 FR26024 and 51792, respectively). As westated in the CY 2005 OPPS final rule<strong>with</strong> comment period (69 FR 65845), webelieve that the use of these chargeinflation factors are appropriate for theOPPS because, <strong>with</strong> the exception of theinpatient routine service cost centers,hospitals use the same ancillary andoutpatient cost centers to capture costsand charges for inpatient and outpatientservices.As noted in the CY 2007 OPPS/ASCfinal rule <strong>with</strong> comment period (71 FR68011), we are concerned that we couldsystematically overestimate the OPPShospital outlier threshold if we did notapply a CCR inflation adjustment factor.Therefore, in the CY 2012 OPPS/ASCproposed rule, we proposed to apply thesame CCR inflation adjustment factorthat we proposed to apply for the FY2012 IPPS outlier calculation to theCCRs used to simulate the proposed CY2012 OPPS outlier payments thatdetermine the fixed-dollar threshold.Specifically, for CY 2012, we proposedto apply an adjustment of 0.9850 to theCCRs that were in the April 2011 OPSFto trend them forward from CY 2011 toCY 2012. The methodology forcalculating this proposed adjustmentwas discussed in the FY 2012 IPPS/LTCH PPS proposed rule (76 FR 26024through 26025).Therefore, to model hospital outlierpayments for the CY 2012 OPPS/ASCproposed rule, we applied the overallCCRs from the April 2011 OPSF fileafter adjustment (using the proposedCCR inflation adjustment factor of0.9850 to approximate CY 2012 CCRs) tocharges on CY 2010 claims that wereadjusted (using the proposed chargeinflation factor of 1.0908 to approximateCY 2012 charges). We simulatedaggregated CY 2012 hospital outlierpayments using these costs for severaldifferent fixed-dollar thresholds,holding the 1.75 multiple thresholdconstant and assuming that outlierpayments would continue to be made at50 percent of the amount by which thecost of furnishing the service wouldexceed 1.75 times the APC paymentamount, until the total outlier paymentsequaled 1.0 percent of aggregatedestimated total CY 2012 OPPSpayments. We estimated that a proposedfixed-dollar threshold of $2,100,combined <strong>with</strong> the proposed multiplethreshold of 1.75 times the APCpayment rate, would allocate 1.0percent of aggregated total OPPSpayments to outlier payments. Weproposed to continue to make an outlierpayment that equals 50 percent of theamount by which the cost of furnishingthe service exceeds 1.75 times the APCpayment amount when both the 1.75multiple threshold and the proposedfixed-dollar threshold of $2,100 are met.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00088 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2For CMHCs, we proposed that, if aCMHC’s cost for partial hospitalizationservices, paid under either APC 0172 orAPC 0173, exceeds 3.40 times thepayment for APC 0173, the outlierpayment would be calculated as 50percent of the amount by which the costexceeds 3.40 times the APC 0173payment rate.Section 1833(t)(17)(A) of the Act,which applies to hospitals as definedunder section 1886(d)(1)(B) of the Act,requires that hospitals that fail to reportdata required for the quality measuresselected by the Secretary, in the formand manner required by the Secretaryunder 1833(t)(17)(B) of the Act, incur a2.0 percentage point reduction to theirOPD fee schedule increase factor, thatis, the annual payment update factor.The application of a reduced OPD feeschedule increase factor results inreduced national unadjusted paymentrates that will apply to certainoutpatient items and services furnishedby hospitals that are required to reportoutpatient quality data and that fail tomeet the Hospital OQR requirements.For hospitals that fail to meet theHospital OQR requirements, weproposed to continue our policy that weimplemented in CY 2010 that thehospitals’ costs would be compared tothe reduced payments for purposes ofoutlier eligibility and paymentcalculation. For more information onthe Hospital OQR Program, we referreaders to section XIV. of this final rule<strong>with</strong> comment period.<strong>Comment</strong>: One commenter opposedthe proposed increase to the fixed-dollarthreshold, stating that it would reducethe number of cases eligible for outlierpayments across the industry. Anothercommenter supported the proposedpolicy of estimating outlier payments tobe 1.0 percent of the estimated aggregatetotal payments under the OPPS foroutlier payments and of increasing thefixed-dollar outlier threshold to $2,100.Response: As indicated above, weintroduced a fixed-dollar threshold inorder to better target outliers to thosehigh cost and complex procedureswhere a very costly service couldpresent a hospital <strong>with</strong> significantfinancial loss. We maintain the targetoutlier percentage of 1.0 percent ofestimated aggregate total payment underthe OPPS and have a fixed-dollarthreshold so that OPPS outlier paymentsare made only when the hospital wouldexperience a significant loss forsupplying a particular service. For CY2012, based on updated data, we haveestablished a fixed-dollar threshold of$1,900 which, together <strong>with</strong> a multiplethreshold of 1.75, will enable us to meet

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74209jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2our target outlier payment of 1 percentof total OPPS spending.3. <strong>Final</strong> Outlier CalculationConsistent <strong>with</strong> historical practice, weused updated data for this final rule<strong>with</strong> comment period for our outliercalculation. For CY 2012, we areapplying the overall CCRs from the July2011 Outpatient Provider-Specific File<strong>with</strong> a CCR adjustment factor of 0.9903to approximate CY 2012 CCRs tocharges on the final CY 2010 claims thatwere adjusted to approximate CY 2012charges (using the final 2-year chargeinflation factor of 1.0794). These are thesame CCR adjustment and chargeinflation factors that were used to setthe IPPS fixed-dollar threshold for theFY 2012 IPPS/LTCH PPS final rule (76FR 51792 through 51795). We simulatedaggregated CY 2012 hospital outlierpayments using these costs for severaldifferent fixed-dollar thresholds,holding the 1.75 multiple thresholdconstant and assuming that outlierpayment would continue to be made at50 percent of the amount by which thecost of furnishing the service wouldexceed 1.75 times the APC paymentamount, until the total outlier paymentsequaled 1.0 percent of aggregatedestimated total CY 2011 OPPSpayments. We estimate that a fixeddollarthreshold of $1,900, combined<strong>with</strong> the multiple threshold of 1.75times the APC payment rate, willallocate 1.0 percent of estimatedaggregated total OPPS payments tooutlier payments.In summary, for CY 2012, we willcontinue to make an outlier paymentthat equals 50 percent of the amount bywhich the cost of furnishing the serviceexceeds 1.75 times the APC paymentamount when both the 1.75 multiplethreshold and the final fixed-dollarthreshold of $1,900 are met. ForCMHCs, if a CMHC’s cost for partialhospitalization services, paid undereither APC 0172 or APC 0173, exceeds3.40 times the payment for APC 0173,the outlier payment is calculated as 50percent of the amount by which the costexceeds 3.40 times the APC 0173payment rate. We estimate that thisthreshold will allocate 0.12 percent ofoutlier payments to CMHCs for PHPoutlier payments.4. Outlier ReconciliationIn the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period (73 CFR 68599),we adopted as final policy a process toreconcile hospital or CMHC outlierpayments at cost report settlement forservices furnished during cost reportingperiods beginning in CY 2009. OPPSoutlier reconciliation more fully ensuresaccurate outlier payments for thosefacilities that have CCRs that fluctuatesignificantly relative to the CCRs ofother facilities, and that receive asignificant amount of outlier payments(73 FR 68598). As under the IPPS, wedo not adjust the fixed-dollar thresholdor the amount of total OPPS paymentsset aside for outlier payments forreconciliation activity because suchaction would be contrary to theprospective nature of the system. Ouroutlier threshold calculation assumesthat overall ancillary CCRs accuratelyestimate hospital costs based on theinformation available to us at the timewe set the prospective fixed-dollaroutlier threshold. For these reasons, aswe have previously discussed in the CY2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68596) and aswe proposed for CY 2012, we did notincorporate any assumptions about theeffects of reconciliation into ourcalculation of the OPPS fixed-dollaroutlier threshold.H. Calculation of an Adjusted MedicarePayment From the National UnadjustedMedicare PaymentThe basic methodology fordetermining prospective payment ratesfor HOPD services under the OPPS is setforth in existing regulations at 42 CFRPart 419, subparts C and D. Asproposed, for this final rule <strong>with</strong>comment period, the payment rate formost services and procedures for whichpayment is made under the OPPS is theproduct of the conversion factorcalculated in accordance <strong>with</strong> sectionII.B. of this final rule <strong>with</strong> commentperiod and the relative weightdetermined under section II.A. of thisfinal rule <strong>with</strong> comment period.Therefore, as proposed, for this finalrule <strong>with</strong> comment period, the nationalunadjusted payment rate for most APCscontained in Addendum A to this finalrule <strong>with</strong> comment period (which isreferenced in section XVII. of this finalrule <strong>with</strong> comment period and availablevia the Internet on the CMS Web site)and for most HCPCS codes to whichseparate payment under the OPPS hasbeen assigned in Addendum B to thisfinal rule <strong>with</strong> comment period (whichis referenced in section XVII. of thisfinal rule <strong>with</strong> comment period andavailable via the Internet on the CMSWeb site) was calculated by multiplyingthe CY 2012 scaled weight for the APCby the CY 2012 conversion factor.We note that section 1833(t)(17) of theAct, which applies to hospitals asdefined under section 1886(d)(1)(B) ofthe Act, requires that hospitals that failto submit data required to be submittedon quality measures selected by theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00089 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Secretary, in the form and manner andat a time specified by the Secretary,incur a reduction of 2.0 percentagepoints to their OPD fee scheduleincrease factor, that is, the annualpayment update factor. The applicationof a reduced OPD fee schedule increasefactor results in reduced nationalunadjusted payment rates that apply tocertain outpatient items and servicesprovided by hospitals that are requiredto report outpatient quality data andthat fail to meet the Hospital OutpatientQuality Reporting (OQR) Program(formerly referred to as the HospitalOutpatient Quality Data ReportingProgram (HOP QDRP)) requirements.For further discussion of the paymentreduction for hospitals that fail to meetthe requirements of the Hospital OQRProgram, we refer readers to sectionXVI.D. of this final rule <strong>with</strong> commentperiod.We demonstrate in the steps belowhow to determine the APC paymentsthat will be made in a calendar yearunder the OPPS to a hospital that fulfillsthe Hospital OQR Program requirementsand to a hospital that fails to meet theHospital OQR Program requirements fora service that has any of the followingstatus indicator assignments: ‘‘P,’’ ‘‘Q1,’’‘‘Q2,’’ ‘‘Q3,’’ ‘‘R,’’ ‘‘S,’’ ‘‘T,’’ ‘‘U,’’ ‘‘V,’’or ‘‘X’’ (as defined in Addendum D1 tothis final rule <strong>with</strong> comment period), ina circumstance in which the multipleprocedure discount does not apply, theprocedure is not bilateral, andconditionally packaged services (statusindicator of ‘‘Q1’’ and ‘‘Q2’’) qualify forseparate payment. We note that,although blood and blood products <strong>with</strong>status indicator ‘‘R’’ and brachytherapysources <strong>with</strong> status indicator ‘‘U’’ arenot subject to wage adjustment, they aresubject to reduced payments when ahospital fails to meet the Hospital OQRProgram requirements.Individual providers interested incalculating the payment amount thatthey would receive for a specific servicefrom the national unadjusted paymentrates presented in Addenda A and B tothis final rule <strong>with</strong> comment period(which are referenced in section XVII. ofthis final rule <strong>with</strong> comment period andavailable via the Internet on the CMSWeb site) should follow the formulaspresented in the following steps. Forpurposes of the payment calculationsbelow, we refer to the nationalunadjusted payment rate for hospitalsthat meet the requirements of theHospital OQR Program as the ‘‘full’’national unadjusted payment rate. Werefer to the national unadjustedpayment rate for hospitals that fail tomeet the requirements of the HospitalOQR Program as the ‘‘reduced’’ national

74210 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2unadjusted payment rate. The reducednational unadjusted payment rate iscalculated by multiplying the reportingratio of 0.980 times the ‘‘full’’ nationalunadjusted payment rate. The nationalunadjusted payment rate used in thecalculations below is either the fullnational unadjusted payment rate or thereduced national unadjusted paymentrate, depending on whether the hospitalmet its Hospital OQR Programrequirements in order to receive the fullCY 2012 OPPS fee schedule increasefactor of 1.90 percent.Step 1. Calculate 60 percent (thelabor-related portion) of the nationalunadjusted payment rate. Since theinitial implementation of the OPPS, wehave used 60 percent to represent ourestimate of that portion of costsattributable, on average, to labor. Werefer readers to the April 7, 2000 OPPSfinal rule <strong>with</strong> comment period (65 FR18496 through 18497) for a detaileddiscussion of how we derived thispercentage. We confirmed that thislabor-related share for hospitaloutpatient services is appropriate duringour regression analysis for the paymentadjustment for rural hospitals in the CY2006 OPPS final rule <strong>with</strong> commentperiod (70 FR 68553).The formula below is a mathematicalrepresentation of Step 1 and identifiesthe labor-related portion of a specificpayment rate for a specific service.X is the labor-related portion of thenational unadjusted payment rate.X = .60 * (national unadjusted paymentrate)Step 2. Determine the wage index areain which the hospital is located andidentify the wage index level thatapplies to the specific hospital. Thewage index values assigned to each areareflect the geographic statistical areas(which are based upon OMB standards)to which hospitals are assigned for FY2012 under the IPPS, reclassificationsthrough the MGCRB, section1886(d)(8)(B) ‘‘Lugar’’ hospitals,reclassifications under section1886(d)(8)(E) of the Act, as defined in§ 412.103 of the regulations, andhospitals designated as urban undersection 601(g) of Public Law 98–21. Wenote that the reclassifications ofhospitals under section 508 of PublicLaw 108–173, as extended by sections3137 and 10317 of the Affordable CareAct, expired on September 30, 2010.Section 102 of the Medicare andMedicaid Extenders Act of 2010 extendsSection 508 and certain additionalspecial exception hospitalreclassifications from October 1, 2010through September 30, 2011. Therefore,these reclassifications will not apply tothe CY 2012 OPPS. (For furtherdiscussion of the changes to the FY2012 IPPS wage indices, as applied tothe CY 2012 OPPS, we refer readers tosection II.C. of this final rule <strong>with</strong>comment period.) As we proposed, weare continuing to apply a wage indexfloor of 1.00 to frontier States, inaccordance <strong>with</strong> section 10324 of theAffordable Care Act.Step 3. Adjust the wage index ofhospitals located in certain qualifyingcounties that have a relatively highpercentage of hospital employees whoreside in the county, but who work ina different county <strong>with</strong> a higher wageindex, in accordance <strong>with</strong> section 505 ofPublic Law 108–173. Addendum L tothis final rule <strong>with</strong> comment period(which is referenced in section XVII. ofthis final rule <strong>with</strong> comment period andavailable via the Internet on the CMSWeb site) contains the qualifyingcounties and the associated wage indexincrease developed for the FY 2012 IPPSand listed as Table 4J in the FY 2012IPPS/LTCH PPS final rule and availablevia the Internet on the CMS Web site at:http://www.cms.gov/AcuteInpatientPPS/01_overview.asp.This step is to be followed only if thehospital is not reclassified orredesignated under section 1886(d)(8) orsection 1886(d)(10) of the Act.Step 4. Multiply the applicable wageindex determined under Steps 2 and 3by the amount determined under Step 1that represents the labor-related portionof the national unadjusted payment rate.The formula below is a mathematicalrepresentation of Step 4 and adjusts thelabor-related portion of the nationalpayment rate for the specific service bythe wage index.X a is the labor-related portion of thenational unadjusted payment rate(wage adjusted).X a = .60 * (national unadjusted paymentrate) * applicable wage indexStep 5. Calculate 40 percent (thenonlabor-related portion) of the nationalunadjusted payment rate and add thatamount to the resulting product of Step4. The result is the wage index adjustedpayment rate for the relevant wageindex area.The formula below is a mathematicalrepresentation of Step 5 and calculatesthe remaining portion of the nationalpayment rate, the amount notattributable to labor, and the adjustedpayment for the specific service.Y is the nonlabor-related portion ofthe national unadjusted payment rate.Y = .40 * (national unadjusted paymentrate)Adjusted Medicare Payment = Y + XaVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00090 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Step 6. If a provider is a SCH, set forthin the regulations at § 412.92, or anEACH, which is considered to be a SCHunder section 1886(d)(5)(D)(iii)(III) ofthe Act, and located in a rural area, asdefined in § 412.64(b), or is treated asbeing located in a rural area under§ 412.103, multiply the wage indexadjusted payment rate by 1.071 tocalculate the total payment.The formula below is a mathematicalrepresentation of Step 6 and applies therural adjustment for rural SCHs.Adjusted Medicare Payment (SCH orEACH) = Adjusted MedicarePayment * 1.071We have provided examples below ofthe calculation of both the full andreduced national unadjusted paymentrates that will apply to certainoutpatient items and services performedby hospitals that meet and that fail tomeet the Hospital OQR Programrequirements, using the steps outlinedabove. For purposes of this example, weuse a provider that is located inBrooklyn, New York that is assigned toCBSA 35644. This provider bills oneservice that is assigned to APC 0019(Level I Excision/Biopsy). The CY 2012full national unadjusted payment ratefor APC 0019 is $307.74. The reducednational unadjusted payment rate for ahospital that fails to meet the HospitalOQR Program requirements is $301.59.This reduced rate is calculated bymultiplying the reporting ratio of 0.980by the full unadjusted payment rate forAPC 0019.The FY 2012 wage index for aprovider located in CBSA 35644 in NewYork is 1.3142. The labor-relatedportion of the full national unadjustedpayment is $242.66 (.60 * $307.74 *1.3142). The labor-related portion of thereduced national unadjusted payment is$237.81 (.60 * $301.59 * 1.3142). Thenonlabor-related portion of the fullnational unadjusted payment is $123.10(.40 * $307.74). The nonlabor-relatedportion of the reduced nationalunadjusted payment is $120.63(.40 *$301.59). The sum of the labor-relatedand nonlabor-related portions of the fullnational adjusted payment is $365.76($242.66 + $123.10). The sum of thereduced national adjusted payment is$358.44 ($237.81 + $120.63).I. Beneficiary Copayments1. BackgroundSection 1833(t)(3)(B) of the Actrequires the Secretary to set rules fordetermining the unadjusted copaymentamounts to be paid by beneficiaries forcovered OPD services. Section1833(t)(8)(C)(ii) of the Act specifies thatthe Secretary must reduce the national

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74211jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2unadjusted copayment amount for acovered OPD service (or group of suchservices) furnished in a year in amanner so that the effective copaymentrate (determined on a nationalunadjusted basis) for that service in theyear does not exceed a specifiedpercentage. As specified in section1833(t)(8)(C)(ii)(V) of the Act, for allservices paid under the OPPS in CY2010, and in calendar years thereafter,the percentage is 40 percent of the APCpayment rate.Section 1833(t)(3)(B)(ii) of the Actprovides that, for a covered OPD service(or group of such services) furnished ina year, the national unadjustedcopayment amount cannot be less than20 percent of the OPD fee scheduleamount. However, section1833(t)(8)(C)(i) of the Act limits theamount of beneficiary copayment thatmay be collected to the amount of theinpatient deductible, which for CY 2012is $1,156.Section 4104 of the Affordable CareAct eliminated the Part B coinsurancefor preventive services furnished on andafter January 1, 2011 that meet certainrequirements, including flexiblesigmoidoscopies and screeningcolonscopies, and waived the Part Bdeductible for screening colonoscopiesthat become diagnostic during theprocedure. Our discussion of thechanges made by the Affordable CareAct <strong>with</strong> regard to copayments forpreventive services furnished on andafter January 1, 2011 may be found insection XII.B. of the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR72013).2. OPPS Copayment PolicyIn the CY 2012 OPPS/ASC proposedrule (76 FR42224), we proposed todetermine copayment amounts for newand revised APCs using the samemethodology that we implementedbeginning in CY 2004. (We refer readersto the November 7, 2003 OPPS final rule<strong>with</strong> comment period (68 FR 63458).) Inaddition, we proposed to use the samestandard rounding principles that wehave historically used in instanceswhere the application of our standardcopayment methodology would result ina copayment amount that is less than 20percent and cannot be rounded, understandard rounding principles, to 20percent. (We refer readers to the CY2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66687) in whichwe discuss our rationale for applyingthese rounding principles.) Theproposed national unadjustedcopayment amounts for services payableunder the OPPS that would be effectiveJanuary 1, 2012, were shown inAddenda A and B to the proposed rule(which were available via the Interneton the CMS Web site). As discussed insection XIV.E. of the proposed rule andthis final rule <strong>with</strong> comment period, forCY 2012, the Medicare beneficiary’sminimum unadjusted copayment andnational unadjusted copayment for aservice to which a reduced nationalunadjusted payment rate applies willequal the product of the reporting ratioand the national unadjusted copayment,or the product of the reporting ratio andthe minimum unadjusted copayment,respectively, for the service.We did not receive any publiccomments regarding the proposedmethodology for calculating copaymentsfor CY 2012. Therefore, for the reasonsset forth in the proposed rule (76 FR42225), we are finalizing our CY 2012copayment amounts <strong>with</strong>outmodification. We note that we receivedpublic comments on the copaymentsthat would apply to beneficiaries whoreceive services from dedicated cancerhospitals under our proposal to providean adjustment to payments to thesehospitals. Those copayment-relatedpublic comments are discussed insection II.F. of this final rule <strong>with</strong>comment period.3. Calculation of an AdjustedCopayment Amount for an APC GroupIndividuals interested in calculatingthe national copayment liability for aMedicare beneficiary for a given serviceprovided by a hospital that met or failedto meet its Hospital OQR Programrequirements should follow theformulas presented in the followingsteps.Step 1. Calculate the beneficiarypayment percentage for the APC bydividing the APC’s national unadjustedcopayment by its payment rate. Forexample, using APC 0019, $61.55 is 20percent of the full national unadjustedpayment rate of $307.74. For APCs <strong>with</strong>only a minimum unadjusted copaymentin Addenda A and B of this final rule<strong>with</strong> comment period (which areavailable via the Internet on the CMSWeb site), the beneficiary paymentpercentage is 20 percent.The formula below is a mathematicalrepresentation of Step 1 and calculatesnational copayment as a percentage ofnational payment for a given service.B is the beneficiary paymentpercentage.B = National unadjusted copayment forAPC/national unadjusted paymentrate for APCStep 2. Calculate the appropriatewage-adjusted payment rate for the APCfor the provider in question, asVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00091 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2indicated in Steps 2 through 4 undersection II.H. of this final rule <strong>with</strong>comment period. Calculate the ruraladjustment for eligible providers asindicated in Step 6 under section II.H.of this final rule <strong>with</strong> comment period.Step 3. Multiply the percentagecalculated in Step 1 by the payment ratecalculated in Step 2. The result is thewage-adjusted copayment amount forthe APC.The formula below is a mathematicalrepresentation of Step 3 and applies thebeneficiary percentage to the adjustedpayment rate for a service calculatedunder section II.H. of this final rule <strong>with</strong>comment period, <strong>with</strong> and <strong>with</strong>out therural adjustment, to calculate theadjusted beneficiary copayment for agiven service.Wage-adjusted copayment amount forthe APC = Adjusted MedicarePayment * BWage-adjusted copayment amount forthe APC (SCH or EACH) =(Adjusted Medicare Payment *1.071) * BStep 4. For a hospital that failed tomeet its Hospital OQR Programrequirements, multiply the copaymentcalculated in Step 3 by the reportingratio of 0.980.The unadjusted copayments forservices payable under the OPPS thatwill be effective January 1, 2012, areshown in Addenda A and B to this finalrule <strong>with</strong> comment period (which arereferenced in section XVII. of this finalrule <strong>with</strong> comment period and availablevia the Internet on the CMS Web site).We note that the national unadjustedpayment rates and copayment ratesshown in Addenda A and B to this finalrule <strong>with</strong> comment period reflect thefull CY 2012 OPD fee schedule increasefactor discussed in section XIV.E. of thisfinal rule <strong>with</strong> comment period.Also as noted above, section1833(t)(8)(C)(i) of the Act limits theamount of beneficiary copayment thatmay be collected to the amount of theinpatient deductible, which for CY 2012is $1,156.III. OPPS Ambulatory PaymentClassification (APC) Group PoliciesA. OPPS Treatment of New CPT andLevel II HCPCS CodesCPT and Level II HCPCS codes areused to report procedures, services,items, and supplies under the hospitalOPPS. Specifically, CMS recognizes thefollowing codes on OPPS claims:• Category I CPT codes, whichdescribe medical services andprocedures;• Category III CPT codes, whichdescribe new and emerging

74212 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationstechnologies, services, and procedures;and• Level II HCPCS codes, which areused primarily to identify products,supplies, temporary procedures, andservices not described by CPT codes.CPT codes are established by theAmerican Medical Association (AMA)and the Level II HCPCS codes areestablished by the CMS HCPCSWorkgroup. These codes are updatedand changed throughout the year. CPTand HCPCS code changes that affect theOPPS are published both through theannual rulemaking cycle and throughthe OPPS quarterly update ChangeRequests (CRs). CMS releases new LevelII HCPCS codes to the public orrecognizes the release of new CPT codesby the AMA and makes these codeseffective (that is, the codes can bereported on Medicare claims) outside ofthe formal rulemaking process via OPPSquarterly update CRs. This quarterlyprocess offers hospitals access to codesthat may more accurately describe itemsor services furnished and/or providespayment or more accurate payment forthese items or services in a timeliermanner than if CMS waited for theannual rulemaking process. We solicitcomments on these new codes andfinalize our proposals related to thesecodes through our annual rulemakingprocess. As we proposed in the CY 2012OPPS/ASC proposed rule (76 FR 42225through 42226), in Table 14 below (alsoTable 14 of the proposed rule), wesummarize our process for updatingcodes through our OPPS quarterlyupdate CRs, seeking public comments,and finalizing their treatment under theOPPS. We note that because of thetiming of the publication of theproposed rule, the codes that wereimplemented through the July 2011OPPS quarterly update were notincluded in Addendum B of theproposed rule (which is available viathe Internet on the CMS Web site),while those codes based upon the April2011 OPPS quarterly update wereincluded in Addendum B.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00092 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.023

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74213This process is discussed in detailbelow. We have separated ourdiscussion into two sections based onwhether we solicited public commentsin the CY 2012 OPPS/ASC proposedrule or whether we are soliciting publiccomments in this CY 2012 OPPS/ASCfinal rule <strong>with</strong> comment period. In theCY 2012 OPPS/ASC proposed rule, wenoted that we sought public comment inthe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period on the new CPT andLevel II HCPCS codes that were effectiveJanuary 1, 2011. We also sought publiccomments in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period on thenew Level II HCPCS codes effectiveOctober 1, 2010. These new codes, <strong>with</strong>an effective date of October 1, 2010, orJanuary 1, 2011, were flagged <strong>with</strong>comment indicator ‘‘NI’’ (New code,interim APC assignment; comments willbe accepted on the interim APCassignment for the new code) inAddendum B to the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period toindicate that we were assigning them aninterim payment status and an APC andpayment rate, if applicable, which weresubject to public comment followingpublication of the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period. We areresponding to public comments andfinalizing our proposed OPPS treatmentof these codes in this CY 2012 OPPS/ASC final rule <strong>with</strong> comment period.We received comments on severalnew codes that were assigned tocomment indicator ‘‘NI’’ in AddendumB of the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period. We respond tothose comments in sections II.A. andIII.D. of this final rule <strong>with</strong> commentperiod. Table 15 lists the longdescriptors for the CPT codes that wereassigned to comment indicator ‘‘NI’’ forwhich we received public comments tothe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period and the specificsections where the comments areaddressed.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00093 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74214 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00094 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.024

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74215jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–C1. Treatment of New Level II HCPCSCodes and Category I CPT VaccineCodes and Category III CPT Codes forWhich We Solicited Public <strong>Comment</strong>sin the CY 2012 Proposed <strong>Rule</strong>Through the April 2011 OPPSquarterly update CR (Transmittal 2174,Change Request 7342, dated March 18,2011) and the July 2011 OPPS quarterlyupdate CR (Transmittal 2234, ChangeRequest 7443, dated May 27, 2011), werecognized several new HCPCS codesfor separate payment under the OPPS.Effective April 1 and July 1 of CY 2011,we made effective a total of 22 newLevel II HCPCS codes and 14 CategoryIII CPT codes. Specifically, 5 new LevelII HCPCS codes were effective for theApril 2011 update and another 17 newLevel II HCPCS codes were effective forthe July 2011 update for a total of 22.Fourteen new Category III CPT codeswere effective for the July 2011 update.Of the 22 new Level II HCPCS codes, werecognized for separate payment 16 ofthese codes, and of the 14 new CategoryIII CPT codes, we recognized forseparate payment 12 of these codes, fora total of 28 new HCPCS codes that arerecognized for separate payment for CY2012.Through the April 2011 OPPSquarterly update CR, we allowedseparate payment for each of the fivenew Level II HCPCS codes. Specifically,as displayed in Table 16 below (Table15 of the proposed rule), we providedseparate payment for the followingHCPCS codes:• HCPCS code C9280 (Injection,eribulin mesylate, 1 mg)• HCPCS code C9281 (Injection,pegloticase, 1 mg)• HCPCS code C9282 (Injection,ceftaroline fosamil, 10 mg)• HCPCS code Q2040 (Injection,incobotulinumtoxin A, 1 unit)• HCPCS code C9729 (Percutaneouslaminotomy/laminectomy (intralaminarapproach) for decompression of neuralelements, (<strong>with</strong> ligamentous resection,discectomy, facetectomy and/orforaminotomy, when performed) anymethod under indirect image guidance,<strong>with</strong> the use of an endoscope whenVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00095 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2performed, single or multiple levels,unilateral or bilateral; lumbar)We note that HCPCS code Q2040replaced HCPCS code C9278 (Injection,incobotulinumtoxin A, 1 unit)beginning April 1, 2010. HCPCS codeC9278 was effective January 1, 2011,and deleted March 30, 2011, because itwas replaced <strong>with</strong> HCPCS code Q2040.HCPCS code C9278 was assigned topass-through status beginning January 1,2011, when the code was implemented.Because HCPCS code Q2040 describesthe same drug as HCPCS code C9278,we are continuing its pass-throughstatus and assigning the HCPCS Q-codeto the same APC and status indicator asits predecessor HCPCS C-code, asshown in Table 16 below. Specifically,HCPCS code Q2040 is assigned to APC9278 and status indicator ‘‘G.’’In the CY 2012 OPPS/ASC proposedrule, we solicited public comments onthe proposed status indicators and APCassignments of HCPCS codes C9280,C9281, C9282, C9729, and Q2040,which were listed in Table 15 of thatproposed rule (76 FR 42226) and nowER30NO11.025

74216 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsappear in Table 16 of this final rule <strong>with</strong>comment period. We did not receiveany public comments on the proposedAPC assignments and status indicatorsfor HCPCS codes C9280, C9281, C9282,C9729, and Q2040. However, for CY2012, the HCPCS Workgroup replacedHCPCS C9280, C9281, C9282, andQ2040 <strong>with</strong> permanent HCPCS J-codes.Specifically, C9280 was replaced <strong>with</strong>J9179 (Injection, eribulin mesylate, 0.1mg), C9281 <strong>with</strong> J2507 (Injection,pegloticase, 1 mg), C9282 <strong>with</strong> J0712(Injection, ceftaroline fosamil, 10 mg),and Q2040 <strong>with</strong> J0588 (Injection,incobotulinumtoxin A, 1 unit).Consistent <strong>with</strong> our general policy ofusing permanent HCPCS codes ifappropriate rather than using temporaryHCPCS codes for the reporting of drugsunder the OPPS in order to streamlinecoding, we are showing the replacementHCPCS codes effective January 1, 2012in Table 16 that replaced HCPCS C9280,C9281, C9282, and Q2040.Similarly, for CY 2012, we deletedHCPCS code C9729 on June 30, 2011because it was replaced <strong>with</strong> CPT code0275T. Further discussion of CPT code0275T can be found below.Because HCPCS codes J2507, J0712,and J0588 describe the same drugs andthe same dosages currently designatedby HCPCS codes C9281, C9282, andQ2040, respectively, these drugs willcontinue their pass-through status in CY2012. Therefore, we are assigningHCPCS codes J2507, J0712, and J0588 tothe same status indicators and APCs astheir predecessor HCPCS codes, asshown in Table 16.However, we note that thereplacement code for HCPCS codeC9280 does not describe the samedosage descriptor, and consequently,the replacement HCPCS code will beassigned a new APC number.Specifically, C9280 has a dosagedescriptor of 1 mg; however, itsreplacement HCPCS code J9179 has adosage descriptor of 0.1 mg. Therefore,effective January 1, 2012, HCPCS codesJ9179 will be assigned to APC 1426 tomaintain data consistency for futurerulemaking. Because the predecessorHCPCS code C9280 was assigned topass-through status, HCPCS code J9179will continue to be assigned statusindicator ‘‘G’’ for CY 2012.We did not receive any publiccomments on the new Level II HCPCScodes that were implemented in April2011. We are adopting as final, <strong>with</strong>outmodification, our proposal to assign theLevel II HCPCS codes listed in Table 16to the APCs and status indicators asproposed for CY 2012, <strong>with</strong> theexception of HCPCS code J9179, whichwill be assigned to APC 1426. Table 16shows the final APC and statusindicator assignments for all five LevelII HCPCS codes.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Through the July 2011 OPPS quarterlyupdate CR, which included HCPCScodes that were made effective July 1,2011, we allowed separate payment forVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00096 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR211 of the 17 new Level II HCPCS codes.Specifically, as displayed in Table 16 ofER30NO11.026

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74217jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2the proposed rule (Table 17 of this finalrule <strong>with</strong> comment period), weprovided separate payment for thefollowing HCPCS codes:• HCPCS code C9283 (Injection,acetaminophen, 10 mg)• HCPCS code C9284 (Injection,ipilimumab, 10 mg)• HCPCS code C9285 (Lidocaine 70mg/tetracaine 70 mg, per patch)• HCPCS code C9365 (Oasis Ultra Tri-Layer Matrix, per square centimeter)• HCPCS code C9406 (Iodine I–123ioflupane, diagnostic, per study dose,up to 5 millicuries)• HCPCS code C9730 (Bronchoscopicbronchial thermoplasty <strong>with</strong> imagingguidance (if performed), radiofrequencyablation of airway smooth muscle, 1lobe)• HCPCS code C9731 (Bronchoscopicbronchial thermoplasty <strong>with</strong> imagingguidance (if performed), radiofrequencyablation of airway smooth muscle, 2 ormore lobes)• HCPCS code Q2041 (Injection, vonwillebrand factor complex (human),Wilate, 1 i.u. vwf:rco)• HCPCS code Q2042 (Injection,hydroxyprogesterone caproate, 1 mg)• HCPCS code Q2043 (Sipuleucel-t,minimum of 50 million autologouscd54+ cells activated <strong>with</strong> pap-gm-csf,including leukapheresis and all otherpreparatory procedures, per infusion)• HCPCS code Q2044 (Injection,belimumab, 10 mg)We note that two of the Level IIHCPCS Q-codes that were madeeffective July 1, 2011, were previouslydescribed by a HCPCS J-code and a C-code that were assigned to pass-throughstatus under the hospital OPPS.Specifically, HCPCS code Q2041replaced HCPCS code J7184 (Injection,von willebrand factor complex (human),Wilate, per 100 iu vwf:rco) beginningJuly 1, 2011. HCPCS code J7184 wasassigned to pass-through status when itwas made effective January 1, 2011;however, the code is ‘‘Not Payable byMedicare’’ because HCPCS code J7184 isreplaced <strong>with</strong> HCPCS code Q2041effective July 1, 2011. Therefore, HCPCScode J7184 was reassigned to statusindicator ‘‘E’’ effective July 1, 2011.Because HCPCS code J7184 describesthe same drug as HCPCS code Q2041,we continued its pass-through statusand assigned HCPCS code Q2041 tostatus indicator ‘‘G’’ effective July 1,2011. However, because the dosagedescriptor for HCPCS code Q2041 is notthe same as HCPCS code J7184, wereassigned HCPCS code Q2041 to a newAPC to maintain data consistency forfuture rulemaking. Specifically, HCPCScode Q2041 was assigned to APC 1352effective July 1, 2011. In addition,HCPCS code Q2043 replaced HCPCScode C9273 (Sipuleucel-t, minimum of50 million autologous cd54+ cellsactivated <strong>with</strong> pap-gm-csf, includingleukapheresis and all other preparatoryprocedures, per infusion) beginning July1, 2011. HCPCS code C9273 wasassigned to pass-through status when itwas made effective October 1, 2010.Because HCPCS code Q2043 describesthe same product as HCPCS code C9273,we continued its pass-through statusand assigned HCPCS code Q2043 tostatus indicator ‘‘G’’ as well as assignedit to the same APC, specifically APC9273, effective July 1, 2011.Of the 17 HCPCS codes that weremade effective July 1, 2011, we did notrecognize for separate payment sixHCPCS codes that describe durablemedical equipment (DME) because DMEis paid under the Durable MedicalEquipment, Prosthetics, Orthotics, andSupplies (DMEPOS) Fee Schedule andnot the OPPS. These codes were listedin Table 16 of the proposed rule, andwere assigned to either status indicator‘‘Y’’ or ‘‘A’’ effective July 1, 2011.In the CY 2012 OPPS/ASC proposedrule, we solicited public comments onthe status indicators and APCassignments where applicable for the 17HCPCS codes that were listed in Table16 of that proposed rule (76 FR 42227through 42228) and now appear inTable 17 of this final rule <strong>with</strong> commentperiod. We received a comment on theAPC assignments for HCPCS codesC9730 and C9731. A summary of thecomments and our responses can befound in section III.D.8.b. (BronchialThermoplasty) of this final rule <strong>with</strong>comment period. In addition, wereceived some comments on the longdescriptor for HCPCS code Q2043. Asummary of the comments and ourresponses can be found in section V.A.3.of this final rule <strong>with</strong> comment period.With the exception of HCPCS codesC9730, C9731, and Q2043, we receivedno other public comments on the 14other Level II HCPCS codes listed inTable 16 of the CY 2011 OPPS/ASCproposed rule. However, for CY 2012,the HCPCS Workgroup replaced severalHCPCS C-codes <strong>with</strong> an A-code, J-code,or Q-code. Specifically, C9283 wasreplaced <strong>with</strong> J0131 (Injection,acetaminophen, 10 mg), C9284 <strong>with</strong>J9228 (Injection, ipilimumab, 1 mg),C9365 <strong>with</strong> Q4124 (Oasis Ultra Tri-Layer Matrix, per square centimeter),C9406 <strong>with</strong> A9584 (Iodine I–123ioflupane, diagnostic, per study dose,up to 5 millicuries), Q2041 <strong>with</strong> J7183(Injection, von willebrand factorcomplex (human), Wilate, 1 i.u.vwf:rco), Q2042 <strong>with</strong> J1725 (Injection,hydroxyprogesterone caproate, 1 mg),and Q2044 <strong>with</strong> J0490 (Injection,belimumab, 10 mg).Because HCPCS codes J0131, J9228,Q4124, A9584, J7183 and J0490 describethe same drugs and the same dosagescurrently designated by HCPCS codesC9283,C9284, C9365, C9406, Q2041,and Q2044, respectively, these drugswill continue their pass-through statusin CY 2012. Therefore, we are assigningHCPCS codes J0131, J9228, Q4124,A9584, J7183 and J0490 to the samestatus indicators and APCs as theirpredecessor HCPCS codes, as shown inTable 17. We note that since HCPCScode Q2042 is assigned to statusindicator ‘‘K’’ (Nonpass-Through Drugs;Paid under OPPS; Separate APCpayment), its replacement HCPCS codeJ1725 will also continue its nonpassthroughstatus in CY 2012.Further, for CY 2012, the CPTEditorial Panel made effective CategoryIII CPT codes 0276T and 0277T onJanuary 1, 2012. Because Category IIICPT codes 0276T and 0277T describethe same procedures as HCPCS codeC9730 and C9731, we are deletingHCPCS codes C9730 and C9731 onDecember 31, 2011, and assigning bothCPT codes to the same status indicatorand APC assignment as its predecessorHCPCS code, as shown in Table 17.As stated previously, we did notreceive any other public comments onthe new Level II HCPCS codes that wereimplemented in July 2011, other thanHCPCS codes C9730, C9731, and Q2043,which are discussed in sectionsIII.D.8.b. and V.A.3., respectively, of thisfinal rule <strong>with</strong> comment period. We areadopting as final, <strong>with</strong>out modification,our proposal to assign the 17 Level IIHCPCS codes listed in Table 12 to theAPCs and status indicators as proposedfor CY 2012.Table 17 below includes a completelist of the Level II HCPCS codes thatwere made effective July 1, 2011, <strong>with</strong>their final status indicators, APCassignments, and payment rates for CY2012.BILLING CODE 4120–01–PVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00097 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74218 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00098 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.027

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74219jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–CIn the CY 2012 OPPS/ASC proposedrule (76 FR 42228), for CY 2012, weproposed to continue our establishedpolicy of recognizing Category I CPTvaccine codes for which FDA approvalis imminent and Category III CPT codesthat the AMA releases in January ofeach year for implementation in Julythrough the OPPS quarterly updateprocess. Under the OPPS, Category Ivaccine codes and Category III CPTcodes that are released on the AMA Website in January are made effective in Julyof the same year through the Julyquarterly update CR, consistent <strong>with</strong> theAMA’s implementation date for thecodes. Through the July 2011 OPPSquarterly update CR, we allowedseparate payment for 12 of the 14 newCategory III CPT codes effective July 1,2011. Specifically, as displayed in Table17 of the proposed rule, we allowseparate payment for the followingCategory III CPT codes:• CPT code 0263T (Intramuscularautologous bone marrow cell therapy,<strong>with</strong> preparation of harvested cells,multiple injections, one leg, includingultrasound guidance, if performed;complete procedure including unilateralor bilateral bone marrow harvest)• CPT code 0264T (Intramuscularautologous bone marrow cell therapy,<strong>with</strong> preparation of harvested cells,multiple injections, one leg, includingultrasound guidance, if performed;complete procedure excluding bonemarrow harvest)• CPT code 0265T (Intramuscularautologous bone marrow cell therapy,<strong>with</strong> preparation of harvested cells,multiple injections, one leg, includingultrasound guidance, if performed;unilateral or bilateral bone marrowharvest only for intramuscularautologous bone marrow cell therapy)• CPT code 0267T (Implantation orreplacement of carotid sinus baroreflexactivation device; lead only, unilateral(includes intra-operative interrogation,programming, and repositioning, whenperformed))• CPT code 0268T (Implantation orreplacement of carotid sinus baroreflexactivation device; pulse generator only(includes intra-operative interrogation,programming, and repositioning, whenperformed))• CPT code 0269T (Revision orremoval of carotid sinus baroreflexactivation device; total system (includesgenerator placement, unilateral orbilateral lead placement, intra-operativeinterrogation, programming, andrepositioning, when performed))• CPT code 0270T (Revision orremoval of carotid sinus baroreflexactivation device; lead only, unilateral(includes intra-operative interrogation,programming, and repositioning, whenperformed))• CPT code 0271T (Revision orremoval of carotid sinus baroreflexactivation device; pulse generator only(includes intra-operative interrogation,programming, and repositioning, whenperformed))VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00099 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2• CPT code 0272T (Interrogationdevice evaluation (in person), carotidsinus baroreflex activation system,including telemetric iterativecommunication <strong>with</strong> the implantabledevice to monitor device diagnosticsand programmed therapy values, <strong>with</strong>interpretation and report (eg, batterystatus, lead impedance, pulseamplitude, pulse width, therapyfrequency, pathway mode, burst mode,therapy start/stop times each day))• CPT code 0273T (Interrogationdevice evaluation (in person), carotidsinus baroreflex activation system,including telemetric iterativecommunication <strong>with</strong> the implantabledevice to monitor device diagnosticsand programmed therapy values, <strong>with</strong>interpretation and report (eg, batterystatus, lead impedance, pulseamplitude, pulse width, therapyfrequency, pathway mode, burst mode,therapy start/stop times each day); <strong>with</strong>programming)• CPT 0274T (Percutaneouslaminotomy/laminectomy (intralaminarapproach) for decompression of neuralelements, (<strong>with</strong> or <strong>with</strong>out ligamentousresection, discectomy, facetectomy and/or foraminotomy) any method underindirect image guidance (eg,fluoroscopic, CT), <strong>with</strong> or <strong>with</strong>out theuse of an endoscope, single or multiplelevels, unilateral or bilateral; cervical orthoracic)• CPT 0275T (Percutaneouslaminotomy/laminectomy (intralaminarapproach) for decompression of neuralER30NO11.028

74220 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationselements, (<strong>with</strong> or <strong>with</strong>out ligamentousresection, discectomy, facetectomy and/or foraminotomy) any method underindirect image guidance (eg,fluoroscopic, CT), <strong>with</strong> or <strong>with</strong>out theuse of an endoscope, single or multiplelevels, unilateral or bilateral; lumbar)(As published in the July 2011 OPPSquarterly update CR, CPT code 0275Treplaced Level II HCPCS code C9729effective July 1, 2011.)We note that Category III CPT codes0262T (Implantation of catheterdeliveredprosthetic pulmonary valve,endovascular approach) and 0266T(Implantation or replacement of carotidsinus baroreflex activation device; totalsystem (includes generator placement,unilateral or bilateral lead placement,intra-operative interrogation,programming, and repositioning, whenperformed)) were assigned to statusindicator ‘‘C’’ (Inpatient Procedures)under the hospital OPPS beginning July1, 2011. As we stated in the proposedrule (76 FR 42229), we believe theseprocedures should only be paid whenprovided in the inpatient settingbecause of the clinical circumstancesunder which these procedures areperformed. There are no new CategoryI Vaccine CPT codes for the July 2011update.Furthermore, for CY 2012, the CPTEditorial Panel made effective CategoryIII CPT code 0275T on July 1, 2011.Because Category III CPT code 0275Tdescribes the same procedure as HCPCScode C9729, we deleted HCPCS codeC9729 on June 30, 2011. Through theJuly 2011 OPPS quarterly update CR, wealso instructed hospitals to report theprocedure previously described byHCPCS code C9729 <strong>with</strong> Category IIICPT code 0275T effective July 1, 2011.Because Category III CPT code 0275Tdescribes the same proceduredesignated by HCPCS code C9729, weassigned Category III CPT code 0275T tothe same status indicator and APCassignment as its predecessor HCPCScode, as shown in Table 16 and Table18.We received a comment on the APCassignment and long descriptor forCategory III CPT code 0275T. Asummary of the comment and ourresponse can be found in sectionIII.D.6.a. (Percutaneous Laminotomy/Laminectomy) of this final rule <strong>with</strong>comment period. Table 18 lists theCategory III CPT codes that wereimplemented in July 2011, along <strong>with</strong>their final status indicators, final APCassignments where applicable, and finalpayment rates for CY 2012.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00100 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74221jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00101 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.029

74222 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00102 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.030

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74223jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–CIn the CY 2012 OPPS/ASC proposedrule (76 FR 42227 through 42229), wesolicited public comments on the CY2012 proposed status indicators and theproposed APC assignments andpayment rates, if applicable, for theLevel II HCPCS codes and the CategoryIII CPT codes that are newly recognizedin April or July 2011 through therespective OPPS quarterly update CRs.These codes were listed in Tables 15,16, and 17 of the proposed rule. Weproposed to finalize their statusindicators and their APC assignmentsand payment rates, if applicable, in thisCY 2012 OPPS/ASC final rule <strong>with</strong>comment period. Because the July 2011OPPS quarterly update CR was issuedclose to the publication of the proposedrule, the Level II HCPCS codes and theCategory III CPT codes implementedthrough the July 2011 OPPS quarterlyupdate CR could not be included inAddendum B to the proposed rule, butthese codes were listed in Tables 16 and17, respectively. We proposed toincorporate these codes into AddendumB to this CY 2012 OPPS/ASC final rule<strong>with</strong> comment period, which isconsistent <strong>with</strong> our annual OPPS updatepolicy. The Level II HCPCS codesimplemented or modified through theApril 2011 OPPS update CR anddisplayed in Table 15 were included inAddendum B to the proposed rule(which is available via the Internet onthe CMS Web site), where theirproposed CY 2012 payment rates werealso shown. We did not receive anyadditional comments on this process.The final status indicators, APCassignments, and payment rates, ifapplicable, for the Level II HCPCS codesand the Category III CPT codes that arenewly recognized in April or July 2011through the respective OPPS quarterlyupdate CRs are found in Addendum Bto this CY 2012 OPPS/ASC final rule<strong>with</strong> comment period (which isavailable via the Internet on the CMSWeb site).2. Process for New Level II HCPCSCodes and Category I and Category IIICPT Codes for Which We Are SolicitingPublic <strong>Comment</strong>s on This CY 2012OPPS/ASC <strong>Final</strong> <strong>Rule</strong> With <strong>Comment</strong><strong>Period</strong>As has been our practice in the past,we incorporate those new Category Iand III CPT codes and new Level IIHCPCS codes that are effective January1 in the final rule <strong>with</strong> comment periodupdating the OPPS for the followingcalendar year. These codes are releasedto the public via the CMS HCPCS (forLevel II HCPCS codes) and AMA Websites (for CPT codes), and also throughthe January OPPS quarterly update CRs.In the past, we also have released newLevel II HCPCS codes that are effectiveOctober 1 through the October OPPSquarterly update CRs and incorporatedthese new codes in the final rule <strong>with</strong>comment period updating the OPPS forthe following calendar year. All of thesecodes are flagged <strong>with</strong> commentVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00103 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2indicator ‘‘NI’’ in Addendum B to theOPPS/ASC final rule <strong>with</strong> commentperiod to indicate that we are assigningthem an interim payment status whichis subject to public comment.Specifically, the status indicator and theAPC assignment and payment rate, ifapplicable, for all such codes flagged<strong>with</strong> comment indicator ‘‘NI’’ are opento public comment in the final rule <strong>with</strong>comment period, and we respond tothese comments in the OPPS/ASC finalrule <strong>with</strong> comment period for the nextcalendar year’s OPPS/ASC update. Inthe CY 2012 OPPS/ASC proposed rule(76 FR 42230), we proposed to continuethis process for CY 2012. Specifically,for CY 2012, we proposed to include inAddendum B to this CY 2012 OPPS/ASC final rule <strong>with</strong> comment period(which is available via the Internet onthe CMS Web site) the new Category Iand III CPT codes effective January 1,2012 (including the Category III CPTcodes that were released by the AMA inJuly 2011) that would be incorporated inthe January 2012 OPPS quarterly updateCR and the new Level II HCPCS codes,effective October 1, 2011, or January 1,2012, that would be released by CMS inits October 2011 and January 2012 OPPSquarterly update CRs. As proposed, inthis final rule <strong>with</strong> comment period,these codes are flagged <strong>with</strong> commentindicator ‘‘NI’’ in Addendum B to thisCY 2012 OPPS/ASC final rule <strong>with</strong>comment period to indicate that wehave assigned them an interim OPPSpayment status for CY 2012. AsER30NO11.031

74224 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2proposed, in this final rule <strong>with</strong>comment period, their status indicatorsand their APC assignments and paymentrates, if applicable, are open to publiccomment and will be finalized in the CY2013 OPPS/ASC final rule <strong>with</strong>comment period. We note that the CPTcodes that were released by the AMA inJuly 2011 that were subject to commentin the CY 2012 OPPS/ASC proposedrule, and were listed in Table 17, willnot be assigned to comment indicator‘‘NI’’ in Addendum B becausecomments about these codes will beaddressed in this CY 2012 OPPS/ASCfinal rule <strong>with</strong> comment period.<strong>Comment</strong>: One commenterrecommended that, through a Webposting, CMS request public input onthe APC assignments of the Category ICPT vaccine codes, Category III CPTcodes, and Level II HCPCS codes thatare made effective on October 1 orJanuary 1 of subsequent years but aremade available to the public by thecompletion of each year’s OPPSproposed rule. The commenterindicated that some of these codes havealready been released to the public,either through the CMS or AMA CPTWeb site, by July 1 of any given year.This same commenter suggested that thelack of stakeholder input on the interimAPC assignments may negatively impactMedicare beneficiaries. In particular, thecommenter stated that interim paymentassignments have been influential indetermining whether hospitals provideservices to Medicare beneficiaries ornot, and further suggested that if thepayment for a procedure or service doesnot adequately reflect the true costs offurnishing the service, then hospitalsmay decide not to offer the service toMedicare beneficiaries.Response: The commenter is correctthat Category I Vaccine and Category IIICPT codes that are effective January 1 ofa subsequent year are released on theAMA CPT Web site on or about July 1.However, some Level II HCPCS codesare not released on the CMS Web siteuntil much later. For the Octoberupdate, the Level II HCPCS C-codes thatare effective October 1 are usuallyreleased and posted on the CMS Website in August or September, dependingon the number of OPPS new technologyservice and pass-through drug anddevice applications that are evaluated.Therefore, we do not have sufficienttime to evaluate the new codes,determine proposed APC assignments,post those proposed assignments to theCMS Web site, accept and considerpublic comments, and respond to publiccomments between the time that thenew codes become available and thetime that we must meet our systemsdeadlines for our claims processing andpayment files for the upcoming quarter.Given the challenges and timeconstraints in meeting the quarterly CPTand Level II HCPCS systems deadlines,we will continue to assign the newcodes that are effective October 1 andJanuary 1 of subsequent year to interimAPC assignments. If we were to wait forcomments on the interim APCassignments for the new codes beforemaking them effective on October 1 orJanuary 1, this may result in servicesand items not being paid for separatelyfor a whole year, which wouldultimately disadvantage both thehospital outpatient facilities andMedicare beneficiaries.The OPPS is a prospective paymentsystem that provides payment forgroups of services that share clinicaland resource use characteristics. Itshould be noted that, <strong>with</strong> all newcodes, our policy has been to assign theservice to an APC based on input froma variety of sources, including but notlimited to review of the clinicalsimilarity of the service to existingprocedures; input from CMS medicaladvisors; information from interestedspecialty societies; and review of allother information available to us,including information provided to us bythe public, whether through meetings<strong>with</strong> stakeholders or additionalinformation that is mailed or otherwisecommunicated to us.After consideration of the publiccomments we received, we arefinalizing our proposed policy, <strong>with</strong>outmodification, to assign the new CPT andLevel II HCPCS codes that are effectiveOctober 1 and January 1 of subsequentyears to interim APC assignments andrequest comments on the codes in theannual OPPS/ASC final rule <strong>with</strong>comment period, as described above.<strong>Comment</strong>: Some commentersrequested that CMS implement a 1 to 2year dampening period to minimizesignificant fluctuations in paymentsfrom year to year for newly bundled orpackaged procedure codes. Onecommenter specifically stated thatlimiting the payment reduction to 10percent would prevent hospitals fromexperiencing substantial paymentreductions and would allow hospitalsreasonable time to appropriately updatetheir chargemasters to reflect the newlypackaged codes.Response: We do not believe it isnecessary or appropriate to limitpayment reductions for any individualservice in order to prevent hospitalsfrom experiencing substantial paymentreductions as the commenter indicates.While payment rates for individualservices may decrease from year to year,VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00104 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2the total estimated payments made tohospitals remains the same because theOPPS is, by statute, a budget neutralpayment system. In order to accuratelyreport charges on their claims, hospitalsmust be cognizant of HCPCS codingchanges, specifically <strong>with</strong> respect toCategory I and III CPT codes and LevelII HCPCS codes that occur throughoutthe year, including the quarterlyupdates (April 1, July 1, and October 1)as well as the annual updates (January1). In recent years, the CMS and theAMA’s CPT Editorial Panel haveincreasingly created new codes that usea single HCPCS code to reportcombinations of services that werepreviously reported by multiple HCPCScodes or multiple units of a single HCPScode. For example, effective January 1,2010, CMS created HCPCS code G0424(Pulmonary rehabilitation, includingexercise (includes monitoring), perhour, per session) to represent acomprehensive program of pulmonarytherapy and the CPT Editorial Panelcreated CPT code 77338 (Multi-leafcollimator (MLC) device(s) for intensitymodulated radiation therapy (IMRT),design and construction per IMRT plan)to report all devices furnished under asingle IMRT treatment plan. As we havestated before, we expect hospitals tocarefully review each new HCPCS codewhen setting charges for theforthcoming year. However, inparticular, hospitals should beespecially careful to thoughtfullyestablish charges for new codes that usea single code to report multiple servicesthat were previously reported bymultiple codes. It is vital in these casesthat hospitals carefully establish chargesthat fully include all of the charges forall of the predecessor services that arereported by the new code. To fail tocarefully construct the charge for a newcode that reports a combination ofservices that were previously reportedseparately, particularly in the first yearof the new code, under-represents thecost of providing the service describingby the new code and can havesignificant adverse impact on futurepayments under the OPPS for theindividual service described by the newcode.B. OPPS Changes—Variations WithinAPCs1. BackgroundSection 1833(t)(2)(A) of the Actrequires the Secretary to develop aclassification system for coveredhospital outpatient department services.Section 1833(t)(2)(B) of the Act providesthat the Secretary may establish groupsof covered OPD services <strong>with</strong>in this

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74225jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2classification system, so that servicesclassified <strong>with</strong>in each group arecomparable clinically and <strong>with</strong> respectto the use of resources. In accordance<strong>with</strong> these provisions, we developed agrouping classification system, referredto as Ambulatory PaymentClassifications (APCs), as set forth in§ 419.31 of the regulations. We useLevel I and Level II HCPCS codes toidentify and group the services <strong>with</strong>ineach APC. The APCs are organized suchthat each group is homogeneous bothclinically and in terms of resource use.Using this classification system, wehave established distinct groups ofsimilar services. We also havedeveloped separate APC groups forcertain medical devices, drugs,biologicals, therapeuticradiopharmaceuticals, andbrachytherapy devices.We have packaged into payment foreach procedure or service <strong>with</strong>in anAPC group the costs associated <strong>with</strong>those items or services that are directlyrelated to, and supportive of, performingthe main independent procedures orfurnishing the services. Therefore, wedo not make separate payment for thesepackaged items or services. Forexample, packaged items and servicesinclude:(1) Use of an operating, treatment, orprocedure room;(2) Use of a recovery room;(3) Observation services;(4) Anesthesia;(5) Medical/surgical supplies;(6) Pharmaceuticals (other than thosefor which separate payment may beallowed under the provisions discussedin section V. of the proposed rule andthis final rule <strong>with</strong> comment period);(7) Incidental services such asvenipuncture;(8) Guidance services, imageprocessing services, intraoperativeservices, imaging, supervision andinterpretation services, diagnosticradiopharmaceuticals, and contrastmedia.Further discussion of packagedservices is included in section II.A.3. ofthis final rule <strong>with</strong> comment period.In CY 2008, we implementedcomposite APCs to provide a singlepayment for groups of services that aretypically performed together during asingle clinical encounter and that resultin the provision of a complete service(72 FR 66650 through 66652). Under CY2011 OPPS policy, we providecomposite APC payment for certainextended assessment and managementservices, low dose rate (LDR) prostatebrachytherapy, cardiacelectrophysiologic evaluation andablation, mental health services, andmultiple imaging services. Furtherdiscussion of composite APCs isincluded in section II.A.2.e. of this finalrule <strong>with</strong> comment period.Under the OPPS, we generally pay forhospital outpatient services on a rateper-servicebasis, where the service maybe reported <strong>with</strong> one or more HCPCScodes. Payment varies according to theAPC group to which the independentservice or combination of services isassigned. Each APC weight representsthe hospital median cost of the servicesincluded in that APC, relative to thehospital median cost of the servicesincluded in APC 0606 (Level 3 HospitalClinic Visits). The APC weights arescaled to APC 0606 because it is themiddle level hospital clinic visit APC(the Level 3 hospital clinic visit CPTcode out of five levels), and becausemiddle level hospital clinic visits areamong the most frequently furnishedservices in the hospital outpatientsetting.Section 1833(t)(9)(A) of the Actrequires the Secretary to review, on arecurring basis occurring no less thanannually, and revise the groups, therelative payment weights, and the wageand other adjustments to take intoaccount changes in medical practice,changes in technology, the addition ofnew services, new cost data, and otherrelevant information and factors.Section 1833(t)(9)(A) of the Act alsorequires the Secretary to consult <strong>with</strong> anexpert outside advisory panel composedof an appropriate selection ofrepresentatives of providers to review(and advise the Secretary concerning)the clinical integrity of the APC groupsand the relative payment weights (theAPC Panel recommendations forspecific services for the CY 2012 OPPSand our responses to them are discussedin the relevant specific sectionsthroughout this final rule <strong>with</strong> commentperiod).<strong>Final</strong>ly, section 1833(t)(2) of the Actprovides that, subject to certainexceptions, the items and services<strong>with</strong>in an APC group cannot beconsidered comparable <strong>with</strong> respect tothe use of resources if the highestmedian cost (or mean cost as elected bythe Secretary) for an item or service inthe group is more than 2 times greaterthan the lowest median cost (or meancost, if so elected) for an item or service<strong>with</strong>in the same group (referred to as the‘‘2 times rule’’). We use the median costof the item or service in implementingthis provision. The statute authorizesthe Secretary to make exceptions to the2 times rule in unusual cases, such aslow-volume items and services (but theSecretary may not make such anexception in the case of a drug orVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00105 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2biological that has been designated as anorphan drug under section 526 of theFederal Food, Drug, and Cosmetic Act).2. Application of the 2 Times <strong>Rule</strong>In accordance <strong>with</strong> section 1833(t)(2)of the Act and § 419.31 of theregulations, we annually review theitems and services <strong>with</strong>in an APC groupto determine, <strong>with</strong> respect tocomparability of the use of resources, ifthe median cost of the highest cost itemor service <strong>with</strong>in an APC group is morethan 2 times greater than the median ofthe lowest cost item or service <strong>with</strong>inthat same group. In making thisdetermination, we consider only thoseHCPCS codes that are significant basedon the number of claims. We note that,for purposes of identifying significantHCPCS codes for examination in the 2times rule, we consider codes that havemore than 1,000 single major claims orcodes that have both greater than 99single major claims and contribute atleast 2 percent of the single majorclaims used to establish the APCmedian cost to be significant (75 FR71832). This longstanding definition ofwhen a HCPCS code is significant forpurposes of the 2 times rule wasselected because we believe that asubset of 1,000 claims is negligible<strong>with</strong>in the set of approximately 100million single procedure or singlesession claims we use for establishingmedian costs. Similarly, a HCPCS codefor which there are fewer than 99 singlebills and which comprises less than 2percent of the single major claims<strong>with</strong>in an APC will have a negligibleimpact on the APC median. In the CY2012 OPPS/ASC proposed rule (76 FR42231), we proposed to make exceptionsto this limit on the variation of costs<strong>with</strong>in each APC group in unusualcases, such as low-volume items andservices for CY 2012.During the APC Panel’s February 2011meeting, we presented median cost andutilization data for services furnishedduring the period of January 1, 2010,through September 30, 2010, aboutwhich we had concerns or about whichthe public had raised concernsregarding their APC assignments, statusindicator assignments, or payment rates.The discussions of most service-specificissues, the APC Panelrecommendations, if any, and ourproposals and final policies for CY 2012are contained mainly in sections III.C.and III.D. of this final rule <strong>with</strong>comment period.In addition to the assignment ofspecific services to APCs that wediscussed <strong>with</strong> the APC Panel, we alsoidentified APCs <strong>with</strong> 2 times violationsthat were not specifically discussed

74226 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2<strong>with</strong> the APC Panel but for which weproposed changes to their HCPCS codes’APC assignments in Addendum B to theproposed rule. We note that AddendumB did not appear in the printed versionof the Federal Register as part of the CY2012 OPPS/ASC proposed rule. Rather,it was published and made availableonly via the Internet on the CMS Website at: http://www.cms.gov/. In thesecases, to eliminate a 2 times violation orto improve clinical and resourcehomogeneity, we proposed to reassignthe codes to APCs that contain servicesthat are similar <strong>with</strong> regard to both theirclinical and resource characteristics. Wealso proposed to rename existing APCsor create new clinical APCs tocomplement proposed HCPCS codereassignments. In many cases, theproposed HCPCS code reassignmentsand associated APC reconfigurations forCY 2012 included in the proposed rulewere related to changes in median costsof services that were observed in the CY2010 claims data newly available for CY2012 ratesetting. We also proposedchanges to the status indicators for somecodes that were not specifically andseparately discussed in the proposedrule. In these cases, we proposed tochange the status indicators for somecodes because we believe that anotherstatus indicator would more accuratelydescribe their payment status from anOPPS perspective based on the policiesthat we proposed for CY 2012.Addendum B of the CY 2012 OPPS/ASCproposed rule identified <strong>with</strong> acomment indicator ‘‘CH’’ those HCPCScodes for which we proposed a changeto the APC assignment or statusindicator as assigned in the April 2011Addendum B Update (available via theInternet on the CMS Web site at:http://www.cms.gov/). In contrast,Addendum B of this final rule <strong>with</strong>comment period identifies <strong>with</strong> the‘‘CH’’ comment indicator the final CY2012 changes compared to the codes’status as reflected in the October 2011Addendum B update.3. Exceptions to the 2 Times <strong>Rule</strong>As discussed earlier, we may makeexceptions to the 2 times limit on thevariation of costs <strong>with</strong>in each APCgroup in unusual cases such as lowvolume items and services. Taking intoaccount the APC changes that weproposed for CY 2012 based on the APCPanel recommendations that werediscussed mainly in sections III.C. andIII.D. of the proposed rule, the otherproposed changes to status indicatorsand APC assignments as identified inAddendum B to the proposed rule(which was available via the Internet onthe CMS Web site), and the use of CY2010 claims data to calculate themedian costs of procedures classified inthe APCs, we reviewed all the APCs todetermine which APCs would notsatisfy the 2 times rule. We used thefollowing criteria to decide whether topropose exceptions to the 2 times rulefor affected APCs:• Resource homogeneity;• Clinical homogeneity;• Hospital outpatient setting;• Frequency of service (volume); and• Opportunity for upcoding and codefragments.For a detailed discussion of thesecriteria, we refer readers to the April 7,2000 OPPS final rule <strong>with</strong> commentperiod (65 FR 18457 and 18458).Table 18 of the CY 2012 OPPS/ASCproposed rule (76 FR 42232) listed 17APCs that we proposed to exempt fromthe 2 times rule for CY 2012 based onthe criteria cited above.For cases in which a recommendationby the APC Panel appeared to result inor allow a violation of the 2 times rule,we generally accepted the APC Panel’srecommendation because thoserecommendations were based onexplicit consideration of resource use,clinical homogeneity, site of service,and the quality of the CY 2010 claimsdata used to determine the APCpayment rates that we proposed for CY2012. The median costs for hospitaloutpatient services for these and allother APCs that were used in thedevelopment of the CY 2012 OPPS/ASCproposed rule and this final rule <strong>with</strong>comment period can be found on theCMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/01_overview.asp.For the CY 2012 OPPS/ASC proposedrule, we based the listed exceptions tothe 2 times rule on claims data for datesof service between January 1, 2010, andDecember 31, 2010, that were processedbefore January 1, 2011. For this finalrule <strong>with</strong> comment period, we usedclaims data for dates of service betweenJanuary 1, 2010, and December 31, 2010,that were processed on or before June30, 2011 and updated CCRs, if available.Although we stated in the CY 2012OPPS/ASC proposed rule (76 FR 42232)that the list of APC exemptions thatappeared in Table 18 were based onclaims data processed from January 1,2010, through September 30, 2010, weare clarifying that the listed exceptionswere based on claims data processedbetween January 1, 2010, and December31, 2010, consistent <strong>with</strong> past practiceof using claims data processed betweenJanuary 1 and December 31 of anapplicable year to determine APCs thatare exempted from the 2 times rule.Thus, after considering the publicVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00106 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2comments we received on the CY 2012OPPS/ASC proposed rule and makingchanges to APC assignments based onthose comments, we analyzed the CY2010 claims data used for this final rule<strong>with</strong> comment period to identify theAPCs <strong>with</strong> 2 times violations. Based onthe final CY 2010 claims data, we foundthat there are 23 APCs <strong>with</strong> 2 times ruleviolations, a cumulative increase of 6APCs from the proposed rule. Weapplied the criteria as described earlierto identify the APCs that are exceptionsto the 2 times rule for CY 2012, andidentified additional APCs that meet thecriteria for exception to the 2 times rulefor this final rule <strong>with</strong> comment period:• APC 0076 (Level I EndoscopyLower Airway)• APC 0135 (Level III Skin Repair)• APC 0148 (Level I Anal/RectalProcedures)• APC 0262 (Plain Film of Teeth)• APC 0317 (Level II MiscellaneousRadiology Procedures)• 0330 (Dental Procedures)• APC 0341 (Skin Tests)• APC 0403 (Level I Nervous SystemImaging)• APC 0409 (Red Blood Cell Tests)• APC 0607 (Level 4 Hospital ClinicVisits)In addition, we also determined thatthere are five APCs that no longerviolate the 2 times rule:• APC 0016 (Level IV Debridement &Destruction)• APC 0105 (Repair/Revision/Removal of Pacemakers, AICDs, orVascular Devices)• APC 0245 (Level I CataractProcedures <strong>with</strong>out IOL)• APC 0263 (Level I MiscellaneousRadiology)• APC 0432 (Health and BehaviorServices)We have not included in this countthose APCs where a 2 times violation isnot a relevant concept, such as APC0375 (Ancillary Outpatient Serviceswhen Patient Expires), <strong>with</strong> an APCmedian cost set based on multipleprocedure claims; therefore, we haveidentified only final APCs, includingthose <strong>with</strong> criteria-based median costs,such as device-dependent APCs, <strong>with</strong> 2times rule violations.<strong>Comment</strong>: One commenter supportedCMS’ proposal to exempt APCs 0016and 0058 from the 2 times rule.According to the commenter, becausethe procedures included in both APCsare similar based on clinicalhomogeneity and resource costs, there islittle opportunity to upcode, andtherefore, it is appropriate to exemptAPCs 0016 and 0058 from the 2 timesrule.Response: We appreciate thecommenter’s support. Based on our

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74227analysis of the CY 2010 claims used forthe final rule <strong>with</strong> comment period, wefound that APC 0016 no longer violatedthe 2 times rule. However, APC 0058continued to violate the 2 times rule.The range in median costs for theprocedures <strong>with</strong> significant claims datain APC 0058 is between $49 and $116.Currently, there are only two levels ofAPCs for services that describestrapping and cast application, whichinclude APC 0058 and APC 0426 (LevelII Strapping and Cast Application). Incontrast to APC 0058, our claims datashow that the range in median costs forthe procedures <strong>with</strong> significant claimsdata in APC 0426 is between $150 and$197. Because of the range in mediancosts in APC 0426, we believe that theprocedures in APC 0058 shouldcontinue to be placed in APC 0058.Therefore, we are finalizing ourproposal to continue to exempt APC0058 from the 2 times rule.After consideration of the publiccomment that we received and ourreview of the CY 2010 costs from claimsavailable for this final rule <strong>with</strong>comment period, we are finalizing ourproposal to exempt 12 original APCs(that appeared in Table 18 of the CY2012 OPPS/ASC proposed rule <strong>with</strong>comment period and also appears inTable 19 below) from the 2 times rulefor CY 2012, <strong>with</strong> modification.Specifically, we removed five APCs thatno longer violated the 2 times rule andincreased the number of APC exceptionsfrom 17 to 23 APCs, as describedpreviously in this section. Our final listof 23 APCs exempted from the 2 timesrule is displayed in Table 19 below.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00107 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.032

74228 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2C. New Technology APCs1. BackgroundIn the November 30, 2001 final rule(66 FR 59903), we finalized changes tothe time period a service was eligible forpayment under a New Technology APC.Beginning in CY 2002, we retainservices <strong>with</strong>in New Technology APCgroups until we gather sufficient claimsdata to enable us to assign the serviceto an appropriate clinical APC. Thispolicy allows us to move a service froma New Technology APC in less than 2years if sufficient data are available. Italso allows us to retain a service in aNew Technology APC for more than 2years if sufficient data upon which tobase a decision for reassignment havenot been collected.We note that the cost bands for NewTechnology APCs range from $0 to $50in increments of $10, from $50 to $100in increments of $50, from $100 to$2,000 in increments of $100, and from$2,000 to $10,000 in increments of $500.These cost bands identify the APCs towhich new technology procedures andservices <strong>with</strong> estimated service coststhat fall <strong>with</strong>in those cost bands areassigned under the OPPS. Payment foreach APC is made at the mid-point ofthe APC’s assigned cost band. Forexample, payment for New TechnologyAPC 1507 (New Technology—Level VII($500–$600)) is made at $550. Currently,there are 82 New Technology APCs,ranging from the lowest cost bandassigned to APC 1491 (NewTechnology—Level IA ($0–$10))through the highest cost band assignedto APC 1574 (New Technology—LevelXXXVII ($9,500–$10,000). In CY 2004(68 FR 63416), we last restructured theNew Technology APCs to make the costintervals more consistent acrosspayment levels and refined the costbands for these APCs to retain twoparallel sets of New Technology APCs,one set <strong>with</strong> a status indicator of ‘‘S’’’(Significant Procedures, Not Discountedwhen Multiple; Paid under OPPS;separate APC payment) and the other set<strong>with</strong> a status indicator of ‘‘T’’(Significant Procedure, MultipleReduction Applies; Paid under OPPS;separate APC payment). These currentNew Technology APC configurationsallow us to price new technologyservices more appropriately andconsistently.Every year we receive many requestsfor higher payment amounts under ourNew Technology APCs for specificprocedures under the OPPS becausethey require the use of expensiveequipment. We are taking thisopportunity to reiterate our response ingeneral to the issue of hospitals’ capitalexpenditures as they relate to the OPPSand Medicare.Under the OPPS, one of our goals isto make payments that are appropriatefor the services that are necessary for thetreatment of Medicare beneficiaries. TheOPPS, like other Medicare paymentsystems, is budget neutral and increasesare limited to the annual hospitalinpatient market basket increase. Webelieve that our payment rates generallyreflect the costs that are associated <strong>with</strong>providing care to Medicare beneficiariesin cost-efficient settings, and we believethat our rates are adequate to ensureaccess to services.For many emerging technologies,there is a transitional period duringwhich utilization may be low, oftenbecause providers are first learningabout the techniques and their clinicalutility. Quite often, parties request thatMedicare make higher paymentamounts under our New TechnologyAPCs for new procedures in thattransitional phase. These requests, andtheir accompanying estimates forexpected total patient utilization, oftenreflect very low rates of patient use ofexpensive equipment, resulting in highper use costs for which requestersbelieve Medicare should make fullpayment. Medicare does not, and webelieve should not, assumeresponsibility for more than its share ofthe costs of procedures based onMedicare beneficiary projectedutilization and does not set its paymentrates based on initial projections of lowutilization for services that requireexpensive capital equipment. For theOPPS, we rely on hospitals to makeinformed business decisions regardingthe acquisition of high cost capitalequipment, taking into considerationtheir knowledge about their entirepatient base (Medicare beneficiariesincluded) and an understanding ofMedicare’s and other payers’ paymentpolicies.We note that, in a budget neutralenvironment, payments may not fullycover hospitals’ costs in a particularcircumstance, including those for thepurchase and maintenance of capitalequipment. We rely on hospitals tomake their decisions regarding theacquisition of high cost equipment <strong>with</strong>the understanding that the Medicareprogram must be careful to establish itsinitial payment rates, including thosemade through New Technology APCs,for new services that lack hospitalclaims data based on realistic utilizationprojections for all such servicesdelivered in cost-efficient hospitaloutpatient settings. As the OPPSacquires claims data regarding hospitalcosts associated <strong>with</strong> new procedures,VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00108 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2we regularly examine the claims dataand any available new informationregarding the clinical aspects of newprocedures to confirm that our OPPSpayments remain appropriate forprocedures as they transition intomainstream medical practice.2. Movement of Procedures From NewTechnology APCs to Clinical APCsAs we explained in the November 30,2001 final rule (66 FR 59902), wegenerally keep a procedure in the NewTechnology APC to which it is initiallyassigned until we have collectedsufficient data to enable us to move theprocedure to a clinically appropriateAPC. However, in cases where we findthat our original New Technology APCassignment was based on inaccurate orinadequate information (although it wasthe best information available at thetime), or where the New TechnologyAPCs are restructured, we may, basedon more recent resource utilizationinformation (including claims data) orthe availability of refined NewTechnology APC cost bands, reassignthe procedure or service to a differentNew Technology APC that mostappropriately reflects its cost.Consistent <strong>with</strong> our current policy, inthe CY 2012 OPPS/ASC proposed rule(76 FR 42233), we proposed for CY 2012to retain services <strong>with</strong>in NewTechnology APC groups until we gathersufficient claims data to enable us toassign the service to a clinicallyappropriate APC. The flexibilityassociated <strong>with</strong> this policy allows us tomove a service from a New TechnologyAPC in less than 2 years if sufficientclaims data are available. It also allowsus to retain a service in a NewTechnology APC for more than 2 yearsif sufficient claims data upon which tobase a decision for reassignment havenot been collected. Table 19 of theproposed rule listed the HCPCS codesand associated status indicators that weproposed to reassign from a NewTechnology APC to a clinicallyappropriate APC or to a different NewTechnology APC for CY 2012.Currently, in CY 2011, there are threeprocedures described by a HCPCS G-code receiving payment through a NewTechnology APC. Specifically, HCPCScode G0417 (Surgical pathology, grossand microscopic examination forprostate needle saturation biopsysampling, 21–40 specimens) is assignedto New Technology APC 1506 (NewTechnology—Level VI ($400—$500));HCPCS code G0418 (Surgical pathology,gross and microscopic examination forprostate needle saturation biopsysampling, 41–60 specimens) is assignedto New Technology APC 1511 (New

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74229Technology—Level XI ($900–$1,000));and HCPCS code G0419 (Surgicalpathology, gross and microscopicexamination for prostate needlesaturation biopsy sampling, greater than60 specimens) is assigned to NewTechnology APC 1513 (NewTechnology—Level XIII ($1,100–$1,200)).Analysis of our hospital outpatientdata for claims submitted for CY 2010indicates that prostate saturation biopsyprocedures are rarely performed onMedicare patients. For OPPS claimssubmitted from CY 2009 through CY2010, our claims data show that therewere only five claims submitted forHCPCS code G0417 in CY 2009 andonly one in CY 2010 <strong>with</strong> a proposedmedian cost of approximately $532. Ourclaims data did not show any hospitaloutpatient claims for HCPCS codesG0418 and G0419 from either CY 2009or CY 2010.While we believe that theseprocedures will always be low volume,given the number of specimens beingcollected, we believe that we shouldcontinue their New Technologypayments for another year for HCPCScodes G0417, G0418, and G0419 to seeif more claims data become available.For CY 2012, we proposed to revise theAPC assignments for these proceduresand continue the New Technology APCpayments for HCPCS G-codes G0417,G0418, and G0419. Specifically, weproposed to reassign HCPCS codeG0417 from APC 1506 to APC 1505(New Technology–Level V ($300–$400)), HCPCS code G0418 from APC1511 to APC 1506 (New Technology–Level VI ($400–$500)), and HCPCSG0419 code from APC 1513 to APC 1508(New Technology–Level VIII ($600–$700)). We stated in the proposed rulethat we believe that the proposedrevised APC assignments would moreappropriately reflect the proceduresdescribed by these three HCPCS G-codes, based on clinical and resourceconsiderations. These procedures andtheir proposed APC assignments aredisplayed in Table 19 of the proposedrule.We did not receive any publiccomments on the APC reassignments forHCPCS codes G0417, G0418, andG0419. Therefore, for the reasons setforth above, we are finalizing ourproposal, <strong>with</strong>out modification, toassign HCPCS code G0417 to APC 1505,HCPCS code G0418 to APC 1506, and toassign HCPCS code G0419 to APC 1508.The final CY 2012 payment rates forHCPCS codes G0417, G0418, and G0419can be found in Addendum B of thisfinal rule <strong>with</strong> comment period (whichis available via the Internet on the CMSWeb site). Table 20 below lists theHCPCS codes and associated statusindicators that we are reassigning froma New Technology APC to a differentNew Technology APC for CY 2012.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2D. OPPS APC–Specific Policies1. Cardiovascular Servicesa. Cardiovascular ComputedTomography (CCT) (APC 0340 and0383)The CPT Editorial Panel created thefollowing new codes for cardiovascularcomputed tomography (CCT) serviceseffective January 1, 2010: CPT codes75571 (Computed tomography, heart,<strong>with</strong>out contrast material, <strong>with</strong>quantitative evaluation of coronarycalcium), 75572 (Computedtomography, heart, <strong>with</strong> contrastmaterial, for evaluation of cardiacstructure and morphology (including 3Dimage postprocessing, assessment ofcardiac function, and evaluation ofvenous structures, if performed)), 75573(Computed tomography, heart, <strong>with</strong>contrast material, for evaluation ofcardiac structure and morphology in thesetting of congenital heart disease(including 3D image postprocessing,assessment of LV cardiac function, RVstructure and function and evaluation ofvenous structures, if performed)), and75574 (Computed tomographicangiography, heart, coronary arteriesand bypass grafts (when present), <strong>with</strong>contrast material, including 3D imagepostprocessing (including evaluation ofcardiac structure and morphology,assessment of cardiac function, andevaluation of venous structures, ifperformed)). These Category I CPTcodes replaced eight Category III CPTcodes that had been in effect throughDecember 31, 2009. For CY 2010, weassigned CPT code 75571 to APC 0340(Minor Ancillary Procedures), and weassigned CPT codes 75572, 75573, and75574 to APC 0383 (Cardiac ComputedTomographic Imaging). For CY 2011, wemaintained these APC assignments,VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00109 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2<strong>with</strong> final payment rates for APC 0340and 0383 of $46.23 and $256.86,respectively. For CY 2012, we proposedto maintain the assignments of CPTcode 75571 to APC 0340 and CPT codes75572, 75573, and 75574 to APC 0383.APCs 0340 and 0383 have final CY 2012median costs of approximately $46 and$262, respectively.<strong>Comment</strong>: One commenter wasconcerned that hospitals may be failingto report the services in APC 0383 <strong>with</strong>CPT codes 75572, 75573, and 75574,which were effective January 1, 2010,and are continuing to report the relatedservices using the expired Category IIICPT codes previously used throughDecember 31, 2009. The commenterrequested that CMS analyze the CY 2010claims data to determine whether theexpired CCT codes are being used toreport CCT services and, if so, to usethose claims in calculating the APC0383 final median cost. The commenterER30NO11.033

74230 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2also urged CMS to reassign CPT code75571 from APC 0340 to APC 0282(Miscellaneous Computed AxialTomography) for reasons of clinicalcoherence and resource use similarity toprocedures in APC 0282. Thecommenter contended that APC 0340contains several procedures that do notrequire the same equipment or clinicalstaff as CPT code 75571, while APC0282 contains services that do havesimilar clinical and resourcecharacteristics to CPT code 75571.In addition, the commenter expressedconcerns that hospitals do not reporttheir costs in a consistent and accurateway and do not update theirchargemasters regularly <strong>with</strong> chargesthat reflect appropriate relativity, andoffered to work <strong>with</strong> CMS to develop astandard methodology to address theseissues. The commenter alsorecommended that CMS promote theneed to accurately and completelyreport all services provided.Response: We believe that the CY2012 median costs we have calculatedfor CPT codes 75572, 75573, and 75574and APC 0383 appropriately reflectvalid estimates of the cost of theseservices. We compared the median costsand single procedure claims based onCY 2009 claims (used for final CY 2011payment rates) <strong>with</strong> median costs andsingle procedure claims based on CY2010 claims (which we are using for thefinal CY 2012 payment rates). The finalCY 2011 APC 0383 median cost ofapproximately $254 used 11,323 singlebills based on 6 of the category III CPTcodes used prior to CPT codes 75572,75573, and 75574. The final CY 2012APC 0383 median cost of approximately$262 used 15,253 single bills based onCPT codes 75572, 75573, and 75574.This shows consistency across years inmedian costs and an increase in thenumber of single bills used. Therefore,we have no reason to believe that themedian costs we have calculated do notreflect valid estimates of the costs ofCPT codes 75572, 75573, and 75574,which went into effect on January 1,2010.We believe that CPT code 75571 is aminor ancillary procedure and isappropriately assigned to APC 0340, interms of resources and clinicalsimilarity. CPT code 75571 has a finalmedian cost of approximately $31, andAPC 0340 has a final median cost ofapproximately $46. In contrast, APC0282 has a final median cost ofapproximately $107, driven largely by asingle major procedure CPT code, thatis, CPT code 76380 (Computedtomography, limited or localized followupstudy), <strong>with</strong> a final median cost ofapproximately $107. Therefore, CPTcode 75571, <strong>with</strong> a final median cost ofapproximately $31, would not be anappropriate resource similarity for APC0282, while CPT code 75571 is similarto other codes in APC 0340 <strong>with</strong> respectto resource use. Therefore, we believe itis appropriately assigned to APC 0340.We agree <strong>with</strong> the commenter thataccurate reporting of charges for allservices will help to ensure that theseitems are appropriately accounted for infuture years’ OPPS payment rates. Aswe often state (73 FR 68535 through68536; 74 FR 60367; and 75 FR 71835),we encourage stakeholders to carefullyreview HCPCS code descriptors, as wellas any guidance CMS may haveprovided for specific HCPCS codes. Wenote that the definition of charges in theregulations at 42 CFR 413.53(b) statesthat implicit in the use of charges as thebasis of apportionment is the objectivethat charges for services be related to thecost of the services. As new HCPCScodes are developed or existing HCPCScode descriptors are revised from year toyear (for example, by redefining units ofservice), we expect that hospitals’submitted Medicare charges relateappropriately to the costs of thoseservices. Therefore, we do not share thecommenter’s belief that we shouldmodify our standard ratesettingmethodology (for example, by usingclaims data for deleted codes) in orderto calculate the median costs for theservices described by CPT codes 75572,75573, and 75574. We refer readers tothe Provider Reimbursement Manual(Pub. 15–2, Part 2, Chapter 40 Hospitaland Hospital Health Care, Form CMS2552–10) for CMS’ instructions forreporting costs.After considering the publiccomments we received and reviewingour claims data, we are maintaining theassignment of CPT code 75571 to APC0340, for which we have calculated afinal rule median cost of approximately$46 for CY 2012, and we aremaintaining the assignment of CPTcodes 75572, 75573, and 75574 to APC0383, for which we have calculated afinal rule median cost of approximately$262 for CY 2012.b. Cardiac Imaging (APC 0377)For CY 2012, we proposed to assignthe following CPT codes to APC 0377(Level II Cardiac Imaging):78451(Myocardial perfusion imaging,tomographic (SPECT) (includingattenuation correction, qualitative orquantitative wall motion, ejectionfraction by first pass or gated technique,additional quantification, whenperformed); single study, at rest or stress(exercise or pharmacologic)); 78452(Myocardial perfusion imaging,VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00110 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2tomographic (SPECT) (includingattenuation correction, qualitative orquantitative wall motion, ejectionfraction by first pass or gated technique,additional quantification, whenperformed); multiple studies, at restand/or stress (exercise orpharmacologic) and/or redistributionand/or rest reinjection); 78453(Myocardial perfusion imaging, planar(including qualitative or quantitativewall motion, ejection fraction by firstpass or gated technique, additionalquantification, when performed); singlestudy, at rest or stress (exercise orpharmacologic)); and 78454 (Myocardialperfusion imaging, planar (includingqualitative or quantitative wall motion,ejection fraction by first pass or gatedtechnique, additional quantification,when performed); multiple studies, atrest and/or stress (exercise orpharmacologic) and/or redistributionand/or rest reinjection). APC 0377 hada proposed national unadjustedpayment rate of approximately $677.The national unadjusted payment forAPC 0377 for CY 2011 is approximately$760. However, it is important to notethat the national unadjusted paymentrate for APC 0377 for CY 2011 wasbased on CY 2009 claims data and CPTcodes 78451, 78452, 78453 and 78454had not been created in CY 2009. In CY2009, APC 0377 was populated <strong>with</strong>CPT codes 78460 (Myocardial perfusionimaging (planar) single study, at rest ofstress (exercise and/or pharmacologic),<strong>with</strong> or <strong>with</strong>out quantification); 78461(Myocardial perfusion imaging (planar)single study, at rest or stress (exerciseand/or pharmacologic), <strong>with</strong> or <strong>with</strong>outquantification; multiple studies (planar),at rest and/or stress (exercise and/orpharmacologic), and redistribution and/or rest injection, <strong>with</strong> or <strong>with</strong>outquantification); 78464 (Myocardialperfusion imaging (planar) single study,at rest or stress (exercise and/orpharmacologic), <strong>with</strong> or <strong>with</strong>outquantification; tomographic (SPECT)single study (including attenuationcorrection when performed), at rest orstress (exercise and/or pharmacologic),<strong>with</strong> or <strong>with</strong>out quantification); and78465 (Myocardial perfusion imaging(planar) single study, at rest or stress(exercise and/or pharmacologic), <strong>with</strong> or<strong>with</strong>out quantification; tomographic(SPECT) multiple studies (includingattenuation correction when performed),at rest or stress (exercise and/orpharmacologic), <strong>with</strong> or <strong>with</strong>outquantification), which were also cardiacimaging services. Therefore, CY 2009 isthe first year in which hospitalsestablished charges for the new CPTcodes for CY 2010 on which the CY

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations742312012 proposed rule and final rulemedians are based.<strong>Comment</strong>: Several commentersexpressed concern over the proposed 11percent payment reduction to APC0377. <strong>Comment</strong>ers believed that therewere irregularities in the hospital costdata that suggest inaccurate reporting ofcosts associated <strong>with</strong> procedures in APC0377, rather than an actual decline inresource use. <strong>Comment</strong>ers particularlypointed out that CPT code 78453(Myocardial perfusion imaging, planar,single study) has a higher mean andmedian cost than CPT code 78454(Myocardial perfusion imaging, planar,multiple studies), according to CMSdata. The commenters stated that it isillogical to expect hospitals to use fewerresources for furnishing multiplestudies than for furnishing a singlestudy. In light of these irregularities,and the continued decline in theproposed payment, the commentersrecommended that CMS reevaluate thedata used to set the payment rate forAPC 0337, to ensure that the dataindeed capture the entire universe ofclaims for these APCs and reflect allprocedure and radiopharmaceuticalcosts. The commenters furtherrecommended that CMS recalculatemedian costs for these procedures afteradditional refinement of the data,including eliminating hospital claims<strong>with</strong> CCRs of 0.2 or less and, ifsubsequent review still warrants apayment reduction for either APC, sucha reduction should be phased in overseveral years. <strong>Comment</strong>ers suggested a1- to 2-year ‘‘dampening period’’beginning <strong>with</strong> the first year that CMScould utilize claims for ratesetting,given that APC 0377 contains four CPTcodes that were new for CY 2010 andreplaced previously existing servicesthat were assigned to APC 0377.<strong>Comment</strong>ers stated that hospitals areoften slow to update their chargemasters following coding changes.Additionally, the commentersrecommended that CMS establish athreshold change of 10 percent thattriggers an enhanced CMS validationprocess for all APCs, includingaccounting for all packaged costs andreview of excluded/included claims.The commenters also recommended thatCMS limit year-to-year changes inpayment rates to a maximum of 5 to 10percent for a single year, unless CMS orpublic commenters identify factorsresponsible for significant fluctuationsin cost data, such as the introduction ofnew technologies or changes in thecomposition of an APC.Response: In accordance <strong>with</strong> sections1833(t)(2)(B) and 1833(t)(9)(A) of theAct and §§ 419.31 and 419.50 of theregulations, we annually review theitems and services <strong>with</strong>in an APC group<strong>with</strong> respect to comparability of the useof resources and clinical homogeneity.The payment rates, including therelative weights, set annually for theseservices are based on the claims andcost report data used for ratesetting. Forthe CY 2012 update, the payment ratesfor APCs 0337 are based on data fromclaims submitted during CY 2010according to the standard OPPSratesetting methodology. Specifically,we used 502,757 single claims (out of584,855 total claims) from CY 2012proposed rule claims data to calculatethe proposed rule median cost ofapproximately $701, and we used539,100 single claims (out of 640,458total claims) from CY 2012 final ruleclaims data to calculate the median costfor APC 0337 of approximately $672, onwhich we based the CY 2012 nationalunadjusted payment rate.We note that the final CY 2012median cost represents a slight declinefrom the median cost of approximately$701, upon which the CY 2012proposed payment rate for this APC wasbased and the median cost ofapproximately $752, upon which thefinal CY 2011 payment rate was based.As we have in the past (75 FR 71916),we note that our cost-findingmethodology is based on reducing eachhospital’s charge for its services to anestimated cost by applying the mostdiscrete hospital-specific CCR availablefor the hospital that submitted theclaim. Therefore, it is the hospital’sclaims and cost reports that determinethe estimated costs that are used tocalculate the median cost for eachservice and, when aggregated into APCgroups, the hospital data are used tocalculate the median cost for the APCon which the APC payment rate isbased. As we have previously, we notethat, as part of our standard ratesettingprocess, we already engage in a standardreview process for all APCs thatexperience significant changes inmedian costs (74 FR 60365).We examined our claims data for APC0377 for the CY 2011 OPPS final rule<strong>with</strong> comment period, the CY 2012proposed rule, and this CY 2012 finalrule <strong>with</strong> comment period. Specificallywe looked at the following dataelements for all single and pseudosingle procedure bills for the four CPTcodes that are assigned to APC 0377 andthat, therefore, are the data points onwhich the median cost for the APC isbased: median CCR; median charge;median line item cost (that is, <strong>with</strong>outpackaging); and median amount ofpackaging (shown in Table 21). We alsoshow in Table 21 the count of single andpseudo single procedure claims for theAPC and the total frequency for theAPC.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00111 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74232 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2We observe from this information thatthe median charge for services that areassigned to APC 0377 has increasedfrom the CY 2011 final rule data (CY2009 claims containing charges for thedeleted codes) to the CY 2012 proposedand final rule data sets (based oncharges for the codes that were effectiveJanuary 1, 2010). The CCRs that areapplied to the codes remained the samefrom the CY 2011 final rule data to theCY 2012 proposed rule data butdeclined slightly in the CY 2012 finalrule data, <strong>with</strong> the updating of the data<strong>with</strong> more current cost reports.Therefore, the line item median costsincreased between the CY 2011 finalrule data and the CY 2012 proposed ruledata but declined in the CY 2012 finalrule data due to the decrease in theCCRs. We also observe that thepackaged cost for codes in APC 0377declined 61 percent from the CY 2011final rule data to the CY 2012 proposedrule data and further declined another 3percent in the CY 2012 final rule data.Therefore, we believe that the reductionin the payment rate for APC 0377 isattributable to the slight decline in theCCRs and the significant decline in thepackaged cost.We acknowledge that some hospitalsmay charge at different markups overcost for different services. However, aslong as the cost report is correctlycompleted and the charges are mappedto the cost center in which the costs forthe service are recorded, the CCRs willrepresent a valid reflection of therelationship between the costs and thecharges. The OPPS, like all otherprospective payment systems, assumesthat hospitals complete the cost reportproperly, including mapping thecharges for a service to the cost centerin which the costs for that service arecaptured.We recognize that there isconsiderable variability in the chargesthat hospitals established for the fourCPT codes that were new for CY 2010and replaced deleted codes for reportingthese services that had been assigned toAPC 0377, but it is not uncommon fora high level of variability in the chargesfor a service to occur. In addition, it isnormal that such variability would becarried through to the calculation ofestimated costs for the service. Hospitalscharges are a reflection of the monetaryvalue that the hospital places on theservice, and we do not advise hospitals<strong>with</strong> regard to what they should chargefor a service other than to require thatthe charges be reasonably related totheir cost for the service, and that theymust charge all payers the same amountfor the same service. (We refer readersto the definition of ‘‘charges’’ at 42 CFR413.53(b).) However, our use of themedian charge to establish paymentlevels was specifically designed toaddress wide variances in hospital costaccounting systems and billing patterns,and also has consistently been a reliablemechanism for promoting increasedconsistency <strong>with</strong>out introducingadditional regulations.We recognize that it appears peculiarthat the estimated cost for CPT code78453, which represents the cost of asingle myocardial perfusion imaging(MPI) study, would be greater than theestimated cost for CPT code 78454,which represents the cost of multiplemyocardial perfusion imaging studiesdone in a single session. However, ourcosts are based on the amount of thecharge that the hospital established forthe service and the hospital’s CCR fromits Medicare cost report. It is notVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00112 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2unusual for hospitals to establishcharges that do not comport <strong>with</strong> ourexpectation of the charges they wouldestablish based on the definition of thecode for the service for which they areestablishing charges and on which webased simulated medians. Moreover,because the median cost is the 50thpercentile of the array of costs fromdifferent hospitals, case-mix andvolume differences between differenthospitals can also result in seeminglypeculiar relativity between mediancosts.Based on our review of the claimsdata and cost report data, we believe ourestimated median cost for APC 0377 isa valid estimate of the relative cost ofthe services under the APC and,therefore, see no reason to adopt analternative methodology that wouldeliminate claims from hospitals <strong>with</strong>CCRs below 0.2 or limit the decline inthe median cost to 5 to 10 percent. Inaddition, based on the significantvolume of single bills used to calculatethe median cost (539,100 singleprocedure bills of 640,458 totalfrequency or 84 percent of the totalfrequency for the services in the APC),we have no reason to believe that themedian cost we have calculated shouldnot be used to establish the payment forAPC 0377 and, therefore, will notimplement a 1- to 2-year ‘‘dampeningperiod,’’ as suggested by thecommenters. To the extent thathospitals determine that their chargesshould be revised to better reflect theresources required to furnish theservices currently assigned to APC 0377,the revised charges would be reflectedin future years’ OPPS payment rates.<strong>Comment</strong>: <strong>Comment</strong>ers asked thatCMS post to the CMS Web site the dataanalysis that was made available to theER30NO11.034

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74233jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2APC Panel for all APCs for which theAPC Panel median costs fluctuated bymore than 10 percent compared to theCY 2011 OPPS final rule median coststo allow all interested stakeholders toreview and comment on the data.Response: During the August 10–11,2011 meeting of the APC Panel, wepresented a list of all APCs whosemedian costs fluctuated by greater than10 percent when comparing the CY2011 final rule median costs to CY 2012proposed rule median costs. While theproposed payment for APC 0377represented a reduction in payment of11 percent, the decline in median costwas less than 10 percent; therefore, itwas not included on the list presentedto the APC Panel during its August 10–11, 2011 meeting. The comparisons ofAPCs <strong>with</strong> median costs fluctuating bymore than 10 percent is based onmedian cost data available on the CMSWeb site at: http://www.cms.gov/HospitalOutpatientPPS. Additionally,the OPPS Limited Data Set (LDS), whichcontain claims used to establish mediancost for use in ratesetting, is availablefor purchase on the CMS Web site at:http://www.cms.gov/HospitalOutpatientPPS. Therefore,interested stakeholders have access tothe same data that we examined andpresented to the APC Panel.After considering the publiccomments we received and examiningthe reasons for the decline in themedian cost for APC 0377, we aredeclining to make any of theadjustments to the median cost thatcommenters requested because webelieve that the data on which themedian cost for APC 0377 is calculatedare valid and that the median cost is anappropriate reflection of the 50thpercentile of the array of the estimatedcosts of services assigned to APC 0377.Therefore, we are finalizing our CY 2012proposal, <strong>with</strong>out modification, tocontinue to assign CPT codes 78451,78452, 78453, and 78454 to APC 0377.We are finalizing a payment rate forAPC 0377 for CY 2012 based on the CY2012 OPPS final rule median cost ofapproximately $672.c. Insertion/Replacement/Repair ofAICD Leads, Generator, and PacingElectrodes (APC 0108)We refer readers to section II.A.2.E.(6)of this final rule <strong>with</strong> comment periodfor a detailed discussion of this issue.d. Implantable Loop RecorderMonitoring (APC 0690)For CY 2012, we proposed to reassignCPT code 93299 (Interrogation deviceevaluation(s), (remote) up to 30 days;implantable cardiovascular monitorsystem or implantable loop recordersystem, remote data acquisition(s),receipt of transmissions and technicianreview, technical support anddistribution of results) from APC 0691(Level III Electronic Analysis of Devices)to APC 0690 (Level I Electronic Analysisof Devices), <strong>with</strong> a proposed paymentrate of approximately $35.<strong>Comment</strong>: Some commenters objectedto the reassignment of CPT code 93299from APC 0691 to APC 0690. Theybelieved that the reassignment willresult in inadequate payment tohospitals for the resources required toprovide the service and may be adisincentive to hospitals to provide thisservice.Response: The calculated median costfor CPT code 93299 based on CY 2010hospital claims and cost report dataavailable for this final rule <strong>with</strong>comment period is approximately $38.We are confident that the observed costsin the claims data are representative ofthe costs of providing this service in CY2010 because almost all of the claimsare single claims (2,249 out of 2,253)that can be used for ratesetting. Thecalculated median cost of approximately$38 for CPT code 93299 is similar tothat of most of the CPT codes in APC0690, and very close to the overall APCmedian cost of approximately $35. Incontrast, the overall APC median costfor APC 0691 is approximately $168,more than four times the median cost ofCPT code 93299. Therefore, we do notagree <strong>with</strong> commenters that theplacement of CPT code 93299 in APC0690 does not meet the APCrecalibration standards of clinical andresource homogeneity and would resultin inadequate payment to hospitals.Thus, we are finalizing our proposal,<strong>with</strong>out modification, to reassign CPTcode 93299 to APC 0690 for CY 2012.e. Echocardiography (APCs 0128, 0269,0270, and 0697)Under the OPPS, echocardiographyservices are reported using acombination of CPT codes and HCPCSC-codes. Hospitals report theechocardiography CPT codes whenperforming echocardiographyprocedures <strong>with</strong>out contrast.Alternatively, hospitals report theHCPCS C-codes when performingechocardiography procedures <strong>with</strong>contrast, or <strong>with</strong>out contrast followedby <strong>with</strong> contrast. In addition to theHCPCS C-codes, hospitals should alsoreport the appropriate units of theHCPCS codes for the contrast agentsused in the performance of theechocardiograms.Currently, there are four APCs thatdescribe echocardiography servicesVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00113 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2• APC 0128 (Echocardiogram WithContrast)• APC 0697 (Level I EchocardiogramWithout Contrast)• APC 0269 (Level II EchocardiogramWithout Contrast)• APC 0270 (Level III EchocardiogramWithout Contrast)For CY 2012, we proposed paymentrates for these APCs of approximately$564, $219, $384, and $567,respectively.<strong>Comment</strong>: Some commentersexpressed concern <strong>with</strong> the proposedpayment rate of approximately $384 forCPT code 93306 (Echocardiography,transthoracic real-time <strong>with</strong> imagedocumentation (2D), includes M-moderecording, when performed, complete,<strong>with</strong> spectral Dopplerechocardiography, and <strong>with</strong> color flowDoppler echocardiography), stating thatthe 5-percent decrease in the paymentrate could be the result of miscoding.The commenters suggested thathospitals were continuing to bill CPTcode 93307 (Echocardiography,transthoracic, real-time <strong>with</strong> imagedocumentation (2D), includes M-moderecording, when performed, complete,<strong>with</strong>out spectral or color Dopplerechocardiography) in conjunction <strong>with</strong>CPT codes 93320 (Dopplerechocardiography, pulsed wave and/orcontinuous wave <strong>with</strong> spectral display(List separately in addition to codes forechocardiographic imaging); complete)and 93325 (Doppler echocardiographycolor flow velocity mapping), ratherthan using CPT code 93306 becausethey were still adjusting to billing <strong>with</strong>CPT code 93306. The commentersrequested that CMS confirm that thecalculation of the median cost for APC0269, which is the APC that CMSproposed to continue to assign to CPTcode 93306, is based on correct coding.Response: CPT code 93306 was madeeffective on January 1, 2009. Consistent<strong>with</strong> our statement in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 71947), we find noevidence that would suggest that thefluctuations in cost data forechocardiography APCs are due toincorrect hospital billing practices. Forthis CY 2012 OPPS/ASC final rule <strong>with</strong>comment period, which is based on theCY 2010 hospital outpatient claims forratesetting, our claims show asignificant volume of data for CPT code93306. Specifically, our analysis revealsa CPT median cost of approximately$394 based on 975,213 single claims(out of 990,809 total claims) for CPTcode 93306, which represents 90percent of the claims in APC 0269.Given the significant volume of claimsand its CPT median cost of

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274234 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsapproximately $394, we believe thatCPT code 93306 is appropriately placedin APC 0269, which has a final APCmedian cost of approximately $393 forCY 2012.Therefore, after consideration of thepublic comments that we received, weare finalizing our CY 2012 proposal,<strong>with</strong>out modification, to continue toassign CPT code 93306 to APC 0269. Ashas been our practice since theimplementation of the OPPS, weannually review all the items andservices <strong>with</strong>in an APC group todetermine, <strong>with</strong> respect tocomparability of the use of resources,for any 2 times rule violations. Inmaking this determination, we reviewour claims data and determine whetherwe need to make changes to the currentAPC assignments for the following year.We will again reevaluate the statusindicator and APC assignment for CPTcode 93306 for the CY 2013 OPPSrulemaking cycle.<strong>Comment</strong>: Several commentersrequested that CMS reassign CPT codes76825 (Echocardiography, fetal,cardiovascular system, real time <strong>with</strong>image documentation (2d), <strong>with</strong> or<strong>with</strong>out m-mode recording) and 76826(Echocardiography, fetal, cardiovascularsystem, real time <strong>with</strong> imagedocumentation (2d), <strong>with</strong> or <strong>with</strong>out m-mode recording; follow-up or repeatstudy) from the proposed APC 0697 toAPC 0269. The commenters believedthat fetal echocardiography is just asresource intensive as adultechocardiography. Another commenterstated that the low median cost for theseservices is the result of low frequencyfor these services, and suggested thatsome of the charges reported may be theresult of miscoding.Response: In Addendum B of the CY2012 OPPS/ASC proposed rule, weflagged CPT codes 76825 and 76826<strong>with</strong> comment indicator ‘‘CH’’ toindicate that we are reassigning the APCassignments for these codes.Specifically, we proposed to reassignCPT code 76825 from APC 0270 to APC0697, and reassign CPT code 76826 fromAPC 0269 to APC 0697. Because thesecodes have been in existence for almost20 years, and have been reportableunder the hospital OPPS since it wasimplemented in 2000, we believe thatthe low frequency of these services isthe result of infrequent use of thisprocedure on Medicare patients.Analysis of our claims data from thepast 3 years, specifically from CY 2008,CY 2009, and CY 2010, reveal that theseprocedures are relatively low volumeprocedures. CPT code 76825 has hadfewer than 330 single claims forratesetting for each year (327 singleclaims in CY 2008, 291 single claims inCY 2009, and 282 single claims in CY2010), <strong>with</strong> a CPT median cost that hasranged between $89 and $126.Similarly, CPT code 76826 has hadfewer than 50 single claims forratesetting for each year (25 singleclaims in CY 2008, 23 single claims inCY 2009, and 43 single claims in 2010),<strong>with</strong> a CPT median cost that has rangedbetween $85 and $92. Based on ourclaims data, we believe that CPT codes76825 and 76826 are more appropriatelyplaced in APC 0697 based on theirclinical homogeneity and resource coststo the other procedure assigned to APC0697. Furthermore, despite therelatively low volumes, the mediancosts for these services are notablystable and are more consistent <strong>with</strong> themedian costs of the services assigned tolowest level echocardiogram APC,specifically, APC 0697, than to theservices assigned to APC 0269, whichhas an APC median cost ofapproximately $393.After consideration of the publiccomments received on our proposedAPC reassignment, we are finalizing ourCY 2012 proposal, <strong>with</strong>outmodification, to reassign CPT code76825 from APC 0270 to APC 0697, andto reassign CPT code 76826 from APC0269 to APC 0697, which has a final CY2012 median cost of approximately$221.<strong>Comment</strong>er: Several commentersexpressed concern that the proposedpayment rate of approximately $567 forthe non-contrast echocardiogramprocedures that are assigned to APC0270 is higher than the proposedpayment rate of approximately $564 forthe contrast echocardiogramsprocedures that are assigned to APC0128. The commenters indicated that itis not appropriate for an APC <strong>with</strong>contrast enhanced echocardiogramprocedures to have a lower median costand lower payment rate than an APC<strong>with</strong> non-contrast enhancedechocardiogram procedures. Thecommenters requested that CMSdevelop a more consistent and stablepayment methodology forechocardiograms that utilize contrastagents because the cost of the contrastagents is approximately $117 andrequires significantly more work whencompared to non-contrastechocardiogram procedures. Onecommenter recommended that CMSadopt three APCs for contrast-enhancedechocardiogram procedures to parallelthe three APCs that exist for noncontrastenhanced echocardiogramprocedures, while another commenterrequested data analysis supporting thehigher proposed payment rate for APCVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00114 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR20270. Several commenters urged CMS topay separately for the administrationand cost of the contrast agent.Response: As stated above, we havefour separate APCs to whichechocardiography services are assigned.Procedures that utilize contrast agentsare assigned to APC 0128, whileprocedures <strong>with</strong>out contrast agents areassigned to one of three APCs,specifically, APC 0270, APC 0269, orAPC 0697. As described above, in theCY 2012 OPPS/ASC proposed rule, theproposed payment rates for APCs 0270,APC 0269, and APC 0697 variedbetween $219 and $567. Analysis of ourclaims data show that the median costsfor two of the non-contrastechocardiogram APCs (APC 0697 and0269) are lower than the median cost ofthe contrast echocardiogram APC (APC0128). Specifically, our claims datashow an APC median cost ofapproximately $221 for APC 0697 andapproximately $393 for APC 0269,compared to the median cost ofapproximately $557 for APC 0128. Ourclaims data show a higher median costfor one of the non-contrastechocardiography APCs, specifically,APC 0270, which has a median cost ofapproximately $581. We agree <strong>with</strong> thecommenters that, in general, contrastbasedechocardiography procedureswould involve more resources than noncontrastechocardiography services.However, we believe that some nonechocardiographyprocedures are morecomplex than contrast-basedechocardiography procedures despitethe lack of contrast use, and as a result,we expect their costs to be higher. Asshown by our claims data, the costsinvolved <strong>with</strong> the non-contrastechocardiography procedures assignedto APC 0270 are significantly higherthan the contrast-basedechocardiography procedures that areassigned to APC 0128. As we do everyyear, we will again review our claimsdata for these services for the CY 2013OPPS rulemaking cycle. We find noevidence that would suggest that themedian costs calculated for these APCsbased on hospital claims and cost reportdata incorrectly reflect the relativeresource costs of providing the servicesin APC 0128 or APC 0697. We also donot believe that it is necessary toseparate APC 0128 into three APCs asone commenter suggested, because thecurrent composition results in no 2times rule violation and the majorprocedures in the APC are similar basedon resource costs, ranging fromapproximately $505 to approximately$732.In addition, payment for theadministration of contrast agents as well

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74235as the contrast agent products areincluded in payment for the associatedimaging procedure, as discussed insection V.B.2.d. of this final rule <strong>with</strong>comment period. In limitedcircumstances, we pay separately forcontrast agents that are approved forpass-through status under the OPPS, asdiscussed in section V.A. of this finalrule <strong>with</strong> comment period. Payment forpass-through status is limited to aminimum of 2 years but no more than3 years.Furthermore, as we stated above,hospitals should report the appropriateunits of the HCPCS codes for thecontrast agents used in the performanceof the echocardiograms procedures. It isextremely important that hospitalsreport all HCPCS codes, consistent <strong>with</strong>their descriptors, CPT and/or CMSinstructions, and correct codingprinciples, for all charges for all servicesthey furnish, whether payment for theservices is made separately or ispackaged. The appropriateness of theOPPS payment rates depend on thequality and completeness of the claimsdata that hospitals submit for theservices they furnish to Medicarebeneficiaries.After consideration of the publiccomments we received, we arefinalizing, <strong>with</strong>out modification, our CY2012 proposal to continue to calculateour median costs for the non-contrastechocardiography procedures based onAPCs 0697, 0269, and 0270, and tocalculate our median costs for thecontrast-echocardiography proceduresbased on APC 0128. We believe thatcontinuing this methodology in CY 2012results in payment rates for the contrastechocardiography and non-contrastechocardiography procedures thatappropriately reflect the costs for theseservices. For a more detailed discussionand history of the OPPS payment forechocardiography services, we referreaders to the CY 2008 OPPS/ASC finalrule <strong>with</strong> comment period (72 FR 66644through 66646), the CY 2009 OPPS/ASCfinal rule <strong>with</strong> comment period (73 FR68542 through 68544), and the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod (74 FR 60374 through 60383).Table 22 below shows the proceduresand final median costs assigned to thefour echocardiography APCs.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00115 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74236 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES22. Gastrointestinal Servicesa. Upper Gastrointestinal (GI) Services(APCs 0141, 0419, and 0422)For CY 2012 we proposed to createnew APC 0419 (Level II Upper GIProcedures), an intermediate APCbetween APC 0141 (Level I Upper GIProcedures) and APC 0422 (Level IIUpper GI Procedures, which weproposed to rename ‘‘Level III Upper GIProcedures’’). For APC 0141, wecalculated a proposed rule median costfor CY 2012 of approximately $603. Forproposed new APC 0419, we calculateda proposed rule median cost ofapproximately $904. For APC 0422, wecalculated a proposed rule median costof approximately $1,833.For CY 2011, there are two uppergastrointestinal (GI) procedure APCs,APC 0141, which has a CY 2011national unadjusted payment rate of$611.73, and APC 0422, which has a CY2011 national unadjusted payment rateof $1,148.75. In the CY 2011 OPPS/ASCproposed rule, we proposed toreconfigure APCs 0141 and APC 0422by moving several CPT codes from APC0141 to APC 0422. We had receivedpublic comments on the CY 2011proposed rule objecting to our CY 2011VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00116 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2proposal on the basis that thereconfiguration would reduce themedian cost and, therefore, the paymentfor services to which APC 0422 wasassigned and would not maintain theclinical homogeneity of these services.Instead commenters, including theapplicable medical specialty societies,asked that we reconfigure APCs 0141and 0422 to create three APCs by addinga new APC for upper GI procedures.They also recommended a HCPCSconfiguration that they believed wouldprovide payment rates that would moreaccurately reflect the median costs ofthe services in APCs 0141 and 0422. WeER30NO11.035

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74237jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2finalized our proposed changes to APCs0141 and 0422 for CY 2011 <strong>with</strong>outestablishing a third APC for upper GIprocedures for the reasons discussed inthe CY 2011 OPPS/ASC final rule <strong>with</strong>public comment period (75 FR 71907).However, when we developed themedian costs for APCs 0141 and 0422using CY 2010 claims data fordiscussion at the APC Panel meeting ofFebruary 28–March 1, 2011, weobserved that there was a 2 times ruleviolation for APC 0141 that had notexisted for the CY 2010 OPPS. For theAPC Panel meeting, we simulated theHCPCS codes and APC median coststhat would result from thereconfiguration that was recommendedby the stakeholders in their commentson the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period, and we discussedthe results <strong>with</strong> the APC Panel. TheAPC Panel recommended that CMScreate an intermediate level upper GIprocedures APC (APC PanelRecommendation 13). The APC Panelrecommendations and report may befound at the APC Panel Web site,located at: http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.For the reasons we discuss below, asstated in the proposed rule, we acceptedthe APC Panel recommendation topropose to establish three levels ofupper GI procedure APCs and topropose to adopt the reconfigurationrecommended by stakeholders becausewe believe that the proposedreconfiguration will provide paymentsthat are more closely aligned <strong>with</strong> themedian costs of the services. We statedthat creating an intermediate APC forupper GI procedures would provideAPC median costs that are more closelyaligned <strong>with</strong> the median costs for themany CPT codes for upper GIprocedures, and therefore, the APCmedian costs better reflect the resourcesrequired to provide these services asdefined by the CPT codes for them.Moreover, we believed that theproposed reconfiguration would resolvethe 2 times rule violation that wouldresult in APC 0141 if we were to applythe CY 2011 APC configuration to theCY 2012 proposed rule data. Therefore,we stated in the proposed rule that webelieved that we would need to proposeto reassign HCPCS codes, regardless ofwhether we created the intermediateAPC for CY 2012. We stated that webelieved that the proposedreconfiguration to create theintermediate APC would be the mostappropriate means of avoiding a 2 timesrule violation that would otherwiseexist for CY 2012 and that the resultingmedian costs would provide paymentsthat are more reflective of the relativecosts of the services being furnished.Therefore, in the CY 2012 OPPS/ASCproposed rule (76 FR 42238), for CY2012, we proposed to create new APC0419 (Level II Upper GI Procedures), asrecommended by the stakeholders, andwe proposed to reassign HCPCS codespreviously assigned to APCs 0141 and0422 to the three APC configuration.Table 23 of the proposed rule containedthe proposed HCPCS codereassignments for CY 2012 using theproposed three APC reconfiguration. Webelieve that this proposedreconfiguration classifies upper GI CPTcodes in groups that demonstrate thebest clinical and resource homogeneity.For APC 0141, we calculated a proposedrule median cost for CY 2012 ofapproximately $603. For proposed newAPC 0419, we calculated a proposedrule median cost of approximately $904.For APC 0422, we calculated a proposedrule median cost of approximately$1,833.At its August 10–11, 2011 APC Panelmeeting, the APC Panel recommendedthat CMS adopt the proposed APCreconfiguration for uppergastrointestinal (GI) procedures and thecreation of a new APC 0419 (Level IIUpper GI Procedures). The Panel furtherrecommended that HCPCS code 43227(Esophagoscopy, rigid or flexible; <strong>with</strong>control of bleeding (e.g., injection,bipolar cautery, unipolar cautery, laser,heater probe, stapler, plasmacoagulator)) and HCPCS code 43830(Gastrostomy, open; <strong>with</strong>outconstruction of gastric tube (e.g., Stammprocedure) (separate procedure)) bereassigned to APC 0422 (proposed to berenames ‘‘Level III Upper GIProcedures’’).Response to APC PanelRecommendation: We do not agree <strong>with</strong>the APC Panel recommendation to moveCPT code 43227 to APC 0422 becauseCPT code 43227 is a very low volumeservice <strong>with</strong> a total frequency of 45 inCY 2010, for which the median cost hasvaried considerably over the past fewyears ($1,010 in CY 2011; $725 in CY2010). We will reassess the placement ofCPT code 43227 for CY 2013. However,we agree <strong>with</strong> the APC Panel’srecommendation to move CPT code43830 to APC 0422 because the mediancost for CPT code 43830 ofapproximately $1,630 is more similar tothe median cost for APC 0422 ofapproximately $1,819 and is less similarto the median cost for APC 0319 ofapproximately $887. Therefore, we areassigning CPT code 43830 to APC 0422for the CY 2012 OPPS.<strong>Comment</strong>: Many commenterssupported the creation of new APCVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00117 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR20419. <strong>Comment</strong>ers indicated thatcreation of the new intermediate APCwould result in APCs for upper GIprocedures that are more cohesive <strong>with</strong>regard to the resources used to providethe services and would provide for moreequitable payment for these services. Inparticular, commenters were pleased to<strong>with</strong> the proposed reassignment of CPTcode 43228 to APC 0422 because theybelieved that the assignment wouldenable facilities to cover the cost of thedevice and provide patients <strong>with</strong> greateraccess to the service. One commenterobjected to the reconfiguration of theseAPCs on the basis that some of theservices in each APC have median coststhat are higher than the median cost forthe APC and, therefore, would be paidless than their median cost.Response: We continue to believe thatit is appropriate to create a third levelof upper GI procedures and that it isappropriate to assign CPT code 43228 toAPC 0422 for the reasons discussed inthe proposed rule as summarized at thebeginning of this section. Therefore, weare adopting our proposal to create newAPC 0419 for CY 2012, and we haveassigned CPT code 43228 to APC 0422for CY 2012. We disagree <strong>with</strong> thecommenter who objected to thereconfiguration of the upper GIprocedure APCs on the basis that themedians for some HCPCS codes in eachAPC were higher than the median costfor the APC. The median cost bydefinition is the 50th percentile of thearray of the costs of single bills.Therefore, the median costs for someHCPCS codes will always fall below themedian cost for the APC. A fundamentalprinciple of a prospective paymentsystem like the OPPS is that prospectivepayment is set at a measure of centraltendency that, on average, pays anamount that is appropriately reflectiveof the relative cost of the services in thegroup to which the payment rateapplies.<strong>Comment</strong>: Several commentersobjected to the proposed assignment ofCPT code 43257 (Upper gastrointestinalendoscopy including esophagus,stomach, and either the duodenum and/or jejunum as appropriate; <strong>with</strong> deliveryof thermal energy to the muscle of loweresophageal sphincter and/or gastriccardia, for treatment of gastroesophagealreflux disease) and CPT code C9724(Endoscopic full thickness placation inthe gastric cardia using endoscopicplacation system (EPS); includesendoscopy) to APC 0422 and asked thatCMS create an APC for transoralsurgical endoscopy to which thesecodes would be assigned. Thecommenters believe that CPT codes43257 and C9724 are clinically different

74238 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsfrom most other services in APC 0422because these services provide surgicaltherapy and that the resources requiredto furnish them are much greater thanthe resources required to furnish theother services in APC 0422.<strong>Comment</strong>ers requested the creation ofthe new level IV upper GI procedureAPC that they believed would result inappropriate payment for theseprocedures and would also improve theaccuracy of the payment for theprocedures that will remain in APC0422. <strong>Comment</strong>ers stated that currentclaims data for CPT code 43257underestimates the cost of the servicebecause hospitals are using the codeincorrectly. They also stated that the CY2010 claims data for CPT code 43257reports the cost of a generation 1 Strettacatheter that was sold at a cost of$1,225, although since 2010 hospitalshave been using a generation 2 catheterwhich has an average sales price of$2,450. Therefore, the commentersasserted that the use of CY 2010 claimsdata will not fully reflect the cost of thedevices that will be used in CY 2012.<strong>Comment</strong>ers suggested that CMSdesignate the new level IV APC thatthey requested as device dependent,establish procedure-to-device edits, anduse only the claims that meet the deviceedits in setting the rates for theapplicable APCs.Response: We disagree that it isnecessary to create a fourth level upperGI APC to which to assign HCPCS codes43257 and C9724. We believe that CPTcodes 43257 and C9724 are clinicallysimilar to the other services assigned toAPC 0422 such as CPT codes 43228(Esophagoscopy, rigid or flexible; <strong>with</strong>ablation of tumor(s), polyp(s), or otherlesion(s), not amenable to removal byhot biopsy forceps, bipolar cautery orsnare technique), and 43870 (Closure ofgastrostomy, surgical), which are boththerapeutic upper GI procedures.Moreover, the final median cost for CPTcode 43257 of approximately $1,535falls below the final median cost forAPC 0422 of approximately $1,819. Aswe discuss in section II.A. of this finalrule <strong>with</strong> public comment, we calculatethe median costs of services based onthe most recent charges and cost reportsthat are available to us at the time weare preparing the proposed and finalrules. To the extent that the costs for thecatheter used to furnish CPT code 43257increased after CY 2010, those costs willbe used to establish payment rates forthe years in which the claims are used.With regard to HCPCS code C9724, wenote that it is a low volume service forwhich the median cost has variedwidely over the past few years (forexample, $1,370 for CY 2009 OPPS;$2,947 for CY 2010 OPPS; and $5,139for CY 2011 OPPS), and we believe thatits median cost of approximately $5,944and low volume make it unsuited forestablishment of a single service APCfor CY 2012 OPPS. We note thatplacement of HCPCS code C9724 inAPC 0422 is not a violation of the 2times rule because HCPCs code C9724 isnot a significant procedure to which the2 times rule applies because it has asingle bill frequency of less than 1,000and also has a single bill frequency thatis less than 99 and the single billsrepresent less than 2 percent of thesingle bills used to calculate the mediancost for APC 0422. We refer readers tosection III.B. of this final rule <strong>with</strong>comment period for additionalinformation regarding the 2 times rule.After consideration of the commentswe received, we are finalizing ourproposals to create new APC 0419(Level II Upper GI Procedures), torename APC 0422 as ‘‘Level III Upper GIProcedures’’, and to reassign the HCPCScodes for upper GI procedures to thethree APC configuration (APCs 0141,0419 and 0422) for CY 2012 OPPS, asshown in Table 23 below. We are notcreating a level IV upper GI procedureAPC into which to place HCPCS codes43257 and C9724 because we believethat HCPCS codes 43257 and C9724 areappropriately assigned to APC 0422 forCY 2012. We are not accepting the APCPanel’s recommendation that wereassign CPT code 43227 to APC 0422because it is a very low volume servicefor which the median cost has not beenstable over the past few years. We areaccepting the APC Panel’srecommendation that we reassign CPTcode 43830 to APC 0422, and we havedone so for the CY 2012 OPPS.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00118 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74239jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00119 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.036

74240 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00120 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.037

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74241jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–Cb. Gastrointestinal Transit and PressureMeasurement (APC 0361)The AMA CPT Editorial Panel createdCPT code 0242T (Gastrointestinal tracttransit and pressure measurement,stomach through colon, wirelesscapsule, <strong>with</strong> interpretation and report)effective January 1, 2011. For CY 2011,we assigned CPT code 0242T to APC0361 (Level II Alimentary Tests) <strong>with</strong> apayment rate of $282.48. For CY 2012,we proposed to maintain the assignmentof CPT code 0242T to APC 0361 <strong>with</strong> aproposed rule median cost ofapproximately $295, and a proposedpayment of $284.80. (The CY 2012OPPS/ASC final rule median cost forAPC 0361 is approximately $286.)<strong>Comment</strong>: Several commenters on theCY 2011 final rule <strong>with</strong> comment periodregarding the APC assignment of CPTcode 0242T, requested reassignment ofCPT code 0242T from APC 0361 to NewTechnology APC 1510 (New TechnologyVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00121 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2APC—Level X), which has a paymentrate of $850. The commenters claimedthat CPT code 0242T is not similar tothe other procedures assigned to APC0361 either in terms of clinicalsimilarity or resource costs; therefore, itshould be assigned to a NewTechnology APC because therecurrently are insufficient utilization andclaims data for the service. Thecommenters believed that CPT code0242T is significantly different than theother procedures in APC 0361, whichER30NO11.038

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274242 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsare predominantly indicated to assessthe esophagus, while CPT code 0242T ispurportedly a unique test that providestransit, pressure, pH, and temperaturemeasurement of the GI tract from thestomach to the colon. The commentersalso stated that the resources, includingclinical labor, for the procedures in APC0361 differ from those of CPT code0242T. The commenters claimed thatthe manometric tests assigned to APC0361 measure neuromuscular activity inan anatomically specific, fixed manner,utilizing a reusable catheter, while CPTcode 0242T utilizes a disposablecapsule and a special meal to capturemultiple pressure and transitmeasurements throughout the GI tractand cost $600 per procedure. Addingother procedure costs to the disposablecosts yields total procedure costs inexcess of $800, according to thecommenters. The commenters point tothe past assignment of CPT code 91110(Gastrointestinal tract imaging,intraluminal (eg, capsule endoscopy),esophagus through ileum, <strong>with</strong>physician interpretation and report) to aNew Technology APC until sufficientclaims data were gathered forassignment to a clinical APC, and theyrequest a similar approach to APCassignment for CPT code 0242T.Response: We disagree thatassignment to a clinical APC necessarilyimplies that there are clinical and costdata for a new service. We routinelymake assignments of new CPT codes toclinical APCs before we have claimsdata that are indicative of their sourcecosts of a procedure. We make theseassignments initially using the bestcurrently available information, whilereviewing claims data once such databecome available and makingreassignments accordingly based onthose data. We expect to do the sameregarding CPT code 0242T.As was the case when we made theinitial assignment for CY 2011, wecontinue to believe that there arerelevant clinical similarities betweenthe CPT code 0242T service and otherservices in APC 0361 to continue tojustify this APC assignment. CPT code0242T and the services in APC 0361 allinvolve tests of the alimentary canal.Regarding resource costs, the final rulemedian cost of APC 0361 isapproximately $288, <strong>with</strong> a median costrange of procedures in the APC fromapproximately $235 to approximately$680. We do not believe a NewTechnology APC is warranted for thisprocedure at this time. We believe thatthe clinical attributes and CY 2012median costs of the services found inAPC 0361 support the assignment ofCPT code 0242T to APC 0361 as aninitial assignment. We generally waituntil median cost claims data areavailable before reassignment to a newAPC. For CY 2012, we will maintain ourassignment of CPT code 0242T to APC0361, which has a final median cost ofapproximately $286. We will reviewthis assignment for CY 2013 when someclaims data should be available for thisprocedure.3. Genitourinary Servicesa. Laser Lithotripsy (APC 0163)For CY 2012, we proposed to continueto assign CPT codes 52353(Cystourethroscopy, <strong>with</strong> ureteroscopyand/or pyeloscopy; <strong>with</strong> lithotripsy(ureteral catheterization is included))and 50590 ((Fragmenting of kidneystone) to their existing CY 2011 APCs.That is, we proposed to continue toassign CPT code 52353 to APC 0163(Level IV Cystourethroscopy and otherGenitourinary Procedures), which had aproposed payment rate of approximately$2,566, and to continue to assign CPTcode 50590 to APC 0169 (Lithotripsy),which had a proposed payment rate ofapproximately $3,568. CPT code 50590was made effective January 1, 1986, anddescribes an extracorporeal shock wavelithotripsy. CPT code 52353 was madeeffective January 1, 2001, and describesa cystourethroscopy <strong>with</strong> lithotripsy.Our understanding is that the lithotripsydescribed in CPT code 52353 is laserlithotripsy.At the August 2011 APC PanelMeeting, a presenter requested the Panelto recommend to CMS to reassign CPTcode 52353 from APC 0163 to the sameAPC as CPT code 50590, which is APC0169. The presenter stated that theproposed payment rate for APC 0169 forCY 2012 shows an increase ofapproximately 23 percent in the OPPSand approximately 25 percent in theASCs, while the proposed payment ratefor APC 0163 shows a 0.3 percentdecrease in the OPPS and a 1.3 percentdecrease in the ASCs, thereby creatinga significant financial advantage forshock wave lithotripsy overureteroscopy <strong>with</strong> lithotripsy. Thepresenter further suggested that placingCPT code 52353 in APC 0169 would beclinically appropriate because bothprocedures describe lithotripsy of stonesin the ureter and kidney, and alsobecause their historical median costshave tracked closely over time. Afterdiscussion of the of the median costsobserved for both CPT codes 52353 and50590, the APC Panel made norecommendation on the CY 2012 APCassignment for CPT code 52353.<strong>Comment</strong>: Some commentersrecommended the reassignment CPTVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00122 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2code 52353 to the same APC as CPTcode 50590, which is APC 0169. Onecommenter argued that the reassignmentof CPT code 52353 to APC 0169 wouldavoid potential incentives to use shockwave lithotripsy over ureteroscopy <strong>with</strong>lithotripsy. This commenter furtherstated that these two similar andcompeting procedures should be placedin the same APC so that their OPPS andASC payment rates will increase, ordecrease, consistently in the future.Response: CPT code 50590 has beenassigned to APC 0169 since the OPPSwas implemented in 2000. CPT code52353 was initially assigned to APC0162 (Level III CystourethroscopyProcedures) when the CPT code wasmade effective in 2001. However, in CY2002, we revised the APC assignmentfor CPT code 52353 to APC 0163 (LevelIV Cystourethroscopy Procedures) basedon input from our clinical advisors thatthe procedure is similar to the otherprocedures in APC 0163 based onclinical homogeneity and resource costs.Since CY 2002, CPT code 52353 hasbeen assigned to APC 0163.In addition, we disagree <strong>with</strong> thecommenter that placing these twoprocedures in two separate APCs createsan incentive to use one procedure overanother. We believe that physicianswould choose the most appropriateprocedure based on a patient’s diagnosisand other relevant clinical factors.Further, based on our claims data, wedo not believe that placing bothprocedures in the same APC would beappropriate. Our analysis of the final CY2012 claims data reveal that shock wavelithotripsy (CPT code 50590) is morecommonly performed on Medicarepatients than ureteroscopy <strong>with</strong>lithotripsy (CPT code 52353).Specifically, our data show a CPTmedian cost of approximately $2,711,based on 3,366 single claims, for CPTcode 52353. CPT code 52353 represents22 percent of the claims <strong>with</strong>in APC0163, and its CPT median cost ofapproximately $2,711 is relatively closeto the CY 2012 final APC median costof approximately $2,596 for APC 0163.In contrast, the CY 2012 final mediancost for CPT code 50590, which is inAPC 0169, is approximately $3,647,based on 30,178 single claims. This finalmedian cost of approximately $3,647 forCPT code 50590 is higher than the finalmedian cost of approximately $2,711 forCPT code 52353.<strong>Comment</strong>: One commenter suggestedthat the increase in the median cost forCPT code 50590 may be a result of theapplication of a CCR calculated fromcosts and charges reported in thenonstandard cost center data forlithotripsy.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74243jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Response: The nonstandardlithotripsy cost center 07699 is a featureof the hospital cost report CMS 2552–10. No CMS 2552–10 cost reports wereused in determining the payment ratesfor the CY 2012 OPPS. The CCRs in theCY 2012 OPPS are created from thehospital cost report CMS 2552–96, andthere is no standard or nonstandardlithotripsy cost center in the CMS 2552–96 cost report.Given our claims data for the CY 2012update for these lithotripsy procedures,we believe that CPT code 52353 isappropriately placed in APC 0163 basedon its clinical homogeneity and resourcecost compared to other proceduresalready assigned in APC 0163. As hasbeen our practice since theimplementation of the OPPS in 2000,we review, on an annual basis, the APCassignments for the procedures andservices paid under the OPPS. We willcontinue to review on an annual basisthe APC assignment for CPT code 52353and determine whether a reassignmentin the APC is necessary.Therefore, after consideration of thepublic comments we received, we arefinalizing our CY 2012 proposal,<strong>with</strong>out modification, to continue toassign CPT code 52353 to APC 0163,which has a final CY 2012 median costof approximately $2,596, and tocontinue to assign CPT code 50590 toAPC 0169, which has a final CY 2012median cost of approximately $3,647.b. Percutaneous Renal Cryoablation(APC 0423)For CY 2012, we proposed to continueto assign CPT code 50593 (Ablation,renal tumor(s), unilateral, percutaneous,cryotherapy) to APC 0423 (Level IIPercutaneous Abdominal and BiliaryProcedures), <strong>with</strong> a proposed paymentrate of approximately $3,969. This CPTcode was new in CY 2008; however, thesame service was previously describedby CPT code 0135T (Ablation renaltumor(s), unilateral, percutaneous,cryotherapy). We note that in CY 2007,based upon the APC Panel’srecommendation made at the March2006 APC Panel meeting, we reassignedCPT code 50593 (then CPT code 0135T)from APC 0163 ((Level IVCystourethroscopy and otherGenitourinary Procedures)) to APC0423. We expect hospitals, whenreporting CPT code 50593, to also reportthe device HCPCS code, C2618 (Probe,cryoablation), associated <strong>with</strong> theprocedure.<strong>Comment</strong>: One commenter disagreed<strong>with</strong> the proposed continuedassignment for CPT code 50593 to APC0423 because, the commenter stated,this APC includes other procedures thatdo not require the use of high-costdevices, such as cryoablation probes.The commenter reported that thepayment rate of approximately $3,969for the procedure does not accuratelyreflect the costs incurred by hospitalsthat perform this procedure, and, as aresult, hospitals are reluctant to performthis procedure. The commentersuggested that CMS determine thepayment rate for CPT code 50593 basedon its mean cost, rather than on mediancost. The commenter stated that theproposed mean cost for APC 0423 isapproximately $4,835, andapproximately $5,394 for CPT code50593. Further, the commenterrecommended that CMS designate CPTcode 50593 as a device-dependentprocedure and require hospitals tosubmit claims <strong>with</strong> the appropriateHCPCS code, C2618, so that charges canbe reported appropriately. Thecommenter stated that CPT code 50593cannot be performed <strong>with</strong>out the device,and adding CPT code 50593 to thedevice-dependent procedure list wouldresult in more accurate claims data forfuture ratesetting.Response: First, we believe that CPTcode 50593 is appropriately placed inAPC 0423 based on clinical andresource costs when compared to otherprocedures also assigned to APC 0423.As we stated in the CY 2007 OPPS finalrule <strong>with</strong> comment period (71 FR 68049through 68050), the CY 2008 OPPS/ASCfinal rule <strong>with</strong> comment period (72 FR66709), the CY 2009 OPPS/ASC finalrule <strong>with</strong> comment period (73 FR68611), the CY 2010 OPPS/ASC finalrule <strong>with</strong> comment period (74 FR60444), and the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71910), we revised the APC assignmentfor the percutaneous renal cryoablationprocedure from APC 0163 to APC 0423in CY 2007 based on the APC Panel’srecommendation to reassign theprocedure to APC 0423.For CY 2012, we proposed to assignfour CPT codes to APC 0423. Theseprocedures share similar median costsranging from approximately $3,733 toapproximately $4,493, which are well<strong>with</strong>in the two-fold variation in mediancost that is permitted by the law for anOPPS payment group. Therefore, thegrouping of these procedures in thesame APC does not violate the 2 timesrule. We note that all four of theseprocedures are relatively low volume,<strong>with</strong> fewer than 1,800 total claims eachfor CY 2010 and fewer than 700 singleclaims each for ratesetting. We believethat grouping these clinically similar,low-volume procedures for thepercutaneous ablation of renal, liver, orpulmonary tumors in the same paymentVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00123 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2group helps to promote paymentstability for these low volume services.Secondly, as we stated in the CY 2009OPPS/ASC final rule <strong>with</strong> commentperiod (73 FR 68611), the final APCrelative weights and payment rates arebased on median hospital costs, notmean costs, for APC groups. The OPPSrelies on the relativity of costs forprocedures as reported by hospitals inestablishing payment rates, and we donot believe it would be appropriate toutilize a different payment methodologybased on mean cost for one APC, whilethe payment rates for the other clinicalAPCs would be based on median costs.Mean and median costs are twodifferent statistical measures of centraltendency and, based on commondistributions, mean costs typically arehigher than median costs. Therefore, wedo not believe it would be appropriateto use a combination of these measuresto establish the payment weights fordifferent APCs under the OPPS.Further, as we stated in the CY 2007OPPS final rule <strong>with</strong> comment period(71 FR 68049 through 68050), the CY2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66709), the CY2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68611), the CY2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60444), and theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 71910), wedesignate a procedure as devicedependentservice based onconsideration of all the procedures in asingle APC. While all of the proceduresassigned to APC 0423 require the use ofimplantable devices, for many of theprocedures, there are no Level II HCPCScodes that describe all of thetechnologies that may be used in theprocedures. Therefore, it would not bepossible for us to develop procedure-todeviceedits for all of the CPT codesassigned to APC 0423.<strong>Final</strong>ly, we remind hospitals that weexpect all of the HCPCS codes to bereported that appropriately describe theitems used to provide services,regardless of whether the HCPCS codesare packaged or paid separately. Whenreporting CPT code 50593, we expecthospitals to also report the deviceHCPCS code C2618, which is associated<strong>with</strong> this procedure. If hospitals usemore than one probe in performing theCPT code 50593 procedure, we expecthospitals to report this information onthe claim and adjust their chargesaccordingly. Hospitals should report thenumber of cryoablation probes used toperform the CPT code 50593 procedureas the units of HCPCS code C2618,which describes these devices, <strong>with</strong>their charges for the probes. Since CY

74244 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES22005, we have required hospitals toreport device HCPCS codes for alldevices used in procedures if there areappropriate HCPCS codes available. Inthis way, we can be confident thathospitals have included charges on theirclaims for devices used in procedureswhen they submit claims for thoseprocedures.After consideration of the publiccomment we received, we are finalizingour CY 2012 proposal, <strong>with</strong>outmodification, to continue to assign CPTcode 50593 to APC 0423, which has afinal CY 2012 APC median cost ofapproximately $4,096.4. Nervous System Servicesa. Revision/Removal of NeurostimulatorElectrodes (APCs 0040 and 0687)As discussed in detail in the CY 2012OPPS/ASC proposed rule (76 FR 42233through 42234), for CY 2012, weproposed to move CPT codes 63663(Revision, including replacement, whenperformed, of spinal neurostimulatorelectrode percutaneous array(s),including fluoroscopy, when performed)and 63664 (Revision, includingreplacement, when performed, of spinalneurostimulator electrode plate/paddle(s) placed via laminotomy orlaminectomy, including fluoroscopy,when performed) from APC 0687(Revision/Removal of NeurostimulatorElectrodes) to APC 0040 (Level IImplantation/Revision/Replacement ofNeurostimulator Electrodes). We notedthat the proposed CY 2012 median costsfor CPT codes 63663 and 63664 ofapproximately $4,316 and $4,883,respectively, are more consistent <strong>with</strong>the proposed median cost of APC 0040of approximately $4,516 than <strong>with</strong> theproposed median cost of APC 0687 ofapproximately $1,492. We alsoproposed to change the title of APC0040 from ‘‘Percutaneous Implantationof Neurostimulator Electrodes’’ to‘‘Level I Implantation/Revision/Replacement of NeurostimulatorElectrodes’’ and the title of APC 0061(Level II Implantation/Revision/Replacement of NeurostimulatorElectrodes) from ‘‘Laminectomy,Laparoscopy, or Incision forImplantation of NeurostimulatorElectrodes’’ to ‘‘Level II Implantation/Revision/Replacement ofNeurostimulator Electrodes.’’ CPT codes63661 (Removal of spinalneurostimulator electrode percutaneousarray(s), including fluoroscopy, whenperformed), 63662 (Removal of spinalneurostimulator electrode plate/paddle(s) placed via laminotomy orlaminectomy, including fluoroscopy,when performed), 63663, and 63664were all effective January 1, 2010. Weproposed that CPT codes 63661 and63662 would remain in APC 0687.In addition, for CY 2012, we proposedto assign CPT 64569 (Revision orreplacement of cranial nerve (eg, vagusnerve) neurostimulator electrode array,including connection to existing pulsegenerator), effective January 1, 2011, toAPC 0687.<strong>Comment</strong>: Several commenterssupported the proposed reassignment ofCPT codes 63663 and 63664 from APC0687 to APC 0040. The commentersbelieved that the proposed reassignmentplaces these CPT codes in an APC thatis consistent <strong>with</strong> their median costs.The commenters also supported theretention of CPT code 63661 and 63662in APC 0687 because their proposed CY2012 median costs are consistent <strong>with</strong>the overall proposed APC 0687 mediancosts. In addition, the commentersagreed <strong>with</strong> the proposed title changesfor APC 0040 and APC 0061. Onecommenter agreed <strong>with</strong> the proposedreassignment of CPT codes 63663 and63664 to APC 0040 but recommendedthe creation of two new HCPCS codes toallow hospitals to differentiate betweenrevision and replacement proceduresand to foster analysis of the costdifferences between revision andreplacement procedures for purposes offuture APC assignments. Thecommenter also sought device-toprocedureand procedure-to-device editsto ensure device costs are completelycaptured.Response: We appreciate thecommenters’ support for thereassignment of CPT codes 63663 and63664 from APC 0687 to APC 0040, thecontinued assignment of CPT codes63661 and 63664 to APC 0687, and thetitle changes to APC 0040 and APC0061. We agree <strong>with</strong> the commentersthat the proposed changes would ensurethat all four codes are in APCs that areconsistent <strong>with</strong> their median costs.Therefore, we are finalizing ourproposals to reassign CPT codes 63663and 63664 to APC 0040, to continue toassign CPT codes 63661 and 63662 toAPC 0687, and to change the titles ofAPC 0040 to ‘‘Level I Implantation/Revision/Replacement ofNeurostimulator Electrodes’’ and APC0061 to ‘‘Level II Implantation/Revision/Replacement of NeurostimulatorElectrodes.’’We do not agree that it is necessaryto create new HCPCS codes in order todifferentiate between neurostimulatorelectrode replacement and revisionprocedures. As we discussed in the CY2012 OPPS/ASC proposed rule (76 FR42234), we examined the CY 2010claims data available for the proposedVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00124 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2rule to compare the frequency of claimscontaining CPT codes 63663 or 63664that were billed <strong>with</strong> and <strong>with</strong>outHCPCS code C1778 (Lead,neurostimulator (implantable)) orHCPCS code C1897 (Lead,neurostimulator test kit (implantable))in order to determine whether theydescribe mainly device revision orreplacement procedures. Because themajority of claims did not containHCPCS code C 1778 or C1897, thesefindings suggested that these CPT codesare being used by hospitals to describemainly device revision procedures,although there were a significantnumber of cases <strong>with</strong> devicereplacement procedures in the claimsdata. We also note that we implementedclaims processing logic to allow CPTcodes 63663 and 63664 to satisfy thedevice-to-procedure edits for HCPCScodes C1778 and C1897, effectiveJanuary 1, 2012. We cannot implementprocedure-to-device edits for CPT codes63663 and 63664 because they do notalways involve the implantation of adevice.<strong>Comment</strong>: One commenter objected tothe proposed assignment of CPT code64569 to APC 0687. The commenterstated that CPT code 64569 is clinicallysimilar to CPT codes 63663 and 63664,the only difference being CPT code64569 is an incision-based procedure,while CPT codes 63663 and 63664 arepercutaneous. The commenter alsoargued that assigning CPT code 64569 toAPC 0687 would result in significantfinancial losses for hospitals andpresented simulated data using claimsfor CPT code 63663 and 63664 toestimate a median cost for CPT code64569 ranging between approximately$5,551 and $7,790.Response: We are assigning CPT code64569 to APC 0687, as we proposed,<strong>with</strong> a CY 2012 final rule median costof approximately $1,451. We do notagree that CPT code 64569 isinappropriately assigned to APC 0687.Our clinical analysis indicates that CPTcode 64569 is similar to the other devicerevision and replacement procedures inAPC 0687. Furthermore, since CPT code64569 was effective January 1, 2011, wedo not have frequency and costinformation upon which to make anassessment of whether there is ameaningful difference between the costof revising the VNS electrodes andgenerator or replacing them. We do notagree <strong>with</strong> the commenter that it ispossible to derive meaningful estimatesof the costs of providing the servicedescribed by CPT code 64569 by usingdata for CPT codes 63663 and 63664because these codes involve differenttypes of devices. Therefore, we are not

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74245jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2convinced by the commenter that theassignment of the CPT code 64569 toAPC 0687 is inappropriate. As we did<strong>with</strong> the CPT codes 63661 through63664, we will continue to monitor andanalyze the data for CPT code 64569when it becomes available.After consideration of the publiccomments we received, we arefinalizing our proposal, <strong>with</strong>outmodification, to assign CPT codes 63663and 63664 to APC 0040 and to assignCPT codes 63661, 63662, and 64569 toAPC 0687. We also are finalizing ourproposal to change the title of APC 0040from ‘‘Percutaneous Implantation ofNeurostimulator Electrodes’’ to ‘‘Level IImplantation/Revision/Replacement ofNeurostimulator Electrodes’’ and thetitle of APC 0061 from ‘‘Laminectomy,Laparoscopy, or Incision forImplantation of NeurostimulatorElectrodes’’ to ‘‘Level II Implantation/Revision/Replacement ofNeurostimulator Electrodes.’’b. Magnetoencephalography (MEG)(APCs 0065, 0066, and 0067)There are three CPT codes associated<strong>with</strong> MEG: 95965(Magnetoencephalography (meg),recording and analysis; for spontaneousbrain magnetic activity (eg, epilepticcerebral cortex localization)); 95966(Magnetoencephalography (meg),recording and analysis; for evokedmagnetic fields, single modality (eg,sensory, motor, language, or visualcortex localization)); and 95967(Magnetoencephalography (meg),recording and analysis; for evokedmagnetic fields, each additionalmodality (eg, sensory, motor, language,or visual cortex localization)). For CY2012 we calculated a proposed rulemedian cost of approximately $1,821 forCPT code 95965 based on a frequencyof 48 single bills out of a total frequencyof 50 bills. We proposed to continue toassign CPT code 95965 to APC 0067(Level III Stereotactic Radiosurgery,MRgFUS, and MEG), which had aproposed rule median cost ofapproximately $3,368.At its August 10–11, 2011 meeting,the APC Panel made tworecommendations <strong>with</strong> regard to CPTcode 95965. First, the APC Panelrecommended that CMS implementappropriate edits requiring hospitals touse the new MEG revenue code, 086X,<strong>with</strong> CPT codes 95965, 95966, and95967. We address this recommendationin the context of a comment from thepublic to which we respond below.Second, the APC Panel recommendedthat CMS move CPT code 95965 fromAPC 0067 to APC 0066 (Level IIStereotactic Radiosurgery, MRgFUS, andMEG), for consistency. We agree <strong>with</strong>this recommendation and havereassigned CPT code 95965 to APC 0066because the median cost in the dataavailable for this final rule <strong>with</strong>comment period for CPT code 95965 ofapproximately $1,741 is similar to themedian cost of APC 0066 ofapproximately $2,521. In contrast, themedian cost of APC 0067 ofapproximately $3,374 is substantiallyabove the median cost for CPT code95965. We note that the proceduredescribed by CPT code 95965 is a lowvolumeservice for which we have asingle bill frequency of 70, compared toa total bill frequency of 75, in our CY2012 OPPS final rule data. Although itis a low-volume service, single billsrepresent 93 percent of total frequencyfor CPT code 95965.<strong>Comment</strong>: <strong>Comment</strong>ers stated that thecosts of MEG are far higher than thecosts of electroencephalograms (EEG)and electrocardiograms (ECG) and thattherefore CMS should not use the CCRsfrom the cost centers for these servicesto reduce the charges for MEG to costs.Instead, according to commenters, CMSshould create a new cost center on theMedicare hospital cost report to isolatethe costs of MEG and calculate andapply a CCR from the dedicated MEGcost center to the charges for MEG tosecure a more accurate estimated costfor MEG.Response: We refer readers to sectionII.A.1.c. of this final rule <strong>with</strong> commentperiod for a summary of publiccomments and responses related to theuse of the CCRs for cost centers 3280(EKG and EEG) as primary and 5400(Electroencephalography) as secondary,to reduce the charges for MEG toestimated relative costs.<strong>Comment</strong>: <strong>Comment</strong>ers urged CMS torequire that hospitals use revenue codesthat are specific to MEG. One hospitalthat furnished comments indicated thatits MEG services are furnished throughthe radiology department, but that thedepartment through which MEGservices are furnished varies acrosshospitals. (As indicated previously, theAPC Panel recommended that CMSimplement appropriate edits requiringhospitals to use the MEG specificrevenue codes, 086X, <strong>with</strong> CPT codes95965, 95966, and 95967.)Response: As we indicate in theSection 20.5, Chapter 4, of the MedicareClaims Processing Manual, generally,CMS does not instruct hospitals on theassignment of HCPCS codes to revenuecodes for services provided under OPPSbecause hospitals’ assignment of costvary (available on the CMS Web site at:http://www.cms.gov/Manuals; selectInternet Only Manuals). Where explicitVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00125 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2instructions are not provided, hospitalsshould report their charges under therevenue code that will result in thecharges being assigned to the same costcenter to which the cost of thoseservices are assigned in the cost report.We do not believe that establishing editsto require hospitals to report the chargesfor MEG under the dedicated MEGrevenue code series is necessary orappropriate. Medicare pays for a lowvolume of MEG services for which thereare no special requirements that wouldjustify creation of edits that forcehospitals to report particular revenuecodes for particular CPT codes.Specifically, in the CY 2012 final ruleclaims data, a small number of hospitalsreported one of the three CPT codes forMEG. We believe that it is notreasonable to implement national CPTto-revenuecode edits to enforce the useof MEG-specific revenue codes when asmall number of hospitals reported only144 lines of MEG total for the 3 MEGcodes in CY 2010. Specifically, in thefinal rule single bills on which we arebasing the CY 2012 median costs, 4hospitals reported 31 lines of CPT code95967; 6 hospitals reported 384 lines ofCPT code 95966; and 10 hospitalsreported 75 lines of CPT code 95965.The MEG codes were first paid underthe OPPS as new technology services inCY 2006 and the total frequency ofservices and the number of hospitalsthat furnish the service have alwaysbeen very low.For CY 2012, as stated previously, weare accepting the APC Panel’srecommendation to reassign CPT code95965 to APC 0066 because the CY 2012final rule median cost of CPT code95965 of approximately $1,741 is moresimilar to the final median cost of APC0066 of approximately $2,521 than tothe median cost of APC 0067, which isapproximately $3,374. We are notaccepting the APC Panel’srecommendation to implement editsrequiring that hospitals that furnishMEG must report the charges for theservice using the MEG specific revenuecode series 086X for the reasons statedabove. For a response to thecommenters’ requests for a dedicatedcost center on the Medicare cost report,we refer readers to section II.A.c. of thisfinal rule <strong>with</strong> comment period.c. Transcranial Magnetic StimulationTherapy (TMS) (APC 0218)For CY 2011, the CPT Editorial Paneldeleted CPT code 0160T (Therapeuticrepetitive transcranial magneticstimulation treatment planning) onDecember 31, 2010, and replaced it <strong>with</strong>CPT codes 90867 (Therapeuticrepetitive transcranial magnetic

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274246 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsstimulation treatment; planning)effective January 1, 2011. Similarly, CPTcode 0161T (Therapeutic repetitivetranscranial magnetic stimulationtreatment delivery and management, persession) was deleted on December 31,2010, and was replaced <strong>with</strong> CPT code90868 (Therapeutic repetitivetranscranial magnetic stimulationtreatment; delivery and management,per session) effective January 1, 2011.In Addendum B to the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod, CPT codes 90867 and 90868were assigned to APC 0216 (Level IIINerve and Muscle Tests) <strong>with</strong> apayment rate of approximately $186 andwere flagged <strong>with</strong> comment indicator‘‘NI’’ to indicate that these codes werenew codes for CY 2011 <strong>with</strong> an interimAPC assignment subject to publiccomment. We stated that we wouldaddress any public comments on issuesregarding these new codes in this CY2012 OPPS/ASC final rule <strong>with</strong>comment period.In addition, in the CY 2012 OPPS/ASC proposed rule, we proposed tocontinue to assign CPT codes 90867 and90868 to APC 0216 for CY 2012.<strong>Comment</strong>: One commenter on the CY2011 OPPS/ASC final rule <strong>with</strong>comment period agreed <strong>with</strong> the APCassignment for CPT code 90867 andindicated that APC 0216 is appropriate,based on the resources required toperform TMS planning and its similarityto other procedures <strong>with</strong> similarresource costs in this APC. However,this same commenter disagreed <strong>with</strong> theplacement of CPT code 90868 in APC0216. The commenter stated there areno clinically similar procedures in APC0216 whose resources are comparable tothat of TMS treatment delivery, andrecommended the reassignment of CPTcode 90868 from APC 0216 to APC 0320(Electroconvulsive Therapy), which hasa payment rate of approximately $414for CY 2011. The commenter assertedthat the hospital outpatient claims datafor TMS is not reliable and, therefore,should not be used as the basis for theassignment of CPT code 90868 to APC0216.Response: Although both CPT codes90867 and 90868 were new codes for CY2011, the services they describe are notnew because they were previouslydescribed by two predecessor CPTcodes, specifically Category III CPTcodes 0160T and 0161T. CPT code90867 was previously described by CPTcode 0160T, and CPT code 90868 waspreviously described by CPT code0161T. Both CPT codes 0160T and0161T were made effective July 1, 2006,and deleted on December 31, 2010.From July 1, 2006 through December 31,2010, both CPT codes 0160T and 0161Twere assigned to APC 0216.We do not agree <strong>with</strong> the commenterthat CPT code 90868 should be placedin APC 0320 based on resourcesimilarity. Based on analysis of ourhospital outpatient claims data forpredecessor CPT codes 0160T and0161T from CY 2006 through CY 2010,we believe that both CPT codes 90867and 90868 would be more appropriatelyplaced in APC 0218 (Level II Nerve andMuscle Tests) rather than in theproposed APC 0216. There were noclaims data for either procedure (asdescribed by CPT codes 0160T and0161T) during CY 2006, CY 2007, andCY 2008. For the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period, weused claims processed during CY 2009for ratesetting, and our claims datashowed a CPT median cost ofapproximately $176 for CPT code 0160Tbased on 17 single claims (out of 17total claims), and a CPT median costalso of approximately $176 for CPT code0161T based on 68 single claims (out of69 total claims), which closely resemblethe APC median cost of approximately$184 for APC 0216 for the CY 2011OPPS. However, for this CY 2012 OPPS/ASC final rule <strong>with</strong> comment period,which is based on the CY 2010 hospitaloutpatient claims for ratesetting, ourclaims data show a CPT median cost ofapproximately $88 for CPT code 0160T(which is now described by CPT code90867) based on 6 single claims (out of9 total claims), and a CPT median costof approximately $105 for CPT code0161T (which is now described by CPTcode 90868) based on 211 single claims(out of 221 total claims). Given ourclaims data for predecessor CPT codes0160T and 0161T, we believe that bothCPT codes 90867 and 90868 areappropriately placed in APC 0218,which has a final APC median cost ofapproximately $84 for CY 2012 based onclinical homogeneity and resource costs.We note that the OPPS methodologyallows hospitals to actively contributeon an ongoing basis to the ratesettingprocess and to influence future paymentrates for services by submitting correctlycoded and accurately priced claims forthe services they provide. According tothis methodology, it is generally not ourpolicy to judge the accuracy of hospitalcoding and charging for purposes ofratesetting. We also do not agree <strong>with</strong>the commenter that the proceduredescribed by CPT code 90868 would fitinto APC 0320 from a clinicalperspective because the provision ofelectroconvulsive therapy generallyrequires more extensive monitoring andservices (for example, muscle blockade)VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00126 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2than transcranial magnetic treatmentdelivery and management.Therefore, after consideration of thepublic comment we received on the CY2011 OPPS/ASC final rule <strong>with</strong>comment period, we are finalizing ourCY 2012 proposal, <strong>with</strong> modification.That is, we are reassigning CPT codes90867 and 90868 from APC 0216 to APC0218, which has a final CY 2012 mediancost of approximately $84. Given theinformation reflected in the CY 2012final rule claims data for predecessorCPT codes 0160T, which shows amedian cost of approximately $105, anda median cost of approximately $88 forCPT code 0161T, we believe our claimsdata show the costs of these proceduresare similar to the costs of otherprocedures assigned to APC 0218. Wealso believe that these procedures aresimilar to the other procedures assignedto APC 0218 from a clinical standpoint.We will reevaluate the APC assignmentfor CPT codes 90867 and 90868 infuture OPPS updates as additionalinformation becomes available to us.5. Ocular and Ophthalmic Servicesa. Placement of Amniotic Membrane(APCs 0233 and 0244)For the CY 2011 update, the AMACPT Editorial Panel revised the longdescriptor for CPT code 65780 (Ocularsurface reconstruction; amnioticmembrane transplantation, multiplelayers) to include the words ‘‘multiplelayers’’ to further clarify the codedescriptor. In addition, the AMA CPTEditorial Panel created two new CPTcodes that describe the placement ofamniotic membrane on the ocularsurface <strong>with</strong>out reconstruction; onedescribing the placement of a selfretaining(non-sutured/non-glued)device on the surface of the eye, and theother describing a single layer ofamniotic membrane sutured to thesurface of the eye. Specifically, theAMA CPT Editorial Panel created CPTcodes 65778 (Placement of amnioticmembrane on the ocular surface forwound healing; self-retaining) and65779 (Placement of amnioticmembrane on the ocular surface forwound healing; single layer, sutured),effective January 1, 2011.As has been our practice since theimplementation of the OPPS in 2000,we review all new procedures beforeassigning them to an APC. Indetermining the APC assignments forCPT codes 65778 and 65779, we tookinto consideration the clinical andresource characteristics involved <strong>with</strong>placement of amniotic membraneproducts on the eye for wound healingvia a self-retaining device and a sutured,

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74247jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2single-layer technique. In the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 72402), we assigned CPTcode 65780 to APC 0244 (Corneal andAmniotic Membrane Transplant) <strong>with</strong> aCY 2011 payment rate of approximately$2,681. We assigned CPT code 65778 toAPC 0239 (Level II Repair and PlasticEye Procedures) <strong>with</strong> a payment rate ofapproximately $559, and CPT code65779 to APC 0255 (Level II AnteriorSegment Eye Procedures) <strong>with</strong> apayment rate of approximately $519. Inaddition, we assigned both CPT codes65778 and 65779 to comment indicator‘‘NI’’ in Addendum B of the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod to indicate that both codes werenew codes for CY 2011 <strong>with</strong> an interimAPC assignment subject to publiccomment. We further stated that wewould address any public comments onissues regarding these new codes in thisCY 2012 OPPS/ASC final rule <strong>with</strong>comment period.At the APC Panel at the February 28–March 1, 2011 meeting, a presenterrequested the reassignment of both newCPT codes 65778 and 65779 to APC0244, which is the same APC to whichCPT code 65780 is assigned. Thepresenter indicated that, prior to CY2011, the procedures described by CPTcodes 65578 and 65779 were previouslyreported under the original version ofCPT code 65780, which did not specify‘‘multiple layers,’’ and, as such, thesenew codes should continue to beassigned to APC 0244. Further, thepresenter stated that the costs of thenew procedures described by CPT codes65778 and 65779 are very similar to theprocedure described by CPT code65780.The APC Panel recommended thatCMS reassign both CPT codes 65778and 65779 to APC 0233 (Level IIIAnterior Segment Eye Procedures),citing clinical similarity to proceduresalready in APC 0233. Based on clinicalas well as resource similarity to theother procedures currently assigned toAPC 0233, in the CY 2012 OPPS/ASCproposed rule (76 FR 42237), weproposed to accept the APC Panel’srecommendations to reassign CPT code65778 from APC 0239 to APC 0233 andto reassign CPT code 65779 from APC0255 to APC 0233. However, basedupon our further review and analysis ofthe clinical characteristics of theprocedure described by CPT code65778, we also proposed toconditionally package CPT code 65778.The service described by CPT code65778 would rarely be provided as aseparate, stand-alone service in theHOPD; it would almost exclusively beprovided in addition to and followinganother procedure or service. Ourmedical advisors indicated that theprocedure described by CPT code 65778is not significantly different thanplacing a bandage contact lens on thesurface of the eye to cover a cornealepithelial defect. CPT code 65778describes the simple placement of aspecial type of bandage (a self-retainingamniotic membrane device) on thesurface of the eye, which would mostcommonly be used in the HOPD tocover the surface of the eye after aprocedure that results in a cornealepithelial defect. In fact, the selfretainingamniotic membrane device isstructurally similar to a bandage contactlens, except that the central material isamniotic membrane instead of contactlens polymer. Given the characteristicsof this procedure, the device used in theprocedure, and its likely use in theHOPD, we proposed to conditionallypackage CPT code 65778 for CY 2012and reassign its status indicator from‘‘T’’ to ‘‘Q2’’ to indicate that theprocedure is packaged when it is billedon the same date <strong>with</strong> anotherprocedure or service that is alsoassigned to status indicator ‘‘T.’’Otherwise, separate payment would bemade for the procedure.In summary, for CY 2012, weproposed to reassign CPT code 65778from APC 0239 to APC 0233 <strong>with</strong> aconditionally packaged status of ‘‘Q2,’’to reassign CPT code 65779 from APC0255 to APC 0233, which had aproposed median cost of approximately$1,214, and to continue to assign CPTcode 65780 to APC 0244, which had aproposed median cost of approximately$2,767.At the August 2011 APC PanelMeeting, a presenter urged the Panel torecommend to CMS not to conditionallypackage CPT code 65778 for CY 2012,and instead, assign it to status indicator‘‘T.’’ Based on information presented atthe meeting, and after further discussionon the issue, the APC Panelrecommended that CMS reassign thestatus indicator for CPT code 65778from conditionally packaged ‘‘Q2’’ tostatus indicator ‘‘T.’’<strong>Comment</strong>: Several commenters urgedCMS not to finalize its proposal toconditionally package CPT code 65778by assigning it to status indicator ‘‘Q2,’’and instead adopt the APC Panel’srecommendation to assign it to statusindicator ‘‘T.’’ One commenterexpressed concern that conditionallypackaging CPT code 65778 isinappropriate because it will result inno payment for the procedure despitethe significant costs hospitals incur infurnishing the service, which includesthe cost of the Prokera device (the self-VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00127 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2retaining amniotic membrane device)that is used <strong>with</strong> this procedure.Further, this same commenter disagreed<strong>with</strong> CMS’ assertion that the servicedescribed by CPT code 65778 is merelya minor procedure that involves placinga bandage contact lens on the surface ofthe eye, and stated that the service is asignificant, separate procedure thatshould continue to be separately paid.Response: We disagree that theprocedure described by CPT code 65778is a significant procedure. Theprocedure has been described by themanufacturer as ‘‘like inserting a contactlens.’’ The manufacturer’s Web sitestates the following about the Prokeraself-retaining amniotic membranedevice: ‘‘The ProKera® deviceconfiguration enables easy insertion inthe office, hospital bedside or followingsurgical procedures to preventadhesions while delivering the woundrepair and wound healing actions ofamniotic membrane.’’ Because this is atype of specialized bandage that istypically placed on the surface of theeye immediately after a surgery that hasresulted in a corneal epithelial defect,we believe that assigning CPT code65778 to a conditionally packaged statusencourages hospitals to use resourcesmore efficiently. We expect hospitals toprovide only necessary, high qualitycare and to provide that care asefficiently as possible. We expect that,for most surgically induced cornealepithelial defects, hospitals will use aconventional eye patch or a standardbandage contact lens to promote fasterwound healing and greater patientcomfort, and that they will reserve veryhigh cost products, such as the selfretainingamniotic membrane device, forrare and exceptional vision-threateningcases. We believe that the conditionalpackaging of CPT code 65778 isconsistent <strong>with</strong> this expectation andwill encourage efficient hospitaloutpatient care under thesecircumstances. Based on the nature ofthis procedure, we believe thatassigning CPT code 65778 to statusindicator ‘‘Q2’’ is appropriate under thehospital OPPS. Therefore, we are notaccepting the APC Panel’srecommendation to reassign thisprocedure to status indicator ‘‘T.’’After consideration of the publiccomments we received and the APCPanel’s August 2011 recommendation,we are finalizing our proposal, <strong>with</strong>outmodification, to assign status indicator‘‘Q2’’ to CPT code 65778. When theservice is furnished <strong>with</strong> a separatelypayable surgical procedure <strong>with</strong> statusindicator ‘‘T’’’ on the same day,payment for CPT code 65778 ispackaged. Otherwise, payment for CPT

74248 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationscode 65778 is made separately throughAPC 0233, which has a CY 2012 finalmedian cost of approximately $1,164.We also are finalizing our proposal toaccept the APC Panel’s recommendationto reassign CPT code 65779 from APC0255 to APC 0233, which has a final CY2012 median cost of approximately$1,164. Further, we are finalizing ourproposal, <strong>with</strong>out modification, tocontinue to assign CPT code 65780 toAPC 0244, which has a final CY 2012median cost of approximately $2,654.As has been our practice since theimplementation of the OPPS, weannually review all the items andservices <strong>with</strong>in an APC group todetermine, <strong>with</strong> respect tocomparability of the use of resources,for any 2 times rule violations. Inmaking this determination, we reviewour claims data and determine whetherwe need to make changes to the currentAPC assignments for the following year.In CY 2012, we will again reevaluate thestatus indicator and APC assignmentsfor CPT codes 65778, 65779, and 65780for the CY 2013 OPPS rulemaking cycle.The amniotic membrane procedures andtheir CY 2012 final APC assignments aredisplayed in Table 24 below.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2b. Insertion of Anterior SegmentAqueous Drainage Device (APC 0673)The AMA CPT Editorial Panel createdcategory III CPT code 0253T (Insertionof anterior segment aqueous drainagedevice, <strong>with</strong>out extraocular reservoir;internal approach, into thesuprachoroidal space) effective onJanuary 1, 2011. We assigned CPT code0253T to APC 234 (Level IV AnteriorSegment Eye Procedures) in the OPPS,effective January 1, 2011 <strong>with</strong> acomment indicator ‘‘NI’’ in AddendumB of the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period (75 FR 72448).For CY 2012, we proposed to continueto assign CPT code 0253T to APC 0234,<strong>with</strong> a proposed payment rate ofapproximately $1,754.<strong>Comment</strong>: A few commentersrequested that CMS reassign CPT code0253T to APC 0673 (Level V AnteriorSegment Eye Procedures), <strong>with</strong> aproposed CY 2012 payment rate ofapproximately $2,901. The commentersclaimed that CPT code 0253T would bemore appropriately placed in APC 0673based on clinical homogeneity andresource costs. Specifically, thecommenters stated that, because CPTcode 0253T is a glaucoma treatment<strong>with</strong> an implantable device, it should beassigned to APC 0673 because, unlikethe procedures assigned to APC 0234,the procedures assigned to APC 0673are primarily glaucoma treatments <strong>with</strong>an implantable device. <strong>Comment</strong>ers alsostated that the procedure described byCPT code 0253T is very similar to theprocedure described by CPT code 0191T(Insertion of anterior segment aqueousdrainage device, <strong>with</strong>out extraocularreservoir; external approach), which isassigned to APC 0673. <strong>Final</strong>ly, thecommenters stated that the cost of thedevice used in CPT code 0253T issimilar to that of other devices used inglaucoma treatment procedures assignedto APC 0673.Response: After revisiting this issueand reexamining the clinical andresource characteristics of CPT code0253T, we agree <strong>with</strong> the commentersthat CPT code 0253T is similarclinically and in terms of resourceutilization to the procedures currentlyassigned to APC 0673. In fact, theprocedure described by CPT code 0253Tis almost the same as the proceduredescribed by CPT code 0191T, which iscurrently assigned to APC 0673. Also,both of these procedures employ thesame type of internally insertedimplantable glaucoma drainage device.Therefore, after consideration of thepublic comments we received, we aremodifying our proposal and reassigningCPT code 0253T from APC 0234 to APC0673, which has a final median cost ofapproximately $2,911 for CY 2012. Wewill monitor claims and cost report datarelated to CPT code 0253T as the databecome available for future updates.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00128 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2c. Scanning Ophthalmic DiagnosticImaging (APC 0230)For CY 2011, the CPT Editorial Paneldeleted CPT codes 0187T (Scanningcomputerized ophthalmic diagnosticimaging, anterior segment, <strong>with</strong>interpretation and report, unilateral)and 92135 (Scanning computerizedophthalmic diagnostic imaging,posterior segment, (e.g., scanning laser)<strong>with</strong> interpretation and report,unilateral) on December 31, 2010, andreplaced them <strong>with</strong> three new codeseffective January 1, 2011. Specifically,CPT code 0187T was replaced <strong>with</strong> CPTcode 92132 (Scanning computerizedophthalmic diagnostic imaging, anteriorsegment, <strong>with</strong> interpretation and report,unilateral or bilateral), and CPT code92135 was replaced <strong>with</strong> CPT codes92133 (Scanning computerizedophthalmic diagnostic imaging,posterior segment, <strong>with</strong> interpretationand report, unilateral or bilateral; opticnerve) and 92134 (Scanningcomputerized ophthalmic diagnosticimaging, posterior segment, <strong>with</strong>interpretation and report, unilateral orbilateral; retina).In Addendum B of the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod, CPT codes 92132, 92133, and92134 were assigned to APC 0230 (LevelI Eye Tests & Treatments) <strong>with</strong> apayment rate of approximately $42 andwere flagged <strong>with</strong> comment indicator‘‘NI’’ to indicate that these codes wereER30NO11.039

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74249jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2new codes for CY 2011 <strong>with</strong> an interimAPC assignment subject to publiccomment. We stated that we wouldaddress any public comments on issuesregarding these new codes in this CY2012 OPPS/ASC final rule <strong>with</strong>comment period.In addition, in the CY 2012 OPPS/ASC proposed rule, we proposed tocontinue to assign CPT codes 92132,92133, and 92134 to APC 0230.<strong>Comment</strong>: One commenter on the CY2011 OPPS/ASC final rule <strong>with</strong>comment period requested that CMSreassign CPT codes 92132, 92133, and92134 from APC 0230 to APC 0698(Level II Eye Tests & Treatments), whichhas a CY 2011 payment rate ofapproximately $67, to account for thelong descriptor changes for the newcodes. Specifically, the commenterindicated that the predecessor codes,specifically, CPT codes 0187T and92135 described a unilateral procedure;however, the new codes, specifically,CPT codes 92132, 92133, and 92134,describe a ‘‘unilateral or bilateral’’procedure in the code descriptors.Further, the commenter expressedconcern that the new codes are paid athalf the CY 2010 payment rate, whichthe commenter believed is inappropriatesince the typical patient encounterinvolves two tests.Response: As indicated above, CPTcodes 92132, 92133, and 92134 wereassigned to APC 0230 effective onJanuary 1, 2011. We assigned these newcodes to the same APC and statusindicator as their predecessor CPT codes0187T and 92135. We note that thesepredecessor CPT codes were activecodes for some time. CPT code 92135was made effective January 1, 1999 anddeleted on December 31, 2010, whileCPT code 0187T was made effectiveJanuary 1, 2008, and deleted onDecember 31, 2010. Given the history ofthe predecessor codes, we reviewed ourclaims.For the CY 2012 update, the paymentrates are based on data from claimssubmitted during CY 2010 according tothe standard OPPS ratesettingmethodology. Based on our analysis, wefound significant claims data forpredecessor CPT codes 92135 and0187T. Our CY 2012 final claims datashow that the median cost for CPT code92135 is approximately $41 based on191,170 single claims (out of 191,934total claims), and approximately $44based on 341 single claims (out of 348total claims) for CPT code 0187T. Webelieve that the final rule median costsof approximately $41 and $44 aresimilar to the final median cost ofapproximately $48 for APC 0230. Wealso believe that the resourcesconsumed in performing theseprocedures are not significantlydifferent for unilateral versus bilateralimaging.After consideration of the publiccomment we received on the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod, we are finalizing our CY 2012proposal, <strong>with</strong>out modification. Giventhe significant information reflected inthe CY 2012 final rule claims data forpredecessor CPT codes 92135 and0187T, we believe our claims data aresufficient for us to continue to assignthese services to APC 0230, which hasa final CY 2012 median cost ofapproximately $45. We will reevaluatethe APC assignment for CPT codes92132, 92133, and 92134 in future OPPSupdates as additional informationbecomes available to us. Also, we expectto have the first claims data available forCPT codes 92132, 92133, and 92134 forthe CY 2013 OPPS/ASC rulemakingcycle.d. Intraocular Laser Endoscopy (APC0233)CPT code 66711 (Ciliary bodydestruction; cyclophotocoagulation,endoscopic) is assigned to APC 0233(Level III Anterior Segment EyeProcedures) for CY 2011, <strong>with</strong> a CY2011 payment rate of $1,233.03. In theCY 2012 OPPS/ASC proposed rule, weproposed continued assignment for CPTcode 66711 for CY 2012 to APC 0233,<strong>with</strong> a proposed payment rate of$1,171.65. The final rule median cost forAPC 0233 is approximately $1,164.<strong>Comment</strong>: One commenter, themanufacturer of a single use intraocularlaser endoscope, indicated that thedevice used to accomplish CPT code66711 is used to treat patients <strong>with</strong>glaucoma and retinal disease. Thecommenter had previouslymanufactured a multiple use version ofthe intraocular laser endoscope, andclaimed that the multiple use devicehad lower per unit costs per use thanthe new single use device, but that itcould no longer be manufactured due tosupply constraints of a part used in themanufacturing process. The commenterstated that the most frequent servicecode used to deliver this service isrepresented by CPT code 66711, andstated that the multiple procedurediscount typically applies, whichreduces the OPPS payment rate toapproximately $616 for CY 2011. Thecommenter stated that the procedure isalso performed in the ASC setting <strong>with</strong>a payment rate of approximately $694for CY 2011, but a multiple procedurediscount typically applies, for apayment rate of approximately $347.The commenter requested that CMS useVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00129 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2one of several suggested approaches topay for the higher costs associated <strong>with</strong>the single use device. One approach thecommenter mentioned was to establisha device pass-through category for thesingle use intraocular laser endoscope,while noting that it had filed an OPPSpass-through application, and that itexpected a separate decision on thepass-through application. Anotheralternative suggested by the commenterwas for CMS to use its equitableadjustment authority under section1833(t)(2)(E) of the SSA, to adjustpayment rates when necessary to ensurepatients’ treatment options are notinappropriately limited as a result ofCMS policies. The third option thecommenter listed was to temporarilyassign the CPT code 66711 procedure toa different clinical APC or to a newtechnology APC, based on external dataprovided by the commenter, untilMedicare claims data are available forratesetting.Response: As stated above, CPT code66711 is assigned to APC 0233 for CY2011, which has a CY 2011 final rulemedian cost of approximately $1,168.CPT code 66711 has a CY 2012 finalmedian cost of approximately $1,430.The commenter stated that the CPT code66711 procedure will not change <strong>with</strong>use of the single use laser endoscopeover the multi-use endoscope. We donot believe that it is necessary to invokethe equitable adjustment clause in thiscase. There are several clinical APCs foranterior segment eye procedures that arepotential APCs for this type of service,and the particular APC assignmentdepends in part on the underlyingclaims data for the procedure. Uponfurther review of the various proceduresin APC 0233 and APC 0234 (Level IVAnterior Segment Eye Procedures), webelieve that CPT code 66711 is moreclinically similar to the range ofprocedures in APC 0234 than theprocedures in APC 0233. Both APCs0233 and 0234 consist of anteriorsegment eye procedures, but APC 0234includes several intraocular proceduresfor the treatment of glaucoma, whichalso describes CPT code 66711. From aresource perspective, CPT code 66711fits in either APC 0233 or APC 0234,which have CY 2012 final median costsof approximately $1,164 and $1,631,respectively. Therefore, we arereassigning CPT code 66711 to APC0234 for CY 2012.We agree <strong>with</strong> the commenter that wewill decide on any device pass-throughapplication by means of our normalprocess for that payment mechanism.

74250 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES26. Orthopedic and MusculoskeletalServicesa. Percutaneous Laminotomy/Laminectomy (APC 0208)We created new HCPCS code C9729(Percutaneous laminotomy/laminectomy (intralaminar approach)for decompression of neural elements,(<strong>with</strong> ligamentous resection,discectomy, facetectomy and/orforaminotomy, when performed) anymethod under indirect image guidance,<strong>with</strong> the use of an endoscope whenperformed, single or multiple levels,unilateral or bilateral; lumbar), andassigned it to APC 0208 (Laminotomiesand Laminectomies) effective April 1,2011. AMA’s CPT Editorial Panelthereafter created CPT code 0275T(Percutaneous laminotomy/laminectomy (intralaminar approach)for decompression of neural elements,(<strong>with</strong> or <strong>with</strong>out ligamentous resection,discectomy, facetectomy and/orforaminotomy) any method underindirect image guidance (eg,fluoroscopic, CT), <strong>with</strong> or <strong>with</strong>out theuse of an endoscope, single or multiplelevels, unilateral or bilateral; lumbar)effective July 1, 2011. We assigned CPTcode 0275T to APC 0208 and deletedHCPCS code C9729 effective July 1,2011. For CY 2011, APC 0208 has apayment rate of $3,535.92. For CY 2012we proposed to maintain assignment ofpercutaneous laminotomy/laminectomy(HCPCS code C9729 is used in the CY2012 proposed rule, while CPT code0275T is used in this CY 2012 final rule<strong>with</strong> comment period) to APC 0208,because we believe the service is similarclinically and <strong>with</strong> regard to resourcesto other APC 0208 procedures, APC0208 had a CY 2012 proposed rulemedian cost of approximately $3,676,and has a final rule median cost ofapproximately $3,553<strong>Comment</strong>: One commenter believed itis appropriate to assign CPT code 0275Tto APC 0208, in the case of ‘‘unilateral’’percutaneous laminotomy/laminectomy,but not in the case of bilateral ormultiple level procedures, which are,according to the commenter, moreresource intensive. The commenterclaimed that the phrase ‘‘unilateral orbilateral’’ in the CPT code 0275Tdescriptor suggests to providers that thecode must be reported unmodifiedwhen the procedure is performed eitherunilaterally or bilaterally, which willpreclude the use of modifier ‘‘50’’ whenthe bilateral approach is employed, eventhough additional physician andfacilities resources are used.Additionally, the commenter believedthat the CPT code 0275T descriptor’sinclusion of ‘‘single or multiple levels’’will preclude providers from reportingmodifier ‘‘51’’ <strong>with</strong> CPT code 0275T, toreflect the additional resourcesconsumed when the procedure isperformed on multiple levels of thespine. Therefore, the commenterbelieved that the APC 0208 paymentrate is not adequate when CPT code0275T is performed bilaterally or onmultiple levels. The commenterrecommended that, for CY 2012, CMSeither allow the use of modifiers whenCPT code 0275T is used, or that CMScreate a HCPCS G-code that describesthe service when performed bilaterallyor on multiple levels. The commenteranticipated that the CPT Editorial Panelwill take up the issue of bilateral ormultiple levels in the CPT code 0275Tcode descriptor for CY 2013.Response: Concerning the request foravailability of modifiers 50 or 51, ormodification to the descriptor for CPTcode 0275T, we refer the commenter tothe CPT Editorial Panel. CPT code0275T is the property of the AMA, andCMS may not modify any CPT codes.We also will wait to see if the CPTEditorial Panel changes the descriptorfor CY 2013, and we will not create aHCPCS G-code for CY 2012.CPT code 0275T is a new codeeffective July 1, 2011 (as was itspredecessor code, HCPCS code C9729,which was available for one quarter,beginning April 1, 2011), and as suchwe have no claims data at this time. ForCY 2013, we should have partial CY2011 data for both HCPCS code C9729and CPT code 0275T, which we can useto reevaluate any APC assignment forpercutaneous laminotomy/laminectomyfor CY 2013. These claims data willinclude the hospital costs related to allof the various clinical options toperform this service, (that is, unilateralversus bilateral, and single versusmultiple levels) to the extent they wereperformed. Based on those claims, wewill reevaluate the APC placement ofCPT code 0275T.After consideration of the publiccomments we received, we arefinalizing our proposed assignment ofCPT code 0275T to APC 0208 for CY2012, which is clinically similar to theprocedures in APC 0208, and which hasa median cost of approximately $3,553.b. Level II Arthroscopy (APC 0042)The CY 2012 proposed rule mediancost for APC 0042 (Level II Arthroscopy)was approximately $3,485, based on5,676 single bill claims from the 28procedures assigned to APC 0042. TheCY 2011 final rule median is $3,301,based on 6,297 single bill claims fromthose 28 arthroscopic procedures. OurCY 2012 final rule data consist of aVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00130 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2median cost of approximately $3,996,based on 3,140 single bill claims basedon 234 procedures.<strong>Comment</strong>: One commenter believedthat the procedures currently assignedto APC 0042 have widely varyingmedian costs, which range fromapproximately $88 to more than$10,000, according to the CY 2012proposed rule data. The commenterclaimed that the APC currently violatesthe 2 times rule. The commenterrecommended that CMS reconfigureAPC 0042 and create two additionalAPCs in order to group proceduressimilar in clinical features and resourcestogether. The commenter recommendedthat CMS place the following hipprocedures in the reconfigured APC0042: CPT codes 29861 (Arthroscopy,hip, surgical; <strong>with</strong> removal of loosebody or foreign body), 29914(Arthroscopy, hip, surgical; <strong>with</strong>femoroplasty (ie, treatment of camlesion)), 29915 (Arthroscopy, hip,surgical; <strong>with</strong> acetabuloplasty (ie,treatment of pincer lesion)), and 29916(Arthroscopy, hip, surgical; <strong>with</strong> labralrepair). The commenter alsorecommended that CMS separate theremaining CPT codes in APC 0042 intonew APC 0043 (proposed descriptor‘‘Level III Upper ExtremityArthroscopy’’) and APC 0044 (Level IVLower Extremity Arthroscopy), <strong>with</strong>respective payment amounts based onthe median costs of those servicegroupings.Response: We do not agree that theHCPCS codes comprising APC 0042have widely varying median costs orthat there is a 2 times rule violation forservices currently assigned to APC 0042,as claimed by the commenter. As westated in the CY 2012 OPPS/ASCproposed rule (76 FR 42231), inaccordance <strong>with</strong> section 1833(t)(2) ofthe Act and § 419.31 of the regulations,we annually review the items andservices <strong>with</strong>in an APC group todetermine, <strong>with</strong> respect tocomparability of the use of resources, ifthe median cost of the highest cost itemor service <strong>with</strong>in an APC group is morethan 2 times greater than the median ofthe lowest cost item or service <strong>with</strong>inthat same group. In making thisdetermination, we consider only thoseHCPCS codes that are significant basedon the number of claims. We note that,for purposes of identifying significantHCPCS codes for examination in the 2times rule, we consider codes that havemore than 1,000 single major claims orcodes that have both greater than 99single major claims and contribute atleast 2 percent of the single majorclaims used to establish the APCmedian cost to be significant (75 FR

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations7425171832). Based on this rule, we have no2 times rule violations in APC 0042.Using our CY 2012 final rule claimsdata, the highest significant procedurein APC 0042 is CPT code 29827(Arthroscopy, shoulder, surgical; <strong>with</strong>rotator cuff repair) <strong>with</strong> a final mediancost of approximately $4,817, and thelowest significant procedure in the APCis CPT code 29823 (Arthroscopy,shoulder, surgical; debridement,extensive), <strong>with</strong> a final median cost ofapproximately $2,959, leading to a ratioof approximately 1.6, well below the 2.0required for a violation. Furthermore,we do not agree <strong>with</strong> the commenter’srecommendation to establish anarthroscopy APC <strong>with</strong> the four hiparthroscopy procedures, specifically,CPT codes 29861, 29914, 29915, and29916, as a viable alternative, becauseall four of those CPT codes have no CY2010 median costs. Therefore, therewould be no basis for establishing anAPC median cost and payment amountfor those four procedures. We see nocompelling reason to revise the currentprocedures of APC 0042 for CY 2012because they are similar both clinicallyand in terms of resource utilization. Wewill keep the current HCPCS codeconfiguration of APC 0042 for CY 2012,and will review the APC 0042 andcomponent HCPCS code median costsagain next year for clinical and resourcesimilarity.c. Closed Treatment Fracture of Finger,Toe, and Trunk (APCs 0129, 0138, and0139)In Addendum A (Proposed OPPSAPCs for CY 2012) of the CY 2012OPPS/ASC proposed rule, we proposedto continue <strong>with</strong> the existing grouptitles for APCs 0129, 0138, and 0139 toread as follows:• APC 0129 (Level I Closed TreatmentFracture Finger/Toe/Trunk)• APC 0138 (Level II Closed TreatmentFracture Finger/Toe/Trunk)• APC 0139 (Level III Closed TreatmentFracture Finger/Toe/Trunk)We note that Addendum A did notappear in the printed version of theFederal Register as part of the CY 2012OPPS/ASC proposed rule. Rather, it waspublished and made available only viathe Internet on the CMS Web site at:http://www.cms.gov/.<strong>Comment</strong>: One commenterrecommended that CMS remove thewords ‘‘Finger/Toe/Trunk’’ from thegroup titles for APCs 0129, 0138, and0139 because there is no need to makethis distinction since there are no otherAPCs that describe closed treatmentfractures.Response: We appreciate thecommenter’s suggestion, and we acceptthis recommendation. We agree thatremoving the words ‘‘Finger/Toe/Trunk’’ from the group titles for APCs0129, 0138, and 0139 moreappropriately describe these APCs.After consideration of the publiccomment we received, we are revisingthe group titles for APCs 0129, 0138,and 0139 to ensure that the titledescribes all procedures assigned tothese APCs. Table 25 shows the finalgroup titles for APCs 0129, 0138, and0139 for CY 2012.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2d. Level I and II Strapping and CastApplication (APCs 0058 and 0426)In Addendum A (Proposed OPPSAPCs for CY 2012) of the CY 2012OPPS/ASC proposed rule, we proposedto continue <strong>with</strong> the existing grouptitles for APCs 0058 and 0426 to read asfollows:• APC 0058 (Level I Strapping and CastApplication)• APC 0426 (Level II Strapping and CastApplication)We note that Addendum A did notappear in the printed version of theFederal Register as part of the CY 2012OPPS/ASC proposed rule. Rather, it waspublished and made available only viathe Internet on the CMS Web site at:http://www.cms.gov/.<strong>Comment</strong>: One commenter statedthere is only a single level APC for thestrapping procedures; therefore, thedesignation ‘‘Level I’’ is not appropriatein the group title because there is no‘‘Level II.’’Response: We disagree <strong>with</strong> thecommenter. There is another level APCfor the strapping procedures,specifically, APC 0426 which reads‘‘Level II Strapping and CastApplication.’’ Under the OPPS, APC0426 was made effective January 1,2005. We remind hospitals that APCs<strong>with</strong> multiple levels are not always insequential order and, as a result, maynot always appear close to each other inAddendum B.After consideration of the publiccomment we received, we are finalizingour CY 2012 proposal, <strong>with</strong>outmodification, to continue to title APC0058 to read ‘‘Level I Strapping and CastApplication’’ and APC 0426 to read‘‘Level II Strapping and CastApplication.’’VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00131 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR27. Radiology Servicesa. Proton Beam Therapy (APC 0664 and0667)For CY 2012, we proposed to continueto assign CPT codes 77520 (Protontreatment delivery; simple, <strong>with</strong>outcompensation) and 77522 (Protontreatment delivery; simple, <strong>with</strong>compensation) to APC 0664 (Level IProton Beam Radiation Therapy), whichhad a proposed payment rate ofapproximately $992. We also proposedto continue to assign CPT codes 77523(Proton treatment delivery;intermediate) and 77525 (Protontreatment delivery; complex) to APC0667 (Level II Proton Beam RadiationTherapy), which had a proposedpayment rate of approximately $1,298.<strong>Comment</strong>: Some commentersappreciated the relative stability in thehospital outpatient proton therapy ratesand supported the proposed paymentsfor the proton beam treatment CPTcodes.ER30NO11.040

74252 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Other commenters indicated that theywere pleased <strong>with</strong> CMS’ proposal toexempt APC 0667 from the 2 times rulebased on the list of APCs that appearedin Table 18 of the CY 2012 OPPS/ASCproposed rule, but expressed concern<strong>with</strong> the proposed decrease in paymentsfor the proton beam therapy APCs.Response: In accordance <strong>with</strong>sectionS 1833(t)(2)(B) and 1833(t)(9)(A)of the Act and §§ 419.31 and 419.50 ofthe regulations, we annually review theitems and services <strong>with</strong>in an APC groupto determine, <strong>with</strong> respect tocomparability of the use of resourcesand clinical homogeneity. The paymentrates, including the relative weights, setannually for these services are based onreview of the claims data used forratesetting. For the CY 2012 update, thepayment rates for APCs 0664 and 0667are based on data from claims submittedduring CY 2010 according to thestandard OPPS ratesetting methodology.Specifically, we used 12,263 singleclaims (out of 13,364 total claims) fromCY 2012 proposed rule claims data (andwe used 13,437 single claims (out of14,519 total claims) from CY 2012 finalrule claims data) to calculate the mediancost upon which the CY 2012 paymentrate for APC 0664 is based. In addition,we used 3,379 single claims (out of3,879 total claims) from CY 2012proposed rule claims data (and we used3,638 single claims (out of 4,145 totalclaims) from CY 2012 final rule claimsdata) to calculate the median cost forAPC 0667.For CY 2012, we are setting the finalpayment rate for proton beam therapybased on median costs of approximately$1,184 for APC 0664 and approximately$1,549 for APC 0667. We note that thesemedian costs are higher than the mediancosts upon which the CY 2012 proposedpayment rates for these APCs werebased ($1,028.10 and $1,344.90,respectively) and higher than themedian costs upon which the final CY2011 payment rates were based($1,020.72 and $1,335.24, respectively).As we have in the past (75 FR 71916),we note that our cost-findingmethodology is based on reducing eachhospital’s charge for its services to anestimated cost by applying the mostdiscrete hospital-specific CCR availablefor the hospital that submitted theclaim. Therefore, it is the hospitals’claims and cost reports that determinethe estimated costs that are used tocalculate the median cost for eachservice and, when aggregated into APCgroups, the hospital data are used tocalculate the median cost for the APCon which the APC payment rate isbased.After consideration of the publiccomments we received, we arefinalizing our CY 2012 proposal,<strong>with</strong>out modification, to pay for protonbeam therapy through APCs 0664 and0667, <strong>with</strong> payment rates based uponthe most current claims and cost reportdata for these services. Specifically, wewill continue to assign CPT codes 77520and 77522 to APC 0664, <strong>with</strong> a final CY2012 APC median cost of approximately$1,184, and CPT codes 77523 and 77525to APC 0667, <strong>with</strong> a final CY 2012 APCmedian cost of approximately $1,549because we continue to believe theseplacements are appropriate in light ofthe resource cost and clinical intensityof the services describe by these CPTcodes.b. Stereotactic Radiosurgery (SRS)Treatment Delivery Services (APCs0065, 0066, 0067, and 0127)For CY 2012, we proposed to continueto assign CPT code 77371 (Radiationtreatment delivery, stereotacticradiosurgery (SRS), complete course oftreatment of cranial lesion(s) consistingof 1 session; multi-source Cobalt 60based) to APC 0127 (Level IVStereotactic Radiosurgery, MRgFUS, andMEG), <strong>with</strong> a proposed payment rate ofapproximately $7,368. We alsoproposed to continue to recognize fourexisting HCPCS G-codes that describelinear accelerator-based SRS treatmentdelivery services for separate paymentin CY 2012. Specifically, we proposedthe following: to assign HCPCS codeG0173 (Linear accelerator basedstereotactic radiosurgery, completecourse of therapy in one session) andHCPCS code G0339 (Image-guidedrobotic linear accelerator-basedstereotactic radiosurgery, completecourse of therapy in one session or firstsession of fractionated treatment) toAPC 0067 (Level III StereotacticRadiosurgery, MRgFUS, and MEG), <strong>with</strong>a proposed payment rate ofapproximately $3,251; to assign HCPCScode G0251 (Linear accelerator-basedstereotactic radiosurgery, deliveryincluding collimator changes andcustom plugging, fractionated treatment,all lesions, per session, maximum fivesessions per course of treatment) to APC0065 (Level I Stereotactic Radiosurgery,MRgFUS, and MEG), <strong>with</strong> a proposedpayment rate of approximately $864;and to assign HCPCS code G0340(Image-guided robotic linear acceleratorbasedstereotactic radiosurgery, deliveryincluding collimator changes andcustom plugging, fractionated treatment,all lesions, per session, second throughfifth sessions, maximum five sessionsper course of treatment) to APC 0066(Level II Stereotactic Radiosurgery,VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00132 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2MRgFUS, and MEG), <strong>with</strong> a proposedpayment rate of approximately $2,447.Further, we proposed to continue toassign SRS CPT codes 77372 (Radiationtreatment delivery, stereotacticradiosurgery (SRS) (complete course oftreatment of cerebral lesion(s) consistingof 1 session); linear accelerator based)and 77373 (Stereotactic body radiationtherapy, treatment delivery, per fractionto 1 or more lesions, including imageguidance, entire course not to exceed 5fractions) status indicator ‘‘B’’ (Codesthat are not recognized by OPPS whensubmitted on an outpatient hospital PartB bill type (12x and 13x)) under theOPPS, to indicate that these CPT codesare not payable under the OPPS.<strong>Comment</strong>: One commenter requestedthat CMS continue to recognize HCPCScodes G0173, G0251, G0339, and G0340for CY 2012 as proposed and supportedthe proposed assignment of statusindicator ‘‘B’’ to CPT codes 77372 and77373. The commenter alsorecommended that CMS revise the codedescriptors for HCPCS code G0173,G0251, G0339, and G0340 to distinguishbetween robotic and nonrobotic gantrybasedSRS systems. Based on analysis ofclaims data for HCPCS codes G0339 andG0340, the commenter found that 41and 42 percent of the claims submittedfor HCPCS codes G0339 and G0340,respectively, during CY 2010 were paidto hospitals <strong>with</strong>out image-guidedrobotic SRS systems. The commentersuggested specific code descriptorchanges for the four HCPCS G-codes toensure submission of correctly codedclaims. Alternatively, the commenterrequested that CMS provide guidanceon the reporting of the existing SRSHCPCS G-codes if no change is made tothe HCPCS code descriptors.Response: As we have stated in thepast (75 FR 71915), these HCPCS G-codes for SRS have been in effect forseveral years and, based on questionsbrought to our attention by hospitals, wehave no reason to believe that hospitalsare confused about the reporting ofthese codes. Moreover, based on ouranalysis of the hospital outpatientclaims data that we use for ratesetting,we see resource differences reflected inthe median costs of the four HCPCS G-codes that are reasonably consistent<strong>with</strong> our expectations for differentmedian costs for the services based onthe current code descriptors. Wecontinue to believe it would beconfusing to hospitals if we were torevise the code descriptors for HCPCScodes G0173, G0251, G0339, and G0340at this point in time and could lead toinstability in our median costs andinaccurate payments for some services.Therefore, we believe that modifying the

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74253jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2HCPCS G-code descriptors is notnecessary for us to continue to provideappropriate payment for the servicesthey describe. Further, we haveprovided instruction on the reporting ofthese SRS codes in Chapter 4, Section200.3 of the Medicare Claims ProcessingManual of the Internet-Only Manual.After consideration of the publiccomment we received, we are finalizingour CY 2012 proposals, <strong>with</strong>outmodification, to maintain the existingCY 2011 APC assignments for the SRSHCPCS codes for CY 2012. Specifically,we are continuing to assign HCPCS G-codes G0173 and G0339 to APC 0067,which has a final CY 2012 APC mediancost of approximately $3,374; HCPCS G-code G0251 to APC 0065, which has afinal CY 2012 APC median cost ofapproximately $903; HCPCS G-codeG0340 to APC 0066, which has a finalCY 2012 APC median cost ofapproximately $2,521; and CPT code77371 to APC 0127, which has a finalCY 2012 APC median cost ofapproximately $7,461 because wecontinue to believe these placements areappropriate in light of the resource costand clinical intensity of the servicesdescribe by these CPT codes. Inaddition, we are finalizing ourproposals, <strong>with</strong>out modification, tocontinue to assign CPT codes 77372 and77373 to status indicator ‘‘B’’ under theOPPS.c. Adrenal Imaging (APC 0408)For CY 2012, we proposed to reassignCPT code 78075 (Adrenal imaging,cortex and/or medulla) from APC 0408(Level III Tumor/Infection Imaging),which had a proposed payment rate ofapproximately $953, to APC 0414 (LevelII Tumor/Infection Imaging), which hada proposed payment rate ofapproximately $485.<strong>Comment</strong>: <strong>Comment</strong>ers questionedCMS’ rationale for the proposal toreassign CPT code 78075 from APC0408 to APC 0414, citing a lack ofclinical reasoning to justify itsmovement as well as CPT code 78075’scost similarity to a clinically similarprocedure assigned to APC 0408.<strong>Comment</strong>ers requested that CMSreevaluate the reassignment of CPT code78075 and consider maintaining itsplacement in APC 0408. <strong>Comment</strong>ersfurther recommended that CMS providerationale in all proposed rules when anyCPT code placement change isproposed.Response: After revisiting this issueand analyzing the final CY 2012 mediancost for CPT code 78075, we agree <strong>with</strong>commenters’ assertion that CPT code78075 should remain in APC 0408 and,therefore, we will continue to assignCPT code 78075 to APC 0408 for CY2012 based on its final median cost ofapproximately $997 (calculated using 99single claims out of 127 total claims),which is similar to the APC median costof APC 0408 of approximately $958. .We note that the proposed rule does notinclude service-specific discussions foreach separately paid HCPCS codereassignment or for each APC. Rather,we discuss the general methodologyused to calculate the median costs uponwhich the proposed payment rates arebased (76 FR 42183 through 42190) andthe principles applied in determiningAPC configurations (76 FR 42230through 42232). We discuss specificAPCs or services in the proposed ruleonly when we have a specific reason todo so, such as when we apply anonstandard ratesetting methodology tocalculate a proposed payment rate for aparticular item or service. In most cases,a proposed reduction of a median costfor an APC or for a HCPCS code that iscalculated from actual charges and costdata will not result in a service specificdiscussion in the propose rule. Thenumber of APCs and the volume ofHCPCS codes for which median costsare calculated prohibit a detailedexplanation of each in the proposedrule.After consideration of the publiccomments we received, we aremodifying our CY 2012 proposal toreassign CPT code 78075 to APC 0414and will instead continue to assign it toAPC 0408, <strong>with</strong> a final CY 2012 APCmedian cost of approximately $958.d. Positron Emission Tomography (PET)Imaging (APC 0308) (Created FromMyocardial Positron EmissionTomography (PET) Imaging (APC 0307)and Non-Myocardial Positron EmissionTomography (PET) Imaging (APC 0308))For CY 2012, we proposed to continueto assign CPT codes 78459 (Myocardialimaging, positron emission tomography(PET), metabolic evaluation), 78491(Myocardial imaging, positron emissiontomography (PET), perfusion; singlestudy at rest or stress), and 78492(Myocardial imaging, positron emissiontomography (PET), perfusion; multiplestudies at rest and/or stress) to APC0307 (Myocardial Position EmissionTomography (PET) Imaging), for whichwe proposed a national unadjustedpayment rate of approximately $921.The CY 2011 national unadjustedpayment rate is approximately $1,107.For CY 2012, we proposed to continueto assign CPT codes 78608 (Brainimaging, positron emission tomography(PET); metabolic evaluation), 78811(Tumor imaging, positron emissiontomography (PET) imaging; limited areaVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00133 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2(eg, chest, head/neck)), 78812 (Tumorimaging, positron emission tomography(PET) imaging; skull base to mid-thigh),78813 (Tumor imaging, positronemission tomography (PET) imaging;whole body), 78814 (Tumor imaging,positron emission tomography (PET)<strong>with</strong> concurrently acquired computedtomography (CT) for attenuationcorrection and anatomical localizationimaging; limited area (eg, chest, head/neck)), 78815 (Tumor imaging, positronemission tomography (PET) <strong>with</strong>concurrently acquired computedtomography (CT) for attenuationcorrection and anatomical localizationimaging; skull base to mid-thigh), and78816 (Tumor imaging, positronemission tomography (PET) <strong>with</strong>concurrently acquired computedtomography (CT) for attenuationcorrection and anatomical localizationimaging; whole body) to APC 0308(Non-Myocardial Positron EmissionTomography (PET) imaging), for whichwe proposed a national unadjustedpayment rate of $1,015. The CY 2011national unadjusted payment rate forAPC 0308 is approximately $1,042.<strong>Comment</strong>: <strong>Comment</strong>ers objected tothe proposed decrease in the paymentrate for APC 0307. <strong>Comment</strong>ers wereconcerned <strong>with</strong> the volatility of thepayment rates from one year to the nextand the proposed reduction in thepayment rate for CY 2012, particularlyin view of the reduction in the paymentrate from CY 2010 to CY 2011. Thecommenters urged CMS to validate thecosts estimated from the CY 2010hospital claims and cost report data forthe limited number of hospitalsreporting CPT codes 78459, 78491, and78492 to determine the reason for theproposed change in payment. Severalcommenters asked that CMS limit to 5to 10 percent the amount of decrease inthe payment rate for CY 2012 comparedto CY 2011 because they believed thatthe reduction CMS proposed formyocardial PET for CY 2012 wouldjeopardize access to the service. Onecommenter asked that CMS combineAPC 0307 and APC 0308 into one singlePET imaging APC because thecommenter believed that myocardialPET and non-myocardial PET areclinically similar and have similarresource requirements. The commenteralso believe that merging the APCswould result in more appropriatepayment for myocardial PET servicesand would increase the stability ofpayment for myocardial PET services.Several commenters indicated thatthey believed that aberrant CCRs for afew hospitals that furnish myocardialPET services are affecting the mediancost for APC 0307 and that the

74254 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsmethodology must be flawed to permitthis to occur. <strong>Comment</strong>ers stated thattheir analyses of the claims data showedthat 4 of the top 25 hospitals contribute34 percent of all single bills used inratesetting for CPT code 78492 and thatthese hospitals have substantially lowercalculated costs as compared to theirpeer institutions. The commentersbelieved that the CCRs of theseinstitutions are aberrantly low and haveskewed the data and lowered the overallmedian cost for APC 0307 due to thesignificant percentage of single billsattributable to them. The commenterrecommended that CMS delete claimsfrom hospitals <strong>with</strong> a CCR lower than0.15 or 0.20 from ratesetting for APC0307 to remove the effect of thesehospitals on the APC 0307 median cost.In contrast, another commenter askedthat CMS ensure that claims from everyhospital that furnished a serviceassigned to APC 0307 are included inthe calculation of the median for APC0307.One commenter stated that themedian cost for myocardial PET servicesis decreasing because they areperformed at a relatively small numberof hospitals and because hospitals donot always align the costs and chargesfor the service properly in theiraccounts and, therefore, the CCRs thatresult from the cost reports understatethe cost of the services. <strong>Comment</strong>ersalso stated that they were concernedthat hospitals had not chargedappropriately for the services and theradiopharmaceutical that is needed tofurnish the service. Some commentersobjected to the absence of a strictdefinition of what costs should beincluded in each cost center becausethis results in a wide variance in thecalculation of costs. One commenterstated that the absence of CMS guidanceto hospitals <strong>with</strong> regard to how tocharge for services results in thepotential for hospitals to set charges at4 to 5 times the cost for establishedprocedures but to establish charges at1.5 times the cost for new, moreexpensive procedures. One commenterurged CMS to remind hospitals toaccurately report all myocardial PETcosts on their Medicare cost reports toimprove the accuracy of the CCRs in thefutures, while another commentersuggested that CMS establish a new costcenter or CCRs for PET to moderate thefluctuations in the median costcalculation for PET services.Response: We agree that myocardialPET and non-myocardial PET havesimilar clinical characteristics and,currently, appear to have somewhatsimilar resource requirements.Therefore, for CY 2012, we are deletingthe myocardial PET APC (APC 0307)and are reassigning CPT codes 78459,78491, and 78492 to APC 0308, whichwe have renamed ‘‘Positron EmissionTomography (PET) Imaging.’’ The CY2012 final rule median cost for newlyreconfigured APC 0308 is approximately$1,038.We were influenced in this decisionby a significant unexpected and unusualdecrease in the median cost for CPTcode 78492 between the proposed ruledata and the final rule data for the CY2012 OPPS. CPT code 78492 comprisesapproximately 98 percent of the volumeof the 3 myocardial PET services thatwere assigned to APC 0307 andtherefore largely would control themedian cost for APC 0307 if it had beenretained for CY 2012 OPPS. Theproposed rule median cost for CPT code78492 was approximately $954, but thefinal rule median cost for CPT code78492 is approximately $778, a decreaseof approximately 18 percent from theproposed rule median cost and adecrease of approximately 29 percentfrom the CY 2011 OPPS median cost ofapproximately $1,096. APC 0307 had amedian cost of approximately $1,096 forCY 2011, a median cost ofapproximately $954 for the CY 2012proposed rule, and had we not deletedit for this final rule, APC 0307 wouldhave had a median cost ofapproximately $809, a 15-percentdecrease from the median cost on whichthe CY 2012 proposed payment rate wasbased.We examined the claims and costreport data for the single procedureclaims for CPT code 78492 to determinewhy it declined substantially from theCY 2011 OPPS final rule data and theCY 2012 proposed rule and yet furtherbetween the CY 2012 proposed rule andthe CY 2012 final rule data. We believethat there are multiple reasons that themedian cost for APC 0307 declined fromCY 2011 to CY 2012. Specifically, welooked at the following elements forCPT code 78492 across the three datasets: Line item CCRs; line item charges;line item costs; packaged costs; numberof hospitals billing the service; andnumber of single bills. Our findings arecontained in Table 26 below.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2We note three significant observationsfrom these data for CPT code 78492,which is the myocardial PET imagingservice that represents 98 percent of theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00134 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2volume of APC 0307. First, the medianline item CCR for CPT code 78492ER30NO11.041

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74255jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2decreased 21 percent from the CY 2011final rule claims data to the CY 2012proposed rule claims data, although themedian charge increased only 5 percentover the same time between the twodata sets. Similarly, the median lineitem CCR for CPT code 78492 decreased5.8 percent from the CY 2012 proposedrule data to the CY 2012 final rule data,although the line item charge remainedthe same in both data sets. Therefore,the median line item CCR for CPT code78492 decreased 25.5 percent from theCT 2011 final rule data to the CY 2012final rule data although the median lineitem charge increased only 5 percentover the same period, thus resulting ina significant decrease in the CY 2012final rule line item median costcompared to both the CY 2011 line itemmedian cost and the CY 2012 line itemmedian cost. Secondly the estimatedmedian cost of the packagedradiopharmaceutical and other suppliesnecessary to furnish the servicedecreased in each data set. Specifically,the estimated median packaged costdecreased by 16.2 percent from the CY2011 final rule data to the CY 2012proposed rule data and by 16.6 percentfrom the CY 2012 proposed rule data tothe CY 2012 final rule data, or adecrease of 30.1 percent from the CY2012 final rule data to the CY 2012 finalrule data. Third, we observed that thenumber of hospitals that furnished theservice increased in a significantproportion and that the volume ofservices furnished increased by 25percent from CY 2009 (CY 2011 finalrule data) to CY 2010 (CY 2012proposed and final rule data sets) andby an additional 6.7 percent from theCY 2012 proposed rule data set to theCY 2012 final rule data set, or a totalincrease from CY 2009 to CY 2010 of33.3 percent.We are particularly concerned <strong>with</strong>the volatility that is displayed in thedata, particularly from the CY 2012proposed rule data to the CY 2012 finalrule data. In particular, there seems tobe a transition in CCRs underway thatshould stabilize itself once the numberof hospitals that furnish the service isstable and once the volume of servicesbeing furnished each year is stable. Webelieve that the CCR changes areincreasing the instability in the mediancosts for CY 2012 and that combiningthe two APCs is a reasonable responsefor the CY 2012 final rule, particularlybecause both former APC 0307 and APC0308 are for PET imaging services andbecause it is reasonable to expect thatthe costs would be similar. However, wewill reevaluate the relative resourceutilization of the services after the costcenter transitions are complete. Ingeneral, large volumes of servicesenhance stability of median costs, andwe believe that by reassigning CPTcodes 78459, 78491 and 78492 to APC0308, we can lessen the volatility ofpayment changes for these services forCY 2012. There are many legitimatereasons why costs for these services maygo down (for example, hospitals arebecoming more efficient as they providegreater volumes of these services<strong>with</strong>out incurring additional substantialcosts for equipment and staff, theradiopharmaceuticals used to providethese services are furnished by use of agenerator that produces a doseperiodically for 28 days and, therefore,additional doses are no more costlyduring the life of the generator, amongothers). If we determine that the per unitcosts for providing myocardial PET havegenuinely decreased over time andstabilized, we believe that it isappropriate that our payment rateswould reflect these diminishing costs.With regard to the comments that weshould exclude claims from hospitals<strong>with</strong> CCRs less than 0.15 or 0.20, wenote that we applied our standardpolicy regarding calculation of CCRs tothe calculation of the median cost ofmyocardial PET services for theproposed and final rule data for the CY2012 OPPS. Specifically, as we discussin detail in the claims accountingdescription that accompanies this finalrule <strong>with</strong> comment period, we excludedclaims from hospitals whose CCRs wereflagged as invalid. These includedclaims for hospitals <strong>with</strong>out a CCR, forhospitals paid an all inclusive rate, forCAHs, for hospitals <strong>with</strong> obviouslyerroneous CCRs (greater than 90 or lessthan .0001), and for hospitals <strong>with</strong> CCRsthat were identified as outliers (3standard deviations from the geometricmean after removing error CCRs). Thislongstanding practice has resulted inenhancing the number of claims we usefor ratesetting, while eliminating claimsthat cannot be reduced to cost or forwhich hospital CCRs are clearlyerroneous. In the case of myocardialPET services, the commenter indicatedthat the claims that the commenterrequested be deleted from the set ofclaims used for ratesetting comprise 34percent of the set of single bills andwere submitted by hospitals <strong>with</strong> CCRslower than 0.15. Assuming that thecommenter’s statement is correct, webelieve that to remove 34 percent of theclaims (more than 1 in every 3 singlebills) from hospitals because their CCRsare lower than 0.15 would result in askewed set of single bills and that theresulting median cost would not be anVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00135 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2accurate representation of the relativecost of the service furnished by the fullpopulation of providers that furnish theservice. These claims would be retainedin the dataset used to set median costsunder our standard process becausethey would not be affected by thestandard claim trims. We refer readersto section II.A.2.c. of this final rule <strong>with</strong>comment period for discussion of ourpolicy <strong>with</strong> regard to trimming of claimrecords before median cost calculation.The OPPS is a system of averages inwhich the measure of central tendencyis used as the basis for the payment fora service, and to delete 34 percent of thedata points would necessarily result ina median cost that would be a lessaccurate, if perhaps higher, reflection ofthe cost of the service. We believe thatthe low CCRs that are of concern to thecommenter may be only one element inthe transition in the data for thesecodes. For CY 2012, we believe thatdeleting APC 0307 and reassigning CPTcodes 78459, 78491, and 78492 to APC0308 is a more reasonable response thandeleting 34 percent of the single bills forthe procedures. Similarly, we do notbelieve that it is necessary to create aservice-specific cost center for thepurpose of calculating a PET-specificCCR because correct and consistentreporting of the costs of PET services onthe Medicare hospital cost report andaccurate crosswalking of the charges forPET to the cost center in which the costsare housed will result in appropriateestimates of the cost of PET serviceswhen the CCR for the cost center isapplied to the charges for the services.With regard to what the commenterviewed as the absence of CMS guidanceregarding what cost centers should beused to record the costs of services andhow hospitals should charge forservices, we note that CMS providesextensive instructions on how costreports should be completed in theProvider Reimbursement Manual.However, hospitals charges are areflection of the monetary value that thehospital establishes for service it isfurnishing and the only CMS restrictionon hospital charges is that charges mustbe reasonably related to cost and thatthe same amount must be charged to allpayers for the same service (we referreaders to the definition of ‘‘charges’’ forcost reporting purposes in 42 CFR413.53(b)). We recognize that somehospitals may charge at differentmarkups over cost for similar services.However, as long as the cost report iscorrectly completed and the charges aremapped to the cost center in which thecosts for the service are recorded, theCCRs should represent a valid reflection

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274256 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsof the relationship between the costsand the charges in the aggregate forservices for which the cost is reportedin that cost center. The OPPS, like allother prospective payment systems,assumes that hospitals complete the costreport properly, including mapping thecharges for a service to the cost centerin which the costs for that service arecaptured. Therefore, when theappropriate CCR is applied to the chargefor a service for which the costs arehoused in the cost center from whichthe CCR is calculated, the result shouldbe a reasonable estimate of the cost ofthe service.With regard to the comment that weshould limit the decline in payment forAPC 0307 in CY 2012 to 5 to 10 percentcompared to the payment for theseservices in CY 2011, we do not believethat it is appropriate to limit thedecrease in payment in such anarbitrary manner for CY 2012. Moreover,for the reasons we discuss above, wehave deleted APC 0307 for CY 2012.Accordingly, we also believe that therewill be no adverse impact on access tocare as a result of deleting APC 0307and reassigning CPT codes 78459, 78491and 78492 to APC 0308.<strong>Comment</strong>: One commenter askedCMS to explain why it proposed to paymore for the non-myocardial PET APC(APC 0308) than for the myocardial PETAPC (APC 0307).Response: We proposed to pay morefor non-myocardial PET (APC 0308)than for myocardial PET (APC 0307)because the proposed rule median costwe calculated for APC 0308 ofapproximately $1,051 was higher thanthe proposed rule median cost wecalculated for APC 0307 ofapproximately $954. We calculated bothmedian costs using our longstandingstandard cost estimation methodologywhich applied each hospital’s mostcurrent, hospital-specific anddepartmental-specific CCR to thathospital’s charge for services furnishedin CY 2010. However, we are deletingAPC 0307 for CY 2012 and, therefore, allPET imaging services will be paid at thesame payment rate for CY 2012, basedon the APC 0308 median cost ofapproximately $1,038.<strong>Comment</strong>: <strong>Comment</strong>ers noted that themedian cost for single myocardial PETscans, represented by CPT code 78491,has been higher than the median cost formultiple scans, represented by CPTcode 78492 in CYs 2007, 2009 and 2010.The commenters believed that this isevidence indicating that the data onwhich CMS is basing the payment rateare flawed. One commenter also statedthat the CY 2012 proposed payment ratefor APC 0307 is below the mean cost foreach of the codes assigned to APC 0307(CPT codes 78459, 78491, and 78492)and is also below the median cost forthree of the codes in APC 0307 thatcomprise 10,929 of the 11,060 totalclaims for the APC.Response: We do not believe that thepresence of a median cost for multiplescans that is greater than the mediancost for a single scan indicates that thedata are flawed. There are many reasonsthat the median cost for a single scancould be higher than the median cost formultiple scans, including differentcharging practices and cost structuresacross hospitals and different hospitalutilization of single versus multiplescans. Our standard ratesettingmethodology converts the hospital’scharge to cost by application of the mostspecific departmental or overallhospital-specific CCR and aftertrimming claims for which the costexceeds +/¥3 standard deviations fromthe geometric mean, and calculates the50th percentile, that is, the median cost,the array of costs. Variation in hospitalpatterns of utilization combined <strong>with</strong>differential hospital charging practicescan result in valid relative costs, as wedefine them for the OPPS, in which themedian cost for single scans exceeds themedian cost for multiple scans.With respect to the commenter’sobservation that the proposed rule meancost for APC 0307 as it was proposed ishigher than its proposed rule mediancost, we note that it is very common forthe mean cost to be higher than themedian cost for services that are paidunder the OPPS because there isfrequently a wide range between theminimum cost and the maximum cost.For example, for CPT code 78492, theCY 2012 proposed rule minimum coston a single bill was approximately $175and the maximum cost wasapproximately $7,828, although themedian cost was approximately $954and the mean cost was approximately$1,186. Therefore, it is clear that thecost of most of the single bills werecloser to $175 than they were to $7,827,but when all of the single bill costs wereaveraged, the mean cost (approximately$1,186) was greater than the mediancost (approximately $954). We do notunderstand what is meant by thecommenter’s additional statement thatthe CY 2012 proposed rule median costfor APC 0307 ‘‘is also below the mediancost for three of the codes in APC 0307that comprise 10,929 of the 11,060 totalclaims for the APC’’ because there wereonly three codes in APC 0307. CPTcodes 78459, 78491, and 78492 were theonly CPT codes assigned to now deletedAPC 0307. We note that it is notsurprising that the median cost for APCVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00136 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR20307 in the CY 2012 proposed rule datawas equal to the median cost for CPTcode 78492 because CPT code 78492contained 98 percent of the single billsin APC 0307 (deleted for CY 2012) and,therefore, CPT code 78492 would belikely to control the median cost in thearray of single procedure bills.<strong>Comment</strong>: One commenter objected tothe absence of a CMS presentation andexplanation of the change in mediancost for APC 0307 at either the winteror summer APC Panel meetings in 2011and to the limited amount ofinformation furnished in the proposedrule.Response: We do not discuss allservices paid under the OPPS at theAPC Panel meetings. The APC Panelmeetings offer the opportunity for anymember of the public to makepresentations on any issue of interestthat is <strong>with</strong>in scope of the Panel’scharter and for CMS to seek Panelcomment and advice on issues forwhich CMS believes such comment andadvice would be useful. The winter APCPanel meeting generally reviewsconcerns of the public <strong>with</strong> regard to thefinal rule for that year and provides anopportunity for the public and CMS toseek the Panel’s comment and advice onissues for the forthcoming year’s OPPS.The summer APC Panel meeting occursduring the comment period of theproposed rule and is generally limitedto hearing the views of the public on theproposed rule for the upcoming year. Nomember of the public asked to make apresentation on the payment rate forAPC 0307 at either the Panel’s winter orthe summer meetings in 2011.Moreover, we had no clinical orresource-related question related to APC0307 for which we believed that APCPanel input would be useful. Therefore,like many other topics applicable to theCY 2012 OPPS, there was no discussionof the proposed payment for APC 0307for CY 2012.We also note that the proposed ruledoes not include service-specificdiscussions of the calculation of mediancost for each separately paid HCPCScode or for each APC. Rather, wediscuss the general methodology used tocalculate the median costs on which theproposed payment rates are based andthe principles applied in determiningAPC configurations. We discuss specificAPCs or services in the proposed ruleonly when we have a specific reason todo so, such as when we apply anonstandard ratesetting methodology tocalculate a proposed payment rate for aparticular item or service. In most cases,a proposed reduction of a median costfor an APC or for a HCPCS code that iscalculated from actual charges and cost

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74257jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2data does not result in a service-specificdiscussion in the proposed rule. Thenumber of APCs and the volume ofHCPCS codes for which median costsare calculated prohibit a detailedexplanation of each change in a mediancost in the proposed rule becauseannual changes to hospital charges andcosts generally result in changes tomedian costs for each HCPCS code and,therefore, for each APC each year.<strong>Comment</strong>: <strong>Comment</strong>ers objected tothe proposed decrease in the paymentrate for non-myocardial PET imagingservices assigned to APC 0308.Response: For CY 2012, the paymentrate for APC 0308 is based on data fromclaims submitted during CY 2010according to the standard OPPSratesetting methodology after thereassignment of CPT codes 78459,78491, and 78492 to APC 0308 for thereasons we discuss above. Specifically,we used 249,026 single procedure bills(out of 289,786 total claims) from CY2012 final rule claims data to calculatethe final median cost upon which theCY 2012 payment rate for APC 0308 isbased. For CY 2012, we are setting thefinal payment rate for all PET imagingservices (including CPT codes 78459,78491 and 78492 that were in APC 0307for CY 2011) based on final rule mediancosts of approximately $1,038 for APC0308. This median cost results in amodest decline in the final CY 2012median cost for PET imaging servicescompared to the CY 2011 median costfor non-myocardial PET imagingservices. We note that our cost-findingmethodology is based on convertingeach hospital’s charge for its services toan estimated cost by applying the mostdiscrete hospital-specific CCR availablefor the hospital that submitted theclaim. Therefore, it is each hospital’sclaims and cost reports that determinethe estimated costs that are used tocalculate the median cost for eachservice and, when aggregated into APCgroups, the hospital data are used tocalculate the median cost for the APCon which the APC payment rate isbased.In summary, based on our review ofthe claims and cost report data and ourassessment of the similarity of theservices in APCs 0307 and 0308, wehave reassigned CPT codes 78459,78491, and 78492 to APC 0308, forwhich we have calculated a median costof approximately $1,038 for CY 2012.We have revised the description of APC0308 to be ‘‘Positron EmissionTomography (PET) Imaging,’’ so that itwill describe both non-myocardial PETand myocardial PET services, and wehave deleted APC 0307 for CY 2012 forthe reasons we discuss previously inthis section. We have made no otherreassignments to APC 0308 nor have weremoved codes that are assigned to APC0308 for CY 2011 from APC 0308 for CY2012.We will reassess whether it continuesto be appropriate to assign both the nonmyocardialPET and the myocardial PETservices to the same APC for CY 2013based on the CY 2013 OPPS cost data.We would propose to make anyreassignments that we may believe to benecessary through the standard annualnotice-and-comment rulemakingprocess.e. Device Construction for IntensityModulated Radiation Therapy (IMRT)(APC 0305)CPT code 77338 (Multi-leaf collimator(MLC) device(s) for intensity modulatedradiation therapy (IMRT), design andconstruction per IMRT plan) was newfor CY 2010. The service was previouslyreported using multiple units of CPTcode 77334 (Treatment devices, designand construction; complex (irregularblocks, special shields, compensators,wedges, molds or casts)). For CY 2012,the first year of claims data for CPT code77338, we proposed to assign CPT code77338 to APC 0305 (Level II TherapeuticRadiation Treatment Preparation), <strong>with</strong>a proposed median cost ofapproximately $266 because wecalculated a proposed rule median costfor CPT code 77338 of approximately$186 based on a single bill frequency of32,547 (out of a total bill frequency of41,663) in the CY 2010 claims data thatwe used to establish the proposedpayment rates for the CY 2012 OPPS.For CY 2011, we had assigned CPTcode 77338 to APC 0310 (Level IIITherapeutic Radiation TreatmentPreparation) based on a simulatedmedian cost of approximately $792 thatwe calculated using CY 2009 claimsdata for CPT code 77334, thepredecessor code to CPT code 77338.Using CY 2009 claims data, weestimated that hospitals would furnish 4units of CPT code 77334 per IMRTtreatment plan and that the estimatedCY 2009 cost per unit for CPT code77334 was $198, thus resulting in anestimated cost per IMRT plan of $792.Based on this simulated median cost forCPT code 77338, we assigned the codeto APC 0310 which had a CY 2011median cost of approximately $917. Westated that, for the CY 2012 OPPS, weplanned to use our standard costestimation process using the CY 2010claims data and the most recent costreport data to establish a median cost forCPT code 77338, and that, based on thatdata, we would assess whetherplacement of CPT code 77338 in APCVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00137 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR20310 would remain appropriate for theCY 2012 OPPS (75 FR 71916).Using the claims data from CY 2010,upon which we proposed to base the CY2012 OPPS payment rates, we proposedto move CPT code 77338 from APC 0310to APC 0305 for CY 2012 because itspresence in APC 0310 would havecreated a 2 times rule violation. We referreaders to section III.B. of this final rule<strong>with</strong> comment period for discussion ofthe 2 times rule. Specifically, theproposed rule median cost for APC 0310of approximately $953 was more thantwice the median cost of approximately$186 that we calculated for CPT code77338, and the single bill frequency forCPT code 77338 of 32,547 caused it tomeet the criteria as a significantprocedure in APC 0310. To resolve the2 times rule violation, we proposed tomove CPT code 77338 to APC 0305 forCY 2012 OPPS.<strong>Comment</strong>: <strong>Comment</strong>ers objected toour proposal to move CPT code 77338from APC 0310 to APC 0305. Theybelieved that even if assigned to APC0310, the code is being underpaidbecause the predecessor code CPT code77334 would have been charged 3 to 9units for the initial IMRT treatment andthat additional units would be charged3 to 9 units for the successive IMRTtreatments. Therefore, the commentersstated that if CPT code 77334 had notbeen replaced by CPT code 77338, theywould have charged and been paidapproximately $4,625 for 18 total unitsof CPT code 77334. <strong>Comment</strong>ers statedthat it is illogical that the proposed rulemedian cost of $213 for CPT code77334, which is for one device, wouldbe greater than the median cost of $186for CPT code 77338, which is for alldevices in an IMRT plan of treatment.One commenter stated that its analysisrevealed there is huge variability inhospital charges for CPT code 77338,specifically, that 25 percent of hospitalscharge less than $500 and 8.5 percent ofhospitals charge more than $5,000 forone unit of CPT code 77338. Thiscommenter noted that this variability iscarried through the CMS cost data, <strong>with</strong>CMS finding costs of less than $100 for17.5 percent of hospitals and costs ofmore than $1,000 for 10 percent ofhospitals. Another commenter indicatedthat its analysis of the proposed ruleclaims data indicated that only 13percent of hospitals submitted claims inline <strong>with</strong> CMS expectations of thecharges for CPT code 77338. Manycommenters stated that it is clear thathospitals require guidance <strong>with</strong> regardto billing for this service beforeimproved data should be used toestablish payment rates. <strong>Comment</strong>ersasked that CMS reassign CPT code

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274258 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations77338 to APC 0301 (Level II RadiationTherapy), or alternatively assign theprocedure to an APC that would pay forconstruction of 10 to 20 devices orassign the code to a new technologyAPC. <strong>Comment</strong>ers also asked that CMSprovide guidance to ensure thathospitals bill appropriately for this newservice because they believed that theirdata analysis shows that median costsare not accurate.Response: After consideration of thepublic comments, the nature of theservice being reported by CPT code77338, and our claims data, we arefinalizing our placement of CPT code77338 in APC 0305, consistent <strong>with</strong> themedian cost that we calculated based onthe actual charges reported by 965hospitals for CPT code 77338, convertedto cost by application of the CCRs wecalculated from the billing hospitals’most recently submitted cost reports.CPT code 77338 has similar clinicalcharacteristics to the services in APC0305 (Level II Therapeutic RadiationTreatment Preparation). In addition, thefinal rule median cost for CPT code77338 of approximately $188 is moresimilar to the median cost for APC 0305of approximately $264 than it is similarto the median cost for APC 0310 ofapproximately $955.Our examination of the CY 2010claims that we used to calculate thefinal median cost of approximately $188for CPT code 77338 reveals that themedian charge in the single bills usedfor ratesetting for CPT code 77338 wasapproximately $826. The median CCRthat we used to reduce the hospitalestablished charges to costs was 0.23.We used 36,860 single procedure billsfrom 965 hospitals (out of 47,589 totallines) or approximately 78 percent ofthe total lines containing actual chargesfor CPT code 77338, to calculate thefinal rule median cost for CPT code77338, which is defined as including alldevices required for an IMRT treatmentplan.We recognize that there isconsiderable variability in the chargesthat hospitals established for these newcodes, but it is not uncommon for thereto be a high level of variability in thecharges for a service, and it is normalthat such variability would be carriedthrough to the calculation of estimatedcosts for the service. We do not advisehospitals <strong>with</strong> regard to what theyshould charge for a service other than torequire that the charges be reasonablyrelated to their cost for the service andthat they must charge all payers thesame amount for the same service.However, our use of the median chargesto establish payment levels wasspecifically designed to address widevariances in hospital cost accountingsystems and billing patterns, and hasalso consistently been a reliablemechanism for promoting increasedconsistency <strong>with</strong>out introducingadditional regulations. We recognizethat it is peculiar that the estimated costfor CPT code 77334, which representsthe cost of a single device, would begreater than the estimated cost for CPTcode 77338, which represents the cost ofall devices in a single IMRT plan oftreatment, but our estimated costs arebased on the amounts of the chargesestablished by hospitals for the serviceand the hospitals’ CCRs, which arecalculated from their Medicare costreports. There are many reasons whythis apparent anomaly could exist,including clinical rationales such as theinclusion of labor-intensive physicalblocks, shields, and molds in the servicedescribed by CPT code 77334, as well asaccounting rationales such as thecrosswalking of a single collimatorsetting to the charges for theconstruction of a physical block, also inthe service described by CPT code77334. It is not unusual for hospitals toestablish charges that do not comport<strong>with</strong> our expectation of the charges theywould establish based on the definitionof the code for the service for whichthey are establishing charges and onwhich we based simulated medians.The OPPS is based on the expectationthat hospital charges reflect the relativeresources that are required to furnishthe service for which they are requestinga specified amount of payment. Thisself-selected hospital charge isconverted to an estimated cost by theapplication of a CCR for the billinghospital which is calculated from thebilling hospital’s own cost report. Asdescribed previously, in this case thesingle bills used to calculate the mediancost were submitted in significantvolume by 965 hospitals (36,860 singlebills were used for ratesetting out of47,589 total lines). Therefore, we haveno reason to believe that the mediancost we have calculated from such arobust submission of charge data from asignificant number of hospitals shouldnot be used to establish the payment forthe service reported by CPT code 77338for CY 2012. To the extent that hospitalsdetermine that their charges should berevised to better reflect the resourcesrequired to furnish the service asdefined by CPT code 77338, the revisedcharges would be reflected in futureyears’ OPPS payment rates. However,for CY 2012, based on the robust set ofsingle procedure bills containing actualcharges for CPT code 77338 by 965hospitals, we believe that it isVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00138 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2appropriate to apply our longstandingcost-finding methodology, as weproposed, to calculate the median coston which the payment for CPT code77338 is based for CY 2012. We see nobasis to ignore our robust set of singleprocedure claims submitted by asignificant number of hospitals bycontinuing to simulate a median cost forCPT code 77338.In conclusion, we see no irregularitiesin our calculation of the median cost forCPT code 77338 based on the actualcharges reported on 36,860 singleprocedure bills submitted by 965hospitals. Therefore, we are finalizingour assignment of CPT code 77338,which has a final median cost ofapproximately $188 to APC 0305, whichhas a final median cost of $264 for CY2012.f. Computed Tomography of Abdomenand Pelvis (APC 0331 and 0334)The AMA CPT Editorial Panel createdthree codes for computed tomography(CT) of abdominal and pelvis that wereeffective January 1, 2011, specifically,CPT code 74176 (Computedtomography, abdomen and pelvis;<strong>with</strong>out contrast material); CPT code74177 (Computed tomography,abdomen and pelvis; <strong>with</strong> contrastmaterial(s)); and CPT code 74178(Computed tomography, abdomen andpelvis; <strong>with</strong>out contrast material in oneor both body regions, followed bycontrast material(s) and further sectionsin one or both body regions). As <strong>with</strong> allnew CPT codes for CY 2011, these newcodes were announced through thepublication of the CY 2011 CPT inNovember 2010, effective on January 1,2011.In accordance <strong>with</strong> our longstandingpolicy, we made an interim APCassignment for each new code for CY2011 based on our understanding of theresources required to furnish the serviceas the service was defined in the newcode (75 FR 71898). Specifically, for CY2011, we assigned new CPT code 74176to APC 0332 (Computed Tomography<strong>with</strong>out Contrast), which has a CY 2011payment rate of approximately $194; weassigned CPT code 74177 to APC 0283(Computed Tomography <strong>with</strong> Contrast),which has a CY 2011 payment rate ofapproximately $300; and we assignedCPT code 74178 to APC 0333(Computed Tomography WithoutContrast Followed by <strong>with</strong> Contrast),which has a CY 2011 payment rate ofapproximately $334. For CY 2011, wealso made these codes eligible forcomposite payment under the multipleimaging composite APC methodologywhen they are furnished <strong>with</strong> other CT

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74259jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2procedures to the same patient on thesame day.As is our standard practice each year,our clinicians review each of the manyCPT code changes that will be effectivein the forthcoming year and make adecision regarding status indicator and/or APC assignment based on theirunderstanding of the nature of theservices furnished. We are unable toinclude a proposed status indicator and/or APC assignment in the proposed rulefor codes that are not announced by theAMA CPT Editorial Board prior to theproposed rule. Therefore, in accordance<strong>with</strong> our longstanding policy, weinclude, in the final rule <strong>with</strong> commentperiod, an interim status indicator and/or APC assignment for all new CPTcodes that are announced by the AMACPT Editorial Board subsequent to theOPPS/ASC proposed rule to enablepayment to be made for new services assoon as the code is effective. Inaccordance <strong>with</strong> our longstandingpractice, we identified the new codesfor abdominal/pelvis CT for CY 2011 inAddendum B of the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period ashaving new interim APC assignments byshowing a comment indicator of ‘‘NI,’’and we provided a public commentperiod. As we do <strong>with</strong> all new CPTcodes, we are responding to the publiccomments in this OPPS/ASC final rule<strong>with</strong> comment period for CY 2012. Thislongstanding process enables us to payfor new services as soon as the new CPTcodes for them go into effect, despite thefact that they first become publiclyavailable around the same time the finalrule <strong>with</strong> comment period for theupcoming year is made public.At its February 28–March 1, 2011meeting, the APC Panel heard publicpresentations on this issue andrecommended that CMS provide moredata on the new CPT codes forcombined abdomen and pelvis CT assoon as these data are available. In theCY 2012 OPPS/ASC proposed rule (76FR 42235), we stated that we wereaccepting this recommendation, and wewould provide claims data as soon asthe data are available. We noted that,because these codes were effectiveJanuary 1, 2011, the first availableclaims data for these codes will be theAPC Panel claims data for the CY 2013OPPS rulemaking. These data will be fordates of service January 1, 2011 throughand including September 30, 2011, asprocessed through the CommonWorking File on or before September 30,2011.As we described in the proposed rule,in general, stakeholders who providedcomments on the interim assignment ofthese codes for CY 2011 stated that themost appropriate approach toestablishing payment for these newcodes is to assign these procedures toAPCs that recognize that each of thenew codes reflects the reporting undera single code of two services that werepreviously reported under two separatecodes and that, therefore, paymentswould be more accurate and betterreflective of the relative cost of theservices under the OPPS if we were toestablish payment rates for the codes forCY 2012 using claim data that reflect thecombined cost of the two predecessorcodes. They noted that when theseservices were reported in CY 2010 usingtwo CPT codes, rather than a singlecode, the services that are beingreported under CPT code 74176 wereassigned to imaging composite APC8005 (CT and CTA <strong>with</strong>out Contrast) forwhich the CY 2010 payment was$419.45. Similarly, the services beingreported under CPT code 74177 or CPTcode 74178 were assigned to compositeAPC 8006 (CT and CTA <strong>with</strong> Contrast)for which the CY 2010 payment was$628.49. They indicated that theybelieved that simulating the median costfor CPT codes 74176, 74177, and 74178using historic claims data from thepredecessor codes in a manner similarto that used to create the composite APCmedians would result in the bestestimates of costs for these codes and,therefore, the most accurate paymentrate for these codes.After considering the presentations atthe APC Panel meeting, the views ofstakeholders who met <strong>with</strong> us to discussthis issue, and the comments inresponse to the CY 2011 final rule <strong>with</strong>public comment period, and afterexamining our claims data for thepredecessor codes, we stated in theproposed rule that we believe thatestablishment of payment rates for theseservices based on historic claims datafor the combinations of predecessorcodes that are now reported by CPTcodes 74176, 74177, and 74178 wouldresult in a more accurate andappropriate payment for these servicesfor CY 2012 because it would take intoaccount the full cost of both servicesthat are now reported by a single CPTcode. We indicated that we believe thatthe best way to secure the mostappropriate payments for CY 2012 is touse the claims data from the predecessorcodes under which the new codes werereported for CY 2010 to simulatemedian costs for the new codes and tocreate APCs that are appropriate to theservices. To do so should reflect boththe full cost of the service as reportedby the new code and should also reflectthe efficiencies of reporting the serviceVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00139 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2represented by the single new code.Therefore, in the CY 2012 OPPS/ASCproposed rule (76 FR 42234), weproposed to establish two APCs towhich we proposed to assign thecombined abdominal and pelvis CTservices. Specifically, we proposed tocreate new APC 0331 (CombinedAbdominal and Pelvis CT WithoutContrast), to which we proposed toassign CPT code 74176 and for whichwe proposed to base the CY 2012 OPPSpayment rate on a median cost ofapproximately $417. We also proposedto create new APC 0334 (CombinedAbdominal and Pelvis CT WithContrast), to which we proposed toassign CPT codes 74177 and 74178 forthe CY 2012 OPPS and for which weproposed to base the CY 2012 OPPSpayment rate on a median cost ofapproximately $592. We proposed tocreate two new APCs to which to assignthese codes, rather than one, becauseCPT code 74176 is furnished <strong>with</strong>outcontrast, while CPT codes 74177 and74178 are furnished <strong>with</strong> contrast.Section 1833(t)(2)(G) of the Act requiresthat services <strong>with</strong> contrast may not beassigned to APCs that contain services<strong>with</strong>out contrast. Therefore, we couldnot assign CPT code 74176, which doesnot require contrast, to the same APC asCPT codes 74177 and 74178, whichrequire contrast.We proposed to create new APC 0331to which we proposed to assign CPTcode 74176 and to create new APC 0334to which we proposed to assign CPTcodes 74177 and 74178 because theproposed methodology for simulatingthe median costs for CPT codes 74176,74177, and 74178, which uses claimsdata for the predecessor codes is uniqueto these CPT codes. Therefore, webelieve that it is appropriate to createAPCs comprised only of services forwhich we calculated medians usingclaims data for the predecessor codes.We stated in the proposed rule that, tothe extent this policy is finalized, wewould reassess whether it continues tobe appropriate to pay these codes underAPCs 0331 and 0334 once the mediancosts for the proposed CY 2013 OPPSare calculated using our standardmethodology, based on hospitals’ CY2011 charges for CPT codes 74176,74177, and 74178.To calculate the proposed mediancosts for proposed APCs 0331 and 0334for CY 2012, we selected claims thatcontained one unit of both of thepredecessor CPT codes that appear inthe CY 2011 CPT for CPT codes 74176,74177, and 74178. The predecessorcodes were limited to the codes in Table20 of the proposed rule (now Table 27of this final rule <strong>with</strong> comment period).

74260 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and RegulationsFor purposes of selecting claims to beused to calculate simulated mediancosts, we selected only claims thatcontained one (and only one) unit ofeach of the predecessor codes in theallowed combinations identified inTable 21 of the proposed rule (nowTable 28 of this final rule <strong>with</strong> commentperiod). We used only claims thatcontained one and only one unit of eachof the code combinations because webelieve that it represents the bestsimulation of the definition of the newcodes. Where more than one unit ofeither or both codes were reported, theclaim would be paid under an imagingcomposite APC, not under APC 0331 or0334. For median calculation, claimsthat contained more than one unit ofeither or both codes were assigned tothe applicable imaging composite APC.We refer readers to section II.A.2.e.5. ofthe proposed rule and this final rule<strong>with</strong> comment period for discussion ofthe imaging composite APCs.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2After we selected the claims thatcontained one and only one unit of eachcode in each combination, we deletedclaims that contained other separatelypaid HCPCS codes if those codes didnot appear on the bypass list (we referreaders to section II.A.1.b. of theproposed rule and this final rule <strong>with</strong>VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00140 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2comment period, and to Addendum N,which was available via the Internet onthe CMS Web site). We bypassed thecosts for codes that appeared on theER30NO11.042 ER30NO11.043

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74261jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2bypass list to create simulated singleprocedure claims for CPT codes 74176,74177, and 74178. Using the remainingsimulated single procedure claims forthe combined abdominal and pelvis CTservices, we applied our standardtrimming, packaging, and wagestandardization methodology tocalculate the median cost for eachcombined abdominal and pelvis CTcode for the two proposed APCs. Werefer readers to section II.A.2.c. of theproposed rule and this final rule <strong>with</strong>comment period for discussion of ourstandard trimming, packaging, and wagestandardization methodology.We found that using the proposedmethodology resulted in a simulatedmedian cost for CPT code 74176 ofapproximately $417, and that, becausewe proposed that CPT code 74176would be the only HCPCS code assignedto APC 0331, the simulated median costfor APC 0331 also would beapproximately $417. We found thatusing this proposed methodology, thesimulated median cost for CPT code74177 was approximately $570 and thesimulated median cost for CPT code74178 was approximately $638, and thatthe simulated median cost for proposedAPC 0334 was approximately $592. Weproposed to use this simulationmethodology to establish proposedmedian costs for proposed APCs 0331and 0334 for the CY 2012 OPPS.We also proposed that, in cases whereCPT code 74176 is reported <strong>with</strong> CTcodes that describe CT services for otherregions of the body other than theabdomen and pelvis in which contrastis not used, it would be assigned toimaging composite APC 8005 (CT andCTA <strong>with</strong>out Contrast), for which weproposed a median cost ofapproximately $445 for the CY 2012OPPS. In cases where CPT code 74177or 74178 is reported <strong>with</strong> CT codes thatdescribe CT services for regions of thebody other than abdomen and pelvis inwhich contrast is used, we proposedthat the code would be assigned to APC8006 (CT and CTA <strong>with</strong> Contrast), forwhich we proposed a median cost ofapproximately $744 for the CY 2012OPPS. We proposed to assign CPT codes74176 to imaging composite APC 8005and to assign CPT codes 74177 and74178 to imaging composite APC 8006because the predecessor codes for CPTcodes 74176, 74177, and 74178(identified in Table 20 of the proposedrule) continue to be reported wheneither abdominal CT or pelvis CT (butnot both) is furnished, and we proposedto continue to assign them to imagingcomposite APCs 8005 and 8006. Westated that we believe that it would beinconsistent <strong>with</strong> our proposed imagingcomposite policy if we did not proposeto assign CPT codes 74176, 74177, and74178 to the applicable imagingcomposite APC for CY 2012. We referreaders to section II.A.2.e.(5) of theproposed rule and this final rule <strong>with</strong>comment period for the discussion ofthe calculation of our median costs forAPCs 8005 and 8006 for CY 2012.In summary, we proposed to establishnew APCs 0331 and 0334 to which wewould assign the abdominal and pelvisCT codes that were created by the AMACPT Editorial Panel for CY 2011 and touse the simulation methodology wedescribe above to establish simulatedmedian costs on which we would basethe CY 2012 payment rates because webelieve that to do so would result inrelative payment weights for these newservices that will more accurately reflectthe resources required to furnish theseservices as defined by CPT than wouldbe true of continued assignment of thecodes to the single service APCs towhich we made interim assignments forCY 2011. We noted that claims and costdata for these services will be availablefor the CY 2013 OPPS rulemaking, andwe will reassess the payment policy forthese codes based on the cost data thatare used to establish the CY 2013 OPPSmedian cost and payment rates.At its August 10–11, 2011 meeting,the APC Panel recommended that CMSadopt the proposal to create new APC0331 (Combined Abdomen and PelvisCT [computed tomography] <strong>with</strong>outContrast), for payment of CPT code74176 (Computed tomography,abdomen and pelvis; <strong>with</strong>out contrastmaterial); and new APC 0334(Combined Abdomen and Pelvis CT<strong>with</strong> Contrast), for payment of CPT code74177 (Computed tomography,abdomen and pelvis; <strong>with</strong> contrastmaterial(s)); and CPT code 74178(Computed tomography, abdomen andpelvis; <strong>with</strong>out contrast material in oneor both body regions, followed bycontrast material(s) and further sectionsin one or both body regions). Werespond to the Panel’s recommendationas part of the response to commentsbelow.<strong>Comment</strong>: <strong>Comment</strong>ers supported theuse of data for the predecessor codes forthe services that were combined intoCPT codes 74176, 74177, and 74178 tocreate simulated median costs for use inestablishing payments for CY 2012.<strong>Comment</strong>ers supported the creation ofAPC 0331, to which we proposed toassign CPT code 74176, and APC 0334,to which we proposed to assign CPTcodes 74177 and 74178 for CY 2012. Asdescribed previously, commenters onthe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period also stated that theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00141 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2most appropriate approach toestablishing payment for these newcodes is to assign these procedures toAPCs that recognize that each of thenew codes reflects the reporting undera single code of two services that werepreviously reported under two separatecodes and that, therefore, paymentswould be more accurate and betterreflective of the relative cost of theservices under the OPPS if we were toestablish payment rates for the codes forCY 2012 using claims data that reflectthe combined cost of the twopredecessor codes.Response: We continue to believe thatit is appropriate to base payment forCPT codes 74176, 74177, and 74178 onsimulated median costs establishedusing the cost data for predecessorcodes for CY 2012 for the reasons westated in the proposed rule, assummarized in the discussion above.Therefore, the median costs for CPTcodes 74176, 74177, and 74178 for CY2012 are based on the cost data for thepredecessor codes, and we areestablishing new APCs 0331 and 0334 towhich these codes are assigned, as weproposed. The final rule median cost forCPT code 74176, which is the only codein APC 0331, is approximately $406.The final median cost for CPT code74177 is approximately $561 and thefinal median cost for CPT code 74178 isapproximately $631. The final mediancost for APC 0334 to which CPT codes74177 and 74178 are assigned isapproximately $581.We have a large volume of services inthe predecessor data on which to basethe simulated median costs for APCs0331 and 0334. Specifically, to calculatethe medians for CPT code 71476, weused 222,193 claims; for CPT code71477, we used 331,262 claims; and forCPT code 74178, we used 201,693claims. Because these codes werecreated effective January 1, 2011, wewill have claims data containing actualcharges for use in calculating themedian cost of these services for the CY2013 OPPS. We expect to have a veryrobust set of claims data containingactual hospital charges to which weexpect to apply our standard processesto calculate the median costs for thesecodes for CY 2013 because of the largevolume of services that we found in thepredecessor data that meet thedefinition of the new codes. At thattime, we will decide whether it isnecessary and appropriate to propose toretain APCs 0331 and 0334. However,we note that the extent to whichhospitals establish charges in a mannerthat reflects that the new codes reportboth the abdominal and pelvis CTservices will greatly affect the median

74262 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2costs that are calculated, using ourlongstanding methodology, from thecharge data present on claims forservices in CY 2011.<strong>Comment</strong>: One commenter on the CY2012 proposed rule and severalcommenters on the CY 2011 final rule<strong>with</strong> comment period asked that CMSincrease payment for the servicesdescribed by CPT codes 74176, 74177,and 74178 for CY 2011 because theybelieve that CMS inappropriatelyreduced payment for these services as aresult of the assignment of CPT code74176 to APC 0332 and the assignmentof CPT codes 74177 and 74178 to APC0333 for CY 2011. <strong>Comment</strong>ers on theCY 2011 final rule <strong>with</strong> comment periodobjected to the assignment of CPT code74176 to APC 0332 and to theassignment of CPT codes 74177 and741178 to APC 0333 on the basis thatthe payments for these single serviceAPCs reduced the payment for theservices which, when coded usingmultiple CPT codes in CY 2010, wouldhave been paid as imaging compositeAPCs at much higher payment rates.Response: The prospective paymentsthat were established as a result ofpublication of the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period aregenerally final payments, <strong>with</strong> theexception of any outlier payment ortransitional outpatient payment towhich the hospital may be entitled. Wegenerally do not change payments thatwe implement as a result of the standardregulatory process during the year inwhich the payments are in effect unlessrequired by legislation. We followed ourlongstanding policy when we made aninterim assignment of CPT code 74176to APC 0332 and when we made aninterim assignment of CPT codes 74177and 74178 to APC 0333 for CY 2011,based on our understanding of thehospital resources required to furnishthese services. It is our longstandingpractice to assign new CPT codes tointerim APCs <strong>with</strong>out having anopportunity to acquire comment fromthe public because the new codes arenot announced to the public until afterthe opportunity for public comment hasended. This interim assignment remainsin effect for the calendar year under thisestablished process. The firstopportunity to change the APCassignment for new codes is the finalrule <strong>with</strong> comment period following theyear the new codes are first recognizedfor OPPS payment.After consideration of the publiccomments we received, for CY 2012, forthe reasons we discussed previously inthis section, we are creating new APC0331, to which we are assigning CPTcode 74176, and new APC 0334, towhich we are assigning CPT codes74177 and 74178. Using the claims datafor the predecessor codes and themethodology we identify above and inthe proposed rule, we calculated asimulated median cost of approximately$406 for APC 0331 and a simulatedmedian cost of approximately $581 forAPC 0334 for CY 2012. We will reassesswhether there is a continued need forthese APCs for the CY 2013 OPPS oncewe have actual charges for theseservices.For the reasons we discuss previouslyin this section, we also are finalizing ourproposal to assign CPT code 74176 toimaging composite APC 8005 whereCPT code 74176 is reported <strong>with</strong> CTcodes that describe CT services forregions of the body other than theabdomen and pelvis in which contrastis not used and to assign CPT codes74177 and 74178 to APC 8006 wheneither of them is reported <strong>with</strong> CT codesthat describe CT services for regions ofthe body other than abdomen and pelvisin which contrast is used. For CY 2012,APC 8005 has a median cost ofapproximately $432 and APC 8006 hasa median cost of approximately $722.g. Complex Interstitial Radiation SourceApplication (APC 0651)APC 0651 (Complex InterstitialRadiation Source Application) consistsof one service described by CPT code77778 (Interstitial radiation sourceapplication; complex). Composite APC8001 (Low Dose Rate ProstateBrachytherapy Composite) employsclaims on which both CPT code 77778and CPT code 55875 (Transperinealplacement of needles or catheters intoprostate for interstitial radioelementapplication, <strong>with</strong> or <strong>with</strong>out cystoscopy)are found on the same date of service,as described in section II.A.2.e.(2) ofthis final rule <strong>with</strong> comment period. Forthe CY 2012 proposed rule, APC 0651had a median cost of approximately$897, based on 96 claims. APC 0651 hasa final CY 2012 median cost ofapproximately $835, based on 92 singleclaims.<strong>Comment</strong>: Several commentersexpressed concern about the lowvolume of single and ‘‘pseudo’’ singleclaims used for APC 0651 ratesetting.They pointed out that both CY 2011 andCY 2012 payment rates for APC 0651 arebased on fewer than 100 claims, andthat the proposed CY 2012 payment ratefor APC 0651 of $866.08 is a 23.3percent decrease from the final CY 2011payment rate of $1,129.46. Thecommenters believed the 96 claims usedto set the proposed CY 2012 rate forAPC 0651 are inadequate, andrecommended that CMS continue toVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00142 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2explore additional methodologies toincrease the number of multipleprocedure claims used forbrachytherapy ratesetting.Response: While we agree that 96single claims associated <strong>with</strong> CPT code77778 is not optimal for APC 0651ratesetting, we believe that a lowvolume of single claims for this code isnot unexpected due to the clinicalnature of the procedure. As we describein section II.A.2.e.(2) of this final rule<strong>with</strong> comment period, the application ofbrachytherapy sources described by CPTcode 77778 and the placement ofneedles or catheters into the prostatedescribed by CPT code 55875 aregenerally provided in the sameoperative session in the same hospitalon the same date of service to theMedicare beneficiary being treated <strong>with</strong>LDR brachytherapy for prostate cancer.For this reason, we are continuing topay for these two procedures whenperformed together through compositeAPC 8001. However, as we indicate inthat section, we understand that thereare a few occasions when a physicianplaces the needles or catheters outsidethe hospital and the patient is thentransferred to a hospital forbrachytherapy source application, inwhich case CPT code 77778 would bereported alone in the hospital outpatientsetting. While we agree <strong>with</strong> thecommenter that it would be preferableif we had more single bills on which tobase the payment for APC 0651, webelieve the variation in the median costsfor CPT code 77778 between the CY2011 final rule and the CY 2012 finalrule appears to be normal variation thatwe would expect to see for low-volumeservices. We also found from examiningthe single bills for CPT code 77778 thatthey are from different hospitals fromyear to year, which also could result influctuations in the median costs. Wewill continue to evaluate additionalrefinements and improvements to ourratesetting methodologies to maximizeour use of claims data generally andcontinue to study means by which wecan use more claims data to establishthe payment rate for APC 0651 inparticular.For CY 2012, the final median cost forAPC 0651 is approximately $835, basedon 92 single bills. We will continue touse this median cost to establishpayment for APC 0651 for CY 2012, andare finalizing our policy for CY 2012that CPT code 77778, when billed alone,will be paid at the APC 0651 paymentrate.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74263jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2h. Radioelement Applications (APC0312)APC 0312 consists of six radioelementapplication codes, one of which isunlisted CPT code 77799 (Unlistedprocedure, clinical brachytherapy). Forthe CY 2012 proposed rule, APC 0312had a median cost of approximately$338 based on 168 single claims. For CY2011, APC 0312 had a final rule mediancost of $351.17, based on 254 singleclaims.<strong>Comment</strong>: One commenter stated thatthe number of APC 0312 single claimsis sparse and shows large and randomvariations in yearly median costs. Thecommenter pointed to a decrease insingle claims from the CY 2011 finalrule to the CY 2012 proposed rule of 33percent, and a decrease in the CY 2011final payment rate to the CY 2012proposed payment rate of 8.1 percent.The commenter recommended that CMScontinue to explore additionalmethodologies to increase the number ofmultiple procedure claims used forbrachytherapy ratesetting, such as forAPC 0312.Response: The CY 2012 final mediancost of approximately $378 shows anincrease of 7.8 percent from the CY 2011final median of $351.17. We believe thevariation in the median costs betweenthe CY 2011 final rule and the CY 2012final rule appears to be normal variationthat we would expect to see for lowvolumeservices. We agree <strong>with</strong> thecommenter that it would be preferableif we had more single bills on which tobase the payment for APC 0312, and wewill continue to evaluate additionalrefinements and improvements to ourratesetting methodologies generally tomaximize our use of claims datagenerally and continue to study meansby which we can use more claims datato establish the payment rate for APC0312 in particular. However, we notethat 268, or approximately 36 percent,of the 736 total lines reported forservices that are assigned to APC 0312in the CY 2012 final rule data, werereported as CPT code 77799, which wedo not use for setting the median costfor the APC because there is nodefinition of the service that wasfurnished. Therefore, some of theapproximately 36 percent of the linespaid under APC 0312 might be used toestablish the median cost for services inAPC 0312 if they had been codedspecifically, or in cases in which thereis no existing code for the service, a newcode were to be created to describe theservices being furnished.After consideration of the publiccomments we received, we arefinalizing a CY 2012 median cost forAPC 0312 of approximately $378, basedon 183 single claims.8. Respiratory Servicesa. Pulmonary Rehabilitation (APC 0102)Section 144(a)(1) of Public Law 110–275 (MIPPA) added section 1861(fff) tothe Act to provide Medicare Part Bcoverage and payment for acomprehensive program of pulmonaryrehabilitation services furnished tobeneficiaries <strong>with</strong> chronic obstructivepulmonary disease, effective January 1,2010. Accordingly, in the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod, we established a policy to payfor pulmonary rehabilitation servicesfurnished as a part of thecomprehensive pulmonaryrehabilitation program benefit (74 FR60567). There was and continues to beno single CPT code that fully andaccurately describes the comprehensivepulmonary rehabilitation benefitprovided in section 1861(fff) of the Act.Moreover, at that time, there were noalphanumeric HCPCS codes thatdescribed the comprehensivepulmonary rehabilitation benefit ineffect for CY 2008 (on which the CY2010 OPPS was based) or CY 2009 (onwhich the CY 2011 OPPS was based).Therefore, for CY 2010, we created newHCPCS code G0424 (Pulmonaryrehabilitation, including exercise(includes monitoring), one hour, persession, up to two sessions per day) andassigned the code to APC 0102 (Level IIPulmonary Treatment), which we alsocreated for the CY 2010 OPPS. Becausenone of the pulmonary treatment codesfor which there were charges for CY2008 or CY 2009 accurately describedthe comprehensive pulmonaryrehabilitation service for which MIPPAprovided coverage, we did not assumethat the charge reported on any one ofthe previously existing HCPCS codesunder which pulmonary treatmentswere reported would represent the fullcharge for the comprehensivepulmonary rehabilitation service.Instead, for the CY 2010 OPPS, whichwas based on claims for services in CY2008, we calculated a median ‘‘persession’’ cost that we simulated fromhistorical hospital claims data forpulmonary therapy services that werebilled in combination <strong>with</strong> one another,much like we create composite APCmedian costs by summing the costs ofmultiple procedures that are typicallyprovided on the same date. Ourmethodology for calculating the ‘‘persession’’ median cost that we used asthe basis for the CY 2010 OPPS paymentrate for HCPCS code G0424 and APC0102 is discussed in detail in the CYVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00143 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR22010 OPPS final rule <strong>with</strong> commentperiod (74 FR 60567 through 60570).Specifically, to simulate the ‘‘persession’’ median cost of new HCPCScode G0424 from claims data forexisting services, we used only claimsthat contained at least one unit ofHCPCS code G0239 (Therapeuticprocedures to improve respiratoryfunction or increase strength orendurance of respiratory muscles, twoor more individuals (includesmonitoring), the group code that is<strong>with</strong>out limitation on time duration,and one unit of HCPCS code G0237(Therapeutic procedures to increasestrength or endurance of respiratorymuscles, one on one, face to face, per15 minutes (includes monitoring) orHCPCS code G0238 (Therapeuticprocedures to improve respiratoryfunction or increase strength orendurance of respiratory muscles, oneon one, face to face, per 15 minutes(includes monitoring), the individual,face-to-face codes that report 15 minutesof service, on the same date of service.We reasoned that patients in apulmonary rehabilitation programwould typically receive individual andgroup services in each session ofapproximately 1 hour in duration. Thiswas consistent <strong>with</strong> public commentsthat suggested that pulmonaryrehabilitation is often provided in groupsessions in the HOPD, although patientscommonly require additional one-ononecare in order to fully participate inthe program. We note that our use of‘‘per session’’ claims reporting one unitof HCPCS code G0237 or G0238 and oneunit of HCPCS code G0239 in thissimulation methodology was alsoconsistent <strong>with</strong> our overall finding ofapproximately 2.4 service units of theHCPCS G-codes per day on a single dateof service, usually consisting of bothindividual and group services, forpatients receiving pulmonary therapyservices in the HOPD based upon CY2008 claims. We concluded that thetypical session of pulmonaryrehabilitation would be 1 hour based onpublic comments that indicated that asession of pulmonary rehabilitation istypically 1 hour and based on ourfindings that the most commonlyreported HCPCS code for pulmonarytreatment is HCPCS code G0239, whichhas no time definition for this groupservice.We included all costs of the relatedtests and assessment services (CPTcodes 94620 (Pulmonary stress testing;simple (e.g., 6-minute walk test,prolonged exercise test forbronchospasm <strong>with</strong> pre- and postspirometryand oximetry)); 94664(Demonstration and/or evaluation of

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274264 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationspatient utilization of an aerosolgenerator, nebulizer, metered doseinhaler or IPPB device); and 94667(Manipulation chest wall, such ascupping, percussion and vibration tofacilitate lung function; initialdemonstration and/or evaluation), andall CPT codes for established patientclinic visits, on the same date of serviceas the HCPCS G-codes in the claims weused to simulate the median cost forHCPCS code G0424. After identifyingthese ‘‘per session’’ claims, which webelieve to represent 1 hour of care, wesummed the costs on them andcalculated the median cost for the set ofselected claims. In light of the cost andclinical similarities of pulmonaryrehabilitation and the existing servicesdescribed by HCPCS codes G0237,G0238, and G0239 and the CPT codesfor related assessments and tests, andthe significant number of ‘‘per session’’hospital claims we found, we believedthat the simulated median cost forHCPCS code G0424, constructed toinclude the costs of these services wherefurnished, was our best estimate of theexpected hospital cost of a pulmonaryrehabilitation session, given that we didnot have hospital charges for thecomprehensive pulmonaryrehabilitation service provided byMIPPA for which we created HCPCScode G0424. We indicated in ourdiscussion of the simulated median thatwe expected hospitals would establishcharges for pulmonary rehabilitationthat would reflect all of the services thatare included in comprehensive benefitthat would be reported by one unit ofHCPCS code G0424 (76 FR 42240).We used the resulting simulatedmedian ‘‘per session’’ cost ofapproximately $50 as the basis for thepayment for pulmonary rehabilitationservice for CY 2010, the first year inwhich the comprehensive pulmonaryrehabilitation benefit was covered. ForCY 2011, which was based on claims forservices furnished in CY 2009, wecontinued to assign HCPCS code G0424to APC 0102 and to apply thesimulation methodology that we used inCY 2010 to claims for services in CY2009 to calculate a median ‘‘persession’’ cost simulated from historicalhospital claims data for similarpulmonary therapy services for the CY2011 OPPS. The CY 2011 OPPS finalrule median cost of approximately $62resulted in a national unadjustedpayment rate for CY 2011 ofapproximately $63.For the CY 2012 OPPS, however, wehave a very robust set of claims forHCPCS code G0424 on which hospitalsreported the charges for thecomprehensive pulmonaryrehabilitation service for which MIPPAprovided the pulmonary rehabilitationbenefit beginning on January 1, 2010.Specifically, the CY 2012 OPPSproposed rule data, based on CY 2010claims, contained a total frequency of393,056 lines of HCPCS code G0424, ofwhich we were able to use 391,901single procedure bills or almost 100percent of the claims submitted forHCPCS code G0424. This is anextremely robust volume of singleprocedure bills containing charges forHCPCS code G0424 on which to base amedian cost. In general, we have foundthat higher volumes of single bills bothin absolute numbers and as a percentageof total frequency provide very stableestimates of hospital costs.Therefore, in the CY 2012 OPPS/ASCproposed rule (76 FR 42239 and 42240),we proposed that the payment rate forHCPCS code G0424 and, therefore, forAPC 102, would be based on the mediancost for the service as derived fromclaims for services furnished in CY 2010and the most current available costreport information, using ourlongstanding process for estimating themedian cost of a service described by aHCPCS code. We refer readers to sectionII. of the proposed rule and this finalrule <strong>with</strong> comment period for adescription of our longstandingstandard process for calculating themedian costs on which the OPPSpayment rates are based. Using ourstandard median calculation process forHCPCS code G0424 resulted in aproposed median cost of approximately$38 for HCPCS code G0424 and,therefore, for APC 0102. Given that thevolume of claims in the CY 2012 OPPSproposed rule data was so robust forHCPCS code G0424, we believed thatthe proposed median cost we calculatedfor HCPCS code G0424 was a validreflection of the relative cost of thecomprehensive pulmonaryrehabilitation service described byHCPCS code G0424 and that theproposed median cost for HCPCS codeG0424 was an appropriate basis onwhich to establish the proposednational unadjusted payment rate forAPC 0102.We indicated in the proposed rulethat we recognized that there is asignificant difference between oursimulated median cost for CY 2011 andthe CY 2012 proposed rule median costof approximately $38 that was derivedfrom application of our standard mediancalculation process to hospital claimsdata for CY 2010. We believe that thisdifference arises because the mediansimulation methodology we used for CY2010 and CY 2011 selected claims thatcontained multiple procedures andVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00144 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2packaged the costs of numerous servicesinto the ‘‘per session’’ cost for thesimulated code where numerousservices appeared on the same date ofservice. Our simulation methodologyassumed that hospitals would includethe charges for these additional servicesin their CY 2010 charges for HCPCScode G0424 because the services areincluded in the definition ofcomprehensive pulmonaryrehabilitation.In response to the CY 2012 OPPSproposed median cost of approximately$38 for HCPCS code G0424, we lookedat our claims data in more depth. Wefound that 1,048 hospitals,approximately 25 percent of hospitalspaid under the OPPS, reported HCPCScode G0424 and that the median lineitem median cost (exclusive ofpackaging) was approximately $38,virtually no different from the mediancost per unit that we derived from thesingle bills. We also examined thecharges that were submitted for HCPCScode G0424 in CY 2010 and the CCRsthat were applied to the charges forHCPCS code G0424 to calculate theestimated median cost for the code forthe CY 2012 proposed rule. We alsolooked at the revenue codes underwhich charges for HCPCS code G0424were reported and the percentage of costthat was associated <strong>with</strong> packaged costs,such as oxygen, drugs, and medicalsupplies. We found that the median lineitem charge for HCPCS code G0424 inthe CY 2012 proposed rule data wasapproximately $150 and that the medianCCR was 0.29. We also found that themost frequently reported revenue codefor HCPCS code G0424 was revenuecode 410 (Respiratory therapy),approximately 108,000 single bills, and<strong>with</strong> revenue code 948 (PulmonaryRehabilitation), approximately 81,000single bills, being the second mostcommonly reported revenue code forHCPCS code G0424. We found that only0.02 percent of the cost of HCPCS codeG0424 was packaged cost (for example,oxygen, drugs, and supplies). In general,our detailed examination of total andline item charges for pulmonaryrehabilitation, the CCRs used to reducethe charges to estimated costs on thesingle bills, the revenue codes reported,and the absence of packaging on thesingle bills supports the proposedmedian cost of approximately $38 perunit as a valid estimate of the relativecost of one unit of HCPCS code G0424.In summary, our examination of theclaims and cost data for HCPCS codeG0424 caused us to believe that theproposed median cost that wecalculated from claims data for HCPCScode G0424 was calculated correctly

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74265jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2according to our longstanding standardmedian cost calculation methodology.Therefore, we proposed to base the CY2012 OPPS payment rate for HCPCScode G0424 and APC 0102 on themedian cost that we derive fromapplying our standard mediancalculation methodology to the CY 2010charges and cost data for HCPCS codeG0424.<strong>Comment</strong>: <strong>Comment</strong>ers objected tothe proposed CY 2012 payment becauseit proposed a significant reduction inpayment from the payment that resultedfrom the simulated median cost forpulmonary rehabilitation for CY 2010and CY 2011. They stated that such areduction in payment would not coverthe labor cost of the service and wouldresult in hospitals ceasing to furnish theservice and, therefore, would reduceaccess to care for beneficiaries.<strong>Comment</strong>ers believed that hospitals donot understand the nature of HCPCScode G0424 as a unit of acomprehensive service. They believedthat hospitals are very familiar <strong>with</strong>HCPCS code G0237, which is for 15minutes of care for patients <strong>with</strong>chronic pulmonary diseases, and theybelieved that hospitals presumed that asingle code for very similar servicescorrelated to a different diagnosis wouldalso be a 15 minute code and that theyset the charge for HCPCS code G0424,which is for similar services but islimited to persons <strong>with</strong> chronicobstructive pulmonary disease (COPD),accordingly. <strong>Comment</strong>ers stated thatCMS data support that hospitals are notreporting charges associated <strong>with</strong> thecorollary services that are part of HCPCScode G0424. They urged CMS to freezethe payment for pulmonaryrehabilitation for CY 2012 at the CY2011 rate and to shift from the use of astandard cost center to the use of anonstandard cost center for determiningthe relative cost of pulmonaryrehabilitation services because theybelieved that using a standard costcenter does not adequately capture thecost of the services. The commentersbelieved that continuing the CY 2011payment for CY 2012 is justifiedbecause there is strong historical datafor HCPCS codes G0237 through G0239and a weak data base for HCPCS codeG0424 and that using 10 years of datafor HCPCS codes G0237 through G0239is wiser than using one year of artifactdata for HCPCS code G0424 as the basisfor the payment for HCPCS code G0424.They indicated that the proposedpayment for pulmonary rehabilitationwill reduce access to care and therebyresult in CMS losing an important toolfor reducing readmissions anddecreasing length of stay in inpatienthospital settings. The commentersstated that HCPCS codes G0237 throughG0239 are used to report individualpulmonary services while HCPCS codeG0424 is generally recognized as agroup code <strong>with</strong> a maximum ratio ofone staff to four patients. However, theystated that this is not always the caseand that HCPCS code G0424 issometimes requires a one-to-one staff topatient ratio. Therefore, until such timeas a more robust set of data is available,the commenters asked that CMScontinue to base payment for HCPCScode G0424 on the data for HCPCScodes G0237 through G0239 using thesimulated median methodology that wasthe basis for payments for HCPCS codeG0424 for CY 2010 and 2011.Response: After considering thecomments and reexamining our claimsdata, we are establishing the CY 2012median cost on which the CY 2012payment for HCPCS code G0424 will bebased on our claims and cost reportdata. The final rule median cost for APC0102 to which HCPCS code G0424 isassigned is approximately $37. Our finalrule data shows that hospitals billed atotal frequency of 448,396 lines ofpulmonary rehabilitation, of which wewere able to use 446,456 or nearly 100percent of the billed lines, for thecalculation of the final median cost forHCPCS code G0424 for CY 2012. Wedisagree <strong>with</strong> commenters that theseclaims are artifact claims that shouldnot be used.For this final rule we expanded ourdata analysis to look not only at thecharges and CCRs for HCPCS codeG0424, but also to look at the chargesand CCRs for HCPCS code G0237through G0239, which the commentersindicated are similar services, and alsoto look at the cost centers that were usedto reduce the charges to costs. We foundthat the median charge for one unit ofHCPCS code G0424 is approximately$152 and the median charge for HCPCScode G0239, which is defined to includeservices to two or more persons, ratherthan one on one service, isapproximately $120. <strong>Comment</strong>ers statedthat HCPCS code G0424 is generally, butnot always, considered to be a groupservice <strong>with</strong> a staff to patient ratio of1:4. Therefore, we view it as mostsimilar to HCPCS code G0239, which isdefined as a group service and whichwas the basis for the simulated mediancost methodology on which we basedthe OPPS payments for CY 2010 and CY2011. Therefore, it seems logical thathospitals charged more for thecomprehensive pulmonaryrehabilitation service of HCPCS codeG0424 than for HCPCS code G0239VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00145 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2which is not a comprehensive servicebut which is a group service for whichtime is not limited. Hospital chargesrepresent the hospital’s statement of thedollar value of the service they furnishand we conclude that hospitals place ahigher dollar value on HCPCS codeG0424 than on G0239. We do not viewHCPCS code G0237 or G0238, whichhave median charges of approximately$88 and $85, respectively, and whichrepresent 15 minutes of care to besimilar to HCPCS code G0424 becauseeach of them is for one-on-one care, asopposed to the group nature of HCPCScodes G0239 and G0424. For thatreason, when we simulated mediancosts for CY 2010 and CY 2011, webased the simulation on the presence ofHCPCS code G0239 on the claim, <strong>with</strong>HCPCS code G0237 and/or HCPCS codeG0238 being a secondary requirement.We next looked at the revenue codesunder which hospitals reported HCPCScode G0424 and G0239. We found thatthe most commonly reported revenuecodes on the lines <strong>with</strong> the single billsfor HCPCS code G0424 were 0410,Respiratory Services, <strong>with</strong> 108,154single bills; 0948, PulmonaryRehabilitation, <strong>with</strong> 84,126 single bills;0460, Pulmonary Function, <strong>with</strong> 64,641single bills; 0419, Other RespiratoryServices, <strong>with</strong> 37,833 single bills, and0940, Other Therapeutic, <strong>with</strong> 59,533single bills. Therefore, of the 446,456single bills used to set the median costfor APC 102, 345,738 bills (excludingthe single bills reported as ‘‘Othertherapeutic’’), or 77 percent, werereported under revenue codes that werespecific to respiratory services of somenature (that is, revenue codes 0410,0948, 0460, and 0419). The remainingsingle bills were reported under avariety of revenue codes. We nextlooked at the cost centers that wereapplied to the charges on the singlebills, and we found that we used therespiratory therapy cost center, costcenter 4900 on the hospital cost reportCMS 2552–96, to reduce the charges onthe line to costs on 63 percent of thesingle bills. When we looked at theCCRs used to reduce charges to cost forHCPCS codes G0424 and G0239, wefound that both the HCPCS codes G0424and G0239 have a CCR of 0.25, whichis consistent <strong>with</strong> our finding thatcharges for both codes were usuallyreduced by the CCR for cost center 4900,Respiratory Therapy. We disagree <strong>with</strong>the commenters’ request that we createa nonstandard cost center for pulmonaryrehabilitation because we believe that itis not necessary and would not result inmore accurate estimated median costsfor pulmonary rehabilitation.

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274266 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and RegulationsStakeholders have repeatedly told usthat respiratory therapists furnish mostpulmonary rehabilitation. Therefore, weexpect that the costs of pulmonaryrehabilitation are captured in thestandard cost center 4900 (RespiratoryTherapy), which is used to convertcharges to costs for pulmonaryrehabilitation for approximately 63percent of single bills used to establishthe median cost for pulmonaryrehabilitation. We note also that anonstandard cost center, whichcommenters’ requested, is not requiredto be used to report costs. However, astandard cost center, like cost center4900, must be completed by a hospitalif it has a cost account for those costsin its general ledger. Hence, the creationof a nonstandard cost center would notnecessarily be used.Everything we observe in the claimsdata for the 446,456 single bills used toreport the CY 2010 charges from whichwe calculated the median cost forHCPCS code G0424 leads us to believethat the calculation of the median costof approximately $37 for HCPCS codeG0424 is appropriate, based on thecharge that hospitals set for the service.The median cost was calculated usingcharges, the majority of which arereported under pulmonary specificrevenue codes and using CCRs, andwhich mostly used the respiratorytherapy cost center.With regard to the comment that thepayment that results from a median costof approximately $37 would beinsufficient to pay the labor cost for theservice, we note that, given that HCPCScode G0424 is generally recognized tobe a group service, generally <strong>with</strong> a ratioof 1 staff to 4 patients, the payment foran hour of service would usually be 3to 4 times the payment for one unit ofHCPCS code G0424.We do not agree <strong>with</strong> the commentersthat freezing the payment for HCPCScode G0424 at the rate that was basedon the simulated median cost for CY2011 would be appropriate, given theresults of our analysis of the robustcharge data and cost report data thathospitals submitted. Similarly, we seeno basis for continuing to use thesimulated methodology to calculatemedian costs for pulmonaryrehabilitation because we now have anabundant number of single billscontaining the actual charges thathospitals requested in payment for theservice they are furnishing. With regardto the comment that hospitalsestablished their charges based onmisunderstanding of the nature of theservice or based on charges for servicesthat they wrongly viewed to be similar,we note that the median hospital chargefor HCPCS code G0424 is higher thanthe median charge for HCPCS codeG0239, the group respiratory service aswe would expect given that HCPCScode G0424 is a comprehensive service.The charges that hospitals establish forservices are the amount they seek to bepaid for the service they furnish, andtherefore, we view them as being areflection of the monetary value thehospital places on the service. Underour longstanding methodology, we usehospital charges to calculate the mediancosts on which the OPPS payment isbased.Lastly, we do not agree <strong>with</strong>commenters that payment based on themedian cost we derived from hospital’scosts and charges for CY 2010 willnecessarily result in reduced access tocare for Medicare patients. We note thatthe respiratory therapy services reportedunder HCPCS code G0239, whichcommenters stated is for an hour ofgroup respiratory therapy and is themost similar code to HCPCS codeG0424, has a median cost ofapproximately $31, which comparesreasonably to the median cost ofapproximately $37 which we found forHCPCS code G0424, a service of morecomplexity. We note that in CY 2010,when the payment rate for HCPCS codeG0239 was $27.39, hospitals reported atotal frequency of 146,616, whichindicates no absence of access to care ata payment rate significantly less thanthe median cost for HCPCS code G0424in CY 2012.<strong>Comment</strong>: <strong>Comment</strong>ers also statedthat some CMS instructions tocontractors were not issued until May2010 and that some MACs did notpermit billing of HCPCS code G0424until October of 2010. Moreover, theystated that some MACs instructedhospitals to report HCPCS codes G0237through G0239 for pulmonaryrehabilitation for COPD patientscontrary to CMS instructions. Theyadded that, given these issues <strong>with</strong>implementation of billing and paymentfor HCPCS code G0424, it isunderstandable that hospitals struggled<strong>with</strong> developing charges for a one hourcode for COPD patients when chargeswere already in place for very similarservices for patients <strong>with</strong> other chronicpulmonary diseases.Response: Hospitals are responsiblefor updating their billing systems torecognize changes to codes and paymentfor services, particularly <strong>with</strong> regard tothe quarterly changes to HCPCS codes,including the addition of new codes.CMS posts all instructions regardingnew codes on the CMS Web site, issuesMedicare Learning Network (MLN)Matters articles on new codes and hostsVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00146 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Hospital Open Door Forum callsregularly to provide easy ways forhospitals to stay up to date on changesin Medicare payment policy. Theinstructions to MACs are available tothe public via the Web site. If a hospitalbelieves that a MAC is not incompliance <strong>with</strong> the instructions andcannot achieve satisfaction fromdiscussing the issue <strong>with</strong> the MAC, thehospital should bring it to the attentionof the CMS regional office staff for thearea in which the hospital is located.We acknowledge that Change Request(CR) 6823 regarding coverage andimplementation of pulmonaryrehabilitation was issued by CMS onMay 7, 2010, effective for servicesfurnished on and after January 1, 2010.However, the Federal Register notice ofthe OPPS for CY 2010, which wasposted to http://www.cms.gov/HospitalOutpatientPPS/ on October 30,2009, contained the coverage andpayment policy for the pulmonaryrehabilitation benefit, a discussion ofhow the services should be coded,including a full discussion of HCPCScode G0424 and an explanation of howthe simulated median was created,including how CMS viewed HCPCScode G0424 to be similar to HCPCScodes G0237 through G0239 (74 FR60569). Moreover, CMS hosted regularHospital Open Door Forum callsbetween November 2009 and January 1,2010 at which CMS staff was availableto discuss any issue arising from theMedicare hospital OPPS. CMS expectedthat hospitals would use the detailedexplanation of how we arrived at thesimulated median that was articulatedin the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period that was postedon the CMS Web site as a basis forestablishing charges for the services forHCPCS code G0424 for CY 2010,because CMS advised hospitals of howthe simulated median was created.Therefore, not<strong>with</strong>standing the delay inthe issuance of CR 6823, we believe thathospitals had access to all of theinformation that was necessary to reportthe new codes and to establishappropriate charges for HCPCS codeG0424 beginning <strong>with</strong> the January 1,2010 effective date.<strong>Comment</strong>: <strong>Comment</strong>ers asked that, forhospital cost reports filed January 1,2012 and later, CMS require thatpulmonary rehabilitation be reported ina nonstandard cost center rather than astandard cost center. They believed thatthe recommendations of RTI in its 2006report, <strong>with</strong> regard to the creation of anew nonstandard cost center for cardiacrehabilitation, should also apply topulmonary rehabilitation because the

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74267jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2authorizing legislation is almostidentical and because they believed thatthis would result in more accuratecharge data and cost reports forpulmonary rehabilitation.Response: We do not agree that theaccuracy of median calculation wouldbe improved if CMS would create anonstandard cost center for pulmonaryrehabilitation. There is already a costcenter in which hospitals can isolate thecosts of respiratory services (which mayinclude the cost of hospital staff otherthan respiratory therapists who furnishrespiratory therapy): Cost center 4900,Respiratory Therapy, on the CMS form2552–96 and cost center 6600,Respiratory Therapy, on the CMS form2552–10. However, we believe thatrespiratory therapists provide themajority of pulmonary rehabilitationand that the costs of respiratorytherapists are largely reported on thecost report under the respiratory therapycost center. Therefore, we believe thatmost of the costs of pulmonaryrehabilitation are already carried in theRespiratory Therapy cost center, basedon our finding that the CCR for theRespiratory Therapy cost center (4900 inthe CMS hospital cost report form 2552–96) is reported sufficiently often that itwas used to reduce the charge for279,803 of the 446,456 single bills, or63 percent of the single bills, to cost. Inview of the existence of the standardcost center for respiratory therapy onboth the CMS form 2552–96 and theCMS form 2552–10 hospital costreports, we have no reason to believethat creation of a nonstandard costcenter would result in more specific andaccurate cost data for HCPCS codeG0424. In contrast, unlike respiratorytherapy, which has long had a dedicatedcost center, the costs of the staff whofurnish cardiac rehabilitation were notpredominantly carried in a single costcenter before the creation of the cardiacrehabilitation cost center. For thisreason, the creation of a cardiacrehabilitation cost center does notjustify the creation of a pulmonaryrehabilitation cost center.<strong>Comment</strong>: One commenter asked thatCMS reconsider the valuation of the costof HCPCS code G0424 to appropriatelyaccount for the services delivered byphysical therapists. The commenterasked that, alternatively, CMS create aseparate HCPCS code that can be usedto delineate those patients who requireindividualized physical therapy <strong>with</strong>inthe pulmonary rehabilitation program.The commenter stated that the need forthe service that would be reported bythe new code would be determined byconducting separate screening that hasclear and distinct criteria that justify theneed for the physical therapy services.Response: Pulmonary rehabilitation isa comprehensive service in which itwould be inappropriate to create a codefor a particular type of professional whoparticipates in providing the service.The charge a hospital establishes forHCPCS code G0424 is a charge for thecomprehensive package of services thatare encompassed in the pulmonaryrehabilitation benefit and includes thecharge for whatever portion of thoseservices may be furnished by a physicaltherapist. We do not believe that itwould be appropriate to create a newand separate code for the servicesfurnished by a physical therapist as partof a comprehensive pulmonaryrehabilitation service because thoseservices are already included in thecharge for HCPCS code G0424. Similarlyno additional payment should be madefor those services because payment forHCPCS code G0424 includes paymentfor the comprehensive package ofservices for which payment is claimedwhen a hospital reports HCPCS codeG0424.In summary, for CY 2010, we areestablishing payment for APC 0102, forwhich HCPCS code G0424 is the onlyassigned code, based on the median costof approximately $37 that we calculatedusing 446,456 single bills of 448,396total frequency, or nearly 100 percent, ofthe billed lines for HCPCS code G0424and the most recent hospital cost reportsfor the hospitals whose bills are beingused. We are not establishing a specialpurpose cost center for pulmonaryrehabilitation because the service islargely furnished by respiratorytherapists for which there is standardcost center (4900, Respiratory Therapy),which is already used to reduce mostcharges for HCPCS code G0424 to costs.Therefore, we do not believe thatcreating a pulmonary rehabilitation costcenter in addition to the standardrespiratory therapy cost center isnecessary to the calculation of themedian cost of HCPCS code G0424.b. Bronchial Thermoplasty (APC 0415)We created two new HCPCS codes,C9730 (Bronchoscopic bronchialthermoplasty <strong>with</strong> imaging guidance (ifperformed), radiofrequency ablation ofairway smooth muscle, 1 lobe) andC9731 (Bronchoscopic bronchialthermoplasty <strong>with</strong> imaging guidance (ifperformed), radiofrequency ablation ofairway smooth muscle, 2 or more lobes),also known as bronchial thermoplasty,and assigned them to APC 0415 (LevelII Endoscopy lower airway), effectiveJuly 1, 2011. Bronchial thermoplasty isindicated for the treatment of severeVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00147 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2persistent asthma, and the bronchialthermoplasty system consists of aradiofrequency (RF) controller and asingle use device <strong>with</strong> an electrodearray that is delivered through theworking channel of a bronchoscope. Thebronchial thermoplasty services,technology, and estimated costs came toour attention via an application for theservices to be placed into a NewTechnology APC. The APC 0415 mediancost for the CY 2012 proposed rule is$2,094.64. AMA’s CPT Editorial Panelhas recently created two new CategoryIII CPT codes to be effective January 1,2012, specifically, CPT codes 0276T(Bronchoscopy, rigid or flexible,including fluoroscopic guidance, whenperformed; <strong>with</strong> bronchialthermoplasty, 1 lobe) and 0277T(Bronchoscopy, rigid or flexible,including fluoroscopic guidance, whenperformed; <strong>with</strong> bronchialthermoplasty, 2 or more lobes). At theAugust 2011 APC Panel meeting, theAPC Panel heard from a presenterregarding APC placement for bronchialthermoplasty, but the Panel did notmake any recommendations to CMS. Weindicated at the August 2011 APC Panelmeeting that we anticipate retiringHCPCS codes C9730 and C9731, andreplacing them <strong>with</strong> CPT codes 0276Tand 0277T, respectively, effectiveJanuary 1, 2012. For CY 2012, weproposed maintaining assignment ofbronchial thermoplasty services to APC0415.<strong>Comment</strong>: One commenter stated thatthe bronchial thermoplasty codes,HCPCS codes C9730 and C9731, shouldnot be assigned to APC 0415 for CY2012 because the resources are notcovered by the CY 2012 proposed rulemedian cost for APC 0415 of $2,094.64.The commenter’s estimated costs for thebronchial thermoplasty proceduresrange from approximately $4,130 to$5,087, which includes its estimatedcost of $2,500 for the single use catheter,while the CY 2012 proposed rulemedian costs of service codes assignedto APC 0415 range from approximately$1,780 to $3,122. The commentercontended that no existing clinicalAPCs are appropriate both in terms ofclinical characteristics and resourcecosts. On the other hand, the commenterrequested that CMS consider anassignment of the bronchialthermoplasty codes to APC 0423 (LevelII percutaneous abdominal and biliaryprocedures). The commenter argued thatAPC 0423 includes CPT code 32998(Ablation therapy for reduction oreradication of one or more pulmonarytumor(s) including pleura or chest wallwhen involved by tumor extension,

74268 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2percutaneous, radiofrequency,unilateral), a service that the commenterclaimed is a better comparator forbronchial thermoplasty in terms ofprocedural costs as well as clinicalsimilarity. The commenter stated that,clinically, the two procedures entailsimilar supplies and equipment andinvolve ablative techniques. However,the commenter stated that CPT code32998 is performed percutaneously,while bronchial thermoplasty isperformed through a bronchoscope. Thecommenter asserted that bronchialthermoplasty requires a disposablecatheter costing $2,500, while CPT code32998 requires a disposable probecosting approximately $1,375. Also, thecommenter asserted that because the CY2012 proposed median cost of CPT code32998 is approximately $3,962 and theCY 2012 proposed median cost of APC0423 is about $4,112, bronchialthermoplasty should be assigned to APC0423 because of greater resourcesimilarity as reflected in the highermedian cost. The second optionrecommended by the commenter is torevise existing APC 0415 into APCs‘‘0415A’’ and ‘‘0415B’’ and place thetwo bronchial thermoplasty codes intoan APC 0415B <strong>with</strong> CPT codes 31626(Bronchoscopy, rigid or flexible,including fluoroscopic guidance, whenperformed; <strong>with</strong> placement of fiducialmarkers, single or multiple), 31631(Bronchoscopy, rigid or flexible,including fluoroscopic guidance, whenperformed; <strong>with</strong> placement of trachealstent(s) (includes tracheal/bronchialdilation as required)), and 31636(Bronchoscopy, rigid or flexible,including fluoroscopic guidance, whenperformed; <strong>with</strong> placement of bronchialstent(s) (includes tracheal/bronchialdilation as required), initial bronchus).The commenter’s third, final andpreferred recommendation was to assignbronchial thermoplasty codes to a NewTechnology APC.Response: As stated above, effectiveJanuary 1, 2012, newly created CPTcodes 0276T and 0277T will be thecodes used to report bronchialthermoplasty, and HCPCS codes C9730and C9731 will be deleted effective thatdate. Regarding the commenter’srecommended option to assignbronchial thermoplasty codes to APC0423, we do not believe that thebronchial thermoplasty service isclinically similar to the procedures inAPC 0423. APC 0423 consists ofpercutaneous procedures, while CPTcodes 0276T and 0277T arebronchoscopic procedures, clinicallysimilar to services in bronchoscopyAPCs. We also do not agree that APC0415 needs to be split into 2 APCs atthis time. All of the bronchoscopyprocedures in APC 0415 are clinicallysimilar, and the final rule median costsfor procedures <strong>with</strong>in APC 0415 rangefrom approximately $1,745 toapproximately $3,300, <strong>with</strong> an overallmedian cost of approximately $2,048.We proposed to assign bronchialthermoplasty to APC 0415 because it issimilar clinically to the bronchoscopyprocedures in APC 0415, particularlyCPT code 31641 (Bronchoscopy, <strong>with</strong>destruction of tumor or relief of stenosisby any method other than excision (e.g.,laser therapy, cryotherapy)), andbecause the estimated resource costs areapproximately similar to the upper endof the range of median costs forprocedures assigned to APC 0415. Wegenerally prefer to wait until mediancost claims data are available beforereassignment of a service to a new APC.We also note that, according to ourusual practice, when adequate actualhospital reported cost data becomeavailable for these procedures, wereevaluate their APC assignments andmay reassign them to another APC, asappropriate. Regarding the option toassign the service to a New TechnologyAPC, we believe that APC 0415 is anappropriate clinical APC for bronchialthermoplasty procedures. Therefore, weare maintaining assignment of thebronchial thermoplasty services to APC0415.We are finalizing our proposal tomaintain the assignment of bronchialthermoplasty procedures (CPT codes0276T and 0277T beginning January 1,2012) to APC 0415 for CY 2012, whichhas a final median cost of approximately$2,024.c. Insertion of Bronchial Valve (APC0415)AMA’s CPT Editorial Panel createdCPT code 0250T (Airway sizing andinsertion of bronchial valve(s), eachlobe) effective January 1, 2011 to reportinsertion of a bronchial valve fortreatment of prolonged air leaks of thelung. CPT code 0250T is an add-oncode; therefore, hospitals must list thecode in addition to the primarybronchoscopy procedure code. For2011, we assigned CPT code 0250T toAPC 0415 (Level II Endoscopy lowerairway), <strong>with</strong> a payment rate of$1,971.77. We believe CPT code 0250Tis similar to other services in APC 0415in its clinical characteristics. For 2012,we proposed to maintain the assignmentof CPT code 0250T to APC 0415, whichhad a proposed rule median cost ofapproximately $2,095, and a proposedpayment rate of approximately $2,022.The CPT code 0250T procedure isVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00148 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2performed <strong>with</strong> a bronchial valveintended to control prolonged air leaksof the lung following three specificsurgical procedures: Lobectomy,segmentectomy, or lung volumereduction surgery (LVRS).<strong>Comment</strong>: One commenter stated thatAPC 0415 does not adequately cover theresource costs of CPT code 0250T, andrecommended that CMS create a newclinical APC that would accuratelyreflect the device and procedural costsassociated <strong>with</strong> CPT code 0250T. Thecommenter claimed that the cost for thebronchial valve that is necessary toperform the CPT code 0250T procedureis $2,750, and that a total device costbased on the number of valves (2.4mean, or median of 2.0 valves) is $6,600based on the mean number of valvesand $5,500 based on the median valves.The commenter asserted that it certifiedto the FDA that the current price of$2,750 complies <strong>with</strong> HumanitarianDevice Exemption (HDE) regulationsgoverning the price of the device. Thecommenter estimated that the CY 2012total procedural cost for CPT code0250T is $7,268.91 (based on the meannumber of valves) or $6,168.91 (basedon the median). The commenterasserted that the highest payingbronchoscopy in APC 0415 does notadequately pay for the cost of CPT code0250T and requested that CMS create anew clinical APC for bronchial valveinsertion and reassign CPT code 0250Tto that APC for CY 2012.Response: CPT code 0250T is a newcode as of January 1, 2011, andtherefore, we have no CY 2010 claimsdata for this service for CY 2012ratesetting. The commenter apparentlyagrees that the bronchoscopy APCclassification is the correct clinical APCtype for the CPT code 0250T procedure,but that the estimated resource costssupport a higher paying bronchoscopyAPC. We generally wait until mediancost claims data are available beforereassignment to a new APC, particularlywhen there are no comparable clinicalprocedures that would allow us to easilyestimate the cost of this new procedure.We again note that CPT code 0250T isan add-on code to a base bronchoscopycode.After consideration of the publiccomments we received, we aremaintaining our assignment of CPT code0250T to APC 0415 for CY 2012, whichhas a final median cost of approximately$2,024, because it is clinically similar tothe services in APC 0415. We willreview this assignment for CY 2013,when we should have some claims datafor CPT code 0250T to determine thecost of the procedure.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations742699. Other Servicesa. Skin Repair (APCs 0133, 0134, and0135)For CY 2012, we proposed to reassignCPT code 15004 (Surgical preparation orcreation of recipient site by excision ofopen wounds, burn eschar, or scar(including subcutaneous tissues), orincisional release of scar contracture,face, scalp, eyelids, mouth, neck, ears,orbits, genitalia, hands, feet and/ormultiple digits; first 100 sq cm or 1% ofbody area of infants and children) fromAPC 0135 (Level III Skin Repair) to APC0134 (Level II Skin Repair). Similarly,we also proposed to reassign CPT code15430 (Acellular xenograft implant; first100 sq cm or less, or 1% of body areaof infants and children) from APC 0135(Level III Skin Repair) to APC 0134(Level II Skin Repair). We reassignedCPT codes 15004 and 15430 from APC0135 to APC 0134 to avoid a 2 timesrule violation in APC 0135.For CY 2012, the AMA’s CPTEditorial Panel deleted 24 skinreplacement and skin substitute-relatedCPT codes and replaced them <strong>with</strong> 8new CPT codes in the IntegumentarySystem section of the 2012 CPT codebook to describe more accurately theservices associated <strong>with</strong> skinreplacement procedures. In particular,the CPT Editorial deleted 24 skinreplacement and skin substitute-relatedCPT codes in the range between CPTcode 15170 through 15431 and created8 new CPT codes in the range between15271 through 15278, which will beeffective January 1, 2012.Our standard process for dealing <strong>with</strong>new CPT codes is to assign the code tothe APC that we believe containsservices that are comparable <strong>with</strong>respect to clinical characteristics andresources required to furnish theservice. The new CPT code is given acomment indicator of ‘‘NI’’ (New code,interim APC assignment; comments willbe accepted on the interim APCassignment for the new code) to identifyit as a new interim APC assignment forthe new year and the APC assignmentfor the new codes is then open to publiccomment. In the case of the new theskin replacement and skin substituterelatedCPT codes, we crosswalked theexisting CY 2011 CPT codes to the newCY 2012 CPT codes that appropriatelydescribes them. In assigning the newcodes to their appropriate APCs, wetook into consideration the size of thewound described in the code descriptor.Specifically, we assigned the new codesto their appropriate APCs based on thefollowing factors:• New codes whose long descriptorsincluded the words ‘‘each additional 25sq cm’’ were assigned to APC 0133;• New codes whose long descriptorsincluded the words ‘‘first 25 sq cm orless’’ or ‘‘each additional 100 sq cm’’were assigned to APC 0134; and• New codes whose long descriptorsincluded the words ‘‘first 100 sq cm’’were assigned to APC 0135Table 29 below lists the CY 2011 APCassignments for the CY 2011 CPT codesthat will be deleted on December 31,2011, and crosswalked to thereplacement codes, which are describedby the new CY 2012 CPT codes that willbe effective January 1, 2012. We notethat because the eight new CPT codeswill be effective January 1, 2012, theyare flagged <strong>with</strong> comment indicator‘‘NI’’ in Addendum B of this final rule,which will be published and madeavailable only via the Internet on theCMS Web site at http://www.cms.gov/.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00149 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

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74272 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00152 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.046

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Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74275jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–C<strong>Comment</strong>: Some commentersrequested CMS to continue to assignCPT code 15004 to APC 0135 becausethe procedure is clinically similar toCPT codes 15002, 15003, and 15005,which are in APC 0135.Response: As we stated above, wereassigned CPT code 15004 from APC0135 to APC 0134 to eliminate a 2 timesrule violation in APC 0135. Based onour analysis, our claims data show aCPT median cost of approximately $278for CPT code 15004 based on 1,529single claims (out of 5,116 total claims).The median cost of approximately $278for CPT code 15004 is closer to themedian cost of approximately $227 forAPC 0134 than to the median cost ofapproximately $345 for APC 0135.Moreover, the range of the median costsfor the procedures <strong>with</strong> significantclaims data that are assigned to APC0134 is between $157 and $291, whilethe range for the procedures <strong>with</strong>significant claims data that are assignedto APC 0135 is between $284 and $642.The median cost of approximately $278for CPT code 15004 is in the range ofmedian costs for the procedures <strong>with</strong>significant claims data in APC 0134 butnot in the range of median costs for theprocedures <strong>with</strong> significant claims datain APC 0135. Further, we believe thatCPT code 15004 is similar to theprocedures in APC 0134 based onclinical homogeneity and resource costs.We remind hospitals that we have morethan two levels of skin repair APCs.Specifically, we have five levels of skinrepair APCs as follows:• APC 0133 (Level I Skin Repair)• APC 0134 (Level II Skin Repair)• APC 0135 (Level III Skin Repair)• APC 0136 (Level IV Skin Repair)• APC 0137 (Level V Skin Repair)Therefore, after consideration of thepublic comments that we received, weare finalizing our CY 2012 proposal,<strong>with</strong>out modification, to reassign CPTcode 15004 from APC 0135 to APC0134, which has a final CY 2012 APCmedian cost of approximately $227.<strong>Comment</strong>: Several commenters urgedCMS not to finalize its proposal toassign CPT code 15430 to APC 0134 andrequested that CMS continue to assignthe code to APC 0135, which is thesame APC that is assigned to its add-onCPT code 15431 (Acellular xenograftimplant; each additional 100 sq cm, oreach additional 1% of body area ofinfants and children, or part thereof).The commenters stated that APC 0135 isthe appropriate APC assignment for CPTcode 15430 based on its clinicalhomogeneity and resource costs to otherprocedures assigned in APC 0135. Onecommenter indicated that the proposedCPT median cost of approximately $300is closer to the proposed payment rateof approximately $361 for APC 0135VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00155 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2than to the proposed payment rate ofapproximately $228 for APC 0134.Response: Although we proposed toreassign CPT code 15430 from APC0135 to APC 0134, the code will bedeleted on December 31, 2011, andreplaced <strong>with</strong> new CPT codes effectiveJanuary 1, 2012. As listed in Table 29,the replacement codes for CPT code15430 have been crosswalked to APC0135 based on the code descriptor.<strong>Comment</strong>: One commenterrecommended that CMS provide propernotice and comment before deletingHCPCS codes from the system. Thecommenter indicated that, in the case ofHCPCS code Q4109 (Tissuemend, persquare centimeter), the public should beprovided adequate notice before thecode is deleted <strong>with</strong> an explanation forits deletion. This same commenterrequested that CMS temporarily reassignHCPCS code Q4109 to status indicator‘‘K’’ (Nonpass-Through Drugs andNonimplantable Biologicals, IncludingTherapeutic Radiopharmaceuticals) forCY 2012.Response: HCPCS code Q4109 wasdeleted on December 31, 2010. We arenot considering a status indicatorreassignment for this code because theHCPCS code is no longer active. ThisHCPCS code was assigned to statusindicator ‘‘D’’ (Discontinued Codes) inAddendum B of the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period. EveryER30NO11.049

74276 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2year hundreds of new codes are created,revised, and deleted as part of theannual HCPCS cycle. In its role as theLevel II Alphanumeric HCPCS code setmaintainer, the CMS HCPCS Workgroupidentifies redundancies across theHCPCS Level II national code set whichreduces opportunities for duplicatebilling. Because we are not aware of allthe coding changes for the upcomingyear when we publish our proposedrules, we do not address the codingchanges in the proposed rule. Anyinterested party that disagrees <strong>with</strong> thecoding actions for the Level IIAlphanumeric HCPCS codes is welcometo submit a request to CMS to review thematter by submitting an applicationusing CMS’ standard procedures. Theapplication will be considered as part ofCMS’ standard code review process,including an opportunity for publiccomment in reaction to a publishedpreliminary HCPCS coding decision.The application can be downloadedfrom this CMS Web site: https://www.cms.gov/MedHCPCSGenInfo/01a_Application_Form_and_Instructions.asp#TopOfPage.b. Nasal Sinus Endoscopy (APC 0075)For CY 2012, we proposed to assignCPT codes 31295 (Nasal/sinusendoscopy, surgical; <strong>with</strong> dilation ofmaxillary sinus ostium (e.g., balloondilation), transnasal or via canine fossa),31296 (Nasal/sinus endoscopy, surgical;<strong>with</strong> dilation of frontal sinus ostium(e.g., balloon dilation), and 31297(Nasal/sinus endoscopy, surgical; <strong>with</strong>dilation of sphenoid sinus ostium (e.g.,balloon dilation) to APC 0075 (Level VEndoscopy Upper Airway).<strong>Comment</strong>: One commenter on the CY2012 OPPS/ASC proposed rule objectedto the assignment of CPT codes 31295,31296, and 31297 to APC 0075 becausethe commenter believed that thepayment rate for APC 0075 substantiallyunderpays providers. <strong>Comment</strong>ers onthe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 71800) relatingto the interim APC assignments and/orstatus indicators of HCPCS codesidentified <strong>with</strong> comment indicator ‘‘NI’’in Addendum B to that final rule <strong>with</strong>comment period addressed the sameissue. The commenters suggested thatinstead of assigning CPT codes 31295,31296, and 31297 to APC 0075, CMScreate a new device-dependent APC forthese three CPT codes. Or, if CMS doesnot decide to create a new devicedependentAPC, the commenterssuggested that the three CPT codesshould instead be assigned to one offour alternative APCs. The commentersbelieved that assigning these codes toAPCs 0056 (Level II FootMusculoskeletal Procedures), 0083(Level I Endovascular Revascularizationof the Lower Extremity), or 0114(Thyroid/LymphadenectomyProcedures) would be justified becausethe payment rates for these APCs moreclosely reflect the costs associated <strong>with</strong>CPT codes 31295, 31296, and 31297.<strong>Comment</strong>ers also suggested that anotheroption would be to assign these CPTs tothe new technology APC 1525 (NewTechnology—Level XXV ($3500-$4000))until more claims data are accumulatedand an appropriate clinical APC can beassigned.Response: We do not agree that CPTcodes 31295, 31296, and 31297 shouldbe assigned to a new device-dependentAPC. When assigning procedures to anAPC, we first consider the clinical andresource characteristics of a procedureand determine the most appropriateAPC assignment. We believe that themost clinically appropriate APC is APC0075, which includes other nasal andsinus endoscopy procedures. The APCssuggested by the commenters (APCs0056, 0083, and 0114) are clinicallyunrelated to the procedures describedby CPT codes 31295, 31296, and 31297.Regarding the resource costs of theprocedures in question, the commentersasserted costs of approximately $4,000for these procedures, which arecurrently assigned to the highest payingclinically appropriate APC (APC 0075),which is level 5 out of 5 levels of APCsfor ‘‘endoscopy upper airway.’’ Thehighest median cost of all of theprocedures assigned to APC 0075 isapproximately $4,000. Therefore, eventhe non-claims data-based cost estimatefor these procedures offered by thecommenters is <strong>with</strong>in the approximaterange (although on the high end of therange) of median costs for proceduresassigned to APC 0075. Therefore, webelieve that, until we have claims datato better inform an APC assignment, thecurrent APC assignment is the mostappropriate. We have no furtherinformation at this time that indicatesthat a device-dependent APC, theassignment of status indicator ‘‘S’’instead of status indicator ‘‘T,’’ or a newtechnology APC would be moreappropriate at this time. Once OPPSclaims data are available for theseprocedures, we will reevaluate theirAPC assignments, as we do for allprocedures on an ongoing and annualbasis.c. Bioimpedance Spectroscopy (APC0097)CPT code 0239T (Bioimpedancespectroscopy (BIS), measuring 100frequencies or greater, directmeasurement of extracellular fluidVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00156 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2differences between the limbs) waseffective January 1, 2011. In accordance<strong>with</strong> our standard policy, we assessedthe properties of the service as CPT code0239T was defined by the AMA’s CPTEditorial Board. We assigned it to theAPC that we believed to have the mostsimilar clinical characteristics andresource requirements. In the case ofCPT code 0239T, we assignedbioimpedance spectroscopy to APC0099 (Electrocardiogram/Cardiography).For CY 2012, we proposed to continueto assign CPT code 0239T, for which wehad no claims data on which tocalculate a median cost, to APC 0099 forCY 2012. We proposed a median cost ofapproximately $28 for APC 0099.<strong>Comment</strong>: One commenter objected tothe proposed assignment of CPT code0239T to APC 0099 for CY 2012 on thebasis that the proposed payment rate forAPC 0099 would be inadequate to payhospitals’ costs and, therefore, wouldjeopardize beneficiary access to theservice. The commenter stated that BISis a method to aid surgeons andoncologists in the pre-surgicalassessment and post-operativemonitoring of unilateral lymphedema ofthe arm. The commenter also stated thatBIS is an aid for therapists to assess andmonitor the measurement of extracellular fluid volume differencesbetween the arms during the treatmentphase for early stage lymphedema. Thecommenter stated that BIS is not adiagnostic test but rather an aid to thephysician in the clinical assessment ofthe patient because the results requireinterpretation by the physician andreview of previous results for clinicalrelevance.The commenter asked that CMSreassign CPT code 0239T from APC0099 to APC 0096 (Level II NoninvasivePhysiologic Studies). The commenterstated that CPT code 239T is not similarto 93701 (Bioimpedance-derivedphysiologic cardiovascular analysis),which the commenter assumed was theCMS rationale for also placing 0239Tinto APC 0099. Instead the commenterindicated that CPT code 239T is moresimilar in resource time, for which thecommenter stated that physician time isa proxy to CPT code 93924(Noninvasive physiologic studies oflower extremity arteries, at rest andfollowing treadmill stress testing, (i.e.,bidirectional Doppler waveform orvolume plethysmography recording andanalysis at rest <strong>with</strong> ankle/brachialindices immediately after and at timedintervals following performance of astandardized protocol on a motorizedtreadmill plus recording of time of onsetof claudication or other symptoms,maximal walking time, and time to

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74277jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2recovery) complete bilateral study). Thecommenter stated that the workdescription for CPT code 93924 ofsetting the patient up, taking diagnosticmeasurements, and analyzing andinterpreting the records is similar to thework involved for CPT code 0239T and,therefore, CPT code 0239T should beassigned to APC 0096 rather than toAPC 0099. The commenter also statedthat the resource time for CPT code0239T is similar to the resource time,using physician time as a proxy, for CPTcode 99214 (Office or other outpatientvisit for the evaluation and managementof an established patient, which requiresat least 2 of these 3 key components: Adetailed history; A detailedexamination; Medical decision makingof moderate complexity). Thecommenter believed that because CPTcode 99214 is assigned to APC 0606,which has a median cost ofapproximately $99, CPT code 0239Tshould be assigned to an APC <strong>with</strong> acomparable payment rate. In addition,the commenter stated that the proposedpayment for APC 0099 is not adequateto compensate hospitals for what thecommenter indicated are the cost of thenecessary machine (approximately$27,000) and supplies (approximately$50 per unit). The commenter statedthat compensation under APC 0099would not be adequate and <strong>with</strong>outadequate compensation, hospitalswould not provide the service.Response: We have no CY 2010claims data for the service reported byCPT code 239T because the CPT code isnew for CY 2011. Therefore, under ourlongstanding policy, we assigned thenew code to the APC that we believedto be most similar clinically and <strong>with</strong>regard to homogeneity of hospitalresources. Specifically, we assignedHCPCS code 0239T to APC 0099 for CY2011, and we proposed to continue thatassignment for CY 2012. We disagree<strong>with</strong> the commenter that BIS is not adiagnostic service because the service isused for the diagnosis of a clinicalcondition. However, after examinationof the information furnished by thecommenter, we agree <strong>with</strong> thecommenter that CPT code 0239Tappears to be somewhat dissimilar inresource utilization to the servicesassigned to APC 0099. However, we donot agree <strong>with</strong> the commenters that CPTcode 0239T should be assigned to APC0096 because we do not believe thatCPT code 0239T rises to the same levelof complexity as codes that are assignedto APC 0096. For example, we believethat CPT code 93924, to which thecommenters compared CPT code 239T,reports a service that is more complexclinically and more costly to hospitalsthan the service reported by CPT code0239T. Similarly, we believe that thereis neither clinical similarity norsimilarity of hospital resources betweenthe services reported by CPT code0239T, which is used to diagnoselymphedema and CPT code 99214,which is an established patientoutpatient visit.Although we do not believe that CPTcode 0239T should be assigned to APC0096, we believe that CPT code 0239Tis sufficiently more complex than theservices that are assigned to APC 0099that it would be more appropriatelyplaced in APC 0097, based on itsclinical homogeneity and resourcesimilarity to other procedures in APC0097. For example, we believe that CPTcode 0239T is more similar to CPT code93922 (Limited bilateral noninvasivephysiologic studies of upper or lowerextremity arteries, (eg, for lowerextremity: ankle/brachial indices atdistal posterior tibial and anterior tibial/dorsalis pedis arteries plusbidirectional, Doppler waveformrecording and analysis at 1–2 levels, orankle/brachial indices at distal posteriortibial and anterior tibial/dorsalis pedisarteries plus volume plethysmographyat 1–2 levels, or ankle/brachial indicesat distal posterior tibial and anteriortibial/dorsalis pedis arteries <strong>with</strong>transcutaneous oxygen tensionmeasurements at 1–2 levels)), which isassigned to APC 0097, both clinicallyand in resource requirements, than toCPT code 93924. Therefore, we arereassigning CPT code 0239T from APC0099 to APC 0097, which has a finalmedian cost of approximately $65 forCY 2012. We will reassess the APCplacement for CPT code 0239T when wehave claims data for services furnishedon and after January 1, 2011, theeffective date for CPT code 0239T.d. Autologous Blood Salvage (APC0345)For CY 2012, we proposed to assignCPT code 86891 (Autologous blood orcomponent, collection processing andstorage; intra- or postoperative salvage)to APC 0345 (Level I TransfusionLaboratory Procedures).<strong>Comment</strong>: One commenter objected tothe assignment of CPT code 86891 toAPC 0345 because the commenterbelieved that the payment rate for APC0345 underpays providers. Thecommenter stated that the reason for theinappropriately low payment is thatCPT 86891 would never appear on asingle procedure claim. The commentersuggested that this service should befurther analyzed and a more appropriatepayment level established based uponVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00157 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2analysis using external data. Thecommenter further stated that thecurrent way in which the groupings andpayment levels for services under APCsare calculated does not appropriatelyaddress the autologous blood salvageservice performed at hospitals.Response: The calculated median costfor CPT code 86891 based on 2010claims data for this final rule <strong>with</strong>comment period is approximately $21based on 124 single procedure claimsout of 332 total claims. The calculatedmedian cost of approximately $21 forCPT code 86891 is <strong>with</strong>in the range ofthe median costs of the other proceduresassigned to APC 0345, and there is noviolation of the 2 times rule. Therefore,assignment of CPT code 86891 to APC0345 satisfies the APC assignmentrequirements of clinical and resourcehomogeneity. We do not agree thatadditional analysis of external data isnecessary. We set the payment rates forAPCs using our standard OPPSmethodology based on relative costsfrom hospital outpatient claims and themost recent cost report data that areavailable. We have no reason to believethat our claims and cost report data, asreported by hospitals, do not accuratelyreflect hospitals’ costs of the servicesassigned to APC 0345, including theservice described by CPT code 86891.Furthermore, as the service described byCPT code 86891 is a transfusionlaboratory procedure, this service isappropriately assigned to APC 0345,which is titled ‘‘Level I TransfusionLaboratory Procedures’’ and includesother transfusion laboratory procedures.Therefore, we are finalizing ourproposal to assign CPT code 86891 toAPC 0345 for CY 2012, which has afinal rule median cost of approximately$15 for CY 2012.IV. OPPS Payment for DevicesA. Pass-Through Payments for Devices1. Expiration of Transitional Pass-Through Payments for Certain Devicesa. BackgroundSection 1833(t)(6)(B)(iii) of the Actrequires that, under the OPPS, acategory of devices be eligible fortransitional pass-through payments forat least 2, but not more than 3, years.This pass-through payment eligibilityperiod begins <strong>with</strong> the first date onwhich transitional pass-throughpayments may be made for any medicaldevice that is described by the category.We may establish a new device categoryfor pass-through payment in anyquarter. Under our established policy,we base the pass-through statusexpiration date for a device category on

74278 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2the date on which pass-throughpayment is effective for the category.The date on which a pass-throughcategory is in effect is the first date onwhich pass-through payment may bemade for any medical device that isdescribed by such category. We proposeand finalize the dates for expiration ofpass-through status for device categoriesas part of the OPPS annual update.We also have an established policy topackage the costs of the devices that areno longer eligible for pass-throughpayments into the costs of theprocedures <strong>with</strong> which the devices arereported in the claims data used to setthe payment rates (67 FR 66763).Brachytherapy sources, which are nowseparately paid in accordance <strong>with</strong>section 1833(t)(2)(H) of the Act, are anexception to this established policy.There currently are three new devicecategories eligible for pass-throughpayment. These device categories aredescribed by HCPCS code C1749(Endoscope, retrograde imaging/illumination colonoscope device(implantable)), which we announced inthe October 2010 OPPS Update(Transmittal 2050, Change Request7117, dated September 17, 2010); andHCPCS codes C1830 (Powered bonemarrow biopsy needle), and C1840(Lens, intraocular (telescopic)), whichwere made effective for pass-throughpayment October 1, 2011, andannounced in Transmittal 2296, ChangeRequest 7545, dated September 2, 2011.There are no categories for which weproposed expiration of pass-throughstatus in CY 2011. If we create newdevice categories for pass-throughpayment status during the remainder ofCY 2011, we will propose futureexpiration dates in accordance <strong>with</strong> thestatutory requirement that they beeligible for pass-through payments for atleast 2, but not more than 3, years fromthe date on which pass-throughpayment for any medical devicedescribed by the category may first bemade.b. CY 2012 PolicyAs stated above, section1833(t)(6)(B)(iii) of the Act requires that,under the OPPS, a category of devicesbe eligible for transitional pass-throughpayments for at least 2, but not morethan 3 years. Device pass-throughcategory C1749 was established for passthroughpayments on October 1, 2010,and will have been eligible for passthroughpayments for more than 2 yearsbut less than 3 years as of the end of CY2012. Therefore, in the CY 2012 OPPS/ASC proposed rule (76 FR 42242), weproposed an expiration date for passthroughpayment for device categoryC1749 of December 31, 2012. Therefore,under our proposal, beginning January1, 2013, device category C1749 will nolonger be eligible for pass-throughpayments. We will propose expirationdates for pass-through payment fordevice categories C1830 and C1840 in afuture rulemaking.<strong>Comment</strong>: Two commenters indicatedthat there was only one currentlyapproved device for pass-throughpayment, noting that in the CY 2012OPPS/ASC proposed rule, we stated thatthere was only one device categoryeligible for pass-through payment for CY2012. These commenters opined thatthere has been a decrease in the numberof categories eligible for pass-throughpayment over the past several years, andencouraged CMS to approve additionaldevice categories for technologies thatmeet the criteria for pass-throughpayments. One commenterrecommended that CMS reevaluate thecriteria and approval process for devicecategory pass-through eligibility. Thecommenter also recommended that CMSannually publish a list of all passthroughapplications filed <strong>with</strong> CMS,along <strong>with</strong> CMS’ determinations andrationale for the resulting decisions.Response: As indicated, we currentlyhave three device categories eligible forpass-through payment, rather than onecategory as stated in the CY 2012proposed rule, and we believe thisshows that we have a robust devicepass-through evaluation and approvalprocess. The number of device passthroughcategories eligible for paymentwill always vary, and we believe thatthe number of active device passthroughcategories eligible for passthroughpayment at any time is afunction of the quality of applicationsunder consideration, that is, whetherthey fully meet the device pass-throughcriteria, rather than a function of ourcriteria and approval process, which webelieve to be appropriate. As we statedin the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period (75 FR 71922), wewill take the recommendation topublish a list of all pass-throughapplications filed <strong>with</strong> us underadvisement as we consider our devicepass-through criteria and process in thefuture.After consideration of the publiccomments we received, we arefinalizing our proposal of an expirationdate for pass-through payment fordevice category C1749 of December 31,2012. Therefore, beginning January 1,2013, device category C1749 will nolonger be eligible for pass-throughpayments. We remind the public that asof January 1, 2013, device categoryC1749 will still be active for the billingVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00158 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2and reporting of devices and theircharges along <strong>with</strong> the HCPCS codes ofthe procedures <strong>with</strong> which they areused. When billing for proceduresutilizing devices that have active devicecodes, hospitals are required to reportthe codes for the devices on their claimsfor the procedure.2. Provisions for Reducing TransitionalPass-Through Payments to Offset CostsPackaged Into APC Groupsa. BackgroundWe have an established policy toestimate the portion of each APCpayment rate that could reasonably beattributed to the cost of the associateddevices that are eligible for pass-throughpayments (66 FR 59904). We deductfrom the pass-through payments foridentified device categories eligible forpass-through payments an amount thatreflects the portion of the APC paymentamount that we determine is associated<strong>with</strong> the cost of the device, defined asthe device APC offset amount, asrequired by section 1833(t)(6)(D)(ii) ofthe Act. We have consistently employedan established methodology to estimatethe portion of each APC payment ratethat could reasonably be attributed tothe cost of an associated device eligiblefor pass-through payment, using claimsdata from the period used for the mostrecent recalibration of the APC rates (72FR 66751 through 66752). We establishand update the applicable device APCoffset amounts for eligible pass-throughdevice categories through thetransmittals that implement thequarterly OPPS updates.We publish a list of all proceduralAPCs <strong>with</strong> the CY 2011 portions (bothpercentages and dollar amounts) of theAPC payment amounts that wedetermine are associated <strong>with</strong> the costof devices, on the CMS Web site at:http://www.cms.gov/HospitalOutpatientPPS/01_overview.asp. Thedollar amounts are used as the deviceAPC offset amounts. In addition, inaccordance <strong>with</strong> our establishedpractice, the device APC offset amountsin a related APC are used in order toevaluate whether the cost of a device inan application for a new device categoryfor pass-through payment is notinsignificant in relation to the APCpayment amount for the service relatedto the category of devices, as specifiedin our regulations at § 419.66(d).As of CY 2009, the costs ofimplantable biologicals <strong>with</strong>out passthroughstatus are packaged into thepayment for the procedures in whichthey are inserted or implanted becauseimplantable biologicals <strong>with</strong>out passthroughstatus are not separately paid

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74279jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2(73 FR 68633 through 68636). For CY2010, we finalized a new policy tospecify that the pass-through evaluationprocess and pass-through paymentmethodology for implantable biologicalsthat are surgically inserted or implanted(through a surgical incision or a naturalorifice; also referred to as ‘‘implantablebiologicals’’) and that are newlyapproved for pass-through statusbeginning on or after January 1, 2010, bethe device pass-through process andpayment methodology only. As a result,for CY 2010, we included implantablebiologicals in our calculation of thedevice APC offset amounts (74 FR60476). We calculated and set thedevice APC offset amount for a newlyestablished device pass-throughcategory, which could include a newlyeligible implantable biological,beginning in CY 2010 using the samemethodology we have historically usedto calculate and set device APC offsetamounts for device categories eligiblefor pass-through payment (72 FR 66751through 66752), <strong>with</strong> one modification.Because implantable biologicals areconsidered devices rather than drugs forpurposes of pass-through evaluation andpayment under our established policy,the device APC offset amounts includethe costs of implantable biologicals. ForCY 2010, we also finalized a policy toutilize the revised device APC offsetamounts to evaluate whether the cost ofan implantable biological in anapplication for a new device categoryfor pass-through payment is notinsignificant in relation to the APCpayment amount for the service relatedto the category of devices. Further, forCY 2010, we no longer used the ‘‘policypackaged’’drug APC offset amounts forevaluating the cost significance ofimplantable biological pass-throughapplications under review and forsetting the APC offset amounts thatwould apply to pass-through paymentfor those implantable biologicals,effective for new pass-through statusdeterminations beginning in CY 2010(74 FR 60463).For CY 2011, we continued our policythat the pass-through evaluation processand pass-through payment methodologyfor implantable biologicals that aresurgically inserted or implanted(through a surgical incision or a naturalorifice) and that are newly approved forpass-through status beginning on orafter January 1, 2010, be the device passthroughprocess and paymentmethodology only.b. CY 2012 PolicyIn the CY 2012 OPPS/ASC proposedrule (76 FR 42243), we proposed tocontinue our policy, for CY 2012, thatthe pass-through evaluation process andpass-through payment methodology forimplantable biologicals that aresurgically inserted or implanted(through a surgical incision or a naturalorifice) and that are newly approved forpass-through status beginning on orafter January 1, 2010, be the device passthroughprocess and paymentmethodology only. The rationale for thispolicy is provided in the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod (74 FR 60471 through 60477). Wealso proposed to continue ourestablished policies for calculating andsetting the device APC offset amountsfor each device category eligible forpass-through payment. In addition, weproposed to continue to review eachnew device category on a case-by-casebasis to determine whether device costsassociated <strong>with</strong> the new category arealready packaged into the existing APCstructure. If device costs packaged intothe existing APC structure areassociated <strong>with</strong> the new category, weproposed to deduct the device APCoffset amount from the pass-throughpayment for the device category. Asstated earlier, these device APC offsetamounts also would be used in order toevaluate whether the cost of a device inan application for a new device categoryfor pass-through payment is notinsignificant in relation to the APCpayment amount for the service relatedto the category of devices (§ 419.66(d)).For CY 2012, we also proposed tocontinue our policy established in CY2010 to include implantable biologicalsin our calculation of the device APCoffset amounts. In addition, weproposed to continue to calculate andset any device APC offset amount for anew device pass-through category thatincludes a newly eligible implantablebiological beginning in CY 2012 usingthe same methodology we havehistorically used to calculate and setdevice APC offset amounts for devicecategories eligible for pass-throughpayment, and to include the costs ofimplantable biologicals in thecalculation of the device APC offsetamounts, as we first finalized andimplemented for CY 2010.In addition, we proposed to update,on the CMS Web site at http://www.cms.gov/HospitalOutpatientPPS,the list of all procedural APCs <strong>with</strong> thefinal CY 2012 portions of the APCpayment amounts that we determine areassociated <strong>with</strong> the cost of devices sothat this information is available for useby the public in developing potentialCY 2012 device pass-through paymentapplications and by CMS in reviewingthose applications.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00159 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2In summary, for CY 2012, consistent<strong>with</strong> the policy established for CY 2010,we proposed to continue the followingpolicies related to pass-throughpayment for devices: (1) Treatingimplantable biologicals, that aresurgically inserted or implanted(through a surgical incision or a naturalorifice) and that are newly approved forpass-through status on or after January1, 2010, as devices for purposes of theOPPS pass-through evaluation processand payment methodology; (2)including implantable biologicals incalculating the device APC offsetamounts; (3) using the device APC offsetamounts to evaluate whether the cost ofa device (defined to include implantablebiologicals) in an application for a newdevice category for pass-throughpayment is not insignificant in relationto the APC payment amount for theservice related to the category ofdevices; and (4) reducing device passthroughpayments based on device costsalready included in the associatedprocedural APCs, when we determinethat device costs associated <strong>with</strong> thenew category are already packaged intothe existing APC structure.<strong>Comment</strong>: Several commentersrecommended that all biologicaltherapies, including implantablebiologicals that are approved by theFDA under biological licenseapplications (BLAs), be treated as drugsfor pass-through payment status for CY2012. The commenters claimed thatCongress intended that all biologicalsapproved by the FDA under a BLA bepaid under the current SCOD paymentsystem, including according to the drugpass-through provisions. Anothercommenter requested that CMS clarifyits policy to state that the device passthroughcriteria apply only tobiologicals <strong>with</strong> an FDA approvedindication or indications that are onlysurgically implanted. This commenterbelieved that the current regulation isunclear regarding how CMS wouldevaluate pass-through eligibility of abiological that has indications in whichthe biological is surgically implanted forone indication and nonimplantable foranother indication. The commenterrecommended that CMS revise theregulations text at 42 CFR 419.64(a)(4)so that if refers to ‘‘a biological that isnot always surgically implanted into thebody.’’Response: As stated in the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod and reiterated in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod, we evaluate implantablebiologicals that function as, and aresubstitutes for, implantable devices forOPPS payment purposes. This is done

74280 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2regardless of their FDA approval route,the intent of which is to ensure theirsafety and effectiveness throughappropriate scientific review (74 FR60476; 75 FR 71924).We do not agree <strong>with</strong> the commenterswho asserted that Congress intendedbiologicals approved under BLAs to bepaid under the statutory provisions thatapply to SCODs, including the passthroughprovisions. Moreover, as westated in the CY 2010 and CY 2011OPPS/ASC final rules <strong>with</strong> commentperiod, Congress did not specify in thestatute that we must pay for implantablebiologicals as biologicals rather thandevices, if these products that functionas medical devices also meet our criteriafor payment as devices (74 FR 60476; 75FR 71924). We continue to believe thatimplantable biologicals are devices forthe purposes of OPPS payment, andtherefore that it is appropriate for us totreat implantable biologicals asimplantable devices and not asnonimplantable biologicals.We appreciate the commenter’srequest that we clarify our meaning ofthe regulation text at 42 CFR419.64(a)(4)(iii), which states that abiological for pass-through statuspurposes must meet the followingcondition (among others): ‘‘biologicalthat is not surgically implanted orinserted into the body.’’ By thisregulatory language, we mean toexclude from consideration for drug andbiological pass-through status anybiological that has an indication suchthat it may function as a surgicallyimplanted or inserted biological, even ifthere are also other indications in whichthe biological is not surgicallyimplanted or inserted.After consideration of the publiccomments we received, we arefinalizing our proposal, <strong>with</strong>outmodification, to continue the policy tospecify that the pass-through evaluationprocess and pass-through paymentmethodology for implantable biologicalsthat are surgically inserted or implanted(through a surgical incision or a naturalorifice) and that are newly approved forpass-through status on or after January1, 2010, be the device pass-throughprocess and payment methodology only.We also are finalizing our otherproposals, <strong>with</strong>out modification, tocontinue the following policiesregarding device offsets: (1) Includingimplantable biologicals in calculatingthe device APC offset amounts; (2) usingthe device APC offset amounts toevaluate whether the cost of a device(defined to include implantablebiologicals) in an application for a newdevice category for pass-throughpayment is not insignificant in relationto the APC payment amount for theservice related to the category ofdevices; and (3) reducing device passthroughpayments based on device costsalready included in the associatedprocedural APCs, when we determinethat device costs associated <strong>with</strong> thenew category are already packaged intothe existing APC structure.B. Adjustment to OPPS Payment for NoCost/Full Credit and Partial CreditDevices1. BackgroundIn recent years, there have beenseveral field actions on and recalls ofmedical devices as a result ofimplantable device failures. In many ofthese cases, the manufacturers haveoffered devices <strong>with</strong>out cost to thehospital or <strong>with</strong> credit for the devicebeing replaced if the patient required amore expensive device. In order toensure that payment rates forprocedures involving devices reflectonly the full costs of those devices, ourstandard ratesetting methodology fordevice-dependent APCs uses onlyclaims that contain the correct devicecode for the procedure, do not containtoken charges, do not contain the ‘‘FB’’modifier signifying that the device wasfurnished <strong>with</strong>out cost or <strong>with</strong> a fullcredit, and do not contain the ‘‘FC’’modifier signifying that the device wasfurnished <strong>with</strong> partial credit. Asdiscussed in section II.A.2.d.(1) of thisfinal rule <strong>with</strong> comment period, as weproposed, we are continuing to use ourstandard ratesetting methodology fordevice-dependent APCs for CY 2012.To ensure equitable payment whenthe hospital receives a device <strong>with</strong>outcost or <strong>with</strong> full credit, in CY 2007, weimplemented a policy to reduce thepayment for specified device-dependentAPCs by the estimated portion of theAPC payment attributable to devicecosts (that is, the device offset) when thehospital receives a specified device atno cost or <strong>with</strong> full credit (71 FR 68071through 68077). Hospitals are instructedto report no cost/full credit cases usingthe ‘‘FB’’ modifier on the line <strong>with</strong> theprocedure code in which the no cost/full credit device is used. In cases inwhich the device is furnished <strong>with</strong>outcost or <strong>with</strong> full credit, the hospital isinstructed to report a token devicecharge of less than $1.01. In cases inwhich the device being inserted is anupgrade (either of the same type ofdevice or to a different type of device)<strong>with</strong> a full credit for the device beingreplaced, the hospital is instructed toreport as the device charge thedifference between its usual charge forthe device being implanted and its usualVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00160 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2charge for the device for which itreceived full credit. In CY 2008, weexpanded this payment adjustmentpolicy to include cases in whichhospitals receive partial credit of 50percent or more of the cost of a specifieddevice. Hospitals are instructed toappend the ‘‘FC’’ modifier to theprocedure code that reports the serviceprovided to furnish the device whenthey receive a partial credit of 50percent or more of the cost of the newdevice.We reduce the OPPS payment for theimplantation procedure by 100 percentof the device offset for no cost/fullcredit cases when both a specifieddevice code is present on the claim andthe procedure code maps to a specifiedAPC. Payment for the implantationprocedure is reduced by 50 percent ofthe device offset for partial credit caseswhen both a specified device code ispresent on the claim and the procedurecode maps to a specified APC.Beneficiary copayment is based on thereduced payment amount when eitherthe ‘‘FB’’ or the ‘‘FC’’ modifier is billedand the procedure and device codesappear on the lists of procedures anddevices to which this policy applies. Werefer readers to the CY 2008 OPPS/ASCfinal rule <strong>with</strong> comment period for morebackground information on the ‘‘FB’’and ‘‘FC’’ payment adjustment policies(72 FR 66743 through 66749).2. APCs and Devices Subject to theAdjustment PolicyIn the CY 2012 OPPS/ASC proposedrule (76 FR 42244 through 42245), weproposed for CY 2012 to continue theexisting policy of reducing OPPSpayment for specified APCs by 100percent of the device offset amountwhen a hospital furnishes a specifieddevice <strong>with</strong>out cost or <strong>with</strong> a full creditand by 50 percent of the device offsetamount when the hospital receivespartial credit in the amount of 50percent or more of the cost for thespecified device. Because the APCpayments for the related services arespecifically constructed to ensure thatthe full cost of the device is included inthe payment, we stated in the CY 2012OPPS/ASC proposed rule (76 FR 42244)that we continue to believe it isappropriate to reduce the APC paymentin cases in which the hospital receivesa device <strong>with</strong>out cost, <strong>with</strong> full credit,or <strong>with</strong> partial credit, in order toprovide equitable payment in thesecases. (We refer readers to sectionII.A.2.d.(1) of this final rule <strong>with</strong>comment period for a description of ourstandard ratesetting methodology fordevice-dependent APCs.) Moreover, thepayment for these devices comprises a

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74281jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2large part of the APC payment on whichthe beneficiary copayment is based, andwe continue to believe it is equitablethat the beneficiary cost sharing reflectsthe reduced costs in these cases.In the CY 2012 OPPS/ASC proposedrule (76 FR 42244), we also proposed tocontinue using the three criteriaestablished in the CY 2007 OPPS/ASCfinal rule <strong>with</strong> comment period fordetermining the APCs to which thispolicy applies (71 FR 68072 through68077). Specifically: (1) All proceduresassigned to the selected APCs mustinvolve implantable devices that wouldbe reported if device insertionprocedures were performed; (2) therequired devices must be surgicallyinserted or implanted devices thatremain in the patient’s body after theconclusion of the procedure (at leasttemporarily); and (3) the device offsetamount must be significant, which, forpurposes of this policy, is defined asexceeding 40 percent of the APC cost.We also proposed to continue to restrictthe devices to which the APC paymentadjustment would apply to a specific setof costly devices to ensure that theadjustment would not be triggered bythe implantation of an inexpensivedevice whose cost would not constitutea significant proportion of the totalpayment rate for an APC. We stated inthe CY 2012 OPPS/ASC proposed rule(76 FR 42244) that we continue tobelieve these criteria are appropriatebecause free devices and device creditsare likely to be associated <strong>with</strong>particular cases only when the devicemust be reported on the claim and is ofa type that is implanted and remains inthe body when the beneficiary leavesthe hospital. We believe that thereduction in payment is appropriateonly when the cost of the device is asignificant part of the total cost of theAPC into which the device cost ispackaged, and that the 40-percentthreshold is a reasonable definition of asignificant cost.As indicated in the CY 2012 OPPS/ASC proposed rule (76 FR 42244through 42245), we examined the offsetamounts calculated from the CY 2012proposed rule data and the clinicalcharacteristics of APCs to determinewhether the APCs to which the no cost/full credit and partial credit deviceadjustment policy applied in CY 2011continue to meet the criteria for CY2012, and to determine whether otherAPCs to which the policy did not applyin CY 2011 would meet the criteria forCY 2012. Based on the CY 2010 claimsdata available for the proposed rule, wedid not propose any changes to theAPCs and devices to which this policyapplies. However, as discussed insection II.A.2.e.(6) of the proposed rule,we proposed to delete APC 0418(Insertion of Left Ventricular PacingElectrode) for CY 2012 and, therefore,proposed to remove this APC from thelist of APCs to which the no cost/fullcredit and partial credit deviceadjustment policy would apply in CY2012.Table 24 of the CY 2012 OPPS/ASCproposed rule (76 FR 42245) listed theproposed APCs to which the paymentadjustment policy for no cost/full creditand partial credit devices would applyin CY 2012 and displayed the proposedpayment adjustment percentages forboth no cost/full credit and partialcredit circumstances. We proposed thatthe no cost/full credit adjustment foreach APC to which this policy wouldcontinue to apply would be the deviceoffset percentage for the APC (theestimated percentage of the APC costthat is attributable to the device coststhat are already packaged into the APC).We also proposed that the partial creditdevice adjustment for each APC wouldcontinue to be 50 percent of the no cost/full credit adjustment for the APC. Table25 of the CY 2012 OPPS/ASC proposedrule (76 FR 42245) listed the proposeddevices to which the paymentadjustment policy for no cost/full creditand partial credit devices would applyin CY 2012. We stated in the CY 2012proposed rule (76 FR 42244) that wewould update the lists of APCs anddevices to which the no cost/full creditand partial credit device adjustmentpolicy would apply for CY 2012,consistent <strong>with</strong> the three criteriadiscussed earlier in this section, basedon the final CY 2010 claims dataavailable for the CY 2012 OPPS/ASCfinal rule <strong>with</strong> comment period.<strong>Comment</strong>: One commenter assertedthat the proposed full offset amount of60 percent and proposed partial offsetamount of 30 percent for APC 0425 isnot supported by real world cost data.The commenter suggested that, based onits data on resource costs for the devicesused in the procedures assigned to APC0425, the full offset amount for this APCshould be no greater than 40 percent.The commenter argued that a 60-percentoffset would result in significantfinancial hardship to certain facilitiesand possibly lead to diminishing patientaccess to critical devices.Response: We do not agree <strong>with</strong> thecommenter that the CY 2012 proposeddevice offset percentage for APC 0425 isinaccurate. As we described in the CY2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 71926), thedevice cost is estimated from the deviceHCPCS codes present on hospital claimsand charges in the lines for four specificVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00161 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2revenue codes: 275 (Medical/SurgicalSupplies: Pacemaker); 276 (Medical/Surgical Supplies: Intraocular lens); 278(Medical/Surgical Supplies: Otherimplants); and 624 (Medical/SurgicalSupplies: FDA investigational devices).The commenter did not provide the‘‘real world cost data’’ upon which itbased its assertion that the full offsetamount for APC 0425 should be nogreater than 40 percent. Therefore, wedo not know why there would be adiscrepancy between that estimate andour estimated device offset percentageof approximately 60 percent stated inthe proposed rule that was based onactual hospital cost as calculated fromhospital claims as described above. Wehave no reason to believe that thisdevice offset percentage does notaccurately reflect the percent of costattributable to devices in APC 0425.Therefore, we do not agree that it isnecessary to limit the device offsetpercentage for no cost/full credit casesfor APC 0425 to 40 percent, as thecommenter suggested.<strong>Comment</strong>: One commenter asked forclarification of CMS’ policy forinstances when a device upgrade occursand the original device is refunded atfull cost and the upgraded device ischarged at full cost. According to thecommenter, the new device is oftenmore expensive than the original device,thus yielding additional deviceacquisition costs. The commenterbelieves that the ‘‘FC’’ modifier shouldbe used in this situation.Response: As stated in the MedicareClaims Processing Manual (Pub. 100–04,Chapter 4, Section 61.3.2), when ahospital replaces a device <strong>with</strong> a moreexpensive device and receives a creditin the amount that the device beingreplaced would otherwise cost, thehospital must append modifier ‘‘–FB’’ tothe procedure code (not on the devicecode) that reports the service providedto replace the device. The hospital mustcharge the difference between its usualcharge for the device being implantedand its usual charge for the device forwhich it received credit. This chargeshould be billed in the covered chargefield. As we stated in the CY 2009 OPPSfinal rule <strong>with</strong> comment period (73 FR68630), we do not agree that we need tomodify the no cost/full credit andpartial credit device adjustment policyto account for the cost of moreexpensive replacement devices whenmanufacturers provide device upgrades.We continue to believe that making thefull APC payment would result insignificant overpayment because, asdescribed above, we use only thoseclaims that reflect the full costs ofdevices in ratesetting for device-

74282 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsdependent APCs. In cases where ahospital incurs a cost for a deviceupgrade, the difference between the costof the replacement device and the fullcredit the hospital receives for thedevice being replaced would likely bemuch less than the full cost of thedevice that is included in the devicedependentAPC payment rate. Toprovide the full APC payment in thesecases would favor a device upgrade,rather than replacement <strong>with</strong> acomparable device, in warranty or recallcases where the surgical procedure toreplace the device is only medicallynecessary because of the originaldefective device, for which themanufacturer bears responsibility.Moreover, we also are concerned that anew policy to apply a smaller APCpayment percentage reduction in anupgrade case, if we were eventually ableto estimate such a percentage fromsufficient claims data, could also favordevice upgrades, rather thanreplacement <strong>with</strong> a comparable devicein those situations for which theupgrade is only being provided becausethe old model failed (and for which themanufacturer provides a full credit) butis no longer available for use in thereplacement procedure. We recognizethat, in some cases, the estimated devicecost and, therefore, the amount of thepayment reduction will be more or lessthan the cost a hospital would otherwiseincur for a no cost/full credit device.However, because averaging is inherentin a prospective payment system, we donot believe this is inappropriate.Therefore, we continue to believe thatthe full device offset reduction shouldbe made when hospitals receive fullcredit for the cost of a replaced deviceagainst the cost of a more expensivereplacement device.After consideration of the publiccomments we received, we arefinalizing our CY 2012 proposals,<strong>with</strong>out modification, to continue theestablished no cost/full credit andpartial credit adjustment policies.Table 30 below lists the APCs towhich the payment adjustment policyfor no cost/full credit and partial creditdevices will apply in CY 2012 anddisplays the final payment adjustmentpercentages for both no cost/full creditand partial credit circumstances. Table31 below lists the devices to which nocost/full credit and partial credit deviceadjustment policy will apply for CY2012, consistent <strong>with</strong> the three selectioncriteria discussed earlier in this section,based on the final CY 2010 claims dataavailable for this final rule <strong>with</strong>comment period. For CY 2012, OPPSpayments for implantation proceduresto which the ‘‘FB’’ modifier is appendedare reduced by 100 percent of the deviceoffset for no cost/full credit cases whenboth a device code listed in Table 31below, is present on the claim, and theprocedure code maps to an APC listedin Table 30 below. OPPS payments forimplantation procedures to which the‘‘FC’’ modifier is appended are reducedby 50 percent of the device offset whenboth a device code listed in Table 31 ispresent on the claim and the procedurecode maps to an APC listed in Table 30.Beneficiary copayment is based on thereduced amount when either the ‘‘FB’’modifier or the ‘‘FC’’ modifier is billedand the procedure and device codesappear on the lists of procedures anddevices to which this policy applies.We note that, as discussed in sectionII.A.2.e.(6) of this final rule <strong>with</strong>comment period, we are finalizing ourproposal to delete APC 0418 for CY2012 and, therefore, will remove thisAPC from the list of APCs to which theno cost/full credit and partial creditdevice adjustment policy will apply inCY 2012.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00162 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

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74284 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00164 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.052

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74285BILLING CODE 4120–01–Cjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00165 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.053

74286 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2V. OPPS Payment Changes for Drugs,Biologicals, and RadiopharmaceuticalsA. OPPS Transitional Pass-ThroughPayment for Additional Costs of Drugs,Biologicals, and Radiopharmaceuticals1. BackgroundSection 1833(t)(6) of the Act providesfor temporary additional payments or‘‘transitional pass-through payments’’for certain drugs and biologicals (alsoreferred to as biologics). As enacted bythe Medicare, Medicaid, and SCHIPBalanced Budget Refinement Act(BBRA) of 1999 (Pub. L. 106–113), thisprovision requires the Secretary to makeadditional payments to hospitals forcurrent orphan drugs, as designatedunder section 526 of the Federal Food,Drug, and Cosmetic Act (Pub. L. 107–186); current drugs and biologicals andbrachytherapy sources used for thetreatment of cancer; and currentradiopharmaceutical drugs andbiologicals. For those drugs andbiologicals referred to as ‘‘current,’’ thetransitional pass-through paymentbegan on the first date the hospitalOPPS was implemented.Transitional pass-through paymentsalso are provided for certain ‘‘new’’drugs and biologicals that were notbeing paid for as an HOPD service as ofDecember 31, 1996, and whose cost is‘‘not insignificant’’ in relation to theOPPS payments for the procedures orservices associated <strong>with</strong> the new drug orbiological. For pass-through paymentpurposes, radiopharmaceuticals areincluded as ‘‘drugs.’’ Under the statute,transitional pass-through payments for adrug or biological described in section1833(t)(6)(C)(i)(II) of the Act can bemade for a period of at least 2 years, butnot more than 3 years, after theproduct’s first payment as a hospitaloutpatient service under Medicare PartB. Proposed CY 2012 pass-throughdrugs and biologicals and theirdesignated APCs were assigned statusindicator ‘‘G’’ in Addenda A and B tothe proposed rule, which are referencedin section XVII. of the proposed ruleand this final rule <strong>with</strong> comment periodand available via the Internet.Section 1833(t)(6)(D)(i) of the Actspecifies that the pass-through paymentamount, in the case of a drug orbiological, is the amount by which theamount determined under section1842(o) of the Act for the drug orbiological exceeds the portion of theotherwise applicable Medicare OPD feeschedule that the Secretary determinesis associated <strong>with</strong> the drug or biological.If the drug or biological is coveredunder a competitive acquisition contractunder section 1847B of the Act, thepass-through payment amount isdetermined by the Secretary to be equalto the average price for the drug orbiological for all competitive acquisitionareas and the year established undersuch section as calculated and adjustedby the Secretary.As we noted in the CY 2009 OPPS/ASC final rule <strong>with</strong> comment period (73FR 68633), the Part B drug CAP programwas postponed beginning in CY 2009(Medicare Learning Network (MLN)Matters Special Edition 0833, availablevia the Web site: http://www.cms.gov).As of publication of this final rule <strong>with</strong>comment period, the postponement ofthe Part B drug CAP program remains ineffect, and there is no effective CAPprogram rate for pass-through drugs andbiologicals as of January 1, 2009.Consistent <strong>with</strong> what we indicated inthe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 71928), if theprogram is reinstituted during CY 2012and Part B drug CAP rates becomeavailable, we would again use the PartB drug CAP rate for pass-through drugsand biologicals if they are a part of thePart B drug CAP program. Otherwise,we would continue to use the rate thatwould be paid in the physician’s officesetting for all drugs and biologicals <strong>with</strong>pass-through status.This methodology for determining thepass-through payment amount is setforth in regulations at 42 CFR 419.64,which specify that the pass-throughpayment equals the amount determinedunder section 1842(o) of the Act minusthe portion of the APC payment thatCMS determines is associated <strong>with</strong> thedrug or biological. Section 1847A of theAct establishes the average sales price(ASP) methodology, which is used forpayment for drugs and biologicalsdescribed in section 1842(o)(1)(C) of theAct furnished on or after January 1,2005. The ASP methodology, as appliedunder the OPPS, uses several sources ofdata as a basis for payment, includingthe ASP, the wholesale acquisition cost(WAC), and the average wholesale price(AWP). In this final rule <strong>with</strong> commentperiod, the term ‘‘ASP methodology’’and ‘‘ASP-based’’ are inclusive of alldata sources and methodologiesdescribed therein. Additionalinformation on the ASP methodologycan be found on the CMS Web site at:http://www.cms.gov/McrPartBDrugAvgSalesPrice.For CYs 2005, 2006, and 2007, weestimated the OPPS pass-throughpayment amount for drugs andbiologicals to be zero based on ourinterpretation that the ‘‘otherwiseapplicable Medicare OPD fee schedule’’amount was equivalent to the amount tobe paid for pass-through drugs andVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00166 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2biologicals under section 1842(o) of theAct (or section 1847B of the Act, if thedrug or biological is covered under acompetitive acquisition contract). Weconcluded for those years that theresulting difference between these tworates would be zero. For CYs 2008 and2009, we estimated the OPPS passthroughpayment amount for drugs andbiologicals to be $6.6 million and $23.3million, respectively. For CY 2010, weestimated the OPPS pass-throughpayment estimate for drugs andbiologicals to be $35.5 million. For CY2011, we estimated the OPPS passthroughpayment for drugs andbiologicals to be $15.5 million. OurOPPS pass-through payment estimatefor drugs and biologicals in CY 2012 is$19 million, which is discussed insection VI.B. of this final rule <strong>with</strong>comment period.The pass-through application andreview process for drugs and biologicalsis explained on the CMS Web site at:http://www.cms.gov/HospitalOutpatientPPS/04_passthrough_payment.asp.2. Drugs and Biologicals With ExpiringPass-Through Status in CY 2011In the CY 2012 OPPS/ASC proposedrule (76 FR 42246 through 42247), weproposed that the pass-through status of19 drugs and biologicals would expireon December 31, 2011, as listed in Table26 of the proposed rule (76 FR 42246through 42247). All of these drugs andbiologicals will have received OPPSpass-through payment for at least 2years and no more than 3 years byDecember 31, 2011. These drugs andbiologicals were approved for passthroughstatus on or before January 1,2010. With the exception of thosegroups of drugs and biologicals that arealways packaged when they do not havepass-through status, specificallydiagnostic radiopharmaceuticals,contrast agents, and implantablebiologicals, our standard methodologyfor providing payment for drugs andbiologicals <strong>with</strong> expiring pass-throughstatus in an upcoming calendar year isto determine the product’s estimated perday cost and compare it <strong>with</strong> the OPPSdrug packaging threshold for thatcalendar year (which is $75), asdiscussed further in section V.B.2. ofthis final rule <strong>with</strong> comment period. Ifthe drug’s or biological’s estimated perday cost is less than or equal to theapplicable OPPS drug packagingthreshold, we would package paymentfor the drug or biological into thepayment for the associated procedure inthe upcoming calendar year. If theestimated per day cost of the drug orbiological is greater than the OPPS drugpackaging threshold, we would provide

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74287separate payment at the applicablerelative ASP-based payment amount(which is ASP+4 percent for CY 2012,as discussed further in section V.B.3. ofthis final rule <strong>with</strong> comment period).Section V.B.2.d. of this final rule <strong>with</strong>comment period discusses thepackaging of all nonpass-throughcontrast agents, diagnosticradiopharmaceuticals, and implantablebiologicals.<strong>Comment</strong>: A number of commentersrequested that CMS continue passthroughpayments for a third year forcertain drugs that, as of December 31,2011, will have received pass-throughpayments for at least 2 years and nomore than 3 years and which CMSproposed to remove from pass-throughstatus in Table 26 of the CY 2012 OPPS/ASC proposed rule (76 CR 42246).Several commenters stated that thevolume for products for which CMSproposed to expire pass-through statushad been low for some portion of thepass-through period, and asserted that athird year of pass-through would permitCMS to collect more accurate andcomplete cost data on the products.Other commenters stated that the costsassociated <strong>with</strong> certain drugs for whichCMS proposed to expire pass-throughstatus are high, so packaging theproduct in an APC is ‘‘not appropriate.’’Several commenters urged CMS toadopt a 3-year pass-through period forall eligible products. One commenterrequested that CMS grant an additionalyear of pass-through payments for theproduct described by HCPCS codeC9248 (Injection, clevidipine butyrate, 1mg) that was removed from the passthroughlist on December 31, 2010,because the product had been subject toa 10-month long voluntarymanufacturer’s recall during its passthroughperiod.Response: As described in sectionV.A.1 of this final rule <strong>with</strong> commentperiod, section 1833(t)(6)(C)(i)(II) of theAct permits CMS to make pass-throughpayments for a period of at least 2 years,but not more than 3 years, after theproduct’s first payment as a hospitaloutpatient service under Medicare PartB. We believe this period of paymentfacilitates dissemination of these newproducts into clinical practice and forthe collection of hospital claims datareflective of their costs for future OPPSratesetting. Our longstanding practicehas been to provide pass-throughpayment for a period of 2 to 3 years,<strong>with</strong> expiration of pass-through statusproposed and finalized through theannual rulemaking process. Each year,when proposing to expire the passthroughstatus of certain drugs andbiologicals, we examine our claims datafor these products. We observe thathospitals typically have incorporatedthese products into their chargemastersbased on the utilization and costsobserved in our claims data. Under theexisting pass-through policy, which hasbeen generally supported bycommenters, we begin pass-throughpayment on a quarterly basis thatdepends on when applications aresubmitted to us for consideration and,because we expire pass-through statusonly on an annual basis, there is no wayto ensure that all pass-through drugsand biologicals receive pass-throughpayment for a full 3 years, while alsoproviding pass-through payment for nomore than 3 years as the statuterequires. Further, based on our reviewof available data, we are confident thatthe period of time for which theproducts listed in Table 26 of the CY2012 OPPS proposed rule (76 CR 42246)received pass-through payments isadequate for CMS to collect sufficientdata to make a packaging determinationand/or an APC assignment in CY 2012.We further note that, consistent <strong>with</strong> theAct, each of these products has receivedpass-through status for at least 2 years,but not more than 3 years. As noted insection V.A.1. of this final rule <strong>with</strong>comment period, when a product’s pass-through status expires, it is eitherpackaged by CMS into an APC if it iseither a relatively low-cost product thatdoes not exceed the packaging thresholdor is ‘‘policy packaged’’, or, if it is arelatively high-cost product, it is paidseparately on the basis of the product’sASP (we refer readers to section V.B.3.of this final rule <strong>with</strong> comment periodfor more details regarding our paymentpolicy for separately payable drugs).Because our policies for drugs <strong>with</strong>expiring pass-through status recognizeproducts’ relative costliness andestablish either separate or bundledpayment as appropriate, based on suchcostliness, we disagree <strong>with</strong>commenters that certain relatively highcost products currently receiving passthroughpayment would not beadequately paid if taken off passthrough,and as a result should continue<strong>with</strong> such status.Regarding the request for a third yearof pass-through status for the productdescribed by HCPCS code C9248(Injection, clevidipine butyrate, 1 mg)which was subject to a 10-month recallduring its pass-through period and forwhich pass-through status expired onDecember 31, 2010, we note thatbecause CMS expires pass throughstatus on an annual basis, if CMS wereto extend the pass-through period forthe product through CY 2012, asrequested by the commenters, thiswould result in the pass-through periodbeing in excess of 3 years; this result isnot permitted under the statute.After consideration of the publiccomments we received, we arefinalizing, <strong>with</strong>out modification, ourproposal to expire the pass-throughstatus of the 19 drugs and biologicalslisted in Table 32 below. Table 32 liststhe drugs and biologicals for whichpass-through status will expire onDecember 31, 2011, the status indicator,and the assigned APC for CY 2012.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00167 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74288 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00168 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.054

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74289jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–C3. Drugs, Biologicals, andRadiopharmaceuticals With New orContinuing Pass-Through Status in CY2012In the CY 2012 OPPS/ASC proposedrule (76 FR 42247 through 42249), weproposed to continue pass-throughstatus in CY 2012 for 33 drugs andbiologicals. None of these drugs andbiologicals will have received OPPSpass-through payment for at least 2years and no more than 3 years byDecember 31, 2011. These drugs andbiologicals, which were approved forpass-through status between April 1,2010 and July 1, 2011, were listed inTable 27 of the proposed rule (76 FR42248 through 42249). The APCs andHCPCS codes for these drugs andbiologicals were assigned statusindicator ‘‘G’’ in Addenda A and B,which are referenced in section XVII. ofthe proposed rule and this final rule<strong>with</strong> comment period and available viathe Internet.Section 1833(t)(6)(D)(i) of the Act setsthe amount of pass-through payment forpass-through drugs and biologicals (thepass-through payment amount) as thedifference between the amountauthorized under section 1842(o) of theAct (or, if the drug or biological iscovered under a CAP under section1847B of the Act, an amount determinedby the Secretary equal to the averageprice for the drug or biological for allcompetitive acquisition areas and theyear established under such section ascalculated and adjusted by theSecretary) and the portion of theotherwise applicable OPD fee schedulethat the Secretary determines isassociated <strong>with</strong> the drug or biological.Payment for drugs and biologicals <strong>with</strong>pass-through status under the OPPS iscurrently made at the physician’s officepayment rate of ASP+6 percent. Webelieve it is consistent <strong>with</strong> the statuteto continue to provide payment fordrugs and biologicals <strong>with</strong> pass-throughstatus at a rate of ASP+6 percent in CY2012, the amount that drugs andbiologicals receive under section1842(o) of the Act. Thus, for CY 2012,we proposed to pay for pass-throughdrugs and biologicals at ASP+6 percent,equivalent to the rate these drugs andbiologicals would receive in thephysician’s office setting in CY 2012.Therefore, the difference betweenASP+6 percent and ASP+4 percent thatwe proposed to pay for nonpass-throughseparately payable drugs under the CY2012 OPPS would be the CY 2012 passthroughpayment amount for thesedrugs and biologicals. In the case ofpass-through contrast agents anddiagnostic radiopharmaceuticals, thedifference between ASP+6 percent andthe ‘‘policy-packaged’’ drug APC offsetamount for the associated clinical APCin which the drug or biological isutilized would be the CY 2012 passthroughpayment amount for thesepolicy-packaged products.We note that we proposed to expirepass-through status for the remainingthree implantable biologicals approvedon or before January 1, 2010, underpass-through status as a drug orbiological. Therefore, as described in theCY 2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60476) and inthis final rule <strong>with</strong> comment period,implantable biologicals that aresurgically inserted or implanted(through a surgical incision or a naturalorifice) will be evaluated under thedevice pass-through process and paidaccording to the device paymentmethodology. Payment for nonpassthroughimplantable biologicals wouldcontinue to be packaged into thepayment for the associated procedure asdescribed in section V.B.2.d. of thisfinal rule <strong>with</strong> comment period.In addition, we proposed to continueto update pass-through payment rateson a quarterly basis on the CMS Website during CY 2012 if later quarter ASPsubmissions (or more recent WAC orAWP information, as applicable)VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00169 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2indicate that adjustments to thepayment rates for these pass-throughdrugs or biologicals are necessary. For afull description of this policy, we referreaders to the CY 2006 OPPS/ASC finalrule <strong>with</strong> comment period (70 FR 42722and 42723). If the Part B drug CAP isreinstated during CY 2012, and a drugor biological that has been granted passthroughstatus for CY 2012 becomescovered under the Part B drug CAP, weproposed to provide pass-thoughpayment at the Part B drug CAP rate andto make the adjustments to the paymentrates for these drugs and biologicals ona quarterly basis, as appropriate.As is our standard methodology, weannually review new permanent HCPCScodes and delete temporary HCPCS C-codes if an alternate permanent HCPCScode is available for purposes of OPPSbilling and payment. We specificallyreview drugs <strong>with</strong> pass-through statusfor CY 2012 that will change from C-code to permanent J-code for CY 2012.For our CY 2012 review, we havedetermined that HCPCS code J1557(Injection, immune globulin(Gammaplex), intravenous, nonlyophilized(e.g. liquid), 500 mg)describes the product reported underHCPCS code C9270 (Injection, immuneglobulin (Gammaplex), intravenous,non-lyophilized (e.g. liquid), 500 mg);HCPCS code J0894 (Injection,denosumab, 1 mg) describes the productreported under HCPCS code C9272(Injection, denosumab, 1 mg); HCPCScode J0840 (Crotalidae PolyvalentImmune Fab (Ovine), 1 vial) describesthe product reported under HCPCS codeC9274 (Crotalidae Polyvalent ImmuneFab (Ovine), 1 vial); HCPCS code J9043(Injection, cabazitaxel, 1 mg) describesthe product reported under HCPCS codeC9276 (Injection, cabazitaxel, 1 mg);HCPCS code J0221 (Injection,alglucosidase alfa (Lumizyme), 1 mg)describes the product reported underHCPCS code C9277 (Injection,alglucosidase alfa (Lumizyme), 1 mg);HCPCS code J9179 (Injection, eribulinER30NO11.055

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274290 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsmesylate, 1 mg) describes the productreported under HCPCS code C9270(Injection, eribulin mesylate, 1 mg);HCPCS code J2507 (Injection,pegloticase, 1 mg) describes the productreported under HCPCS code C9281(Injection, pegloticase, 1 mg); HCPCScode J0712 (Injection, ceftarolinefosamil, 10 mg) describes the productreported under HCPCS code C9282(Injection, ceftaroline fosamil, 10 mg);HCPCS code J0131 (Injection,acetaminophen, 10 mg) describes theproduct reported under HCPCS codeC9283 (Injection, acetaminophen,10 mg); and, HCPCS code J9228(Injection, ipilimumab, 1 mg) describesthe product reported under HCPCS codeC9284 (Injection, ipilimumab, 1 mg).In CY 2012, as is consistent <strong>with</strong> ourCY 2011 policy for diagnostic andtherapeutic radiopharmaceuticals, weproposed to provide payment for bothdiagnostic and therapeuticradiopharmaceuticals that are grantedpass-through status based on the ASPmethodology. As stated above, forpurposes of pass-through payment, weconsider radiopharmaceuticals to bedrugs under the OPPS. Therefore, if adiagnostic or therapeuticradiopharmaceutical receives passthroughstatus during CY 2012, weproposed to follow the standard ASPmethodology to determine the passthroughpayment rate that drugs receiveunder section 1842(o) of the Act, whichis ASP+6 percent. If ASP data are notavailable for a radiopharmaceutical, weproposed to provide pass-throughpayment at WAC+6 percent, theequivalent payment provided to passthroughdrugs and biologicals <strong>with</strong>outASP information. If WAC information isalso not available, we proposed toprovide payment for the pass-throughradiopharmaceutical at 95 percent of itsmost recent AWP.<strong>Comment</strong>: Many commenterssupported CMS’ proposal to continueproviding pass-through payments fordrugs, biological, andradiopharmaceuticals. One commenterstated that it viewed the provision ofpass-through payments as a ‘‘temporarysolution,’’ and asserted that the globalmarketplace for Molybdenum and othermedical isotopes could make historicalpayment data an inadequate indicator ofcosts. One commenter recommendedthat CMS require manufacturers tosubmit ASP data for all therapeuticradiopharmaceuticals currently paidunder the OPPS.Response: We appreciate thecommenters’ support for our passthroughpayment policy. Although weacknowledge that pass-throughpayments are, by statute, ‘‘temporary’’(section 1833(t)(6)(C)(i)(II) of the Actpermits CMS to make pass-throughpayments only for a period of at least2 years, but not more than 3 years), wedisagree <strong>with</strong> the commenter’s assertionthat historical payment data are aninadequate indicator of costs. We permitradiopharmaceutical manufacturers tovoluntarily submit ASP data to us fortherapeutic radiopharmaceuticals, andfor diagnostic radiopharmaceuticals<strong>with</strong> pass-through status. These data areupdated regularly, are as current aspossible (the most recently availableASP data used for this final rule <strong>with</strong>comment period are from October 2011),and are an important component ofpayment. Therefore, we believe thatCMS’ use of recent ASP data, together<strong>with</strong> the most recently available costand claims data, are adequatelyresponsive to changes in global pricesfor Molybdenum and other medicalisotopes.We do not believe, however, thatrequiring manufacturers to submit ASPdata for all therapeuticradiopharmaceuticals currently paidunder the OPPS is appropriate. As westated in the CY 2010 OPPS/ASC finalrule <strong>with</strong> comment period (74 FR 60524through 60525), the challenges involvedin reporting ASP for aradiopharmaceutical are significant,given the variety of manufacturingprocesses in some cases. Therefore, dueto the fact that the added administrativeburden of direct reporting outweighs theexpected benefits, and given the relativeaccuracy of hospital claims dataregarding such drugs, payment based onmean unit cost from historical hospitalclaims data offers the best proxy foraverage hospital acquisition cost andassociated handling costs for aradiopharmaceutical in the absence ofASP. If ASP information is unavailablefor a therapeutic radiopharmaceutical,meaning that a manufacturer is notwilling or not able to submit ASPinformation, we will provide paymentbased on the mean unit cost of theproduct that is applicable to paymentrates for the year the nonpass-throughtherapeutic radiopharmaceutical isadministered.<strong>Comment</strong>: Several commenterssupported CMS’ proposal to providepayment at ASP+6 percent for drugs,biologicals, contrast agents, andradiopharmaceuticals that are grantedpass-through status. One commenterapproved of the proposal to use the ASPmethodology that would providepayment based on WAC if ASPinformation is not available, andpayment at 95 percent of AWP if WACinformation is not available. Somecommenters requested that CMSVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00170 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2provide an additional payment forradiopharmaceuticals that are grantedpass-through status.Response: As discussed above, thestatutorily mandated pass-throughpayment for pass-through drugs andbiologicals for CY 2012 generally equalsthe amount determined under section1842(o) of the Act minus the portion ofthe otherwise applicable APC paymentthat CMS determines is associated <strong>with</strong>the drug or biological. Therefore, thepass-through payment is determined bysubtracting the otherwise applicablepayment amount under the OPPS(determined to be ASP+4 percent for CY2012) from the amount determinedunder section 1842(o) of the Act (ASP+6percent).Regarding the comments that CMSshould provide an additional paymentfor radiopharmaceuticals that aregranted pass-through status, we notethat for CY 2012, consistent <strong>with</strong> our CY2011 payment policy for diagnostic andtherapeutic radiopharmaceuticals, weproposed to provide payment for bothdiagnostic and therapeuticradiopharmaceuticals <strong>with</strong> pass-throughstatus based on the ASP methodology.As stated above, the ASP methodology,as applied under the OPPS, uses severalsources of data as a basis for payment,including the ASP, WAC if ASP isunavailable, and 95 percent of theradiopharmaceutical’s most recent AWPif ASP and WAC are unavailable. Forpurposes of pass-through payment, weconsider radiopharmaceuticals to bedrugs under the OPPS. Therefore, if adiagnostic or therapeuticradiopharmaceutical receives passthroughstatus during CY 2012, weproposed to follow the standard ASPmethodology to determine its passthroughpayment rate under the OPPS.We have routinely provided a singlepayment for drugs, biologicals, andradiopharmaceuticals under the OPPSto account for the acquisition andpharmacy overhead costs, includingcompounding costs. We continue tobelieve that a single payment isappropriate for diagnosticradiopharmaceuticals <strong>with</strong> pass-throughstatus in CY 2012, and that the paymentrate of ASP+6 percent (or paymentbased on the ASP methodology) isappropriate to provide payment for boththe radiopharmaceutical’s acquisitioncost and any associated nuclearmedicine handling and compoundingcosts. We refer readers to section V.B.3.of this final rule <strong>with</strong> comment periodfor further discussion of payment fortherapeutic radiopharmaceuticals basedon ASP information submitted bymanufacturers and the CMS Web site at:

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74291jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2http://www.cms.gov/HospitalOutpatientPPS/.After consideration of the commentswe received, we are finalizing ourproposal to provide payment for bothdiagnostic and therapeuticradiopharmaceuticals that are grantedpass-through status based on the ASPmethodology. If a diagnostic ortherapeutic radiopharmaceuticalreceives pass-through status during CY2012, we will follow the standard ASPmethodology to determine the passthroughpayment rate that drugs receiveunder section 1842(o) of the Act, whichis ASP+6 percent. If ASP data are notavailable for a radiopharmaceutical, wewill provide pass-through payment atWAC+6 percent, the equivalentpayment provided to pass-through drugsand biologicals <strong>with</strong>out ASPinformation. If WAC information is alsonot available, we will provide paymentfor the pass-throughradiopharmaceutical at 95 percent of itsmost recent AWP.As discussed in more detail in sectionV.B.2.d. of this final rule <strong>with</strong> commentperiod, over the last 4 years, weimplemented a policy whereby paymentfor all nonpass-through diagnosticradiopharmaceuticals, contrast agents,and implantable biologicals is packagedinto payment for the associatedprocedure. In the CY 2012 OPPS/ASCproposed rule (76 FR 42247 through42248), we proposed to continue thepackaging of these items, regardless oftheir per day cost. As stated earlier,pass-through payment is the differencebetween the amount authorized undersection 1842(o) of the Act (or, if the drugor biological is covered under a CAPunder section 1847B of the Act, anamount determined by the Secretaryequal to the average price for the drugor biological for all competitiveacquisition areas and the yearestablished under such section ascalculated and adjusted by theSecretary) and the portion of theotherwise applicable OPD fee schedulethat the Secretary determines isassociated <strong>with</strong> the drug or biological.Because payment for a drug that iseither a diagnostic radiopharmaceuticalor a contrast agent (identified as a‘‘policy-packaged’’ drug, first describedin the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period (73 FR 68639))would otherwise be packaged if theproduct did not have pass-throughstatus, we believe the otherwiseapplicable OPPS payment amountwould be equal to the ‘‘policypackaged’’drug APC offset amount forthe associated clinical APC in which thedrug or biological is utilized. Thecalculation of the ‘‘policy-packaged’’drug APC offset amounts is described inmore detail in section IV.A.2. of thisfinal rule <strong>with</strong> comment period. Itfollows that the copayment for thenonpass-through payment portion (theotherwise applicable fee scheduleamount that we would also offset frompayment for the drug or biological if apayment offset applies) of the totalOPPS payment for those drugs andbiologicals would, therefore, beaccounted for in the copayment for theassociated clinical APC in which thedrug or biological is used.According to section 1833(t)(8)(E) ofthe Act, the amount of copaymentassociated <strong>with</strong> pass-through items isequal to the amount of copayment thatwould be applicable if the pass-throughadjustment was not applied. Therefore,as we did in CY 2011, we proposed tocontinue to set the associatedcopayment amount for pass-throughdiagnostic radiopharmaceuticals andcontrast agents that would otherwise bepackaged if the item did not have passthroughstatus to zero for CY 2012. Theseparate OPPS payment to a hospital forthe pass-through diagnosticradiopharmaceutical or contrast agent,after taking into account any applicablepayment offset for the item due to thedevice or ‘‘policy-packaged’’ APC offsetpolicy, is the item’s pass-throughpayment, which is not subject to acopayment according to the statute.Therefore, we proposed to not publisha copayment amount for these items inAddenda A and B to the proposed rule(which are referenced in section XVII. ofthe proposed rule and this final rule<strong>with</strong> comment period and available viathe Internet on the CMS Web site).<strong>Comment</strong>: Several commenterssupported the CY 2012 proposal tocontinue to set the associatedcopayment amounts for pass-throughdiagnostic radiopharmaceuticals,contrast agents, and implantablebiologicals that would otherwise bepackaged if the product did not havepass-through status to zero. Thecommenters noted that this policy isconsistent <strong>with</strong> statutory requirementsand provides cost-saving benefits tobeneficiaries.Response: We appreciate thecommenters’ support of our proposal.As discussed in the CY 2012 OPPS/ASCproposed rule (76 FR 42248), we believethat, for drugs and biologicals that are‘‘policy–packaged,’’ the copayment forthe nonpass-through payment portion ofthe total OPPS payment for this subsetof drugs and biologicals is accounted forin the copayment for the associatedclinical APC in which the drug orbiological is used. According to section1833(t)(8)(E) of the Act, the amount ofcopayment associated <strong>with</strong> pass-throughitems is equal to the amount ofcopayment that would be applicable ifthe pass-through adjustment was notapplied. Therefore, we believe that thecopayment amount should be zero fordrugs and biologicals that are ‘‘policypackaged,’’including diagnosticradiopharmaceuticals.After consideration of the publiccomments we received, we arefinalizing our proposal to continue toset the associated copayment amount forpass-through diagnosticradiopharmaceuticals and contrastagents that would otherwise bepackaged if the item did not have passthroughstatus to zero for CY 2012.The 33 drugs and biologicals that weproposed to continue on pass-throughstatus for CY 2012 or that have beengranted pass-through status as of July2011 were displayed in Table 27 of theproposed rule (76 FR 42248 through42249). We note that, for CY 2010 andthe first two quarters of CY 2011,HCPCS code J1572 (Injection, immuneglobulin, (flebogamma/flebogamma dif),intravenous, non-lyophilized (e.g.liquid), 500 mg) was assigned a statusindicator of ‘‘K,’’ meaning that thisproduct was paid separately as anonpass-through separately payabledrug. Beginning on July 1, 2011, HCPCScode J1572 is assigned a status indicatorof ‘‘G’’ and will be given pass-throughstatus for at least 2, but not more than3 years. The payment rate reflecting apass-through payment amount of ASP+6percent was not included in Addenda Aand B of the proposed rule becausethese Addenda solely reflect codes andprices effective as of the second quarterof CY 2011, or April 2011. The 38 drugsand biologicals that we are continuingon pass-through status for CY 2012 orthat have been granted pass-throughstatus as of January 2012 are displayedin Table 33.BILLING CODE 4120–01–PVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00171 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74292 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00172 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.056

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74293jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–C4. Provisions for Reducing TransitionalPass-Through Payments for DiagnosticRadiopharmaceuticals and ContrastAgents To Offset Costs Packaged IntoAPC Groupsa. BackgroundPrior to CY 2008, diagnosticradiopharmaceuticals and contrastVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00173 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2agents were paid separately under theOPPS if their mean per day costs weregreater than the applicable year’s drugpackaging threshold. In CY 2008 (72 FR66768), we began a policy of packagingpayment for all nonpass-throughdiagnostic radiopharmaceuticals andcontrast agents as ancillary andsupportive items and services into theirER30NO11.057

74294 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2associated nuclear medicine procedures.Therefore, beginning in CY 2008,nonpass-through diagnosticradiopharmaceuticals and contrastagents were not subject to the annualOPPS drug packaging threshold todetermine their packaged or separatelypayable payment status, and instead allnonpass-through diagnosticradiopharmaceuticals and contrastagents were packaged as a matter ofpolicy. For CY 2012, we proposed tocontinue to package payment for allnonpass-through diagnosticradiopharmaceuticals and contrastagents, as discussed in section V.B.2.d.of this final rule <strong>with</strong> comment period.b. Payment Offset Policy for DiagnosticRadiopharmaceuticalsAs previously noted,radiopharmaceuticals are considered tobe drugs for OPPS pass-throughpayment purposes. As described above,section 1833(t)(6)(D)(i) of the Actspecifies that the transitional passthroughpayment amount for passthroughdrugs and biologicals is thedifference between the amount paidunder section 1842(o) of the Act (or thePart B drug CAP rate) and the otherwiseapplicable OPD fee schedule amount.There is currently oneradiopharmaceutical <strong>with</strong> pass-throughstatus under the OPPS, HCPCS codeA9584 (Iodine I–123 ioflupane,diagnostic, per study dose, up to 5millicuries). This product, which ispresently referred to using HCPCS codeA9584, was granted pass-through statususing HCPCS code C9406 beginning July1, 2011, and we proposed that itcontinue receiving pass-through statusin CY 2012. We currently apply theestablished radiopharmaceuticalpayment offset policy to pass-throughpayment for this product. As describedearlier in section V.A.3. of this final rule<strong>with</strong> comment period, we proposed thatnew pass-through diagnosticradiopharmaceuticals would be paid atASP+6 percent, while those <strong>with</strong>outASP information would be paid atWAC+6 percent or, if WAC is notavailable, payment would be based on95 percent of the product’s mostrecently published AWP.Because a payment offset is necessaryin order to provide an appropriatetransitional pass-through payment, wededuct from the pass-through paymentfor radiopharmaceuticals an amountreflecting the portion of the APCpayment associated <strong>with</strong> predecessorradiopharmaceuticals in order to ensureno duplicate radiopharmaceuticalpayment is made. In CY 2009, weestablished a policy to estimate theportion of each APC payment rate thatcould reasonably be attributed to thecost of predecessor diagnosticradiopharmaceuticals when consideringa new diagnostic radiopharmaceuticalfor pass-through payment (73 FR 68638through 68641). Specifically, we use the‘‘policy-packaged’’ drug offset fractionfor APCs containing nuclear medicineprocedures, calculated as 1 minus (thecost from single procedure claims in theAPC after removing the cost for ‘‘policypackaged’’drugs divided by the costfrom single procedure claims in theAPC).In the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period (74 FR 60480through 60484), we finalized a policy toredefine ‘‘policy-packaged’’ drugs asonly nonpass-through diagnosticradiopharmaceuticals and contrastagents, as a result of the policydiscussed in sections V.A.4. andV.B.2.d. of the CY 2010 OPPS/ASC finalrule <strong>with</strong> comment period (74 FR 60471through 60477 and 60495 through60499, respectively) that treats nonpassthroughimplantable biologicals that aresurgically inserted or implanted(through a surgical incision or a naturalorifice) and implantable biologicals thatare surgically inserted or implanted(through a surgical incision or a naturalorifice) <strong>with</strong> newly approved passthroughstatus beginning in CY 2010 orlater as devices, rather than drugs. Todetermine the actual APC offset amountfor pass-through diagnosticradiopharmaceuticals that takes intoconsideration the otherwise applicableOPPS payment amount, we multiply the‘‘policy-packaged’’ drug offset fractionby the APC payment amount for thenuclear medicine procedure <strong>with</strong> whichthe pass-through diagnosticradiopharmaceutical is used and,accordingly, reduce the separate OPPSpayment for the pass-through diagnosticradiopharmaceutical by this amount.Beginning in CY 2011 and asdiscussed in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71934 through 71936), we finalized apolicy to require hospitals to appendmodifier ‘‘FB’’ to specified nuclearmedicine procedures when thediagnostic radiopharmaceutical isreceived at no cost/full credit. Theseinstructions are contained <strong>with</strong>in theI/OCE CMS specifications on the CMSWeb site at http://www.cms.gov/OutpatientCodeEdit/02_OCEQtrReleaseSpecs.asp#TopOfPage. For CY 2012 andfuture years, we proposed to continue torequire hospitals to append modifier‘‘FB’’ to specified nuclear medicineprocedures when the diagnosticradiopharmaceutical is received at nocost/full credit. In addition, weproposed to continue to require thatVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00174 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2when a hospital bills <strong>with</strong> an ‘‘FB’’modifier <strong>with</strong> the nuclear medicinescan, the payment amount forprocedures in the APCs listed in Table28 of the proposed rule (76 FR 42250)would be reduced by the full ‘‘policypackaged’’offset amount appropriate fordiagnostic radiopharmaceuticals.<strong>Final</strong>ly, we also proposed to continue torequire hospitals to report a tokencharge of less than $1.01 in cases inwhich the diagnosticradiopharmaceutical is furnished<strong>with</strong>out cost or <strong>with</strong> full credit.<strong>Comment</strong>: Several commenterssupported CMS for continuing torequire that hospitals append modifier‘‘FB’’ to specified nuclear medicineprocedures when the diagnosticpharmaceutical is received at no cost/full credit.Response: We appreciate thecommenters’ support for this proposedpolicy.<strong>Comment</strong>: One commenterrecommended that CMS extendmodifier ‘‘FB’’ to all proceduresinvolving nuclear medicine in which alldiagnostic radiopharmaceuticals arereceived at no cost or full credit.Further, the commenter recommendedthat CMS consider adopting this policyfor all contrast-enhanced procedures inwhich the contrast agent is provided atno cost/full credit. The commenterstated that CMS could then publish alist of appropriate APCs to whichcontrast-enhanced procedures areassigned in a calendar year, andhospitals would then be required to listthe ‘‘FB’’ modifier <strong>with</strong> the appropriateAPC for the contrast-enhancedprocedure; payment, according to thecommenter, could then be reduced by apolicy-packaged offset amount forcontrast agents. As in our policy forreporting of diagnosticradiopharmaceuticals in nuclearmedicine procedures, the commentersuggested that CMS also requirehospitals report a token charge of lessthan $1.01 in cases in which thecontrast agent is furnished <strong>with</strong>out costor <strong>with</strong> full credit. The commenterasserted that requiring hospitals toreport modifier ‘‘FB’’ for contrast agentsreceived at no cost/full credit wouldlead to more accurate payment andwould lead to greater consistencybetween drugs.Response: In the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71934 through 71936), we discussed ourproposed and finalized policy requiringthat hospitals append modifier ‘‘FB’’ tospecified nuclear medicine procedureswhen the diagnostic pharmaceutical isreceived at no cost/full credit. Thepolicy, which was finalized in the CY

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations742952011 final rule <strong>with</strong> comment periodand implemented in CY 2011, wasprompted by questions from hospitalsinquiring how to properly bill fordiagnostic radiopharmaceuticalsobtained free of charge, typically incases when the radiopharmaceuticalhad been provided to the hospital as afree sample. Although we have notreceived similar billing questions fromhospitals regarding contrast agents, andhave no indications about howwidespread the practice of amanufacturer is of providing ‘‘sample’’contrast agents at no cost to a hospital,we agree <strong>with</strong> the commenter thatrequiring modifier ‘‘FB’’ in suchcircumstances would lead to moreconsistency between drugs and,potentially, to more accurate payment.As is the case <strong>with</strong> diagnosticradiopharmaceuticals, CMS alsoannually posts a proposed and final listof APCs to which a contrast offset maybe applicable. We could foresee this listbeing a possible element of a futurepolicy establishing a modifier ‘‘FB’’reporting policy, policy-packaged offsetamount, and token charge reportingrequirement.However, we note that contrast agentsare different in some regards fromdiagnostic radiopharmaceuticals.Contrast agents are, in general,substantially less costly than diagnosticradiopharmaceuticals and are subject toa higher level of competition fromgeneric competitors; this combination oflower price and higher potential forgeneric substitution may lead to fewerinstances of manufacturers providinghospitals <strong>with</strong> free samples.Furthermore, manyradiopharmaceuticals have a verylimited shelf life, often requiringprocurement for a specific patient orvery narrow window. Contrast agents,on the other hand, have longer shelflives, making it much more likely that‘‘wastage’’ from a large vial could beused to reduce or eliminate the costs fora subsequent patient. Splitting singledose vials can be acceptable in certainsituations and may create ‘‘free’’contrast agent for a patient that does noteconomically justify an ‘‘FB’’adjustment by the hospital. Thesecomplexities may reduce the utility ofthe ‘‘FB’’ modifier for contrast agents.Regardless of the differences andsimilarities between diagnosticradiopharmaceutical products, andnot<strong>with</strong>standing any possible policymerits of treating these two types ofproducts similarly <strong>with</strong> regards tomodifier ‘‘FB,’’ in the CY 2012 OPPS/ASC proposed rule, we did not proposeto extend the modifier ‘‘FB’’ policy tocontrast agents. However, we areinterested in receiving comments fromhospitals, manufacturers and otherinterested parties regarding the possibleapplication of modifier ‘‘FB’’ to contrastagents when the product is received atno cost/full credit to the hospital, theestablishment of a policy-packagedoffset amount for contrast agents, andpossible reporting of a token charge ofless than $1.01 in cases in which thecontrast agent is furnished <strong>with</strong>out cost/full credit. Although we are notaccepting the commenter’srecommendation that CMS extend themodifier ‘‘FB’’ policy to contrast agentsreceived at no cost/full credit to ahospital because it was not proposed byCMS in CY 2012, we anticipateconsidering these modifications forfuture rulemaking.After consideration of the publiccomments we received, we arefinalizing our proposal, <strong>with</strong>outmodification, to continue requiringhospitals to append modifier ‘‘FB’’ tospecified nuclear medicine procedureswhen the diagnosticradiopharmaceutical is received at nocost/full credit in CY 2012. In addition,we will continue to reduce the paymentamount for procedures in the APCslisted in Table 34 in this final rule <strong>with</strong>comment period by the full ‘‘policypackaged’’offset amount appropriate fordiagnostic radiopharmaceuticals.<strong>Final</strong>ly, we also will continue to requirehospitals to report a token charge of lessthan $1.01 in cases in which thediagnostic radiopharmaceutical isfurnished <strong>with</strong>out cost or <strong>with</strong> fullcredit.For CY 2011, we finalized a policy toapply the diagnosticradiopharmaceutical offset policy topayment for pass-through diagnosticradiopharmaceuticals, as describedabove. For CY 2012, we proposed tocontinue to apply the diagnosticradiopharmaceutical offset policy topayment for pass-through diagnosticradiopharmaceuticals.<strong>Comment</strong>: One commenter requestedthat CMS post all data used to calculatethe offset amounts and stated that,<strong>with</strong>out these amounts, the publiccannot make comments on the accuracyand appropriateness of CMS’ calculationof radiopharmaceutical costs packagedinto the nuclear medicine APC or thecorresponding offset amounts for passthroughradiopharmaceuticals.Response: The exact data used tocalculate all of the proposed and finalpayment rates, including the associatedoffset amounts, for the CY 2012 OPPSare available for purchase under a CMSdata use agreement through the CMSWeb site at: http://www.cms.gov/hospitalOutpatientPPS. This Web siteincludes information about purchasingthe ‘‘OPPS Limited Data Set,’’ whichnow includes the additional variablespreviously available only in the OPPSIdentifiable Data Set, including ICD–9–CMS diagnosis codes and revenue codepayment amounts. We typically havenot posted the offset amounts by APCuntil publication of the final rulebecause we assign services to APCsbased on our estimate of their fullresource cost, including, but not limitedto, packaged diagnosticradiopharmaceuticals. The offsetamount is the portion of each APCpayment rate that could reasonably beattributed to the cost of predecessordiagnostic radiopharmaceuticals whenconsidering a new diagnosticradiopharmaceutical for pass-throughpayment and has no bearing on APCassignment.After consideration of the publiccomments we received, we arefinalizing our proposal to continueapplying the diagnosticradiopharmaceutical offset policy topayment for pass-through diagnosticradiopharmaceuticals, as described inthe CY 2012 OPPS/ASC proposed rule(76 FR 42249 through 42250).Table 34 below displays the APCs towhich nuclear medicine procedures willbe assigned in CY 2012 and for whichwe expect that an APC offset could beapplicable in the case of diagnosticradiopharmaceuticals <strong>with</strong> pass-throughstatus.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00175 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74296 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2c. Payment Offset Policy for ContrastAgentsSection 1833(t)(6)(D)(i) of the Actspecifies that the transitional passthroughpayment amount for passthroughdrugs and biologicals is thedifference between the amount paidunder section 1842(o) of the Act (or thePart B drug CAP rate) and the otherwiseapplicable OPD fee schedule amount.There is currently one contrast agent<strong>with</strong> pass-through status under theOPPS: HCPCS code C9275 (Injection,hexaminolevulinate hydrochloride,100 mg, per study dose). HCPCS codeC9275 was granted pass-through statusbeginning January 1, 2011, and wasproposed to continue <strong>with</strong> pass-throughstatus in CY 2012. As described insection V.A.3 of the proposed rule, weproposed that new pass-throughcontrast agents would be paid at ASP+6percent, while those <strong>with</strong>out ASPinformation would be paid at WAC+6percent or, if WAC is not available,payment would be based on 95 percentof the product’s most recently publishedAWP.We believe that a payment offset isnecessary in order to provide anappropriate transitional pass-throughpayment for contrast agents because allof these items are packaged when theydo not have pass-through status. Inaccordance <strong>with</strong> our standard offsetmethodology, in the CY 2012 OPPS/ASC proposed rule (76 FR 42250through 42251), we proposed for CY2012 to deduct from the payment forpass-through contrast agents an amountthat reflects the portion of the APCpayment associated <strong>with</strong> predecessorVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00176 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2contrast agents, in order to ensure noduplicate contrast agent payment ismade.In CY 2010, we established a policyto estimate the portion of each APCpayment rate that could reasonably beattributed to the cost of predecessorcontrast agents when considering newcontrast agents for pass-throughpayment (74 FR 60482 through 60484).For CY 2012, as we did in CY 2011, weproposed to continue to apply this samepolicy to contrast agents. Specifically,we proposed to utilize the ‘‘policypackaged’’drug offset fraction forclinical APCs calculated as 1 minus (thecost from single procedure claims in theAPC after removing the cost for ‘‘policypackaged’’drugs divided by the costfrom single procedure claims in theAPC). In CY 2010, we finalized a policyER30NO11.058

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74297to redefine ‘‘policy-packaged’’ drugs asonly nonpass-through diagnosticradiopharmaceuticals and contrastagents (74 FR 60495 through 60499). Todetermine the actual APC offset amountfor pass-through contrast agents thattakes into consideration the otherwiseapplicable OPPS payment amount, weproposed to multiply the ‘‘policypackaged’’drug offset fraction by theAPC payment amount for the procedure<strong>with</strong> which the pass-through contrastagent is used and, accordingly, reducethe separate OPPS payment for the passthroughcontrast agent by this amount.We proposed to continue to apply thismethodology for CY 2012 to recognizethat when a contrast agent <strong>with</strong> passthroughstatus is billed <strong>with</strong> anyprocedural APC listed in Table 29 of theproposed rule, a specific offset based onthe procedural APC would be applied topayments for the contrast agent toensure that duplicate payment is notmade for the contrast agent.We did not receive any publiccomments on our proposal to deduct,from the payment for pass-throughcontrast agents, an amount that reflectsthe portion of the APC paymentassociated <strong>with</strong> predecessor contrastagents in order to ensure no duplicatecontrast agent payment is made. We arefinalizing, as proposed, our policy todeduct from the payment for passthroughcontrast agents an amount thatreflects the portion of the APC paymentfor pass-through contrast agents, asdescribed in the CY 2012 OPPS/ASCproposed rule (76 FR 42250 through42251). We also are finalizing theproposed CY 2012 pass-through contrastagent offset policy to specify theprocedural APCs to which offsets forpass through contrast agents wouldapply. In addition, as we proposed, forthis final rule <strong>with</strong> comment period,procedural APCs for which we expect acontrast agent offset could be applicablein the case of a pass-through contrastagent have been identified as anyprocedural APC <strong>with</strong> a ‘‘policypackaged’’drug amount greater than $20that is not a nuclear medicine APCidentified in Table 34 above, and theseAPCs are displayed in Table 35 below.The methodology used to determine athreshold cost for application of acontrast agent offset policy is describedin detail in the CY 2010 OPPS/ASC finalrule <strong>with</strong> comment period (74 FR 60483through 60484). We are finalizing thismethodology for CY 2012 to continue torecognize that, when a contrast agent<strong>with</strong> pass-through status is billed <strong>with</strong>any procedural APC listed in Table 35,a specific offset based on the proceduralAPC would be applied to payment forthe contrast agent to ensure thatduplicate payment is not made for thecontrast agent.As we proposed, for this final rule<strong>with</strong> comment period, we will continueto post annually on the CMS Web siteat http://www.cms.gov/HospitalOutpatientPPS a file thatcontains the APC offset amounts thatwill be used for that year for purposesof both evaluating cost significance forcandidate pass-through devicecategories and drugs and biologicals,including contrast agents, andestablishing any appropriate APC offsetamounts. Specifically, the file willcontinue to provide the amounts andpercentages of APC payment associated<strong>with</strong> packaged implantable devices,‘‘policy-packaged’’ drugs, and‘‘threshold-packaged’’ drugs andbiologicals for every OPPS clinical APC.Procedural APCs for which we expecta contrast offset could be applicable inthe case of a pass-through contrast agenthave been identified as any proceduralAPC <strong>with</strong> a ‘‘policy-packaged’’ drugamount greater than $20 that is not anuclear medicine APC identified inTable 34 above and these APCs aredisplayed in Table 35 below. Themethodology used to determine aproposed threshold cost for applicationof a contrast agent offset policy isdescribed in detail in the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod (70 FR 60483 through 60484).For CY 2012, we proposed to continueto recognize that when a contrast agent<strong>with</strong> pass-through status is billed <strong>with</strong>any procedural APC listed in Table 29of the proposed rule (76 FR 42251), aspecific offset based on the proceduralAPC would be applied to payment forthe contrast agent to ensure thatduplicate payment is not made for thecontrast agent.We did not receive any publiccomments regarding this proposal and,therefore, are adopting it for CY 2012<strong>with</strong>out modification.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00177 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74298 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2B. OPPS Payment for Drugs, Biologicals,and Radiopharmaceuticals WithoutPass-Through Status1. BackgroundUnder the CY 2011 OPPS, wecurrently pay for drugs, biologicals, andradiopharmaceuticals that do not havepass-through status in one of two ways:as a packaged payment included in thepayment for the associated service or asa separate payment (individual APCs).We explained in the April 7, 2000 OPPSfinal rule <strong>with</strong> comment period (65 FR18450) that we generally package thecost of drugs and radiopharmaceuticalsinto the APC payment rate for theprocedure or treatment <strong>with</strong> which theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00178 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2products are usually furnished.Hospitals do not receive separatepayment for packaged items andsupplies, and hospitals may not billbeneficiaries separately for anypackaged items and supplies whosecosts are recognized and paid <strong>with</strong>in thenational OPPS payment rate for theassociated procedure or service.ER30NO11.059

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74299jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2(Transmittal A–01–133, issued onNovember 20, 2001, explains in greaterdetail the rules regarding separatepayment for packaged services.)Packaging costs into a single aggregatepayment for a service, procedure, orepisode-of-care is a fundamentalprinciple that distinguishes aprospective payment system from a feeschedule. In general, packaging the costsof items and services into the paymentfor the primary procedure or service<strong>with</strong> which they are associatedencourages hospital efficiencies andalso enables hospitals to manage theirresources <strong>with</strong> maximum flexibility.Section 1833(t)(16)(B) of the Act setthe threshold for establishing separateAPCs for drugs and biologicals at $50per administration for CYs 2005 and2006. Therefore, for CYs 2005 and 2006,we paid separately for drugs,biologicals, and radiopharmaceuticalswhose per day cost exceeded $50 andpackaged the costs of drugs, biologicals,and radiopharmaceuticals whose perday cost was equal to or less than $50into the procedures <strong>with</strong> which theywere billed. For CY 2007, the packagingthreshold for drugs, biologicals, andradiopharmaceuticals that were not newand did not have pass-through statuswas established at $55. For CYs 2008and 2009, the packaging threshold fordrugs, biologicals, andradiopharmaceuticals that were not newand did not have pass-through statuswas established at $60. For CY 2010, thepackaging threshold for drugs,biologicals, and radiopharmaceuticalsthat were not new and did not havepass-through status was established at$65. For CY 2011, the packagingthreshold for drugs, biologicals, andradiopharmaceuticals that were not newand did not have pass-through statuswas established at $70. Themethodology used to establish the $55threshold for CY 2007, the $60threshold for CYs 2008 and 2009, the$65 threshold for CY 2010, the $70threshold for CY 2011, and ourproposed approach for CY 2012 arediscussed in more detail in sectionV.B.2.b. of this final rule <strong>with</strong> commentperiod.2. Criteria for Packaging Payment forDrugs, Biologicals, andRadiopharmaceuticalsa. BackgroundAs indicated in section V.B.1. of thisfinal rule <strong>with</strong> comment period, inaccordance <strong>with</strong> section 1833(t)(16)(B)of the Act, the threshold for establishingseparate APCs for payment of drugs andbiologicals was set to $50 peradministration during CYs 2005 and2006. In CY 2007, we used the fourquarter moving average Producer PriceIndex (PPI) levels for PharmaceuticalPreparations (Prescription) to trend the$50 threshold forward from the thirdquarter of CY 2005 (when the Pub. L.108–173 mandated threshold becameeffective) to the third quarter of CY2007. We then rounded the resultingdollar amount to the nearest $5increment in order to determine the CY2007 threshold amount of $55. Usingthe same methodology as that used inCY 2007 (which is discussed in moredetail in the CY 2007 OPPS/ASC finalrule <strong>with</strong> comment period (71 FR 68085through 68086)), we set the packagingthreshold for establishing separate APCsfor drugs and biologicals at $60 for CYs2008 and 2009. For CY 2010, we set thepackaging threshold at $65; and for CY2011, we set the packaging threshold at$70.Following the CY 2007 methodology,in the CY 2012 OPPS/ASC proposedrule, we used the most recentlyavailable four quarter moving averagePPI levels to trend the $50 thresholdforward from the third quarter of CY2005 to the third quarter of CY 2012 androunded the resulting dollar amount($77.63) to the nearest $5 increment,which yielded a figure of $80, which weproposed as the packaging threshold forCY 2012. In performing this calculation,we used the most recent forecast of thequarterly index levels for the PPI forPharmaceuticals for Human Use(Prescription) (Bureau of Labor Statistics(BLS) series code WPUSI07003) fromCMS’ Office of the Actuary (OACT). (Wenote that we did not propose a changeto the PPI that is used to calculate thethreshold for CY 2012; rather, thischange in terminology reflects a changeto the BLS naming convention for thisseries.) We refer below to this seriesgenerally as the PPI for PrescriptionDrugs.We chose this PPI as it reflects pricechanges associated <strong>with</strong> the average mixof all pharmaceuticals in the overalleconomy. In addition, we chose thisprice series because it is publiclyavailable and regularly published,improving public access andtransparency. Forecasts of the PPI forPrescription Drugs are developed by IHSGlobal Insight, Inc., a nationallyrecognized economic and financialforecasting firm. As actual inflation forpast quarters replaced forecastedamounts, the PPI estimates for priorquarters have been revised (compared<strong>with</strong> those used in the CY 2007 OPPS/ASC final rule <strong>with</strong> comment period)and have been incorporated into ourcalculation. Based on the calculationsdescribed above, we proposed aVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00179 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2packaging threshold for CY 2012 of $80.(For a more detailed discussion of theOPPS drug packaging threshold and theuse of the PPI for Prescription Drugs, werefer readers to the CY 2007 OPPS/ASCfinal rule <strong>with</strong> comment period (71 FR68085 through 68086).)b. Cost Threshold for Packaging ofPayment for HCPCS Codes ThatDescribe Certain Drugs, NonimplantableBiologicals, and TherapeuticRadiopharmaceuticals (‘‘Threshold-Packaged Drugs’’)In the CY 2012 OPPS/ASC proposedrule (76 FR 42252 through 42253), wecalculated on a HCPCS code-specificbasis the per day cost of all drugs,nonimplantable biologicals, andtherapeutic radiopharmaceuticals(collectively called ‘‘thresholdpackaged’’drugs) that had a HCPCScode in CY 2010 and were paid (viapackaged or separate payment) underthe OPPS in order to determine theirproposed CY 2012 packaging status. Weused data from CY 2010 claimsprocessed before January 1, 2011 for thiscalculation. However, we did notperform this calculation for those drugsand biologicals <strong>with</strong> multiple HCPCScodes that include different dosages asdescribed in section V.B.2.c. of this finalrule <strong>with</strong> comment period or fordiagnostic radiopharmaceuticals,contrast agents, and implantablebiologicals that we proposed to continueto package in CY 2012, as discussed insection V.B.2.d. of this final rule <strong>with</strong>comment period.In order to calculate the per day costsfor drugs, nonimplantable biologicals,and therapeutic radiopharmaceuticals todetermine their proposed packagingstatus in CY 2012, we used themethodology that was described indetail in the CY 2006 OPPS proposedrule (70 FR 42723 through 42724) andfinalized in the CY 2006 OPPS final rule<strong>with</strong> comment period (70 FR 68636through 70 FR 68638). For each drugand nonimplantable biological HCPCScode, we used an estimated paymentrate of ASP+4 percent (which is thepayment rate we proposed for separatelypayable drugs and nonimplantablebiologicals for CY 2012, as discussed inmore detail in section V.B.3.b. of theproposed rule and this final rule <strong>with</strong>comment period) to calculate the CY2012 proposed rule per day costs. Weused the manufacturer submitted ASPdata from the fourth quarter of CY 2010(data that were used for paymentpurposes in the physician’s officesetting, effective April 1, 2011) todetermine the proposed rule per daycost.

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274300 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and RegulationsAs is our standard methodology, forCY 2012 we proposed to use paymentrates based on the ASP data from thefourth quarter of CY 2010 for budgetneutrality estimates, packagingdeterminations, impact analyses, andcompletion of Addenda A and B to theproposed rule (which were referencedin section XVII. of the proposed ruleand available via the Internet) becausethese are the most recent data availablefor use at the time of development of theproposed rule. These data were also thebasis for drug payments in thephysician’s office setting, effective April1, 2011. For items that did not have anASP-based payment rate, such as sometherapeutic radiopharmaceuticals, weused their mean unit cost derived fromthe CY 2010 hospital claims data todetermine their per day cost. Weproposed to package items <strong>with</strong> a perday cost less than or equal to $80 andidentified items <strong>with</strong> a per day costgreater than $80 as separately payable.Consistent <strong>with</strong> our past practice, wecrosswalked historical OPPS claims datafrom the CY 2010 HCPCS codes thatwere reported to the CY 2011 HCPCScodes that we displayed in AddendumB of the proposed rule (which wasreferenced in section XVII. of theproposed rule and available via theInternet) for payment in CY 2012.<strong>Comment</strong>: The majority ofcommenters objected to the proposedincrease in the OPPS packagingthreshold to $80 for CY 2012. Manystated that the $10 increase in thethreshold from CY 2011 was larger thanexpected because recent increases in thepackaging threshold have occurred in $5increments. Several commentersrecommended that CMS consider eithereliminating the drug packagingthreshold and providing separatepayment for all drugs <strong>with</strong> HCPCScodes or freezing the packagingthreshold at $70 for CY 2012. Onecommenter, in particular, suggested thatCMS freeze the packaging threshold at$70 for at least 3 years. Manycommenters objected to the use of apackaging threshold under the OPPSwhen one is not used for physician’soffice payment. These commentersexpressed concern that the packagingthreshold may impede beneficiaryaccess to lower cost packaged drugs inthe HOPD setting. A few commenterssuggested that CMS limit increases inthe packaging threshold amount to themarket basket update for the year. Onecommenter also recommended that CMSnot round up the threshold amount tothe nearest $5 increment and, instead,defer increases in the threshold untilchanges in prices exceed $5.Some commenters believed thateliminating the packaging threshold andpaying separately for all drugs in theHOPD setting would allow a moreaccurate calculation of the separatelypayable payment amount for drugs(otherwise referred to as the ASP+Xcalculation).Response: As discussed in detail inthe CY 2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66757 through66758), the CY 2009 OPPS/ASC finalrule <strong>with</strong> comment period (73 FR68643), the CY 2010 OPPS/ASC finalrule <strong>with</strong> comment period (74 FR 60485through 60487), and the CY 2011 finalrule <strong>with</strong> comment period (75 FR 71940through 71943), we continue to believethat unpackaging payment for all drugs,biologicals and radiopharmaceuticals isinconsistent <strong>with</strong> the concept of aprospective payment system and thatsuch a change could create anadditional reporting burden forhospitals. The OPPS and the MPFS thatapplies to physician’s services arefundamentally different paymentsystems <strong>with</strong> essential differences intheir payment policies and structures.Specifically, the OPPS is a prospectivepayment system based on the concept ofpayment for groups of services thatshare clinical and resourcecharacteristics. Payment is made underthe OPPS according to prospectivelyestablished payment rates that arerelated to the relative costs of hospitalresources for services. When physician’sservices are furnished in an officesetting, they are paid under the MPFS,which is a fee schedule based on therealative value of each component.Under the MPFS, separate payment ismade for each service provided in thephysician’s office; when individualdrugs are furnished in the physician’soffice, they are generally paid under theASP methodology. In contrast, the OPPSincludes various drugs <strong>with</strong>in aprospective payment system, wherepayment for certain drugs is packagedinto the associated procedure paymentfor the APC group. Given thefundamental differences in the waypayment is made in an HOPD and aphysician’s office setting, differences inpayment are to be expected.In general, we do not believe that ourpackaging methodology under the OPPSresults in limited beneficiary access todrugs because packaging is afundamental component of aprospective payment system thataccounts for the cost of certain itemsand services in larger payment bundles,recognizing that some clinical cases maybe more costly and others less costly,but that, on average, OPPS payment isappropriate for the services provided.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00180 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2The growing utilization associated <strong>with</strong>packaged drugs and biologicals in ourclaims data suggests Medicarebeneficiaries have sufficient access tothese items.We note that, in CYs 2005 and 2006,the statutorily mandated drug packagingthreshold was set at $50, and wecontinue to believe that it is appropriateto continue a modest drug packagingthreshold for the CY 2012 OPPS for thereasons set forth below. As stated in theCY 2007 OPPS/ASC final rule <strong>with</strong>comment period (71 FR 68086), webelieve that packaging certain items is afundamental component of aprospective payment system, thatpackaging these items does not lead tobeneficiary access issues and does notcreate a problematic site of servicedifferential, that the packagingthreshold is reasonable based on theinitial establishment in law of a $50threshold for the CY 2005 OPPS, thatupdating the $50 threshold is consistent<strong>with</strong> industry and government practices,and that the PPI for Prescription Drugsis an appropriate mechanism to gaugePart B drug inflation. Therefore, becauseof our continued belief that packaging isa fundamental component of aprospective payment system thatcontinues to provide importantflexibility and efficiency in the deliveryof high quality hospital outpatientservices, we are not adopting thecommenters’ recommendations to payseparately for all drugs, biologicals, andradiopharmaceuticals for CY 2012 or toeliminate or to freeze the packagingthreshold at $70.We disagree <strong>with</strong> the commenterswho suggested that CMS should limitincreases in the outpatient drugpackaging threshold amount to themarket basket update for the year. Asstated above, we continue to believe thatupdating the $50 threshold is consistent<strong>with</strong> industry and government practicesand that the PPI for Prescription Drugsis an appropriate mechanism to gaugePart B drug inflation. As we stated inthe CY 2007 OPPS/ASC final rule <strong>with</strong>comment period (71 FR 68085), webelieve that the PPI for PrescriptionDrugs reflects price changes at thewholesale or manufacturer stage.Because OPPS payment rates for drugsand biologicals are generally based onthe ASP data that are reported by theirmanufacturers, we believe that the PPIfor Prescription Drugs is an appropriateprice index to use to update thepackaging threshold for CY 2007 andbeyond.In contrast, the market basket updatecontains numerous price proxies,including, but not limited to, proxies forwages and salaries, utilities, and

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74301jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2nonlabor-related expenses, that are notrelated to price increases forprescription drugs. Therefore, webelieve that the market basket as awhole is not an appropriate mechanismfor determining the outpatient drugpackaging threshold amount. Within thecalculation of the market basket update,we use the PPI for Prescription Drugsspecifically to measure the price growthfor prescription drugs, but price changesfor prescription drugs are only onecomponent of price changes for thenumerous items and services hospitalspurchase. Additionally, we disagree<strong>with</strong> the commenters’ suggestion thatwe not round up the packagingthreshold to the nearest $5 incrementand, instead, defer any increases in thethreshold until changes in prices exceed$5. We note that we equally round upor round down to the nearest $5increment, and we continue to believethat rounding to the nearest $5increment more accurately updates the2005 statutorily mandated drugpackaging threshold.<strong>Final</strong>ly, we believe that our continuedapplication of the methodology initiallyadopted in CY 2007 to update the drugpackaging threshold does not inhibit ourability to pay accurately for drugs andbiologicals. We have made severalrefinements to the ASP+X drug paymentmethodology under the OPPS fornonpass-through drugs and biologicalsover the past several years to improveits accuracy. During that time, we havecontinued to implement our establishedmethodology for annually updating thedrug packaging threshold. For CY 2010,we finalized an overhead adjustmentmethodology for determining paymentfor separately payable drugs <strong>with</strong>outpass-through status while we havecontinued to consistently apply themethodology described above to updatethe drug packaging threshold.Since publication of the CY 2012OPPS/ASC proposed rule, consistent<strong>with</strong> our policy of updating thepackaging threshold <strong>with</strong> more recentlyavailable data for the final rule, we haveagain followed the CY 2007methodology for CY 2012 and usedupdated four quarter moving averagePPI index levels provided by the CMSOffice of the Actuary to trend the $50threshold forward from the third quarterof CY 2005 to the third quarter of CY2012. We then rounded the resultingdollar updated dollar amount ($77.44)to the nearest $5 increment, whichyielded a figure of $75. We note that thiscalculation, by using the most recentforecast of the quarterly PPI indexlevels, resulted in a decrease in thetrended dollar amount from $77.63 inthe CY 2012 proposed rule to $77.44 forthis final rule <strong>with</strong> comment period.Because it is our policy to round thedollar amount to the nearest $5increment, the slight decrease in thetrended dollar amount has resulted in areduced packaging threshold, from $80in the proposed rule, to a final CY 2012packaging threshold of $75. Therefore,after consideration of the publiccomments we received, and consistent<strong>with</strong> our established methodology forestablishing the packaging thresholdusing the most recent PPI forecast data,we are adopting a CY 2012 packagingthreshold of $75.Our policy during previous cycles ofthe OPPS has been to use updated ASPand claims data to make finaldeterminations of the packaging statusof HCPCS codes for drugs,nonimplantable biologicals, andtherapeutic radiopharmaceuticals forthe final rule <strong>with</strong> comment period. Wenote that it is also our policy to makean annual packaging determination for aHCPCS code only when we develop theOPPS/ASC final rule <strong>with</strong> commentperiod for the update year. Only HCPCScodes that are identified as separatelypayable in the final rule <strong>with</strong> commentperiod are subject to quarterly updates.For our calculation of per day costs ofHCPCS codes for drugs andnonimplantable biologicals in this CY2012 OPPS/ASC final rule <strong>with</strong>comment period, we proposed to useASP data from the first quarter of CY2011, which is the basis for calculatingpayment rates for drugs and biologicalsin the physician’s office setting usingthe ASP methodology, effective July 1,2011, along <strong>with</strong> updated hospitalclaims data from CY 2010. We note thatwe also proposed to use these data forbudget neutrality estimates and impactanalyses for this CY 2012 OPPS/ASCfinal rule <strong>with</strong> comment period.Payment rates for HCPCS codes forseparately payable drugs andnonimplantable biologicals included inAddenda A and B to this final rule <strong>with</strong>comment period are based on ASP datafrom the second quarter of CY 2011.These data are the basis for calculatingpayment rates for drugs and biologicalsin the physician’s office setting usingthe ASP methodology, effective October1, 2011. These physician’s officepayment rates will then be updated inthe January 2012 OPPS update, based onthe most recent ASP data to be used forphysician’s office and OPPS payment asof January 1, 2012. For items that do notcurrently have an ASP-based paymentrate as proposed, we recalculate theirmean unit cost from all of the CY 2010claims data and updated cost reportinformation available for this CY 2012VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00181 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2final rule <strong>with</strong> comment period todetermine their final per day cost.Consequently, the packaging status ofsome HCPCS codes for drugs,nonimplantable biologicals, andtherapeutic radiopharmaceuticals in thisCY 2012 OPPS/ASC final rule <strong>with</strong>comment period may be different fromthe same drug HCPCS code’s packagingstatus determined based on the dataused for the proposed rule. Under suchcircumstances, we proposed to continueto follow the established policiesinitially adopted for the CY 2005 OPPS(69 FR 65780) in order to more equitablypay for those drugs whose median costfluctuates relative to the proposed CY2012 OPPS drug packaging thresholdand the drug’s payment status (packagedor separately payable) in CY 2011.Specifically, consistent <strong>with</strong> ourhistorical practice, we applied thefollowing policies to these HCPCS codesfor drugs, nonimplantable biologicals,and therapeutic radiopharmaceuticalswhose relationship to the $75 drugpackaging threshold changes based onthe updated drug packaging thresholdand on the final updated data:• HCPCS codes for drugs andnonimplantable biologicals that werepaid separately in CY 2011 and thatwere proposed for separate payment inCY 2012, and that then have per daycosts equal to or less than $75, based onthe updated ASPs and hospital claimsdata used for this CY 2012 final rule<strong>with</strong> comment period, will continue toreceive separate payment in CY 2012.• HCPCS codes for drugs andnonimplantable biologicals that werepackaged in CY 2011 and that areproposed for separate payment in CY2012, and that then have per day costsequal to or less than $75, based on theupdated ASPs and hospital claims dataused for this CY 2012 final rule <strong>with</strong>comment period, will remain packagedin CY 2012.• HCPCS codes for drugs andnonimplantable biologicals for whichwe proposed packaged payment in CY2012 but then have per day costs greaterthan $75, based on the updated ASPsand hospital claims data used for thisCY 2012 final rule <strong>with</strong> commentperiod, will receive separate payment inCY 2012.We did not receive any publiccomments on our proposal to apply theestablished policies initially adopted forthe CY 2005 OPPS (69 FR 65780) inorder to more equitably pay for thosedrugs whose median cost fluctuatesrelative to the CY 2012 OPPS drugpackaging threshold and the drug’spayment status (packaged or separatelypayable) in CY 2011. Therefore, we are

74302 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2finalizing our proposal, <strong>with</strong>outmodification, for CY 2012.We note that HCPCS codes J2513(Pentastarch 10% solution), J3310(Perphenazine injection), and J9351(Topotecan) were paid separately for CY2011 and were proposed for separatepayment in CY 2012 and had final perday costs of less than the $75 drugpackaging threshold, based on updatedASPs and the CY 2010 hospital claimsdata available for this CY 2012 final rule<strong>with</strong> comment period. Therefore,HCPCS codes J2513, J3310, and J9351will continue to be paid separately inCY 2012 according to the establishedmethodology set forth above.In addition, we proposed to provideseparate payment for HCPCS code J2597(Inj desmopressin acetate) in CY 2012,which was packaged in CY 2011. Usingupdated ASPs and the CY 2010 hospitalclaims data available for this final rule<strong>with</strong> comment period, HCPCS codeJ2597 now has a per day cost of lessthan $75. In accordance <strong>with</strong> ourestablished policy for such cases, for CY2012, we are packaging payment forHCPCS code J2597.We also proposed to package HCPCScodes 90378 (Rsv ig, im, 50mg), J0364(Apomorphine hydrochloride), J1324(Enfuvirtide injection), J1642 (Injheparin sodium per 10 u), J1644 (Injheparin sodium per 1000u), J1756 (Ironsucrose injection), J2700 (Oxacillinsodium injeciton), J3030 (Sumatriptansuccinate/6 MG), J9070(Cyclophosphamide 100 MG inj), J9185(Fludarabine phosphate inj), J9206(Irinotecan injection), J9390(Vinorelbine tartrate inj), and Q4103(Oasis burn matrix) . Using updatedASPs and the CY 2010 hospital claimsdata available for this final rule <strong>with</strong>comment period, HCPCS codes 90378,J0364, J1324, J1642, J1644, J1756, J2700,J3030, J9070, J9185, J9206, J9390, andQ4103 now have per day costs greaterthan $75. In accordance <strong>with</strong> ourestablished policy for such cases, for CY2012 we will pay for HCPCS codes90378, J0364, J1324, J1642, J1644, J1756,J2700, J3030, J9070, J9185, J9206, J9390,and Q4103 separately.<strong>Final</strong>ly, because we did not haveclaims data for HCPCS code J9213(Interferon alfa-2a inj) in the CY 2012OPPS/ASC proposed rule, we hadproposed a status indicator of ‘‘E’’ forthis product in CY 2012. However, sincepublication of the proposed rule, wehave received claims data and, becausethe per day cost for this product ofapproximately $70 is less than the final$75 CY 2012 packaging threshold, theproduct is packaged and has a CY 2012status indicator of ‘‘N.’’In the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period (74 FR 60485through 60489), we implemented apolicy to treat oral and injectable formsof 5–HT3 antiemetics comparably to allother threshold packaged drugs,nonimplantable biologicals, andtherapeutic radiopharmaceuticals underour standard packaging methodology ofpackaging drugs <strong>with</strong> a per day cost lessthan $65. In the CY 2012 OPPS/ASCproposed rule (76 FR 42252), weproposed for CY 2012 to continue ourpolicy of not exempting these 5–HT3antiemetic products from our standardpackaging methodology. For CY 2012,we proposed to package payment for allof the 5–HT3 antiemetics exceptpalonosetron hydrochloride, which forCY 2012 has an estimated per day cost,from the CY 2010 claims data, above theproposed CY 2012 drug packagingthreshold. Our rationale for this policyis outlined in the CY 2010 OPPS/ASCfinal rule <strong>with</strong> comment period (74 FR60487 through 60488).<strong>Comment</strong>: Several commenterssuggested that CMS reinstate its policyof separate payment for 5–HT3antiemetics, which are a class of drugsoften used as part of an anti-cancertreatment regimen to treat nausea.Response: We continue to believe thatuse of these antiemetics is an integralpart of an anti-cancer treatment regimenand that OPPS claims data demonstratetheir increasingly common hospitaloutpatient utilization. As we stated inthe CY 2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60488), we nolonger believe that a specific exemptionto our standard drug paymentmethodology is necessary to ensureaccess to the most appropriateantiemetic products for Medicarebeneficiaries. We continue to believethat our analysis conducted in the CY2010 OPPS/ASC proposed rule on 5–HT3 antiemetics (74 FR 35320), along<strong>with</strong> the historical stability inprescribing patterns for these productsand the availability of genericalternatives for several of theseproducts, allow us to continue ourpolicy of specifically not exemptingthese products from the OPPS drugpackaging threshold.<strong>Comment</strong>: One commenterrecommended that CMS not packageany drugs used in anti-cancer regimens.Response: We disagree <strong>with</strong> thecommenter for the reasons mentionedabove. We believe that packaging certainitems, including items used in anticancerregimens, is a fundamentalcomponent of a prospective paymentsystem, and is an essential feature thatdistinguishes a prospective paymentsystem from a fee schedule. We do notVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00182 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2believe that packaging drugs used in ananti-cancer regimen or in outpatienttreatment of other significant diseasesleads to beneficiary access issues. Thisfinding is confirmed by our analysis ofhospital claims data in which we havefound that beneficiaries appear to haveadequate access to cancer treatments, asis signified by ongoing volume growthin cancer-related APCs and stability inprescribing products for anti-cancerdrugs such as 5–HT3 antiemetics, forwhich CMS has continued to observevolume growth, even after we ended ourmultiyear exemption from the packagingthreshold for these products. Insummary, after consideration of thepublic comments we received, we arefinalizing our proposal to continue ourpolicy of not exempting 5–HT3antiemetics from the drug packagingthreshold for CY 2012. In addition, weare not providing any exceptions to thestandard drug packaging methodologyfor any class of drugs, including anticancertherapies, for CY 2012. However,we note that the 5–HT3 antiemeticproduct described by HCPCS code J2469(palonosetron hydrocholride) has a CY2012 estimated per day cost, from theCY 2010 claims data, above the CY 2012drug packaging threshold and, therefore,will receive separate payment in CY2012.c. Packaging Determination for HCPCSCodes That Describe the Same Drug orBiological But Different DosagesIn the CY 2008 OPPS/ASC final rule<strong>with</strong> comment period (72 FR 66776), webegan recognizing, for OPPS paymentpurposes, multiple HCPCS codesreporting different dosages for the samecovered Part B drugs or biologicals inorder to reduce hospitals’ administrativeburden by permitting them to report allHCPCS codes for drugs and biologicals.In general, prior to CY 2008, the OPPSrecognized for payment only the HCPCScode that described the lowest dosage ofa drug or biological. We extended thisrecognition to multiple HCPCS codes forseveral other drugs under the CY 2009OPPS (73 FR 68665). During CYs 2008and 2009, we applied a policy thatassigned the status indicator of thepreviously recognized HCPCS code tothe associated newly recognized code(s),reflecting the packaged or separatelypayable status of the new code(s). In theCY 2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66775), weexplained that once claims data wereavailable for these previouslyunrecognized HCPCS codes, we woulddetermine the packaging status andresulting status indicator for eachHCPCS code according to the general,established HCPCS code-specific

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74303methodology for determining a code’spackaging status for a given update year.However, we also stated that weplanned to closely follow our claimsdata to ensure that our annual packagingdeterminations for the different HCPCScodes describing the same drug orbiological did not create inappropriatepayment incentives for hospitals toreport certain HCPCS codes instead ofothers.In the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period (74 FR 60490through 60491), we finalized a policy tomake a single packaging determinationfor a drug, rather than an individualHCPCS code, when a drug has multipleHCPCS codes describing differentdosages. We analyzed CY 2008 claimsdata for the HCPCS codes describingdifferent dosages of the same drug orbiological that were newly recognized inCY 2008 and found that our claims datawould result in several differentpackaging determinations for differentcodes describing the same drug orbiological. Furthermore, we found thatour claims data included few units anddays for a number of newly recognizedHCPCS codes, resulting in our concernthat these data reflected claims fromonly a small number of hospitals, eventhough the drug or biological itself maybe reported by many other hospitalsunder the most common HCPCS code.Based on these findings from our firstavailable claims data for the newlyrecognized HCPCS codes, we believedthat adopting our standard HCPCS codespecificpackaging determinations forthese codes could lead to paymentincentives for hospitals to report certainHCPCS codes instead of others,particularly because we do not currentlyrequire hospitals to report all drug andbiological HCPCS codes under the OPPSin consideration of our previous policythat generally recognized only thelowest dosage HCPCS code for a drug orbiological for OPPS payment.For CY 2012, we continue to believethat adopting the standard HCPCS codespecificpackaging determinations forthese codes could lead to paymentincentives for hospitals to report certainHCPCS codes for drugs instead ofothers. Making packagingdeterminations on a drug-specific basiseliminates these incentives and allowshospitals flexibility in choosing toreport all HCPCS codes for differentdosages of the same drug or only thelowest dosage HCPCS code. Therefore,in the CY 2012 OPPS/ASC proposedrule (76 FR 42253 through 42255), weproposed to continue our policy to makepackaging determinations on a drugspecificbasis, rather than a HCPCScode-specific basis, for those HCPCScodes that describe the same drug orbiological but different dosages in CY2012.For CY 2012, in order to propose apackaging determination that isconsistent across all HCPCS codes thatdescribe different dosages of the samedrug or biological, we aggregated bothour CY 2010 claims data and our pricinginformation at ASP+4 percent across allof the HCPCS codes that describe eachdistinct drug or biological in order todetermine the mean units per day of thedrug or biological in terms of the HCPCScode <strong>with</strong> the lowest dosage descriptor.All HCPCS codes listed in Table 30 ofthe proposed rule (76 FR 42254 through42255) had ASP pricing informationavailable for the CY 2012 OPPS/ASCproposed rule. Therefore, we multipliedthe weighted average ASP+4 percent perunit payment amount across all dosagelevels of a specific drug or biological bythe estimated units per day for allHCPCS codes that describe each drug orbiological from our claims data todetermine the estimated per day cost ofeach drug or biological at less than orequal to $80 (whereupon all HCPCScodes for the same drug or biologicalwould be packaged) or greater than $80(whereupon all HCPCS codes for thesame drug or biological would beseparately payable).Although we did not receive anypublic comments regarding thismethodology, as noted in sectionV.B.2.b. of this final rule <strong>with</strong> commentperiod, the final CY 2012 drugpackaging threshold is $75, and not $80as had been proposed in the CY 2012OPPS proposed rule. Therefore, inpreparation for the CY 2012 final rule<strong>with</strong> comment period, we againaggregated both our CY 2010 claims dataand our pricing information at ASP+4percent across all of the HCPCS codesthat describe each distinct drug orbiological in order to determine themean units per day of the drug orbiological in terms of the HCPCS code<strong>with</strong> the lowest dosage descriptor forthose drugs listed in Table 30 of theproposed rule (76 FR 42254 through42255). We then multiplied theweighted average ASP+4 percent perunit payment amount across all dosagelevels of a specific drug or biological bythe estimated units per day for allHCPCS codes that describe each drug orbiological from our claims data todetermine the estimated per day cost ofeach drug or biological at less than orequal to $75 (whereupon all HCPCScodes for the same drug or biologicalwould be packaged) or greater than $75(whereupon all HCPCS codes for thesame drug or biological would beseparately payable). In repeating thisanalysis, we found that two products forwhich we had proposed a CY 2012status indicator of ‘‘N,’’ HCPCS J1642(Injection, heparin sodium (heparin lockflush), per 10 units) and J1644(Injection, heparin sodium, per 1000units) had a recalculated per day cost inexcess of the $75 packaging threshold.Therefore, HCPCS J1642 and J1644 areassigned status indicator ‘‘K’’ and willbe separately payable in CY 2012.With the exception of the changedstatus indicators for HCPCS J1642 andJ1644, we are adopting as final theproposed packaging status of each drugand biological HCPCS code to which theaforementioned methodology applies.The products affected are displayed inTable 36 below.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00183 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74304 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00184 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.060

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74305jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00185 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.061

74306 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–Cd. Packaging of Payment for DiagnosticRadiopharmaceuticals, Contrast Agents,and Implantable Biologicals (‘‘Policy-Packaged’’ Drugs and Devices)Prior to CY 2008, the methodology ofcalculating a product’s estimated perday cost and comparing it to the annualOPPS drug packaging threshold wasused to determine the packaging statusof drugs, biologicals, andradiopharmaceuticals under the OPPS(except for our CYs 2005 through 2009exemption for 5–HT3 antiemetics).However, as established in the CY 2008OPPS/ASC final rule <strong>with</strong> commentVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00186 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2period (72 FR 66766 through 66768), webegan packaging payment for alldiagnostic radiopharmaceuticals andcontrast agents into the payment for theassociated procedure, regardless of theirper day costs. In addition, in CY 2009,we adopted a policy that packaged thepayment for nonpass-throughER30NO11.062

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74307jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2implantable biologicals into payment forthe associated surgical procedure on theclaim (73 FR 68633 through 68636). Werefer to diagnostic radiopharmaceuticalsand contrast agents collectively as‘‘policy-packaged’’ drugs andimplantable biologicals as devicesbecause, in CY 2010, we began to treatimplantable biologicals as devices for allOPPS payment purposes.According to our regulations at§ 419.2(b), as a prospective paymentsystem, the OPPS establishes a nationalpayment rate that includes operatingand capital-related costs that aredirectly related and integral toperforming a procedure or furnishing aservice on an outpatient basis including,but not limited to, implantableprosthetics, implantable durablemedical equipment, and medical andsurgical supplies. Packaging costs into asingle aggregate payment for a service,encounter, or episode-of-care is afundamental principle thatdistinguishes a prospective paymentsystem from a fee schedule. In general,packaging the costs of items andservices into the payment for theprimary procedure or service <strong>with</strong>which they are associated encourageshospital efficiencies and also enableshospitals to manage their resources <strong>with</strong>maximum flexibility.Prior to CY 2008, we noted that theproportion of drugs, biologicals, andradiopharmaceuticals that wereseparately paid under the OPPS hadincreased in recent years, a pattern thatwe also observed for procedural servicesunder the OPPS. Our final CY 2008policy that packaged payment for allnonpass-through diagnosticradiopharmaceuticals and contrastagents, regardless of their per day costs,contributed significantly to expandingthe size of the OPPS payment bundlesand is consistent <strong>with</strong> the principles ofa prospective payment system.As discussed in more detail in the CY2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68645 through68649), we presented several reasonssupporting our initial policy to packagepayment of diagnosticradiopharmaceuticals and contrastagents into their associated procedureson a claim. Specifically, we stated thatwe believed packaging was appropriatebecause: (1) The statutorily requiredOPPS drug packaging threshold hasexpired; (2) we believe that diagnosticradiopharmaceuticals and contrastagents function effectively as suppliesthat enable the provision of anindependent service; and (3) section1833(t)(14)(A)(iii) of the Act requiresthat payment for specified coveredoutpatient drugs (SCODs) be setprospectively based on a measure ofaverage hospital acquisition cost.For these reasons, we believe it isappropriate to continue to treatdiagnostic radiopharmaceuticals andcontrast agents differently from SCODsfor CY 2012. Therefore, in the CY 2012OPPS/ASC proposed rule (76 FR 42255through 42256), we proposed tocontinue packaging payment for allcontrast agents and diagnosticradiopharmaceuticals, collectivelyreferred to as ‘‘policy-packaged’’ drugs,regardless of their per day costs, for CY2012. We also proposed to continue topackage the payment for diagnosticradiopharmaceuticals into the paymentfor the associated nuclear medicineprocedure and to package the paymentfor contrast agents into the payment ofthe associated echocardiographyimaging procedure, regardless ofwhether the agent met the OPPS drugpackaging threshold. We refer readers tothe CY 2010 OPPS/ASC final rule <strong>with</strong>comment period for a detaileddiscussion of nuclear medicine andechocardiography services (74 FR 35269through 35277).<strong>Comment</strong>: Several commentersobjected to CMS’ proposal to packagepayment for all diagnosticradiopharmaceuticals and contrastagents in CY 2012. A number ofcommenters stated that diagnosticradiopharmaceuticals and contrastagents <strong>with</strong> per day costs over theproposed OPPS drug packagingthreshold are defined as SCODs and,therefore, should be assigned separateAPC payments. In particular, thecommenters questioned CMS’ authorityto classify groups of drugs, such asdiagnostic radiopharmaceuticals andcontrast agents, and implementpackaging and payment policies that donot reflect their status as SCODs.Several comments disagreed <strong>with</strong> CMS’labeling of radiopharmaceuticals assupplies and stated instead that theyshould be treated as other SCODs. Thecommenters recommended thatdiagnostic radiopharmaceuticals shouldbe subject to the same per day cost drugpackaging threshold that applies toother drugs, in order to determinewhether their payment would bepackaged or made separately.Response: As discussed in the CY2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66766), the CY2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68645), the CY2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60497), and theCY 2011 final rule <strong>with</strong> comment period(75 FR 71949), we continue to believethat diagnostic radiopharmaceuticalsand contrast agents are different fromVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00187 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2other drugs and biologicals for severalreasons. We note that the statutorilyrequired OPPS drug packagingthreshold has expired, and we continueto believe that diagnosticradiopharmaceuticals and contrastagents function effectively as suppliesthat enable the provision of anindependent service and are alwaysancillary and supportive to anindependent service, rather thanthemselves serving as the therapeuticmodality. We packaged their payment inCYs 2008, 2009, 2010, and 2011 asancillary and supportive services inorder to provide incentives for greaterefficiency and to provide hospitals <strong>with</strong>additional flexibility in managing theirresources. In order for payment to bepackaged, it is not necessary that allproducts be interchangeable in everycase, and we recognized that, in somecases, hospitals may utilize higher costproducts and, in some cases, lower costproducts, taking into consideration theclinical needs of the patient andefficiency incentives. While werecognize this variability from case tocase, on average under a prospectivepayment system, we expect payment topay appropriately for the servicesfurnished. In the past, we haveclassified different groups of drugs forspecific payment purposes, asevidenced by our CY 2005 through CY2009 policy regarding 5–HT3antiemetics and their exemption fromthe drug packaging threshold. We notethat we treat diagnosticradiopharmaceuticals and contrastagents as ‘‘policy-packaged’’ drugsbecause our policy is to packagepayment for all of the products in thecategory.In the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period (73 FR 68634), wealso began packaging the payment for allnonpass-through implantablebiologicals into payment for theassociated surgical procedure becausewe consider these products to always beancillary and supportive to independentservices, similar to implantablenonbiological devices that are alwayspackaged. Therefore, we currentlypackage payment for nonpass-throughimplantable biologicals, also known asdevices that are surgically inserted orimplanted (through a surgical incisionor a natural orifice) into the body. As westated in the CY 2012 OPPS/ASCproposed rule (76 FR 42256), wecontinue to believe that payment shouldbe packaged for nonpass-throughimplantable biologicals for CY 2012.Although our final CY 2009 policy(which we are continuing for CY 2012as discussed below) packages paymentfor all diagnostic radiopharmaceuticals,

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274308 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationscontrast agents, and nonpass-throughimplantable biologicals into thepayment for their associated procedures,we are continuing to provide paymentfor these items in CY 2012 based on aproxy for average acquisition cost, as wedid in CY 2009. We continue to believethat the line-item estimated cost for adiagnostic radiopharmaceutical,contrast agent, or nonpass-throughimplantable biological in our claimsdata is a reasonable approximation ofaverage acquisition and preparation andhandling costs for diagnosticradiopharmaceuticals, contrast agents,and nonpass-through implantablebiologicals, respectively. As wediscussed in the CY 2009 OPPS/ASCfinal rule <strong>with</strong> comment period (73 FR68645), we believe that hospitals haveadapted to the CY 2006 coding changesfor radiopharmaceuticals and respondedto our instructions to include chargesfor radiopharmaceutical handling intheir charges for theradiopharmaceutical products. Further,because the standard OPPS packagingmethodology packages the totalestimated cost of eachradiopharmaceutical, contrast agent, ornonimplantable biological on eachclaim (including the full range of costsobserved on the claims) <strong>with</strong> the cost ofassociated procedures for ratesetting,this packaging approach is consistent<strong>with</strong> considering the average cost forradiopharmaceuticals, contrast agents,or nonpass-through implantablebiologicals, rather than the median cost.In addition, as we noted in the CY 2009OPPS/ASC final rule <strong>with</strong> commentperiod (72 FR 68646), these drugs,biologicals, or radiopharmaceuticals forwhich we have not established aseparate APC and therefore, for whichpayment would be packaged rather thanseparately provided under the OPPS, areconsidered to not be SCODs. Similarly,drugs and biologicals <strong>with</strong> per day costsof less than $75 in CY 2012 that arepackaged and for which a separate APChas not been established also are notSCODs. This reading is consistent <strong>with</strong>our final payment policy whereby wepackage payment for diagnosticradiopharmaceuticals, contrast agents,and nonpass-through implantablebiologicals and provide payment forthese products through payment fortheir associated procedures.<strong>Comment</strong>: Several commentersdisagreed <strong>with</strong> the proposal todistinguish between diagnostic andtherapeutic radiopharmaceuticals forpayment purposes under the OPPS. Thecommenters noted that CMS’identification of HCPCS code A9544(Iodine I-131 tositumomab, diagnostic,per study dose) as a diagnosticradiopharmaceutical is inappropriatebecause this radiopharmaceuticalfunctions as a dosimetricradiopharmaceutical and not as adiagnostic radiopharmaceutical. A fewcommenters explained that thisparticular radiopharmaceutical productis used as part of a therapeutic regimenand, therefore, should be consideredtherapeutic for OPPS payment purposes.Response: As discussed above and inthe CY 2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66641), the CY2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68645), the CY2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60498), and theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 71949), weclassified each radiopharmaceutical intoone of the two groups according towhether its long descriptor containedthe term ‘‘diagnostic’’ or ‘‘therapeutic’’.HCPCS code A9544 contains the term‘‘diagnostic’’ in its long code descriptor.Therefore, according to our establishedmethodology, we continue to classify itas diagnostic for the purposes of CY2012 OPPS payment. While weunderstand that this item is provided inconjunction <strong>with</strong> additional supplies,imaging tests, and therapeuticradiopharmaceuticals for patientsalready diagnosed <strong>with</strong> cancer, wecontinue to believe that the purpose ofadministering the product described byHCPCS code A9544 is diagnostic innature. As we first stated in the CY 2008OPPS/ASC final rule <strong>with</strong> commentperiod (72 FR 66641), we continue tobelieve that the product described byHCPCS code A9544 is a diagnosticradiopharmaceutical. While it is notused to necessarily diagnose a generaldisease state, it is used to determinewhether future therapeutic serviceswould be beneficial to the patient andto determine how to proceed <strong>with</strong>therapy. We note that this is no differentthan the use of a lab test to guidetherapy; the fact that the diagnostic test,a service which provides information, isused to guide therapy does not make ita therapeutic service, one whichintended to improve a patient’s clinicalcondition. While a group of associatedservices may be considered atherapeutic regimen by somecommenters, HCPCS code A9544 isprovided in conjunction <strong>with</strong> a series ofnuclear medicine imaging scans. Manynuclear medicine studies usingdiagnostic radiopharmaceuticals areprovided to patients who already havean established diagnosis. We continueto consider HCPCS code A9544 to bediagnostic because this item is providedVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00188 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2for the purpose of conducting adiagnostic imaging procedure and isused to identify the proposed dose ofthe therapeutic agent to be provided ata later time.<strong>Comment</strong>: Some commentersrecommended using the ASPmethodology to make payment fornonpass-through diagnosticradiopharmaceuticals, noting that itwould be inconsistent for CMS to treatdiagnostic radiopharmaceuticals as‘‘drugs’’ for pass-through paymentpurposes and provide payment fordiagnostic radiopharmaceuticals thathave pass-through status based on theASP methodology, and, then, after thediagnostic radiopharmaceutical’s passthroughpayment status expires, packagethe costs included in historical hospitalclaims data, rather than use the ASPmethodology to pay for the product andtreat the drug as a supply. A fewcommenters suggested that diagnosticradiopharmaceuticals could be paidseparately as therapeuticradiopharmaceuticals are paid, whichwould allow manufacturers tovoluntarily submit ASP data, and thendefault to the mean unit cost when ASPdata are unavailable. One commenterasserted that CMS, by paying separatelyfor diagnostic radiopharmaceuticals,could reduce Medicare programexpenditures through reduced outlierpayments, decreased variability inpackaged costs, and more accuratepayments for nuclear medicineprocedures. The commenter stated thatthis would occur at ‘‘only a modestcost’’ to the OPPS.Response: As we stated above, thestatutorily required OPPS drugpackaging threshold has expired, andwe continue to believe that diagnosticradiopharmaceuticals and contrastagents are always ancillary andsupportive to an independent service,rather than services themselves as thetherapeutic modality. We disagree <strong>with</strong>commenters who suggest that nonpassthroughdiagnosticradiopharmaceuticals should be paidunder the ASP methodology, thatnonpass-through diagnosticradiopharmaceuticals should be paid aspass-through drugs and biologicals, orthat nonpass-through diagnosticradiopharmaceuticals should be paidsimilarly to therapeuticradiopharmaceuticals. We continue tobelieve that nonpass-through diagnosticradiopharmaceuticals and contrastagents function effectively as suppliesthat enable the provision of anindependent service. As we noted in theCY 2009 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 68646) andrestate above, drugs biologicals, or

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74309jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2radiopharmaceuticals for which wehave not established a separate APC willreceive packaged payment under theOPPS, and are considered to not beSCODs. We are continuing to providepayment for these items in CY 2012based on a proxy for average acquisitioncost. We continue to believe that theline-item estimated cost for a diagnosticradiopharmaceutical, contrast agent, ornonpass-through implantable biologicalin our claims data is a reasonableapproximation of average acquisitionand preparation and handling costs fordiagnostic radiopharmaceuticals,contrast agents and nonpass-throughimplantable biologicals, respectively.Further, as we have stated above, webelieve that packaging costs into a singleaggregate payment for a service,encounter, or episode-of-care is afundamental principle thatdistinguishes a prospective paymentsystem from a fee schedule. Our policyof packaging payment for diagnosticradiopharmaceuticals, contrast agents,and implantable biologicals into thepayment for the primary procedure orservice <strong>with</strong> which they are associatedencourages hospital efficiencies andalso enables hospitals to manage theirresources <strong>with</strong> maximum flexibility.Paying separately for diagnosticradiopharmaceuticals, contrast agents,or implantable biologicals, when each ofthese items is ancillary and supportiveto an independent service, is contrary tothis principle of a prospective paymentsystem. Moreover, we note that SCODs,the payment methodology for which thecommenters suggest that CMS adopt fordiagnostic radiopharmaceuticals andcontrast agents, receive OPPS paymentsbased on the ASP+X methodology,which has consistently resulted inpayment rates for SCODs that are equalto some amount greater than 100percent of average sales price for theseproducts; in CY 2012, as discussed insection V.B.3.b. of this final rule <strong>with</strong>comment period, SCODs will receivepayment equal to 104 percent of ASP(ASP+4). We do not agree that paymentfor diagnostic radiopharmaceuticals andcontrast agents, were it equal to theSCOD reimbursement amountcalculated using the ASP+Xmethodology (or ASP+4 in CY 2012),could reduce outlier payments or APCvariability to an extent sufficient enoughto offset higher payment rates for theseproducts under the ASP+Xmethodology. <strong>Final</strong>ly, we do not agree<strong>with</strong> the commenter’s assertion thatseparate payment for diagnosticradiopharmaceuticals would result inmore accurate payment for theseproducts. When CMS discussed possibleASP-based payment for diagnosticradiopharmaceuticals in the proposedand final rules for OPPS in CY 2006 (70FR 68653 through 68657), numerouspublic commenters advised CMS thatradiopharmaceuticals are formulated,distributed, compounded, andadministered in unique distributionchannels that preclude thedetermination of ASP relevant to aradiopharmaceutical HCPCS code.Further, commenters advised CMS thatthe manufacturer has no way tocalculate the ASP of the end productpatient dose and, consequently, couldnot supply CMS <strong>with</strong> accurate ASPdata. In the intervening period betweenthe CY 2006 final rule <strong>with</strong> commentperiod and the present, diagnosticradiopharmaceutical use has becomemore widespread, and their formulationmore complex. Moreover, we believethat the phenomena described bycommenters (includingradiopharmaceutical manufacturers) inthe comment period preceding the CY2006 OPPS final rule, including themany preparatory and compoundingsteps between manufacturer and thepatient’s bedside, remain animpediment to manufacturers’calculations of accurate ASP, and thusaccurate payment, for these products.Therefore, we do not believe thatdiagnostic radiopharmaceuticals shouldbe paid separately under the OPPS suchthat manufacturers voluntarily cansubmit ASP data and then default tomean unit cost when ASP data areunavailable. We believe they areappropriately packaged into a singleaggregate payment for theaccompanying service provided.<strong>Comment</strong>: A few commentersrecommended that CMS provideseparate payment for all diagnosticradiopharmaceuticals <strong>with</strong> a median perday cost greater than $200. Thecommenters believed that thisrecommendation is most consistent <strong>with</strong>the APC Panel’s recommendation toCMS at the Panel’s September 2007meeting (described below). Onecommenter recommended that if CMSdoes not adopt the recommended $200packaging threshold for diagnosticradiopharmaceuticals, that CMS adoptalternate packaging criteria providingseparate payment when the cost of theproduct is greater than the total APCpayment or when the coefficient ofvariation of the radiopharmaceuticalexceeds a certain threshold.Response: As we stated in the CY2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60499), at theSeptember 2007 APC Panel meeting, theAPC Panel recommended that CMSpackage radiopharmaceuticals <strong>with</strong> aVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00189 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2median per day cost of less than $200but pay separately forradiopharmaceuticals <strong>with</strong> a median perday cost of $200 or more. In the CY 2008OPPS/ASC final rule <strong>with</strong> commentperiod (72 FR 66638), we did not acceptthe APC Panel’s recommendation, citingan inability to determine an empiricalbasis for paying separately forradiopharmaceuticals <strong>with</strong> a median perday cost in excess of $200. Instead, asproposed, for CY 2008, we finalized thepackaging of payment for all diagnosticradiopharmaceuticals. Consistent <strong>with</strong>the CY 2012 OPPS/ASC proposed rule,for this final rule <strong>with</strong> comment period,we continue to believe that diagnosticradiopharmaceuticals are ancillary andsupportive to the nuclear medicineprocedures in which they are used andthat their costs should be packaged intothe primary procedures <strong>with</strong> which theyare associated. We do not believe itwould be appropriate to set a costthreshold for packaging diagnosticradiopharmaceuticals because,regardless of their per day cost, they arealways supportive of an independentprocedure that is the basis foradministration of the diagnosticradiopharmaceutical. We also do notbelieve that it is appropriate to consideralternate packaging criteria for nonpassthroughdiagnosticradiopharmaceuticals. We continue tobelieve that, regardless of their per-daycost, these items are always supportiveof an independent procedure that is thebasis for administration of thediagnostic radiopharmaceutical.Therefore, our policy of packaging costsfor these products into an associatedAPC continues to be the approach bestsuited for use in a prospective paymentsystem.Further, we note that the OPPS, as aprospective payment system, alreadyincludes the costs associated <strong>with</strong>diagnostic radiopharmaceuticals intothe APCs for which the product isancillary or supportive. We believe thatthe cost associated <strong>with</strong> a given productat a given point in time is immaterialbecause the OPPS, as a prospectivepayment system <strong>with</strong> payments basedon average costs associated <strong>with</strong> acovered procedure, already takes intoaccount both higher and lower inputcosts associated <strong>with</strong> that procedure.We also note that the OPPS, like manyof Medicare’s prospective paymentsystems, has policies in place to providehospitals <strong>with</strong> additional outlierpayments for certain high-cost caseswhose costs exceed certain thresholds.This system of outliers already provideshospitals (or, in the case of partialhospitalization services, community

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274310 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsmental health centers) <strong>with</strong> additionalreimbursement to offset costs that arehigh relative to the prospective paymentamount, regardless of whether the costsare associated <strong>with</strong>radiopharmaceuticals or anotherrelatively high-cost element in thepatient’s course of care.<strong>Comment</strong>: Several commentersrequested that CMS provide the public<strong>with</strong> data detailing how the full costs ofdiagnostic radiopharmaceuticals andcontrast agents are reflected inprocedural APC payments.Response: The exact data used tocalculate all of the proposed and finalAPC assignments and rates, includingcosts associated <strong>with</strong> diagnosticradiopharmaceuticals and contrastagents, for the CY 2012 OPPS areavailable for purchase under a CMS datause agreement through the CMS Website at: http://www.cms.gov/hospitalOutpatientPPS. This Web siteincludes information about purchasingthe ‘‘OPPS Limited Data Set,’’ whichnow includes the additional variablespreviously available only in the OPPSIdentifiable Data Set, including ICD–9–CMS diagnosis codes and revenue codepayment amounts. We typically havenot posted the offset amounts by APCuntil publication of the final rulebecause we assign services to APCsbased on our estimate of their fullresource cost, including, but not limitedto, packaged diagnosticradiopharmaceuticals.In CY 2009, we adopted a final policyto package payment for all nonpassthroughimplantable biologicals that aresurgically inserted or implanted(through a surgical incision or a naturalorifice) like our longstanding policy thatpackaged payment for all implantablenonbiological devices <strong>with</strong>out passthroughstatus. We finalized a policy inCY 2010 to package payment fornonpass-through implantablebiologicals that are surgically inserted orimplanted (through a surgical incisionor a natural orifice) into the body,considering them to be devices.For CY 2012, we proposed to continueto package payment for nonpass-throughimplantable biologicals that aresurgically inserted or implanted(through a surgical incision or a naturalorifice) into the body, considering themto be devices. Three of the products<strong>with</strong> expiring pass-through status for CY2012 are biologicals that, according totheir FDA-approved indications, areonly surgically implanted. Theseproducts are described by HCPCS codesC9361 (Collagen matrix nerve wrap(NeuroMend Collagen Nerve Wrap), per0.5 centimeter length), C9362 (Porouspurified collagen matrix bone void filler(Integra Mozaik OsteoconductiveScaffold Strip), per 0.5 cc), and C9364(Porcine implant, Permacol, per squarecentimeter). Like the two implantablebiologicals <strong>with</strong> expiring pass-throughstatus in CY 2011 that were discussedin the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period (75 FR 71948through 71950), we believe that thethree biologicals specified above <strong>with</strong>expiring pass-through status for CY2012 differ from other biologicals paidunder the OPPS in that they specificallyfunction as surgically implanteddevices. As a result of our proposedpackaged payment methodology fornonpass-through implantablebiologicals, we proposed to packagepayment for HCPCS codes C9361,C9362, and C9364 and assign themstatus indicator ‘‘N’’ for CY 2012. Inaddition, any new biologicals <strong>with</strong>outpass-through status that are surgicallyinserted or implanted (through asurgical incision or a natural orifice)would be packaged in CY 2012.Moreover, for nonpass-throughbiologicals that may sometimes be usedas implantable devices, we continue toinstruct hospitals to not bill separatelyfor the HCPCS codes for the productswhen used as implantable devices. Thisreporting ensures that the costs of theseproducts that may be, but are notalways, used as implanted biologicalsare appropriately packaged intopayment for the associated implantationprocedures. We received no commentsregarding our proposed packaging ofnonpass-through implantablebiologicals that are surgically inserted orimplanted (through a surgical incisionor a natural orifice) into the body.After consideration of the publiccomments we received, we arefinalizing our CY 2012 proposals,<strong>with</strong>out modification, to continue topackage payment for all nonpassthroughdiagnosticradiopharmaceuticals and contrastagents, and implantable biologicals thatare surgically inserted or implanted intothe body through a surgical incision ora natural orifice, regardless of their perday costs. Given the inherent functionof contrast agents and diagnosticradiopharmaceuticals as ancillary andsupportive to the performance of anindependent procedure and the similarfunctions of implantable biologicals andnonbiological devices as integral to andsupportive of the separately paidsurgical procedures in which either maybe used, we continue to view thepackaging of payment for contrastagents, diagnostic radiopharmaceuticals,and implantable biologicals as a logicalexpansion of packaging payment forVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00190 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2drugs and biologicals. In addition, as weinitially established in the CY 2008OPPS/ASC final rule <strong>with</strong> commentperiod (72 FR 66768), we will continueto identify diagnosticradiopharmaceuticals specifically asthose Level II HCPCS codes that includethe term ‘‘diagnostic’’ along <strong>with</strong> aradiopharmaceutical in their long codedescriptors, and therapeuticradiopharmaceuticals as those Level IIHCPCS codes that include the term‘‘therapeutic’’ along <strong>with</strong> aradiopharmaceutical in their long codedescriptors. We believe that the currentdescriptors accurately discriminatebetween those pharmaceuticals whichare used to gather information and thosewhich are intended to improve thepatient’s medical condition.In addition, any new biologicallacking pass-through status that issurgically inserted or implanted througha surgical incision or natural orificewould be packaged in CY 2012. Forthree biologicals <strong>with</strong> expiring passthroughstatus and which differ fromother biologicals paid under the OPPSin that they specifically function assurgically implanted devices, we arefinalizing our proposal to package theproducts described by HCPCS codeC9361, C9362, and C9364 and assignthem status indictor ‘‘N’’ for this finalrule <strong>with</strong> comment period.We also are finalizing our proposal topackage payment for contrast agentsinto the payment of the associatedechocardiography imaging procedure,regardless of whether the agent met theOPPS drug packaging threshold. Werefer readers to section III.D.1.e. of thisfinal rule <strong>with</strong> comment period for moreinformation on CMS’ finalechocardiography payment policy. Formore information on how we set CY2012 payment rates for nuclearmedicine procedures in whichdiagnostic radiopharmaceuticals areused and echocardiography servicesprovided <strong>with</strong> and <strong>with</strong>out contrastagents, we refer readers to the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod for a detailed discussion ofnuclear medicine and echocardiographyservices (74 FR 35269 through 35277).3. Payment for Drugs and BiologicalsWithout Pass-Through Status That AreNot Packageda. Payment for Specified CoveredOutpatient Drugs (SCODs) and OtherSeparately Payable and Packaged Drugsand BiologicalsSection 1833(t)(14) of the Act definescertain separately payableradiopharmaceuticals, drugs, andbiologicals and mandates specific

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74311jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2payments for these items. Under section1833(t)(14)(B)(i) of the Act, a ‘‘specifiedcovered outpatient drug’’ (SCOD) is acovered outpatient drug, as defined insection 1927(k)(2) of the Act, for whicha separate APC has been established andthat either is a radiopharmaceuticalagent or is a drug or biological for whichpayment was made on a pass-throughbasis on or before December 31, 2002.Under section 1833(t)(14)(B)(ii) of theAct, certain drugs and biologicals aredesignated as exceptions and are notincluded in the definition of ‘‘specifiedcovered outpatient drugs’’. Theseexceptions are—• A drug or biological for whichpayment is first made on or afterJanuary 1, 2003, under the transitionalpass-through payment provision insection 1833(t)(6) of the Act.• A drug or biological for which atemporary HCPCS code has not beenassigned.• During CYs 2004 and 2005, anorphan drug (as designated by theSecretary).Section 1833(t)(14)(A)(iii) of the Actrequires that payment for SCODs in CY2006 and subsequent years be equal tothe average acquisition cost for the drugfor that year as determined by theSecretary, subject to any adjustment foroverhead costs and taking into accountthe hospital acquisition cost survey datacollected by the GovernmentAccountability Office (GAO) in CYs2004 and 2005, and later periodicsurveys conducted by the Secretary asset forth in the statute. If hospitalacquisition cost data are not available,the law requires that payment be equalto payment rates established under themethodology described in section1842(o), section 1847A, or section1847B of the Act, as calculated andadjusted by the Secretary as necessary.Most physician Part B drugs are paid atASP+6 percent pursuant to sections1842(o) and 1847A of the Act.Section 1833(t)(14)(E) of the Actprovides for an adjustment in OPPSpayment rates for overhead and relatedexpenses, such as pharmacy servicesand handling costs. Section1833(t)(14)(E)(i) of the Act requiredMedPAC to study pharmacy overheadand related expenses and to makerecommendations to the Secretaryregarding whether, and if so how, apayment adjustment should be made tocompensate hospitals for overhead andrelated expenses. Section1833(t)(14)(E)(ii) of the Act authorizesthe Secretary to adjust the weights forambulatory procedure classifications forSCODs to take into account the findingsof the MedPAC study.In the CY 2006 OPPS proposed rule(70 FR 42728 through 42731), wediscussed the June 2005 report byMedPAC regarding pharmacy overheadcosts in HOPDs and summarized thefindings of that study:• Handling costs for drugs,biologicals, and radiopharmaceuticalsadministered in the HOPD are notinsignificant;• Little information is available aboutthe magnitude of pharmacy overheadcosts;• Hospitals set charges for drugs,biologicals, and radiopharmaceuticals atlevels that reflect their respectivehandling costs; and• Hospitals vary considerably in theirlikelihood of providing services thatutilize drugs, biologicals, orradiopharmaceuticals <strong>with</strong> differenthandling costs.As a result of these findings, MedPACdeveloped seven drug categories forpharmacy and nuclear medicinehandling costs based on the estimatedlevel of hospital resources used toprepare the products (70 FR 42729).Associated <strong>with</strong> these categories weretwo recommendations for accuratepayment of pharmacy overhead underthe OPPS.1. CMS should establish separate,budget neutral payments to cover thecosts hospitals incur for handlingseparately payable drugs, biologicals,and radiopharmaceuticals.2. CMS should define a set ofhandling fee APCs that group drugs,biologicals, and radiopharmaceuticalsbased on attributes of the products thataffect handling costs; CMS shouldinstruct hospitals to submit charges forthese APCs and base payment rates forthe handling fee APCs on submittedcharges reduced to costs.In response to the MedPAC findings,in the CY 2006 OPPS proposed rule (70FR 42729), we discussed our belief that,because of the varied handling resourcesrequired to prepare different forms ofdrugs, it would be impossible toexclusively and appropriately assign adrug to a certain overhead category thatwould apply to all hospital outpatientuses of the drug. Therefore, our CY 2006OPPS proposed rule included aproposal to establish three distinct LevelII HCPCS C-codes and threecorresponding APCs for drug handlingcategories to differentiate overhead costsfor drugs and biologicals (70 FR 42730).We also proposed: (1) To combineseveral overhead categoriesrecommended by MedPAC; (2) toestablish three drug handling categories,as we believed that larger groups wouldminimize the number of drugs that mayfit into more than one category andVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00191 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2would lessen any undesirable paymentpolicy incentives to utilize particularforms of drugs or specific preparationmethods; (3) to collect hospital chargesfor these HCPCS C-codes for 2 years;and (4) to ultimately base payment forthe corresponding drug handling APCson CY 2006 claims data available for theCY 2008 OPPS.In the CY 2006 OPPS final rule <strong>with</strong>comment period (70 FR 68659 through68665), we discussed the publiccomments we received on our proposalregarding pharmacy overhead. Theoverwhelming majority of commentersdid not support our proposal regardingpharmacy overhead and urged us not tofinalize this policy, as it would beadministratively burdensome forhospitals to establish charges for HCPCScodes for pharmacy overhead and toreport them. Therefore, we did notfinalize this proposal for CY 2006.Instead, we established payment forseparately payable drugs and biologicalsat ASP+6 percent, which we calculatedby comparing the estimated aggregatecost of separately payable drugs andbiologicals in our claims data to theestimated aggregate ASP dollars forseparately payable drugs andbiologicals, using the ASP as a proxy foraverage acquisition cost (70 FR 68642).Hereinafter, we refer to thismethodology as our standard drugpayment methodology. We concludedthat payment for drugs and biologicalsand pharmacy overhead at a combinedASP+6 percent rate would serve as anacceptable proxy for the combinedacquisition and overhead costs of eachof these products.In the CY 2007 OPPS/ASC final rule<strong>with</strong> comment period (71 FR 68091), wefinalized our proposed policy to providea single payment of ASP+6 percent forthe hospital’s acquisition cost for thedrug or biological and all associatedpharmacy overhead and handling costs.The ASP+6 percent rate that wefinalized was higher than the equivalentaverage ASP-based amount calculatedfrom claims of ASP+4 percent accordingto our standard drug paymentmethodology, but we adopted paymentat ASP+6 percent for stability while wecontinued to examine the issue of thecosts of pharmacy overhead in theHOPD and awaited the accumulation ofCY 2006 data as discussed in the CY2006 OPPS/ASC final rule <strong>with</strong>comment period.In the CY 2008 OPPS/ASC proposedrule (72 FR 42735), in response toongoing discussions <strong>with</strong> interestedparties, we proposed to continue ourmethodology of providing a combinedpayment rate for drug and biologicalacquisition and pharmacy overhead

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274312 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationscosts while continuing our efforts toimprove the available data. We alsoproposed to instruct hospitals to removethe pharmacy overhead charge for bothpackaged and separately payable drugsand biologicals from the charge for thedrug or biological and report thepharmacy overhead charge on anuncoded revenue code line on theclaim. We believed that this wouldprovide us <strong>with</strong> an avenue for collectingpharmacy handling cost data specific todrugs in order to package the overheadcosts of these items into the associatedprocedures, most likely drugadministration services. Similar to thepublic response to our CY 2006pharmacy overhead proposal, theoverwhelming majority of commentersdid not support our CY 2008 proposaland urged us to not finalize this policy(72 FR 66761). At its September 2007meeting, the APC Panel recommendedthat hospitals not be required toseparately report charges for pharmacyoverhead and handling and thatpayment for overhead be included aspart of drug payment. The APC Panelalso recommended that CMS continueto evaluate alternative methods tostandardize the capture of pharmacyoverhead costs in a manner that issimple to implement at theorganizational level (72 FR 66761).Because of concerns expressed by theAPC Panel and public commenters, wedid not finalize the proposal to instructhospitals to separately report pharmacyoverhead charges for CY 2008. Instead,in the CY 2008 OPPS/ASC final rule<strong>with</strong> comment period (72 FR 66763), wefinalized a policy of providing paymentfor separately payable drugs andbiologicals and their pharmacyoverhead at ASP+5 percent as atransition from their CY 2007 paymentof ASP+6 percent to payment based onthe equivalent average ASP-basedpayment rate calculated from hospitalclaims according to our standard drugpayment methodology, which wasASP+3 percent for the CY 2008 OPPS/ASC final rule <strong>with</strong> comment period.Hospitals continued to include chargesfor pharmacy overhead costs in the lineitemcharges for the associated drugsreported on claims.For CY 2009, we proposed to payseparately payable drugs and biologicalsat ASP+4 percent, including bothSCODs and other drugs <strong>with</strong>out CY2009 OPPS pass-through status, basedon our standard drug paymentmethodology. We also continued toexplore mechanisms to improve theavailable data. We proposed to split the‘‘Drugs Charged to Patients’’ cost centerinto two cost centers: One for drugs<strong>with</strong> high pharmacy overhead costs andone for drugs <strong>with</strong> low pharmacyoverhead costs (73 FR 41492). We notedthat we expected that CCRs from theproposed new cost centers would beavailable in 2 to 3 years to refine OPPSdrug cost estimates by accounting fordifferential hospital markup practicesfor drugs <strong>with</strong> high and low overheadcosts. After consideration of the publiccomments received and the APC Panelrecommendations, we finalized a CY2009 policy (73 FR 68659) to providepayment for separately payablenonpass-through drugs and biologicalsbased on costs calculated from hospitalclaims at a 1-year transitional rate ofASP+4 percent, in the context of anequivalent average ASP-based paymentrate of ASP+2 percent calculatedaccording to our standard drug paymentmethodology from the final rule claimsdata and cost report data. We did notfinalize our proposal to split the singlestandard ‘‘Drugs Charged to Patients’’cost center into two cost centers largelydue to concerns raised by hospitalsabout the associated administrativeburden. Instead, we indicated in the CY2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68659) that wewould continue to explore otherpotential approaches to improve ourdrug cost estimation methodology,thereby increasing payment accuracy forseparately payable drugs andbiologicals.In response to our proposals for theCY 2008 and CY 2009 OPPS, a group ofpharmacy stakeholders (hereinafterreferred to as the pharmacystakeholders), including some cancerhospitals, some pharmaceuticalmanufacturers, and some hospital andprofessional associations, commentedthat we should pay an acquisition costof ASP+6 percent for separately payabledrugs, should substitute ASP+6 percentfor the packaged cost of all packageddrugs and biologicals on procedureclaims, and should redistribute thedifference between the aggregateestimated packaged drug cost in claimsand payment for all drugs, includingpackaged drugs at ASP+6 percent, asseparate pharmacy overhead paymentsfor separately payable drugs. Theyindicated that this approach wouldpreserve the aggregate drug costobserved in the claims data, whilesignificantly increasing paymentaccuracy for individual drugs andprocedures by redistributing drug costfrom packaged drugs. Their suggestedapproach would provide a separateoverhead payment for each separatelypayable drug or biological at one ofthree different levels, depending on thepharmacy stakeholders’ assessment ofVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00192 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2the complexity of pharmacy handlingassociated <strong>with</strong> each specific drug orbiological (73 FR 68651 through 68652).Each separately payable drug orbiological HCPCS code would beassigned to one of the three overheadcategories, and the separate pharmacyoverhead payment applicable to thecategory would be made when each ofthe separately payable drugs orbiologicals was paid.In the CY 2010 OPPS/ASC proposedrule (74 FR 35332), we acknowledgedthe limitations of our data and ouravailability to find a method to improvethat data in a way that did not imposeunacceptable administrative burdens onproviders. Accepting that chargecompression was a reasonable butunverifiable supposition, we proposedto redistribute between one-third andone-half of the estimated overhead costassociated <strong>with</strong> coded packaged drugsand biologicals <strong>with</strong> an ASP. Thisproposed redistribution resulted in ourproposal to pay for the acquisition andpharmacy overhead costs of separatelypayable drugs and biologicals that didnot have pass-through payment status atASP+4 percent. We calculated estimatedoverhead cost for coded packaged drugsand biologicals by determining thedifference between the aggregate claimscost for coded packaged drugs andbiologicals <strong>with</strong> an ASP and the ASPdollars (ASP multiplied by the drug’s orbiological’s units in the claims data) forthose same coded drugs and biologicals.This difference was our estimatedoverhead cost for coded packaged drugsand biologicals.In the CY 2010 OPPS/ASC proposedrule (74 FR 35326 through 35333), westated that we believed that betweenone-third and one-half of the estimated$395 million total in pharmacyoverhead costs included in our claimsdata for coded packaged drugs andbiologicals <strong>with</strong> reported ASP data,specifically approximately $150 millionof those costs, should be attributed toseparately payable drugs andbiologicals. We stated that the $150million serves as the adjustment for thepharmacy overhead costs of separatelypayable drugs and biologicals. As aresult, we also proposed to reduce thecosts of coded drugs and biologicals thatare packaged into payment forprocedural APCs to offset the $150million adjustment to payment forseparately payable drugs andbiologicals. In addition, we proposedthat any redistribution of pharmacyoverhead cost that may arise from theCY 2010 final rule <strong>with</strong> comment perioddata would occur only from some drugsand biologicals to other drugs andbiologicals, thereby maintaining the

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74313jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2estimated total cost of drugs andbiologicals that we calculate based onthe charges and costs reported byhospitals on claims and cost reports. Asa result of this approach, noredistribution of cost would occur fromother services to drugs and biologicalsor vice versa.Using our CY 2010 proposed ruledata, and applying our longstandingmethodology for calculating the totalcost of separately payable drugs andbiologicals in our claims compared tothe ASP dollars for the same drugs andbiologicals, <strong>with</strong>out applying theproposed overhead cost redistribution,we determined that the estimatedaggregate cost of separately payabledrugs and biologicals (status indicators‘‘K’’ and ‘‘G’’), including acquisition andpharmacy overhead costs, wasequivalent to ASP¥2 percent.Therefore, under the standardmethodology for establishing paymentfor separately payable drugs andbiologicals, we would have paid forthose drugs and biologicals at ASP¥2percent for CY 2010, their equivalentaverage ASP-based payment rate. Wealso determined that the estimatedaggregate cost of coded packaged drugsand biologicals <strong>with</strong> an ASP (statusindicator ‘‘N’’), including acquisitionand pharmacy overhead costs, wasequivalent to ASP+247 percent.While we had no way of assessingwhether this current distribution ofoverhead cost to coded packaged drugsand biologicals <strong>with</strong> an ASP wasappropriate, we acknowledged in theCY 2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60499 through60518) that the established method ofconverting billed charges to costs hadthe potential to ‘‘compress’’ thecalculated costs to some degree. Further,we recognized that the attribution ofpharmacy overhead costs to packaged orseparately payable drugs and biologicalsthrough our standard drug paymentmethodology of a combined payment foracquisition and pharmacy overheadcosts depends, in part, on the treatmentof all drugs and biologicals each yearunder our annual drug packagingthreshold. Changes to the packagingthreshold may result in changes topayment for the overhead cost of drugsand biologicals that do not reflect actualchanges in hospital pharmacy overheadcost for those products. For thesereasons, we stated that we believedsome portion, but not all, of the totaloverhead cost that is associated <strong>with</strong>coded packaged drugs and biologicals(the difference between aggregate costfor those drugs and biologicals on theclaims and ASP dollars for the samedrugs and biologicals), should, at leastfor CY 2010, be attributed to separatelypayable drugs and biologicals based onour standard methodology.We acknowledged that the observedcombined payment for acquisition andpharmacy overhead costs of ASP¥2percent for separately payable drugs andbiologicals may be too low andASP+247 percent for coded packageddrugs and biologicals <strong>with</strong> reported ASPdata in the CY 2010 claims data may betoo high (74 FR 35327 and 35328). Inaddition, we stated that we believed thatthe pharmacy stakeholders’recommendation to set packaged drugand biological dollars to ASP+6 percentwas inappropriate, given ourunderstanding that an equal allocationof indirect overhead costs amongpackaged and separately payable drugsand biologicals would lead to a higherobserved ASP+X percent than ASP+6percent for packaged drugs andbiologicals. Further, we indicated thatindirect overhead costs that are commonto all drugs and biologicals have norelationship to the cost of an individualdrug or biological or to the complexityof the handling, preparation, or storageof that individual drug or biological.Therefore, we indicated that webelieved that indirect overhead costalone for an inexpensive drug orbiological which would be packagedcould be far in excess of the ASP for thatinexpensive product. We also explainedthat layered on these indirect costs aredirect costs of staff, supplies, andequipment that are directly attributableonly to the storage, handling,preparation, and distribution of drugsand biologicals and which do vary,sometimes considerably, dependingupon the drug being furnished.Therefore, we stated that a middleground would represent the mostaccurate redistribution of pharmacyoverhead cost. Our assumption was thatapproximately one-third to one-half ofthe total pharmacy overhead costcurrently associated <strong>with</strong> codedpackaged drugs and biologicals in theCY 2008 claims data offered a moreappropriate allocation of drug andbiological cost to separately payabledrugs and biologicals (74 FR 35328).One third of the $395 million ofpharmacy overhead cost associated <strong>with</strong>packaged drugs and biologicals was$132 million, whereas one-half was$198 million.Within the one-third to one-halfparameters, we proposed thatreallocating $150 million in drug andbiological cost observed in the claimsdata from coded packaged drugs andbiologicals <strong>with</strong> an ASP to separatelypayable drugs and biologicals for CY2010 would more appropriatelyVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00193 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2distribute pharmacy overhead costamong packaged and separately payabledrugs and biologicals. Based on thisredistribution, we proposed a CY 2010payment rate for separately payabledrugs and biologicals of ASP+4 percent.Redistributing $150 million representeda reduction in cost of coded packageddrugs and biologicals <strong>with</strong> reported ASPdata in the CY 2010 proposed ruleclaims data of 27 percent.We also proposed that anyredistribution of pharmacy overheadcost that may arise from CY 2010 finalrule data would occur only from somedrugs and biologicals to other drugs andbiologicals, thereby maintaining theestimated total cost of drugs andbiologicals in our claims data (noredistribution of cost would occur fromother services to drugs and biologicalsor vice versa) (74 FR 35332). We furtherproposed that the claims data for 340Bhospitals be included in the calculationof payment for drugs and biologicalsunder the CY 2010 OPPS, and thathospitals that participate in the 340Bprogram would be paid the sameamounts for separately payable drugsand biologicals as hospitals that do notparticipate in the 340B program (74 FR35332 through 35333). <strong>Final</strong>ly, weproposed that, in accordance <strong>with</strong> ourstandard drug payment methodology,the estimated payments for separatelypayable drugs and biologicals would betaken into account in the calculation ofthe weight scaler that would apply tothe relative weights for all proceduralservices (but would not apply toseparately payable drugs andbiologicals) paid under the OPPS, asrequired by section 1833(t)(14)(H) of theAct (74 FR 35333).In the CY 2010 OPPS final rule <strong>with</strong>comment period, we adopted atransitional payment rate of ASP+4percent based on a pharmacy overheadadjustment methodology for CY 2010that redistributed $200 million frompackaged drug and biological cost toseparately payable drug cost. We referreaders to the CY 2010 OPPS/ASC finalrule <strong>with</strong> comment period for acomplete discussion of the pharmacyoverhead adjustment methodology (74FR 60499 through 60518). This $200million included the proposed $150million redistribution from thepharmacy overhead cost of codedpackaged drugs and biologicals forwhich an ASP is reported and anadditional $50 million dollars from thetotal uncoded drug and biological costto separately payable drugs andbiologicals as a conservative estimate ofthe pharmacy overhead cost of uncodedpackaged drugs and biologicals thatshould be appropriately associated <strong>with</strong>

74314 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2the cost of separately payable drugs andbiologicals (74 FR 60517). We believedthat our proposal to reallocate $150million of costs from coded packageddrugs and biologicals, or one-third ofthe pharmacy overhead costs of theseproducts, based upon the claims dataavailable for the CY 2010 final rule, toseparately payable drugs and biologicalswas appropriate (74 FR 60511). We alsoacknowledged that, to some unknownextent, there are pharmacy overheadcosts being attributed to the items andservices reported under the pharmacyrevenue code <strong>with</strong>out HCPCS codes thatare likely pharmacy overhead forseparately payable drugs. Therefore, wereallocated $50 million or 8 percent ofthe total cost of uncoded packaged drugand biological cost in order to representthe pharmacy overhead cost of uncodedpackaged drugs and biologicals thatshould be appropriately associated <strong>with</strong>the cost of separately payable drugs andbiologicals. This was an intentionallyconservative estimate as we could notidentify definitive evidence thatuncoded packaged drug and biologicalcost included a pharmacy overheadamount comparable to that of codedpackaged drugs and biologicals <strong>with</strong> anASP. We stated that we could not knowthe amount of overhead associated <strong>with</strong>these drugs <strong>with</strong>out making significantassumptions about the amount ofpharmacy overhead cost associated <strong>with</strong>the drug and biologicals captured bythese uncoded packaged drug costs (74FR 60511 through 60513).We noted that our final CY 2010payment policy for separately payabledrugs and biologicals at ASP+4 percentfell <strong>with</strong>in the range of ASP–3 percent(that would have resulted from nopharmacy overhead cost redistributionfrom packaged to separately payabledrugs and biologicals), to ASP+7percent (that would have resulted fromredistribution of pharmacy overheadcost based on expansive assumptionsabout the nature of uncoded packageddrug and biological cost). We finalizeda policy of redistributing pharmacyoverhead cost from some drugs andbiologicals to other drugs andbiologicals, thereby maintaining theestimated total cost of drugs andbiologicals in our claims data (noredistribution of cost would occur fromother services to drugs and biologicalsor vice versa). We also reiterated ourcommitment to continue in our effortsto refine our analyses.For CY 2011, we continued the CY2010 pharmacy overhead adjustmentmethodology (74 FR 60500 through60512). We determined the total cost ofseparately payable drugs using CY 2009claims data and compared these costs tothe ASP dollars (April 2010 ASPquarterly payment rates multiplied byunits for the separately payable drugsand biologicals in the claims data) forthe same drugs and biologicals. Wedetermined that the total estimatedpayment for separately payable drugsand biologicals (status indicators ‘‘K’’and ‘‘G’’), including acquisition andpharmacy overhead costs, was ASP–1percent, which also would be the ASPbasedpayment rate under the standardmethodology that we established in CY2006 (75 FR 46275). Additionally, wedetermined that the total estimatedaggregate cost for packaged drugs andbiologicals <strong>with</strong> a HCPCS code forwhich manufacturers report ASP data(status indicator ‘‘N’’), includingacquisition and pharmacy overheadcosts, was equivalent to ASP+296percent. <strong>Final</strong>ly, we determined that thetotal estimated cost for both packageddrugs and biologicals <strong>with</strong> a HCPCScode and separately payable drugs andbiologicals (status indicators ‘‘N,’’ ‘‘K,’’and ‘‘G’’) for which we also have ASPdata, including acquisition andpharmacy overhead costs, was ASP+13percent. Consistent <strong>with</strong> oursupposition that the combined paymentfor average acquisition and pharmacyoverhead costs under our standardmethodology may understate the cost ofseparately payable drugs and biologicalsand related pharmacy overhead forthose drugs and biologicals, weredistributed $150 million from thepharmacy overhead cost of codedpackaged drugs and biologicals <strong>with</strong> anASP and redistributed $50 million fromthe cost of uncoded packaged drugs andbiologicals, for a total redistribution of$200 million from costs for coded anduncoded packaged drugs to separatelypayable drugs and biologicals, <strong>with</strong> theresult that we pay separately paid drugsand biologicals at ASP+5 percent for CY2011. The redistribution amount of $150million in overhead cost from codedpackaged drugs and biologicals <strong>with</strong> anASP and $50 million in costs fromuncoded packaged drugs and biologicals<strong>with</strong>out an ASP were <strong>with</strong>in theparameters established in the CY 2010OPPS/ASC final rule. In addition, as inprior years, we described some of ourwork to improve our analyses during thepreceding year, and reiterated ourcommitment to continue to refine ourdrug pricing methodology.b. CY 2012 Payment PolicySection 1833(t)(14)(A)(iii) of the Act,as described above, continues to beapplicable to determining payments forSCODs for CY 2012. This provisionrequires that payment for SCODs beequal to the average acquisition cost forVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00194 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2the drug for that year as determined bythe Secretary, subject to any adjustmentfor overhead costs and taking intoaccount the hospital acquisition costsurvey data collected by the GAO inCYs 2004 and 2005 and later periodicsurveys conducted by the Secretary asset forth in the statute. If hospitalacquisition cost data are not available,section 1833(t)(14)(A)(iii)(II) of the Actrequires that payment be equal topayment rates established under themethodology described in section1842(o) of the Act, section 1847A of theAct (ASP+6 percent as paid forphysician Part B drugs), or section1847B of the Act (CAP), as the case maybe, as calculated and adjusted by theSecretary as necessary. In accordance<strong>with</strong> sections 1842(o) and 1847A of theAct, payments for most Medicare non-OPPS Part B drugs furnished on or afterJanuary 1, 2005, are paid based on theASP methodology. Medicare Part Bdrugs generally fall into three categories:Physician-administered drugs (drugsfurnished incident to a physician’sservice), drugs delivered through DME(drugs furnished under the durablemedical equipment benefit), and drugsspecifically covered by a statutoryprovision (certain oral anti-cancer andimmunosuppressive drugs). Section1833(t)(14)(E)(ii) of the Act authorizes,but does not require, the Secretary toadjust APC weights to take into accountthe 2005 MedPAC report relating tooverhead and related expenses, such aspharmacy services and handling costs.As discussed in V.B.3.a. of this finalrule <strong>with</strong> comment period, since CY2006, we have used ASP data and costsestimated from charges on hospitalclaims data as a proxy for the sum of theaverage hospital acquisition cost thatthe statute requires for payment ofSCODs and the associated pharmacyoverhead cost in order to establish acombined payment rate for acquisitioncost and pharmacy overhead. Prior toCY 2010, we applied this methodologyto payment for all separately payabledrugs and biologicals <strong>with</strong>out passthroughstatus, including both SCODsand other drugs and biologicals that donot meet the statutory definition ofSCODs.For the CY 2010 OPPS, as part of ourongoing efforts to improve the validityof our payments, we revised thestandard methodology to include anadjustment for pharmacy overhead. Asexplained previously, we haveacknowledged, and continue to believe,that the established method ofconverting billed charges to costs hadthe potential to ‘‘compress’’ thecalculated costs to some degree. We

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74315recognized that the attribution ofpharmacy overhead costs to packaged orseparately payable drugs and biologicalsthrough our standard drug paymentmethodology of a combined payment foracquisition and pharmacy overheadcosts depends, in part, on the treatmentof all drugs and biologicals each yearunder our annual drug packagingthreshold. To some unknown extent, webelieve that some pharmacy overheadcosts attributed to packaged drugs andbiologicals may include pharmacyoverhead costs for separately payabledrugs.For the CY 2012 OPPS/ASC proposedrule, we proposed to continue to use ourstandard methodology for determiningthe total cost of separately payable drugsand biologicals in our CY 2010 claimsdata and comparing these costs to theASP dollars (April 2011 ASP quarterlypayment rates multiplied by units forthe separately payable drugs andbiologicals in the claims data) for thesame drugs and biologicals. Wedetermined that the total estimatedpayment for separately payable drugsand biologicals (status indicators ‘‘K’’and ‘‘G’’), including acquisition andpharmacy overhead costs, is ASP–2percent, which also would be the ASP-based payment rate under the standardmethodology that we established in CY2006 (75 FR 46275). Additionally, wedetermined that the total estimatedaggregate cost for packaged drugs andbiologicals <strong>with</strong> a HCPCS code forwhich manufacturers report ASP data(status indicator ‘‘N’’), includingacquisition and pharmacy overheadcosts, is equivalent to ASP+188 percent.<strong>Final</strong>ly, we determined that the totalestimated cost for both packaged drugsand biologicals <strong>with</strong> a HCPCS code andseparately payable drugs and biologicals(status indicators ‘‘N,’’ ‘‘K,’’ and ‘‘G’’)for which we also have ASP data,including acquisition and pharmacyoverhead costs, is ASP+11 percent.Table 31 of the proposed rule (76 FR42260) displays our findings <strong>with</strong> regardto the percentage of ASP in comparisonto the cost for packaged coded drugsand biologicals and for separatelypayable coded drugs and biologicalsbefore application of the proposedoverhead adjustment methodology.<strong>Comment</strong>: Although manycommenters urged CMS to adopt apayment rate for separately payabledrugs that was at least equivalent to theASP+6 payment provided for similardrugs in the physician offices and usedthe methodology described in section1842(o), section 1847A, or section1847B of the Act, commenters weregenerally supportive of our proposal tonot use the standard methodology forestablishing payment in CY 2012. Manycommenters stated that they believecharge compression, which is thehospital practice of attaching a highermark-up to charges for low cost suppliesand a lower mark-up to charges forhigher cost supplies, continues to havea distorting influence on the standardmethodology. <strong>Comment</strong>ers furtherasserted that payment for SCODs that isbased on the standard methodology ofASP¥2 would be far below manyhospitals’ acquisition costs forseparately payable drugs, and may forcehospitals to be unable to provide a fullrange of necessary treatment options.Response: We appreciate thecommenters’ support.Our findings, based on final ruleclaims data, <strong>with</strong> regard to thepercentage of ASP in comparison to thecost for packaged coded drugs andbiologicals and for separately payablecoded drugs and biologicals beforeapplication of the proposed overheadadjustment methodology is displayed inTable 37 below.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00195 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74316 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2We acknowledge that the combinedpayment for average acquisition andpharmacy overhead costs under ourstandard methodology may understatethe cost of separately payable drugs andbiologicals and related pharmacyoverhead for those drugs andbiologicals. Specifically, we recognizethat payment at ASP¥2 percent forsuch costs may not be sufficient. Wealso acknowledge that ASP+188 percentmay overstate the combined acquisitionand pharmacy overhead cost ofpackaged drugs and biologicals.Therefore, in the CY 2012 OPPS/ASCproposed rule (76 FR 42260 through42262), we proposed to continue the CY2010 and CY 2011 overhead adjustmentmethodology, as first implemented inthe CY 2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60501 through60517), which redistributes $200million in cost from packaged drugs<strong>with</strong> an ASP and uncoded packageddrugs.For CY 2012, we proposed to continueto make an overhead adjustment foranother year because we believed it wasappropriate to account for inflation thathas occurred since the overheadVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00196 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2redistribution amount of $200 millionwas applied in CY 2011. Therefore, weproposed to apply an inflationallowance to account for inflation andchanges in the prices of pharmaceuticalsin the overall economy. We proposed toadjust the overhead redistributionamount of $200 million using the PPIfor Pharmaceuticals for Human Use. ThePPI for Pharmaceuticals for Human Use(Prescription) (Bureau of Labor Statistics(BLS) series code WPUSI07003),provided through CMS’ Office of theActuary (OACT), is a price series thatreflects price changes associated <strong>with</strong>ER30NO11.063

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74317jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2the average mix of all pharmaceuticalsin the overall economy. We refer to thisseries generally as the PPI forPrescription Drugs. We believe that thisprice series is appropriate to use toupdate the overhead redistributionamount because the PPI for PrescriptionDrugs is publicly available and regularlypublished and because we havesuccessfully utilized the PPI forPrescription Drugs for the past 5 yearsto update the drug packaging thresholdas described in section V.B.2.a. of thisfinal rule <strong>with</strong> comment period.In order to apply the inflationallowance to the overhead redistributionamount for CY 2012, we used the mostrecent forecast of yearly index levels forthe PPI for Prescription Drugs tocalculate an updated overheadredistribution amount. After adjustingthe $200 million overheadredistribution amount for inflation usingthe PPI for Prescription Drugs, wedetermined that $161 million wouldneed to be redistributed from codedpackaged drugs and biologicals <strong>with</strong>reported ASP data and $54 millionwould need to be redistributed from thecost of uncoded packaged drugs andbiologicals <strong>with</strong>out an ASP to separatelypayable drugs and biologicals. Theproposed redistribution amount of $161million in overhead cost from codedpackaged drugs and biologicals is<strong>with</strong>in the redistribution parametersestablished in the CY 2010 OPPS/ASCfinal rule <strong>with</strong> comment period ofroughly one-third to one-half ofoverhead cost in coded packaged drugsand biologicals. The total proposedredistribution amount from both codedand uncoded packaged drugs andbiologicals to separately paid drugs andbiologicals would therefore be $215million.Having determined to redistributeoverhead, in the proposed rule, we alsocontinued to believe that themethodology to redistribute a portion ofdrug overhead cost from packagedcoded and uncoded drugs andbiologicals to separately payable drugsand biologicals while keeping the totalcost of drugs and biologicals in theclaims data constant continued to beappropriate for the reasons set forth inthe CY 2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60501 through60517). Therefore, for CY 2012, weproposed to redistribute a total overheadredistribution amount, adjusted forinflation, of $215 million from codedand uncoded packaged drugs andbiologicals to separately payable drugsand biologicals.In the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period, we reallocated$150 million in overhead cost fromcoded packaged drugs and biologicals<strong>with</strong> an ASP to separately payable drugsand biologicals <strong>with</strong> an ASP, or onethirdof the pharmacy overhead cost ofthese products based upon the claimsdata available for the CY 2010 final rule.In addition, we noted that some of thecost associated <strong>with</strong> uncoded packageddrugs and biologicals was appropriate toredistribute to separately payable drugsand biologicals. Therefore, we made aconservative estimate, as compared <strong>with</strong>the case of coded packaged drugs andbiologicals <strong>with</strong> an ASP for which wehad a specific pharmacy overhead costestimate in relationship to their knownASPs, and reallocated $50 million, or 8percent of the total cost of uncodedpackaged drugs and biologicals <strong>with</strong> noASP. We made the assumption thatwhatever pharmacy overhead costinappropriately associated <strong>with</strong>uncoded packaged drugs and biologicalswould not be less than 8 percent of totaluncoded drugs and biologicals cost.In the CY 2012 OPPS/ASC proposedrule, we noted that continuing toredistribute $200 million (or $215million <strong>with</strong> the adjustment forinflation) falls <strong>with</strong>in the parametersoriginally established in the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod. A redistribution amount of $161million in overhead cost from codedpackaged drugs and biologicals <strong>with</strong> anASP or approximately 35 percent falls<strong>with</strong>in one-third to one-half of theestimated pharmacy overhead cost. Inaddition, we noted that a redistributionamount of $54 million in overhead costfrom uncoded packaged drugs andbiologicals, or approximately 11percent, is not less than 8 percent of thetotal cost of uncoded packaged drugsand biologicals. Therefore, our proposalto redistribute $215 million is consistent<strong>with</strong> the overhead adjustmentmethodology first implemented in CY2010. We continue to believe that amiddle ground of approximately onethirdto one-half of the total pharmacyoverhead cost currently associated <strong>with</strong>coded packaged drugs and biologicals inthe CY 2010 claims data represents themost accurate redistribution ofpharmacy overhead cost.In the CY 2012 OPPS/ASC proposedrule, we estimated the overhead cost forcoded packaged drugs to be $544million ($705 million in total cost forcoded packaged drugs and biologicals<strong>with</strong> a reported ASP, less $161 millionin total ASP dollars for coded packageddrugs and biologicals <strong>with</strong> a reportedASP). As we did in CY 2010 and CY2011, we proposed for CY 2012 that anyredistribution of pharmacy overheadcost would occur only among drugs andbiologicals in our claims data, and thatVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00197 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2no redistribution of cost would occurfrom other services to drugs andbiologicals or vice versa. We believe thatredistributing $215 million frompackaged to separately payable drugsand biologicals, which includes anadjustment for inflation, is anappropriate redistribution of pharmacyoverhead costs to address any chargecompression in the standardmethodology. We indicated that thiswould result in a proposed CY 2012payment rate for separately payabledrugs and biologicals of ASP+4 percent.We noted that, in past years, theproposed ASP+X amount decreased byat least 1 percentage point when weupdated the ASP data, claims data, andcost report data between the proposedrule and the final rule <strong>with</strong> commentperiod.As indicated in Table 31 of theproposed rule (76 FR 42260), if we wereto propose to establish payment forseparately payable drugs and biologicalsunder the standard methodologyestablished in CY 2006 <strong>with</strong>outapplying a pharmacy overheadadjustment, we would have had topropose to pay for separately payabledrugs and biologicals at ASP¥2percent. However, because we areconcerned about the possibility ofunderpaying for separately payabledrugs and biologicals, we believe that apharmacy overhead adjustment using aredistribution methodology fordetermining the amount of payment fordrugs and biologicals, as we did for CY2011, is appropriate for CY 2012. Weacknowledge that the observed ASP¥2percent may reflect some amount ofcharge compression and variabilityattributable to the choice of a packagingthreshold. We displayed the effect ofthis proposed adjustment paymentmethodology in Table 32 of theproposed rule (76 FR 42262).<strong>Comment</strong>: The majority ofcommenters urged CMS to adopt anASP+X amount that is higher thanASP+4 for CY 2012. Many commentersstated that CMS should simply adoptthe default payment rate of ASP+6percent for CY 2012, rather than use theredistribution methodology proposed inthe CY 2012 OPPS/ASC proposed rule.Noting that section 1833(t)(14)(A) of theAct requires CMS to pay for separatelypayable drugs at a rate that is equal tothe average acquisition cost for the drugfor a year, as determined by the GAO orCMS surveys of hospital acquisitioncost, and that the most recent surveyavailable is ‘‘outdated’’ because it wasperformed in CY 2004 by the GAO, thecommenters urged CMS to pay forseparately payable drugs at ASP+6percent or the rate applicable in the

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274318 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsphysician’s office setting. Thecommenters stated that CMS has theauthority to pay for separately payabledrugs at ASP+6 percent under thestatute. Many of these commenterssuggested that CMS discontinue the useof the standard methodology and theoverhead redistribution methodology,and instead use the default payment rateof ASP+6 percent, as is given byCongress in statute.Response: While the commenters arecorrect that the statute provides for theuse of the methodology described insection 1842(o), section 1847A, orsection 1847B of the Act, as the casemay be, as calculated and adjusted bythe Secretary as necessary, paymentunder these provisions for a SCOD isrequired only when the average hospitalacquisition cost for the drug for thatyear are unavailable (which at theoption of the Secretary may vary byhospital group (as defined by theSecretary based on the volume ofcovered OPD services or other relevantcharacteristics)), as determined by theSecretary taking into account thehospital acquisition cost survey dataunder subparagraph (D). We continue tobelieve that we have established bothour hospital claims data and ASP dataas an appropriate proxy for averagehospital acquisition cost, taking theGAO survey information into accountfor the base year (70 FR 68641). Manyof the drugs and biologicals coveredunder the OPPS are provided a majorityof the time in the hospital setting, andwe believe that the ASP information wecollect is an adequate proxy for hospitalacquisition cost. Further, thecommenters have not disputed theaccuracy of the total drug and biologicalcost estimated in our claims data, onlythe estimated cost of separately payabledrugs and biologicals. We continue tobelieve that average sales prices forseparately paid drugs and biologicalsrepresent a generally appropriate sourceof hospital average acquisition cost fordrugs and biologicals. As we stated inthe CY 2006 OPPS final rule, we intendfor the quarterly updates of theASP-based payment rates for separatelypaid drugs and biologicals to function asthe surveys of hospital acquisition coststhat are required by section1833(t)(14)(D)(ii) of the Act (70 FR68641). Prices calculated using the ASPmethodology account for sales to allpurchasers, and are net of mostdiscounts, nominal sales, and othersales that are otherwise exempt from theMedicaid Best Price calculations. Giventhat purchase price generally equalssales price for any transaction, webelieve that the ASP is an accurateproxy for hospitals’ average acquisitioncost for separately paid drugs andbiologicals. Therefore, we disagree thatwe are not complying <strong>with</strong> the statuteby not performing a survey and notpaying at the physician’s office rate. Forthe reasons explained above, we do notbelieve that it is appropriate at this timeto provide payment at an amount otherthan average acquisition cost based onthe drug and biological costs observedin hospital claims data and pricinginformation observed in ASP data, asadjusted <strong>with</strong> a redistribution forpharmacy overhead.<strong>Comment</strong>: One commenter stated thatthe statute requires that CMS makepayment for SCODs at ASP+6 percent,citing that cost data derived from claimsdata cannot accurately be said to equalaverage acquisition cost. Thecommenter noted that CMS’methodology in using claims datareduced by CCRs to derive proxies forhospital costs is a methodologydependent on assumptions about therelationship between charges and costsand, therefore, does not typify actualhospital costs for drugs and biologicals.These cost data, the commenter argued,therefore cannot equal averageacquisition cost for drugs andbiologicals.Response: As we discussed in theresponse to the previous comment, webelieve that ASP is an appropriate proxyfor the acquisition cost of drugs. Withrespect to establishing the totalestimated cost of drugs and biologicals,including both pharmacy overhead andacquisition cost of drugs andbiologicals, we use hospital charges andcost report data. We believe that ourclaims data and cost report data providethe best estimate of the nationalaggregate total cost of drugs andbiologicals. We do not believe that thismethodology for estimating the totalcost of drugs and biologicals, includingpharmacy overhead cost, is based onassumptions about costs and charges,but the actual relationship betweencosts and charges for the same hospitalfor the same services. We estimate costsfrom charges submitted on claims forpayment, and cost and chargeinformation from cost report data thatare certified to be correct by thehospital. We note that we view the ASPdata, not the cost data, to be theappropriate proxy for hospitalacquisition cost for drugs andbiologicals, <strong>with</strong>out pharmacy overheadcosts, while the cost of drugs andbiologicals that we estimate from claimsand cost report data is the only sourceof the total cost of drugs and biologicals,that includes both pharmacy overheadand acquisition cost.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00198 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2<strong>Comment</strong>: MedPAC remainedconcerned about our policy of settingpayment rates for drugs and biologicalsas a percentage of ASP because, asMedPAC stated, pharmacy overhead, asa percentage of total costs, varies widelyacross individual drugs. MedPACpreviously had recommended that CMScollect data on hospitals’ pharmacyoverhead costs separately from drugacquisition costs and that these datacould be used to create separatepayment to hospitals for pharmacyoverhead and drug acquisition costs.Response: While we acknowledge thatpharmacy overhead varies by the drugto which it applies, we believe that aslong as payment is distributed amonghospitals in a manner that, on average,reflects relative costs of drugs andbiologicals they furnish, includingpharmacy overhead, the goals of theOPPS are met as it is a system ofaverages. With regard to the commentthat CMS should collect data onhospitals’ pharmacy overhead costsseparately from drug acquisition costsand that these data could be used tocreate separate payment to hospitals forpharmacy overhead and drugacquisition costs, as we discussed indetail above, we proposed to createHCPCS codes for pharmacy overheadservices so that hospitals could chargefor these services and provide us a basisfor making separate payments forpharmacy overhead. However, hospitalsstrongly objected and providedconvincing arguments that to do sowould impose an enormous burden onthem and on other payers that wouldnot provide an offsetting benefit. Webelieve that hospitals would find anyoption requiring them to identify thecost associated <strong>with</strong> the overheadcomponent of a drug or biological or aclass of drugs or biologicals burdensomeand imprecise.<strong>Comment</strong>: A few commentersexpressed concern that when CMSapplies a single CCR to adjust charges tocosts for drugs and biologicals, chargecompression leads to misallocation ofpharmacy overhead costs associated<strong>with</strong> high and low cost drugs andbiologicals during ratesetting. Thecommenters noted that hospitalsdisproportionately mark up theircharges for low cost drugs andbiologicals to account for pharmacyoverhead costs. Therefore, somecommenters suggested using the costs ofboth packaged drugs and separatelypayable drugs when calculating theequivalent average ASP-based paymentamount for separately payable drugs.They argued that this would provide amore accurate ASP-based paymentamount for separately payable drugs. As

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74319jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2an alternative, the commentersrecommended that CMS eliminate thedrug packaging threshold and provideseparate payment for all Part B drugsunder the OPPS at an ASP+X percentamount calculated from the cost for alldrugs <strong>with</strong> HCPCS codes.Several commenters objected to theinclusion of data from hospitals thatreceive Federal discounts on drug pricesunder the 340B program in the ASPcalculation for separately payable drugsand biologicals. The commenterspointed out that hospital participationin the 340B program had grownsubstantially over the past few years,and will further increase due to theprovisions in the Affordable Care Act.The commenters believed that the costsfrom these hospitals now constituted asignificant proportion of hospital drugcosts on CY 2010 OPPS claims. Thecommenters stated that including 340Bhospital claims data when comparingaggregate hospital costs based on claimsdata to ASP rates contributed to anartificially low equivalent average ASPbasedpayment rate because ASP dataspecifically exclude drug sales underthe 340B program.In addition, MedPAC encouragedCMS to exclude data from 340Bhospitals from the ratesetting. MedPACstated that analysis indicates thatexclusion of the 340B hospitals wouldincrease CMS’ estimates of the cost ofseparately paid drugs by about 3.5percent above the estimate obtainedwhen the 340B hospital claims data areincluded in the ratesetting calculationsand that excluding the 340B hospitalclaims data would result in paymentrates for separately paid drugs that moreaccurately reflect the costs incurred byother hospitals.Response: In proposing to continueour CY 2010 overhead adjustmentmethodology for CY 2012, we attemptedto address the issue of chargecompression by redistributing someportion of the estimated overhead costequivalent to the CY 2011 redistributionamount indexed for the increase in thePPI for Prescription Drugs for codedpackaged drugs ($161 million), and aconservative estimate of overhead costin the uncoded packaged drug cost ($54million). Further, we have made severalproposals in the past to more preciselyidentify pharmacy overhead costs and toaddress charge compression in thepharmacy revenue center, which werenot finalized due to objections raised inpublic comments. As we noted in ourdiscussion of the MedPAC commentabove, for the CY 2006 OPPS, weproposed to establish three distinctLevel II HCPCS C-codes and threecorresponding APCs for drug handlingcategories to differentiate overhead costsfor drugs and biologicals (70 FR 42730).In the CY 2008 OPPS/ASC proposedrule (72 FR 42735), we proposed toinstruct hospitals to remove thepharmacy overhead charge for bothpackaged and separately payable drugsand biologicals from the charge for thedrug or biological and report thepharmacy overhead charge on anuncoded revenue code line on theclaim. We believed that this wouldprovide us <strong>with</strong> an avenue for collectingpharmacy handling cost data specific todrugs in order to package the overheadcosts of these items into the associatedprocedures, most likely drugadministration services. However, wedid not finalize these proposals due tostrong objection from hospitals. For CY2009, we proposed to split the ‘‘DrugsCharged to Patients’’ cost center intotwo cost centers: One for drugs <strong>with</strong>high pharmacy overhead costs and onefor drugs <strong>with</strong> low pharmacy overheadcosts (73 FR 41492). We noted that weexpected that CCRs from the proposednew cost centers would be available in2 to 3 years to refine OPPS drug costestimates by accounting for differentialhospital markup practices for drugs<strong>with</strong> high and low overhead costs.However, we did not finalize any ofthese proposals due to concerns fromthe hospital community that theseproposals would create anoverwhelming burden on hospitals andstaff. By proposing to continue our CY2010 overhead adjustment methodology,we were once again attempting toaddress the issue of charge compression<strong>with</strong>out requiring any changes tocurrent hospital reporting practices.It has been our policy since CY 2006to only use separately payable drugs andbiologicals in the calculation of theequivalent average ASP-based paymentamount under the OPPS. We do notinclude packaged drugs and biologicalsin this standard analysis because costdata for these items are alreadyaccounted for <strong>with</strong>in the APCratesetting process through the mediancost calculation methodology discussedin section II.A. of this final rule <strong>with</strong>comment period. To include the costs ofcoded packaged drugs and biologicals inboth our APC ratesetting process (forassociated procedures present on thesame claim) and in our ratesettingprocess to establish an equivalentaverage ASP-based payment amount forseparately payable drugs and biologicalswould give these data disproportionateemphasis in the OPPS by skewing ouranalyses, as the costs of these packageditems would be, in effect, counted twice.Accordingly, we are not adopting theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00199 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2suggestion from commenters that weinclude all packaged and separatelypayable drugs and biologicals whenestablishing an equivalent average ASPbasedrate to provide payment for thehospital acquisition and pharmacyhandling costs of drugs and biologicals.However, we remind commenters thatbecause the costs of packaged drugs andbiologicals, including their pharmacyoverhead costs, are packaged into thepayment for the procedures in whichthey are administered, the OPPSprovides payment for both the drugsand the associated pharmacy overheadcosts through the applicable proceduralAPC payments.Furthermore, we disagree <strong>with</strong> thecommenters who recommended that weshould pay separately for all drugs andbiologicals <strong>with</strong> HCPCS codes. Wecontinue to believe that packaging is afundamental component of aprospective payment system thatcontributes to important flexibility andefficiency in the delivery of high qualityhospital outpatient services. Therefore,we believe it is appropriate to maintaina modest drug packaging threshold thatpackages the costs of inexpensive drugsinto payment for the associatedprocedures. We also note that hospitalshave been particularly sensitive to anyincreased administrative burden, andwe are aware that the burden of separatereporting for a multitude of very lowcost packaged drugs is significant.With respect to the comment that weshould not include data from hospitalsthat receive discounts on outpatientdrug prices under the 340B program inour estimation of the total cost ofseparately paid drugs and biologicalsand pharmacy overhead, as we stated inthe CY 2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60517) and theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 71963), wecontinue to believe that excluding datafrom hospitals that participate in the340B program from our ASP+Xcalculation, and paying those hospitalsat that derived payment amount, wouldinappropriately redistribute payment todrugs and biologicals from payment forother services under the OPPS. TheASP-equivalent cost of drugs under theOPPS that would be calculated onlyfrom claims data for hospitals that donot participate in the 340B program,would likely be higher than the cost ofall drugs from our aggregate claims fromall hospitals. To set drug payment ratesfor all hospitals based on a subset ofhospital cost data, determined only fromclaims data from hospitals that do notparticipate in the 340B program wouldincrease the final APC payment weightsfor drugs in a manner that does not

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274320 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsreflect the drug costs of all hospitals,although all hospitals, including 340Bhospitals, would be paid at these ratesfor drugs. Furthermore, as aconsequence of the statutoryrequirement for budget neutrality,increasing the payment weights fordrugs by excluding 340B hospital claimswould reduce the relative paymentweight for other services in a mannerthat does not reflect the procedural costsof all hospitals relative to the drug costsof all hospitals, thereby distorting therelativity of payment weights forservices based on hospital costs. Manycommenters on the CY 2009 OPPS/ASCfinal rule <strong>with</strong> comment period weregenerally opposed to differentialpayment for hospitals based on their340B participation status, and we do notbelieve it would be appropriate toexclude claims from this subset ofhospitals in the context of a CY 2012drug and biological payment policy thatis based on average acquisition cost andpays all hospitals at the same rate forseparately payable drugs andbiologicals.<strong>Comment</strong>: One commenter requestedthat CMS provide more informationregarding the outcomes of the analysisreferenced in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71962) finding that matching the ASPdata <strong>with</strong> the time of the cost reportwould remove a downward bias in thestandard methodology, but that theupward bias of later charges from claimsgenerally offsets the increases in pricesin a more recent ASP file. Thecommenter further stated that theybelieved the use of later ASP data in afinal rule may be directly attributable tothe tendency of the relationshipbetween ASP and total costs ofseparately payable drugs to decline by 1percentage point in the final rule.Response: We are uncertain whatadditional information the commentersare seeking regarding our finding in theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period that the slightly higherestimated cost created by using a CCRfrom the year prior to the claim yeargenerally offsets the increases in pricesin a more recent ASP file (75 FR 71962).However, as described below, in ouranalysis of the ASP+X methodology forthis CY 2012 final rule <strong>with</strong> commentperiod, we have found that a primarycause in the decline of themethodologically-derived ASP+Xpercent is the inclusion of a wholeyear’s data for the final rule whilekeeping the drug overheadredistribution amount constant, and notthe use of later ASP data, as thecommenter suggested. Had we finalizedour proposed redistributionmethodology <strong>with</strong>out modification inCY 2012, this would have again yieldeda 1 percent decline, from ASP+4 toASP+3, in the final CY 2012 ASP+Xpercent.<strong>Comment</strong>: A few commentersrecommended that CMS requirehospitals to bill all drugs <strong>with</strong> HCPCScodes under revenue code 0636 in orderto improve its data on packaged drugs.The commenter also recommended thatCMS require hospitals to report J3490(Unclassified drugs) for drugs <strong>with</strong>out aHCPCS code. One commenter assertedthat requiring that hospitals take theseadditional steps for packaged drugscould occur <strong>with</strong> minimal additionaladministrative burden to hospitals sincehospitals are now required to reportnational drug codes (NDCs) to StateMedicaid programs. Other commentersasked that CMS require mandatoryreporting of all drugs using eitherspecific HCPCS codes or J3490, and thatCMS should leave the choice of therevenue code that must be reported onthe line to the discretion of the hospital.Response: We did not propose torequire hospitals to report all drugs andbiologicals using HCPCS codes andreport drugs and biologicals that do nothave specific HCPCS codes usingHCPCS code J3490 for the CY 2012OPPS. Therefore, we do not accept thecommenters’ recommendation that CMSrequire these products to be reported.We do not believe that it would beappropriate to impose such arequirement <strong>with</strong>out first proposing itand considering the comments of thepublic.However, we continue to believe thatOPPS ratesetting is most accurate whenhospitals report charges for all itemsand services that have HCPCS codesusing those HCPCS codes, regardless ofwhether payment for the items andservices is packaged. As we state in thisfinal rule <strong>with</strong> comment period, it is ourstandard ratesetting methodology to relyon hospital cost report and chargeinformation as it is reported to usthrough the claims data. We continue tobelieve that more complete data fromhospitals identifying the specific drugsthat were provided during an episode ofcare will improve payment accuracy forseparately payable drugs in the future.Therefore, we continue to encouragehospitals to change their reportingpractices if they are not alreadyreporting HCPCS codes for all drugs andbiologicals furnished, where specificHCPCS codes are available for thosedrugs and biologicals.<strong>Comment</strong>: Several commenterscharacterized our proposedredistribution methodology as arbitraryin nature, in part because CMS does notVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00200 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2truly know the amount of overhead tomove for the proposed overheadadjustment. A few commentersgenerally agreed <strong>with</strong> CMS’ proposal toredistribute pharmacy overhead costfrom packaged drugs and biologicals toseparately payable drugs andbiologicals. However, severalcommenters expressed concern that,under this methodology, the projectedCY 2012 ASP+X amount of ASP+4percent may decline to ASP+3 percentin the final rule <strong>with</strong> comment period.The commenters reasserted their beliefthat payment at less than ASP+6 percentis insufficient for payment for separatelypayable drugs and biologicals.Several commenters supported thepayment of ASP+6 percent forseparately paid drugs and biologicalsand the redistribution methodology on awhole, but did not support the proposedredistribution amount of $215 millionfrom packaged drugs and biologicals($161 million from coded packageddrugs and biologicals and $54 millionfrom uncoded packaged drugs andbiologicals). A majority of commentersrecommended that CMS increase theamount redistributed from coded anduncoded packaged drugs and biologicalsto separately payable drugs andbiologicals. A few of these commentersstated that a larger portion of theoverhead costs should be reallocatedfrom uncoded packaged drugs andbiologicals to separately payable drugsand biologicals, noting that coded anduncoded drugs and biologicals havesimilar overall charge mark-up and,therefore, warrant a similarredistribution of costs. Severalcommenters recommended that an equalor close to equal amount of cost shouldbe redistributed from packaged codedand uncoded drug and biological cost toseparately payable drugs andbiologicals.Response: We are not convinced bythe commenters that we should payseparately paid drugs and biologicals atASP+6 percent or higher for CY 2012.We disagree <strong>with</strong> commenters’assertions that payment at less thanASP+6 percent would be insufficient toadequately pay for the costs ofseparately paid drugs and biologicalsbecause our review of claims and costreport data provides no evidence thatsupports that payment at less thanASP+6 percent is insufficient to payadequately for the costs of separatelypaid drugs and biologicals. To thecontrary, the utilization of drugs andbiologicals continues to increase. Inaddition, we note that payment forpharmacy overhead is not only paidthrough payment for specificallyidentified drugs and biologicals, but

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74321jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2pharmacy overhead payment also ispackaged into payment for theprocedure in which the cost of packageddrugs and biologicals is included. Whena separately paid drug or biological isfurnished during a procedure, pharmacyoverhead is being paid both through theASP+X percent payment for theseparately paid drug and biological and,to some extent, in the payment for theprocedure, because the APC paymentfor any procedure includes the cost ofpackaged drugs and the overhead costassociated <strong>with</strong> those packaged drugsand biologicals.Although several commentersrecommended that CMS reallocate alarger portion of the estimatedpharmacy overhead costs from packageddrugs to separately payable drugs for CY2012 under the overhead adjustmentmethodology, and other commentersargued that we should redistribute anequal or nearly equal amount of costfrom both packaged drugs andbiologicals <strong>with</strong> HCPCS codes andpackaged drugs and biologicals <strong>with</strong>outHCPCS codes, for the reasons set forthbelow and consistent <strong>with</strong> our rationaleoutlined in the CY 2010 OPPS/ASCfinal rule <strong>with</strong> public comment period(74 FR 60511 through 60512) and theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 71955), we donot believe that we should redistributea higher portion of drug cost from codedpackaged drugs and biologicals, nor canwe assume that uncoded packageddrugs and biologicals have the same orhigher pharmacy overhead costs ascoded packaged drugs and biologicals.Therefore, we do not believe that we cantreat them comparably for purposes ofestimating overhead. With regard toredistributing more from uncodedpackaged drugs and biologicals, first, asindicated in the preamble to the CY2011 OPPS/ASC proposed rule (75 FR46277 through 46278), conversations<strong>with</strong> stakeholders and hospitals havesuggested that hospitals do not alwaysreport HCPCS codes for drugs for avariety of reasons. A key premise of thepharmacy overhead adjustmentredistribution methodology is ourassessment of the amount of drug costin the claims data above aggregate ASPavailable as ‘‘overhead’’ forredistribution. Knowing the specificHCPCS codes for packaged drugs andtheir associated ASP allows us to assessthe difference between the aggregateASP and claims cost for packaged drugsand to assess the intensity of pharmacyoverhead associated <strong>with</strong> these drugs.The inability to know which drugs arecaptured by uncoded drug charges on aclaim is challenging because we cannotknow the hospitals’ charges for the drug,which include overhead costs, or whatthe overhead complexity may be.Therefore, we cannot be certain that theamount of uncoded pharmacy overheadcosts is as high as the public hassuggested or that hospitals mark upthese uncoded drugs and biologicals inthe same way as packaged drugs andbiologicals <strong>with</strong> HCPCS codes. Second,we continue to believe that theinformation supplied to us bycommenters urging us to redistribute agreater (or equivalent) fraction of costsfor uncoded packaged drugs andbiologicals is insufficient to enable us toisolate the portion of the uncodedpackaged drug and biological cost thatis pharmacy overhead cost. In order toisolate the portion of uncoded packageddrug and biological cost that ispharmacy overhead cost, we believe thatwe would need more drug specificinformation reported to us by hospitals,either through more reporting ofpackaged drugs on claims or throughmore granular cost centers on the costreport. In addition, we note that in ourpreparation for the CY 2011 rulemakingcycle, and as indicated in the CY 2011OPPS/ASC proposed rule, we have alsoevaluated claims data in an effort toassess how much uncoded packageddrugs resemble coded packaged drugs(75 FR 46278). We found that mostuncoded packaged drug costs appear<strong>with</strong> surgical services and that mostcoded packaged drug costs appear <strong>with</strong>medical services. In light of thisinformation, we are not confident thatthe drugs captured by uncoded drugcosts are the same drugs captured by thecoded packaged drug cost. Therefore,we do not agree that we can assume thatthey are the same drugs, <strong>with</strong>comparable overhead and handlingcosts. Without being able to calculate anASP for these drugs and <strong>with</strong>out beingable to gauge the magnitude of theoverhead complexity associated <strong>with</strong>these drugs, we do not believe weshould assume the same or a greaterproportional overhead is appropriate forredistribution. Third, we also disagree<strong>with</strong> the commenter’s assertions thatpharmacy services and overhead costsfor all uncoded packaged drugs aresimilar to the costs associated <strong>with</strong>coded packaged drugs and are asufficient basis for redistributing equalor close to equal amount of dollars fromuncoded packaged drugs as from codedpackaged drugs to separately paid drugsunder this overhead adjustment policy.This would be contrary to findings fromMedPAC in Chapter 6 of its June 2005Report to Congress that linked overheadto the seven complexity categories ofVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00201 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2delivery; this report can be viewed onthe MedPAC Web site at: http://www.medpac.gov/publications%5Ccongressional_reports%5CJune05_ch6.pdf. As we have stated elsewhere,we remain committed to using hospitaldata as reported to us by hospitals to setOPPS payment rates. Therefore, wecontinue to believe that it would beinappropriate to assume that the costsreported under uncoded pharmacyrevenue code lines are for the samedrugs and biologicals <strong>with</strong> the sameASPs, as the costs of packaged drugsand biologicals reported <strong>with</strong> HCPCScodes. Therefore, for the reasons setforth above, we continue to believe thatwe should not make broad assumptionsthat the same overall charge markupexists for both coded and uncodedpackaged drugs or that we shouldredistribute a similar or greater amountof cost from both coded and uncodedpackaged cost to separately payabledrugs and biologicals.We also do not agree that ourpharmacy overhead adjustmentmethodology is arbitrary. The basis forthe proposed and final CY 2012pharmacy overhead adjustmentmethodology is the same as our CY 2011and 2010 final rules, but <strong>with</strong> onerefinement for this final rule <strong>with</strong>comment period to enhance the intrarulemakingstability of the ASP+Xamount, as described below. As westated in our CY 2010 proposed rule, weremain concerned that the ASP valuederived using the standard methodologyhas the potential to ‘‘compress’’ costs forrelatively high-cost products, includingSCODs, due to hospital chargingpractices, and thus may understate thecost of separately payable drugs andbiologicals and related pharmacyoverhead for those drugs andbiologicals. We cited the relatively lowCY 2010 ASP value of ASP¥2 forseparately covered drugs and biologicalsand the relatively high ASP value ofASP+247 for packaged drugs andbiologicals as evidence of thisdistortion. We further stated that webelieve that, according industrystakeholders and MedPAC,approximately $150 million of handlingand pharmacy overhead cost for codedpackaged drugs, and approximately $50million of costs attributed to pharmacyoverhead cost for uncoded packageddrugs were appropriate to redistribute toseparately payable drugs in CY 2010.We believed, and continue to believe,that between approximately one-thirdand one-half of the overhead costassociated <strong>with</strong> coded packaged drugscould be attributable to chargecompression due to our cost estimation

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274322 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsmethodology and our choice of apackaging threshold. In addition,redistributing $50 million of the totalcost associated <strong>with</strong> uncoded packageddrugs and biologicals to separatelypayable drugs and biologicals falls inthe approximate 8 percent range of totaluncoded drug and biological costs usingCY 2009 claims and the most recentlyavailable cost report data. This is aconservative estimate as we remainunwilling to make sweepingassumptions that uncoded packageddrugs and biologicals included apharmacy overhead amount comparableto those of coded packaged drugs andbiologicals <strong>with</strong> an ASP. Using ourstandard methodology to calculate ASPvalues in the CY 2011 OPPS/ASCproposed rule, we again found arelatively low ASP value for separatelypayable drugs and biologicals (ASP+0),and a relatively high ASP value forpackaged drugs and biologicals(ASP+283). Thus, in the CY 2011 OPPSfinal rule <strong>with</strong> comment period (75 FR71953 through 71967), we againfinalized our proposed redistributionmethodology, and redistributed $200million in pharmacy overhead costsfrom packaged to separately payabledrugs and biologicals. We note that ourproposed CY 2012 policy ofredistributing $161 million in overheadfrom coded packaged drugs andbiologicals <strong>with</strong> an ASP, or 35 percent,falls <strong>with</strong>in the one-third to one-half ofthe estimated pharmacy overhead costin coded packaged drugs andbiologicals. The CY 2010 policy forredistributing $150 million from codedpackaged drugs and biologicals toseparately payable drugs and biologicalswas based on our assessments usingboth industry and MedPAC data (74 FR60505 through 60507). We believed andcontinue to believe that betweenapproximately one-third and one-half ofthe overhead cost in coded packageddrugs could be attributable to chargecompression due to our cost estimationmethodology and our choice of apackaging threshold.The proposed CY 2012 policy ofredistributing $53 million of the totalcost of uncoded packaged drugs andbiologicals to separately payable drugsand biologicals, or approximately11 percent in overhead cost fromuncoded packaged drugs andbiologicals, falls into the parameter ofnot less than 8 percent of cost associated<strong>with</strong> these items, as discussed in the CY2010 OPPS/ASC final rule <strong>with</strong>comment period. Further, as weindicated in the CY 2010 OPPS/ASCfinal rule <strong>with</strong> comment period, theproportion of uncoded packaged drugcost that is redistributed is aconservative estimate, as compared tothe case of coded packaged drugs andbiologicals <strong>with</strong> an ASP and for whichwe have a specific pharmacy overheadcost estimate in relationship to theirknown ASPs. As discussed in the CY2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60511), weremain unwilling to make sweepingassumptions that uncoded packageddrug and biological cost included apharmacy overhead amount comparableto those of coded packaged drugs andbiologicals <strong>with</strong> an ASP. We continue tobe confident that a conservativeestimate of approximately 11 percent (or$54 million for redistribution in theproposed rule) from the cost of uncodedpackaged drugs and biologicals toseparately payable drugs and biologicalsis an appropriate amount in light of ouruncertainty about the relationshipbetween ASP and pharmacy overheadcosts for the uncoded drugs andbiologicals. We also do not believe ourredistribution policy is arbitrary becausewe finalized our CY 2010 policy for anoverhead adjustment methodology inresponse to public commenterconsensus that this approach was anappropriate avenue for addressingcharge compression in the drug andbiological payment rates for separatelypaid drugs. We believe that theconsensus among commenters regardingthe necessity of a redistributionmethodology to correct for relativelyhigh and low ASP values for packagedand separately payable drugs using ourstandard methodology is furtherevidence that the policy adopted in CY2010 and CY 2011, and which we arecontinuing for CY 2012 <strong>with</strong> onerefinement (as discussed below), has arational basis and is not arbitrary.Although we proposed to continueour established policy to redistributeone-third to one-half of overhead costfor coded packaged drugs, and not lessthan 8 percent of cost for uncodedpackaged drugs and are finalizing thisaspect of the proposed policy, webelieve the intra-rulemaking fluctuationthat can occur <strong>with</strong> the proposedmethodology can be minimized, asrequested by commenters. Ascommenters have stated, and as wewarned in the CY 2012 OPPS/ASCproposed rule (76 FR 42261), theoverhead redistribution methodologywhich we finalized in CY 2010 toredistribute $200 million in cost forpackaged drugs, used again in CY 2011to redistribute $200 million in cost forpackaged drugs, and proposed toredistribute $215 million in cost forpackaged drugs in CY 2012, has led toVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00202 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2a decrease in the ASP+X amountbetween the proposed and final rules.Although in CY 2010 the magnitude wasnot large enough to prompt a decline inthe final ASP+X percent due torounding and due to the addition of $50million in cost for uncoded packageddrugs in the CY 2010 final rule <strong>with</strong>comment period, it did result in a 1percent decline in CY 2011 between theproposed rule and the final rule <strong>with</strong>comment period. We believe that thispossible decrease in the ASP+X percentbetween the CY 2012 proposed rule andthis final rule <strong>with</strong> comment periodprompted several commenters,especially those commentersrepresenting hospitals and hospitalassociations, to characterize theproposed overhead redistributionmethodology as unstable.In our consideration of commenters’concerns regarding this observed intrarulemakingvariability (that is, thefluctuation in the derived ASP+X valuebetween the OPPS proposed rule andthe final rule), in preparation for this CY2012 final rule <strong>with</strong> comment period,we revisited this issue and analyzedcost and claims data in an effort todetermine the cause of the fluctuation.We observed that much of thisfluctuation occurs as a result of CMSadding additional cost and claims databetween the proposed rule and the finalrule <strong>with</strong> comment period in order toinclude a full year of data and, to amuch lesser extent, our regular updateof the ASP data. For example, in the CY2012 proposed rule, we proposed toupdate the CY 2011 redistributionamount of $200 million by the PPI forPrescription Drugs and redistribute $215million in overhead cost for packageddrugs, or about $161 million inoverhead cost for coded packaged drugsand about $54 million in overhead costfor uncoded packaged drugs. Thisproposed redistribution amount resultedin a proposed ASP+X percent of ASP+4,because of the mathematicalrelationship between the proposed $215million in redistributed drug overheadcost to the amount of total drug costwhich, for the proposed rule, wasapproximately $4.7 billion based on thepartial year data available to CMS at thetime of the proposed rule. However, inour analysis of drug cost to derive thefinal CY 2012 ASP+X percent, weobserved that, due to the inclusion of anentire year’s worth of cost data(amounting to approximately $5.4billion) in the calculation, the ASP+Xpercent based on the proposed $215million redistribution of packaged drugoverhead cost again dropped 1 percentfrom ASP+4 in the CY 2012 proposed

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74323rule to ASP+3 if the proposedmethodology was used, <strong>with</strong>outmodification, for the final calculation.We then analyzed our ASP+Xcalculations in 2011, and found thesame effect, namely that inclusion of anentire year’s worth of cost data for eachrespective year’s final rule relative to afixed redistribution amount resulted ina different and lower ASP+X value inthe final rule than was proposed.Although the change in CY 2010 wasless than one-half percent and thusprompted no change in the final ASP+Xpercent due to rounding, the inclusionof a whole year of costs caused a 1percent decline in the ASP+X percent inCY 2011, just as it would in CY 2012were CMS to finalize our proposedredistribution methodology <strong>with</strong> a fixed$215 million redistribution. This effectis illustrated in the following Table 38.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2The observed decline in the ASP+Xpercent occurs because during the CY2012 proposed rule CMS has only apartial year’s worth of cost data tocalculate the ASP+X percentage, whichis itself an expression of the ratio of costto ASP. However, when the analysis isrepeated for each year’s final rule, weuse an entire year of cost data but afixed dollar overhead redistributionamount. Because the amount of totaldrug cost data analyzed for the final ruleis larger than it was for the proposedrule but the redistribution amountremains unchanged, the ASP+X valuewill always experience a decline in theintra-rulemaking period. We project thatfor most years this shrinking in theredistributed cost to total drug cost ratiothat derives the ASP+X percent willcause a decrease in the ASP+X percentof at least 1 percent between theproposed and final rules when theproposed methodology is used.Specifically, as indicated in Table 38, ifCMS were to finalize for CY 2012 ourproposed redistribution of $161 millionin overhead cost from coded packageddrugs and $54 million in overhead costfrom uncoded packaged drugs, theASP+X percent would decline fromASP+4 in the proposed rule to ASP+3 inthe final rule. This occurs because anincrease in total drug costs of $763million analyzed for the final rule <strong>with</strong>no change to the redistribution amountchanges the ratio of redistributed cost tototal drug cost changes and prompts a1 percent decrease in the ASP+Xpercent.<strong>Comment</strong>: In general, commentersurged CMS to increase the stability anddecrease the volatility of its paymentpolicies wherever possible. Thecommenters stated that instability in theOPPS rates creates budgeting, planning,and operating problems for hospitals,and that as more care is provided on anoutpatient, rather than inpatient basis,the need for stable payment rates fromone year to the next becomes moreimportant to hospitals. Regardingpayment for SCODs and the ASP+Xmethodology in particular, commentersalso cited instability as beingproblematic, particularly because of theintra-rulemaking decline in the ASP+Xpercent.Response: For several years now wehave made policy changes in ourpayment for separately payable drugs toensure adequate and accurate paymentand enhance the predictability ofMedicare payment for these products.Although we had adopted the standardmethod in the CY 2006 final rule <strong>with</strong>comment period, we adopted an ASP+Xpercent of ASP+6 in the CY 2007 finalrule <strong>with</strong> comment period in order toprovide stability while we continued toexamine the costs of pharmacyoverhead. Observing declines in theequivalent average ASP+X percentcalculated using the standardVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00203 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2methodology, we provided a transitionalrate of ASP+5 and ASP+4 for the CY2008 and 2009 final rules, respectively,in order to enhance the stability of theASP+X percent for those years. In CY2010, we concluded that chargecompression was likely distorting theequivalent average ASP+X percentcalculated using the standardmethodology. Therefore, in order toensure adequate and stable payment, weimplemented the overhead costredistribution methodology describedabove and redistributed $200 millionfrom packaged drug overhead cost toseparately payable drugs in CY 2010and 2011.As in each of these prior years, in CY2012, CMS’ goal is to provide accuratepayment for separately payable drugsthat is based upon acquisition costs,while still ensuring stability to thepayment levels. In continued pursuit ofthis goal, in CY 2012, we stated that webelieve it is appropriate to account forinflation that has occurred since theoverhead redistribution amount of $200million was applied in CY 2011.Therefore, we proposed to apply aninflation allowance equal to the PPI forPrescription Drugs to the redistributionamount. The CY 2011 redistributionamount of $200 million updated by thePPI for Prescription Drugs yielded aproposed redistribution amount of $215million in CY 2012 ($150 million inoverhead cost from coded packagedER30NO11.064

74324 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsdrugs updated by the PPI forPrescription Drugs was $161.25 million;$50 million in overhead from uncodedpackaged drugs updated by the PPI forPrescription Drugs was $53.75 million)and prompted our proposed ASP+Xvalue of ASP+4 in CY 2012. However,when we updated our analysis using awhole year of cost data in preparationfor the CY 2012 final rule, holding theredistribution amount of $215 millionconstant but updating the analysis usinga full year of costs, we observed adecline of 1 percent in the ASP+Xamount to ASP+3. This result, and theconcerns raised by commentersregarding the intra-rulemakingfluctuation in the methodologicallyderivedASP+X percent <strong>with</strong> a fixedredistribution amount, prompted us toreexamine this issue in order to betterunderstand the principal source of theintra-rulemaking fluctuation.We note that since theimplementation of the costredistribution methodology, while wehave always used an entire year of costdata to calculate the ASP+X percent inthe final rule <strong>with</strong> comment period, wehave not made adjustments in theredistribution amount to account forthese additional data in the final rule.After further analysis, including 3 yearsof cost, claims, and redistribution datapertaining to the ASP+X calculation, wehave determined that holding theredistribution amount constant betweenthe proposed and final rules (as we didin the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period and had proposedto again do for CY 2012) is the principalcontributing factor to the intrarulemakingfluctuation observed bycommenters in CMS’ current ASP+Xmethodology.After performing the analysisdescribed above, we believe thefluctuation in the methodologicallyderivedASP+X percent in the intrarulemakingperiod (that is, the period oftime between the proposed and finalrule) identified by commenters can beminimized, and greater stability in theASP+X percent during the intrarulemakingperiod achieved if CMSimplements in CY 2012 a refinement toour ASP+X methodology that adjusts forthe additional cost and claims dataanalyzed for the final rule. Thisrefinement, in which we willredistribute a proportional amount ofpharmacy overhead and handling costsfrom packaged to separately payabledrugs instead of a fixed amount, isexplained in detail below.In the proposed rule, the $161 millionof coded drug cost and $54 million inuncoded drug cost that we calculatedusing the CY 2011 redistributionamounts for coded and uncoded drugsindexed by the PPI for PrescriptionDrugs constituted 35 percent and 10.7percent, respectively, of the drughandling and overhead costs for thesecategories. If we had redistributed thesame amounts ($161 million of codeddrug costs and $54 million of uncodeddrug costs) for the final rule <strong>with</strong>comment period, due to the inclusion ofa whole year’s cost data in the finalASP+X calculation, each amount wouldconstitute a substantially smallerproportion of all drug handling andpharmacy overhead costs and wouldcause the ASP+X to drop. However,because the final rule ASP+Xcalculation uses a whole year of data,while the proposed rule is based on apartial year, and because this additionaldata will, in most years, cause a declinein the ASP+X between the proposedrule and the final rule <strong>with</strong> commentperiod, we now believe that it isappropriate to hold constant theproportions of redistributed packageddrug cost from the proposed rule to thefinal rule <strong>with</strong> comment period insteadof finalizing our prior years’methodology of redistributing a fixedamount of cost from coded and uncodedpackaged drugs, and holding constantthis amount of overhead that isredistributed from the proposed to thefinal rule.We now believe that redistributing thesame proportion, rather than the sameamount, of coded and uncodedpackaged drug cost in the final rule isappropriate because we believe thisapproach will enhance the intrarulemakingstability for SCOD paymentrates; the refinement will yield a finalASP +X value that in most cases doesnot change between the proposed ruleand the final rule <strong>with</strong> comment period.Such a result occurs because thisapproach maintains the mathematicalrelationship between redistributedpackaged drug pharmacy overhead andhandling cost and total drug overheadand handling cost, so that when a wholeyear of cost data are analyzed for thefinal rule, the same proportional amountof coded and uncoded packaged drugcost is redistributed in order to calculatethe ASP+X percent. Therefore, webelieve that this approach is a small butimportant refinement in theredistribution methodology used tocalculate the ASP+X amount and willlead to greater intra-rulemaking stabilityfor SCOD payment rates.It is important to note that thismethodology redistributes a fixedproportion of the calculated overheadattributable to coded and uncodedpackaged drugs so that the percent ofoverhead will not change between theproposed rule and the final rule <strong>with</strong>comment period. However, thepercentage of total drug cost that isredistributed will be expected to changeslightly between the proposed rule andthe final rule <strong>with</strong> comment period.This is because each drug has a differentfraction of its total cost attributed topharmacy overhead and handling, andthe ‘‘mix’’ of products (each <strong>with</strong> anindividual pharmacy overhead cost)prescribed by physicians and billed toMedicare varies from month to month.The additional cost and claim data usedto derive the ASP+X percent in the finalrule <strong>with</strong> comment period will thereforereflect a slightly different mix of drugsand therefore a slightly different ratio ofhandling costs to total drug costs, whencompared <strong>with</strong> the ratio from theproposed rule, which used less than awhole year of data. Table 39 belowdisplays our findings <strong>with</strong> regard to thepercentage of ASP in comparison to thecost for packaged coded drugs andbiologicals and for separately payablecoded drugs and biologicals afterapplication of the final CY 2012overhead adjustment methodology andamounts.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00204 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74325jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2In summary, for the reasons set forthabove and considering the datalimitations we have previouslydiscussed, we are finalizing ourproposal to continue our prior CY 2010and CY 2011 acquisition cost proxymethodology and pharmacy overheadredistribution methodology in CY 2012,but <strong>with</strong> one refinement discussedbelow. In addition, we are finalizing ourproposal to adjust the $200 millionredistribution amount finalized in CY2011 for inflation using the PPI forPrescription Drugs. For this final rule<strong>with</strong> comment period, we have analyzedthe PPI-updated amount of $215million, which is comprised of $161million in overhead costs from codedpackaged drugs and biologicals and $54million in overhead costs from uncodedpackaged drugs and biologicals, andnoted that these updated amountstranslate to approximately 35 percent ofcoded packaged drug overhead costs,and approximately 10.7 percent ofuncoded packaged drug overhead costs.Rather than holding the redistributionamounts constant between the proposedrule and the final rule, for this CY 2012OPPS final rule <strong>with</strong> comment period,we are instead holding constant theredistribution proportions of overheadcost for coded and uncoded packageddrugs in order to maintain the 35percent and 10.7 percent ratios.Consequently, although the finalredistribution amount is higher in thisfinal rule <strong>with</strong> comment period than itwas in the proposed rule, the proportionof redistributed overhead cost for codedand uncoded packaged drugs remainsconstant between the proposed and finalrule. Therefore, for CY 2012, we willupdate the CY 2011 redistributionamounts by the PPI for PrescriptionDrugs (yielding $215 million, asdescribed in the proposed rule), andthen hold the proportions constantbetween the proposed rule and the finalrule <strong>with</strong> comment period in order toredistribute $169 million (or 35 percent)of coded packaged drug overhead cost,and $71.3 million (or 10.7 percent) ofuncoded packaged drug overhead cost,resulting in a total redistributionamount of $240.3 million.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00205 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2The redistribution amount of $169million in overhead cost from codedpackaged drugs and biologicals is<strong>with</strong>in the redistribution parametersestablished in the CY 2010 OPPS/ASCfinal rule <strong>with</strong> comment period ofroughly one-third to one-half ofoverhead cost in coded packaged drugsand biologicals. The amount of 10.7percent of drug cost in uncodedpackaged drugs and biologicals wouldbe redistributed to separately payabledrugs for CY 2012. Therefore, thisamount continues to be no less than 8percent of the total uncoded drug andbiological cost. The result of thismethodology is an ASP+4 percentamount for CY 2012 when applied usingJuly 2011 ASPs, data for claims forservices furnished during CY 2010 andprocessed through the CommonWorking File before January 1, 2010,and the most current submitted costreports as of January 1, 2011. For thereasons set forth above, we are finalizingan ASP+X percent of ASP+4 forseparately payable drugs in CY 2012.ER30NO11.065

74326 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Further, we are finalizing ourproposal to continue to include theclaims data for 340B hospitals in thecalculation of payment for drugs andbiologicals under the CY 2012 OPPS.We believe excluding data fromhospitals that participate in the 340Bprogram from our ASP+X calculation,but paying those hospitals at thatderived payment amount, wouldeffectively redistribute payment to drugsor biologicals from payment for otherservices under the OPPS. Furthermore,we do not believe it would beappropriate to exclude claims from thissubset of hospitals in the context of aproposed CY 2012 drug and biologicalpayment policy that pays all hospitalsthe same rate for separately payabledrugs and biologicals (74 FR 60517). Inaddition, we are finalizing our proposalthat 340B hospitals continue to be paidthe same amounts for separately payabledrugs and biologicals as hospitals thatdo not participate in the 340B programfor CY 2012 because commenters havegenerally opposed differential paymentfor hospitals based on their 340Bparticipation status.<strong>Final</strong>ly, we are finalizing our proposalthat the estimated payments forseparately payable drugs and biologicalsbe taken into account in the calculationof the weight scaler that would apply tothe relative weights for all proceduralservices (but would not apply toseparately payable drugs andbiologicals) paid under the OPPS, asrequired by section 1833(t)(14)(H) of theAct.We note that although it is CMS’longstanding policy under the OPPS torefrain from instructing hospitals on theappropriate revenue code to use tocharge for specific services, we continueto encourage hospitals to bill all drugsand biologicals <strong>with</strong> HCPCS codes,regardless of whether they areseparately payable or packaged, and toensure that drug costs are completelyreported, using appropriate revenuecodes. We also note that we makepackaging determinations for drugs andbiologicals annually based on costinformation reported under HCPCScodes, and the OPPS ratesetting is bestserved when hospitals report charges forall items and services <strong>with</strong> HCPCScodes when they are available, whetheror not Medicare makes separatepayment for the items and services.We also note that we continue topursue the most appropriatemethodology for establishing paymentfor drugs and biologicals under theOPPS. Because we are always trying toimprove the integrity of our data, wehave previously proposed multiplemechanisms to improve the cost dataavailable to us, but have notimplemented those proposals due tohospital concerns about theadministrative burden. We continue tobe interested in developing mechanismsthat improve the cost data available tous while minimizing, to the extentpossible, the administrative burden onhospitals. For the past 3 years, we haveproposed an internal adjustment toredistribute an amount from packagedcoded and uncoded drugs andbiologicals to separately payable drugsand biologicals because the results ofour standard drug paymentmethodology are unlikely to accuratelyreflect the full cost of acquisition andpharmacy overhead for separatelypayable and packaged drugs andbiologicals due to hospital chargingpractices and our use of an annual drugpackaging threshold. As we continue towork to refine our payment systems, agoal to which we have been consistentlycommitted over the past several years,we encourage public input onalternative cost-based methodologies toaid in our ongoing evaluations thatcould improve upon the adoptedmethodology.c. Payment Policy for TherapeuticRadiopharmaceuticalsBeginning in the CY 2005 OPPS finalrule <strong>with</strong> comment period, weexempted radiopharmaceuticalmanufacturers from reporting ASP datafor all radiopharmaceuticals forpayment purposes under the OPPS. (Formore information, we refer readers tothe CY 2005 OPPS final rule <strong>with</strong>comment period (69 FR 65811) and theCY 2006 OPPS final rule <strong>with</strong> commentperiod (70 FR 68655).) Consequently,we did not have ASP data forradiopharmaceuticals for considerationfor OPPS ratesetting until we begancollecting ASP for nonpass-throughseparately paid therapeuticradiopharmaceuticals for CY 2010. Inaccordance <strong>with</strong> section1833(t)(14)(B)(i)(I) of the Act, we haveclassified therapeuticradiopharmaceuticals under the OPPSas SCODs. As such, we have paid forradiopharmaceuticals at averageacquisition cost as determined by theSecretary and subject to any adjustmentfor overhead costs. For CYs 2006 and2007, we used mean unit cost data fromhospital claims to determine eachradiopharmaceutical’s packaging statusand implemented a temporary policy topay for separately payableradiopharmaceuticals based on thehospital’s charge for eachradiopharmaceutical adjusted to costusing the hospital’s overall CCR. Themethodology of providing separateVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00206 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2radiopharmaceutical payment based oncharges adjusted to cost throughapplication of an individual hospital’soverall CCR for CYs 2006 and 2007 wasfinalized as an interim proxy for averageacquisition cost.In CY 2008, we packaged payment forall diagnostic radiopharmaceuticals andwe proposed and finalized amethodology to provide prospectivepayment for therapeuticradiopharmaceuticals (defined as thoseLevel II HCPCS codes that include theterm ‘‘therapeutic’’ along <strong>with</strong> aradiopharmaceutical in their long codedescriptors) using mean costs derivedfrom the CY 2006 claims data, where thecosts were determined using ourstandard methodology of applyinghospital-specific departmental CCRs toradiopharmaceutical charges, defaultingto hospital-specific overall CCRs only ifappropriate departmental CCRs wereunavailable (72 FR 66772). Followingissuance of the CY 2009 OPPS/ASCproposed rule, section 142 of theMedicare Improvements for Patients andProviders Act of 2008 (Pub. L. 110–275)amended section 1833(t)(16)(C) of theAct, as amended by section 106(a) of theMedicare, Medicaid, and SCHIPExtension Act of 2007 (Pub. L. 110–173), to further extend the paymentperiod for therapeuticradiopharmaceuticals based onhospitals’ charges adjusted to costthrough December 31, 2009. Therefore,for CY 2009, we finalized a policy tocontinue to pay hospitals for therapeuticradiopharmaceuticals at chargesadjusted to cost through the end of CY2009.For CY 2010, we proposed andfinalized a policy to pay for separatelypaid therapeutic radiopharmaceuticalsunder the ASP methodology adopted forseparately payable drugs andbiologicals. We allowed manufacturersto submit the ASP data in a patientspecificdose or patient-ready form inorder to properly calculate the ASPamount for a given HCPCS code. Thisresulted in payment for nonpassthroughseparately paid therapeuticradiopharmaceuticals at ASP+4 percentfor CY 2010 for products for which themanufacturer submitted ASP. We alsofinalized a policy to base therapeuticradiopharmaceutical payment on CY2008 mean unit cost data derived fromhospital claims if ASP information wasunavailable. For CY 2011, we continuedto pay for nonpass-through separatelypaid therapeutic radiopharmaceuticalsunder the ASP methodology adopted forseparately payable drugs andbiologicals, resulting in a payment ratefor nonpass-through separately paidtherapeutic radiopharmaceuticals of

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74327jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2ASP+5 percent. We also continued tobase therapeutic radiopharmaceuticalpayment on CY 2009 mean unit costdata derived from hospital claims if ASPinformation was unavailable.We believe that the rationale outlinedin the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period (74 FR 60524through 60525) for applying theprinciples of separately payable drugpricing to therapeuticradiopharmaceuticals continues to beappropriate for nonpass-throughseparately payable therapeuticradiopharmaceuticals in CY 2012.Therefore, in the CY 2012 OPPS/ASCproposed rule (76 FR 42263), weproposed to continue to pay allnonpass-through, separately payabletherapeutic radiopharmaceuticals underthe ASP+X payment level establishedusing the proposed pharmacy overheadadjustment based on a redistributionmethodology to set payment forseparately payable drugs and biologicals(proposed at ASP+4 percent, asdiscussed in section V.B.3.b. of thisfinal rule <strong>with</strong> comment period) basedon ASP information, if available, for a‘‘patient ready’’ dose and updated on aquarterly basis for products for whichmanufacturers report ASP data. For afull discussion of how a ‘‘patient ready’’dose is defined, we refer readers to theCY 2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60520 through60521). We also proposed to rely on CY2010 mean unit cost data derived fromhospital claims data for payment ratesfor therapeutic radiopharmaceuticals forwhich ASP data are unavailable and toupdate the payment rates for separatelypayable therapeuticradiopharmaceuticals, according to ourusual process for updating the paymentrates for separately payable drugs andbiologicals, on a quarterly basis ifupdated ASP information is available.The proposed CY 2012 payment ratesfor nonpass-through separately payabletherapeutic radiopharmaceuticals wereincluded in Addenda A and B to theproposed rule (which is referenced insection XVII. of the proposed rule andavailable via the Internet).<strong>Comment</strong>: A large number ofcommenters from consumers anddisease-focused advocacy groupssubmitted comments regarding CMS’payment for BEXXAR ® (Tositumomaband Iodine I 131 Tositumomab). Thecommenters stated that CMS paymentfor this product is inadequate and thatpayment rates may cause hospitals andphysicians to be unable to makeBEXXAR ® available. <strong>Comment</strong>ers alsostated that CMS erred in treating certainportions of the BEXXAR ® product asdiagnostic, rather than therapeutic,because the presence of disease hasalready been diagnosed and affirmedprior to the administration ofBEXXAR ® . A few commenterscharacterized the proposed CY 2012payment rate for BEXXAR ® as beingmotivated by saving money. Some ofthese commenters stated that CMS wasattempting to ‘‘cut stipends’’ or failingto fund cancer research. Othercommenters suggested that CMS wouldno longer cover BEXXAR ® or otherradioimmunotherapies. One commentersubmitted information on studiesregarding the efficacy of BEXXAR ® fortreating Lymphoma. Severalcommenters stated that they wereconcerned about their ability to affordradioimmunotherapy services. Onecommenter suggested that CMSnegotiate <strong>with</strong> drug manufacturers toreduce their charges.Response: We do not agree <strong>with</strong>commenters’ assertions that Medicarepayment through the OPPS forBEXXAR ® is inadequate. We analyzedthis assertion against our standardmethodologies and did not findevidence to support the commenters’assertion that OPPS payment forBEXXAR ® is unusually low. In thecomment letter to CMS, themanufacturer of BEXXAR ® stated that itbelieved hospital acquisition cost forBEXXAR ® is approximately $35,657,but the amount that Medicare hasproposed to pay for CY 2012 is $33,982.We note that we pay for the majority ofthe cost of BEXXAR ® treatment underthe OPPS based on the manufacturersuppliedASP plus, in CY 2012, 4percent for hospital pharmacy handlingand overhead, an amount calculatedusing hospital claims data. We also notethat part of the administration costs forany therapy is typically bundled intoprospective payments such aschemotherapy administration codes. Inanalyzing the elements of the treatmentregimen described by commenters, webelieve that all costs are accounted forin the various payment methods used byCMS to reimburse for the hot(therapeutic) and warm (diagnostic)doses of Tositumomab.We also do not agree that our policyin paying portions of BEXXAR ® as adiagnostic (rather than therapeutic)radiopharmaceutical is inappropriate.Although we acknowledge that certaincomponents of BEXXAR ® aretherapeutic, other components of thetherapy, most notably the ‘‘warm’’ doseof Tositumomab, are diagnostic innature and are used in conjunction <strong>with</strong>imaging studies to determine whetherfuture therapeutic services would bebeneficial to the patient, and how toproceed <strong>with</strong> therapy. We note thatVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00207 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2diagnostic uses are characterized bothby the inclusion of the word‘‘diagnostic’’ in HCPCS long descriptorsand by the use of the service to obtaininformation as opposed to improvingthe medical condition of the patient. Webelieve that commenters claiming thatCMS is cutting stipends or failing tofund cancer research are mistaken; theMedicare program generally, and theOPPS in particular, does not providestipends to cancer researchers, nor doesit directly fund cancer research. We alsowish to emphasize that CMS has notchanged its coverage status forBEXXAR ® , which remains a Medicarecoveredtreatment in the hospitaloutpatient department. Further, CMShas not made its proposed payment forBEXXAR ® to save the Medicare programmoney. Payment for BEXXAR ® , likemost drugs and procedures in the OPPS,is determined by statute and is based onacquisition data furnished by drugmanufacturers and costs reported toCMS by hospitals. Year-to-yearfluctuations in payment for individualitems and treatments are often the resultof fluctuations in the submitted costdata, as it is in this case, and not theresult of a policy decision to save theMedicare program money.<strong>Final</strong>ly, we are sympathetic tocommenters’ concern regarding the highcost of radioimmunotherapy services.We note that the national unadjustedcopayment for the ‘‘hot’’ dose of IodineI-131 Tositumomab is approximately$6,000, and can appreciate how manyMedicare beneficiaries would havedifficulties affording such a largecoinsurance amount. Although we sharecommenters’ concerns about the growthin health costs, CMS does not have theauthority to directly negotiate <strong>with</strong> drugmanufacturers on behalf of Medicarebeneficiaries to get manufacturers toreduce their drug prices.<strong>Comment</strong>: Several commentersrequested that CMS create a HCPCSJ-code for tositumomab, currentlyprovided under a radioimmunotherapyregimen and billed as part of HCPCScode G3001 (Administration and supplyof tositumomab, 450 mg). Thecommenter argued that becausetositumomab is approved by the FDA aspart of the BEXXAR ® regimen and hasits own National Drug Code (NDC), itshould be recognized as a drug and,therefore, be paid as other drugs arepaid under the OPPS methodology,instead of having a payment ratedetermined by hospital claims data. Thecommenters recommended thatnonradiolabeled Tositumomab receiveseparate payment.Response: We have consistently notedthat unlabeled tositumomab is not

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274328 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsapproved as either a drug or aradiopharmaceutical. It is a supply thatis required as part of theradioimmunotherapy treatment regimen(the CY 2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68658), the CY2008 OPPS final rule <strong>with</strong> commentperiod (72 FR 66765), the CY 2006OPPS final rule <strong>with</strong> comment period(70 FR 68654), and the CY 2004 OPPSfinal rule <strong>with</strong> comment period (68 FR63443)). We do not make separatepayment for supplies used in servicesprovided under the OPPS. Payments fornecessary supplies are packaged intopayments for the separately payableservices provided by the hospital.Specifically, it is the administration ofunlabeled tositumomab (the ‘‘cold’’ ordiagnostic dose) that is a completeservice that qualifies for separatepayment under its own clinical APC,0442. This diagnostic (informationcollecting, nontherapeutic) completeservice is currently described by HCPCScode G3001, which includestositumomab as a supply. Therefore, wedo not agree <strong>with</strong> the commenter’srecommendation that we should assigna separate HCPCS code to the supply ofunlabeled tositumomab. Rather, we willcontinue to make separate payment forthe administration of tositumomab, andpayment for the supply of unlabeledtositumomab is packaged into theadministration payment.<strong>Comment</strong>: A majority of commenterssupported CMS’ proposal to continue topay for separately payable therapeuticradiopharmaceuticals under the ASP+Xpayment level established using theproposed pharmacy overheadadjustment based on a redistributionmethodology to set payment forseparately payable drugs and biologicalsbased on ASP information, if available,for a ‘‘patient ready’’ dose and updatedon a quarterly basis for products forwhich manufacturers report ASP data.Several commenters disagreed <strong>with</strong> theproposed payment rate for nonpassthroughseparately payable drugs,biologicals, and therapeuticradiopharmaceuticals at ASP+4 andinstead recommended that CMSreimburse for these products at a set rateof ASP+6.Several commenters disagreed <strong>with</strong>CMS’ proposal to rely on CY 2010 meanunit cost data derived from hospitalclaims data for payment rates fortherapeutic radiopharmaceuticals forwhich ASP data are unavailable. Thecommenters suggested that CMS insteaduse hospitals’ charges adjusted to costwhen ASP data are unavailable fornonpass-through separately payabletherapeutic radiopharmaceuticals. Somecommenters also recommended thatCMS provide cost-based payment tohospitals when ASP is not available. Afew commenters further noted that CMSshould require all manufacturers oftherapeutic radiopharmaceuticals tosubmit ASP data for all therapeuticradiopharmaceuticals currently paidunder the OPPS.Response: We appreciate thecommenters’ support. We continue tobelieve that providing payment fornonpass-through separately payabletherapeutic radiopharmaceuticals basedon ASP information, if available, for a‘‘patient ready’’ dose, and updatedquarterly for products for which themanufacturer reported ASP data ormean unit cost if ASP information is notavailable would provide appropriatepayment for these products. As stated inthe CY 2011 OPPS/ASC proposed rule(75 FR 46276), we believe that the ASPinformation collected under section1847A(b)(1)(A) of the Act and ourhospital claims data is a suitable proxyfor the acquisition cost data, and thatASP+6 is an accurate payment forseparately covered drugs and biologicalswhen it is derived using these data andour standard methodology. Therefore,we do not agree <strong>with</strong> commenters’assertion that we should as a matter ofpolicy set payment for these items atASP+6. When ASP data are notavailable, we believe that paying fortherapeutic radiopharmaceuticals usingmean unit cost would appropriately payfor the average hospital acquisition andassociated handling costs of nonpassthroughseparately payable therapeuticradiopharmaceuticals. As we stated inthe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 71968) and theCY 2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60523),although using mean unit cost forpayment for therapeuticradiopharmaceuticals when ASP dataare not available is not the usual OPPSprocess (that relies on alternative datasource, such as WAC or AWP, whenASP information is temporarilyunavailable, prior to defaulting to themean unit cost from hospital claimsdata), we continue to believe that WACor AWP is not an appropriate proxy toprovide OPPS payment for averagetherapeutic radiopharmaceuticalacquisition cost and associated handlingcosts when manufacturers are notrequired to submit ASP data. Inaddition, we do not believe that weshould provide payment at chargesreduced to cost or reasonable cost whenASP data is not available. As we havestated previously in the CY 2008 OPPS/ASC final rule <strong>with</strong> comment period, wecontinue to believe that payment on aVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00208 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2claim-specific basis is not consistent<strong>with</strong> the payment of items and servicesin a prospective payment system underthe OPPS and may also lead toextremely high or low payments tohospitals for radiopharmaceuticals, evenwhen those products would be expectedto have relatively predictable andconsistent acquisition and handlingcosts across individual clinical casesand hospitals. For CY 2012, Medicarewill pay for only a few outpatientservices at reasonable cost. Theseinclude, but are not limited to, cornealtissue acquisition and influenzavaccines. Corneal tissue acquisition andinfluenza vaccines are paid atreasonable cost in part because theinput costs for future years are hugelyunpredictable and to set a prospectivepayment rate for them may result inpayment that is so deficient thathospitals would not be able to providethe services and the general publiccould be denied the benefits. Inparticular, it is not possible to forecast<strong>with</strong> confidence what the cost ofinfluenza vaccine would be a year inadvance because the composition of thevaccine is not constant from year toyear. In contrast, however, the inputcosts of therapeuticradiopharmaceuticals are not hugelyunpredictable. Therefore, we do notbelieve that therapeuticradiopharmaceuticals should be paid inthe same manner as the few outpatientservices paid at reasonable cost. Wecontinue to believe that when ASP dataare unavailable for therapeuticradiopharmaceuticals, payment basedupon mean unit cost is an appropriateproxy for hospitals’ acquisition andhandling data.We disagree <strong>with</strong> the commenterswho suggested that CMS require allmanufacturers of therapeuticradiopharmaceuticals to submit ASPdata for all therapeuticradiopharmaceuticals currently paidunder the OPPS. We continue to believethat requiring ASP data for alltherapeutic radiopharmaceuticalscurrently paid under the OPPS wouldpotentially be burdensome formanufacturers. Moreover, as we statedin the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period (75 FR 71969) andthe CY 2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60524), thechallenges involved in reporting ASPfor a radiopharmaceutical are significantin many cases, given the variety ofmanufacturing processes and thefrequent need for patient specific preprocessing.Therefore, due to the factthat the added administrative burden ofdirect reporting outweighs the expected

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74329jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2benefits, and given the relative accuracyof hospital claims data regarding suchdrugs, payment based on mean unit costfrom historical hospital claims dataoffers the best proxy for average hospitalacquisition cost and associated handlingcosts for a radiopharmaceutical in manysituations. We continue to believe thatwe should allow, but not require,manufacturers to submit ASPinformation for therapeuticradiopharmaceuticals. If ASPinformation is unavailable for atherapeutic radiopharmaceuticalbecause a manufacturer is not willing ornot able to submit ASP information, wewill provide payment based on themean unit cost of the product that isapplicable to payment rates for the yearthe nonpass-through therapeuticradiopharmaceutical is administered.<strong>Comment</strong>: One commenter stated thatwhile it supported paying separatelypayable therapeuticradiopharmaceuticals under the ASP+Xpayment methodology established in theCY 2012 proposed rule, it believed thatpayment for radiopharmaceuticalsshould be made at a higher level thanother drugs and biologicals because ofthe unique pharmacy handling andoverhead costs associated <strong>with</strong>radiopharmaceuticals. Therefore, thecommenter recommended that CMS payfor radiopharmaceuticals at a paymentrate of at least ASP+10 percent whilecontinuing to develop detailed data onthe overhead and handling costsassociated <strong>with</strong> radiopharmaceuticals.Response: We continue to believe thatpaying for therapeuticradiopharmaceuticals under the ASP+Xpayment amount established forseparately payable drugs and biologicalsunder the OPPS, established at ASP+4percent for CY 2012, is the mostappropriate proxy for acquisition andpharmacy overhead and handling costsfor separately payable therapeuticradiopharmaceuticals, regardless of theamount of pre-processing needed tocreate a ‘‘patient ready’’ dose. As westated in the CY 2010 OPPS/ASC finalrule <strong>with</strong> comment period (74 FR60522), we established ourinterpretation of ‘‘patient-ready’’ forpurposes of the OPPS to mean that theASP, reported in terms that reflect theapplicable HCPCS code descriptor,should include the price for allcomponent materials of theradiopharmaceutical as well as anyadditional processing, includingradiolabeling, that is reflected in theprice the manufacturer charges for theradiopharmaceutical, so long as the feespaid for such additional processingmeet the ‘‘bona fide service fee’’ testunder the regulations implementingsection 1847A of the Act. We explicitlynoted that becauseradiopharmaceuticals uniquely requireradiolabeling of their componentmaterials, we believe that radiolabelingcould constitute a bona fide service onbehalf of the manufacturer and the feescould meet the ‘‘bona fide service fee’’test, for purposes of OPPS ASPreporting. Given our position onradiolabeling, we similarly believe thatsignificant manufacturer processingcosts associated <strong>with</strong> handlingradiopharmaceuticals may be reflectedin the prices used to calculate themanufacturer’s ASP data for OPPSpurposes. Therefore, the combinedsingle payment for nonpass-throughseparately payable therapeuticradiopharmaceutical acquisition andoverhead costs embodied in the ASP+4percent payment rate for CY 2012 wouldaddress any other processing by themanufacturer for purposes of the OPPS,and we continue to believe this paymentis sufficient to cover additionalhandling costs borne by the hospital (ascalculated by hospital cost data). Underthis interpretation of ‘‘patient-ready’’dose, we do not believe that making anadditional payment for more intensivehandling costs is necessary.After consideration of the publiccomments we received, we arefinalizing our proposal, <strong>with</strong>outmodification, to continue to pay allnonpass-through, separately payabletherapeutic radiopharmaceuticals underthe ASP+X payment level establishedusing the pharmacy overheadadjustment based on a redistributionmethodology to set payment forseparately payable drugs and biologicals(as discussed in section V.B.3.b. of thisfinal rule <strong>with</strong> comment period) basedon ASP information, if available, for a‘‘patient ready’’ dose and updated on aquarterly basis for products for whichmanufacturers report ASP data. For CY2012, nonpass-through separatelypayable therapeuticradiopharmaceuticals will be paid atASP+4 percent under the ASP+Xpayment methodology for nonpassthroughseparately payable drugs andbiologicals. We will base nonpassthrough,separately payable therapeuticradiopharmaceutical payment rates onmean unit cost derived from CY 2010claims data when ASP pricing is notavailable. The final CY 2012 paymentrates for nonpass-through separatelypayable therapeuticradiopharmaceuticals are included inAddenda A and B to this final rule <strong>with</strong>comment period (which are referencedin section XVII. of this final rule <strong>with</strong>VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00209 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2comment period and available via theInternet).4. Payment for Blood Clotting FactorsFor CY 2011, we provided paymentfor blood clotting factors under the samemethodology as other nonpass-throughseparately payable drugs and biologicalsunder the OPPS and continued payingan updated furnishing fee. That is, forCY 2011, we provided payment forblood clotting factors under the OPPS atASP+5 percent, plus an additionalpayment for the furnishing fee. We notethat when blood clotting factors areprovided in physicians’ offices underMedicare Part B and in other Medicaresettings, a furnishing fee is also appliedto the payment. The CY 2011 updatedfurnishing fee is $0.176 per unit.In the CY 2012 OPPS/ASC proposedrule (76 FR 42263 through 42264), forCY 2012, we proposed to pay for bloodclotting factors at ASP+4 percent,consistent <strong>with</strong> our proposed paymentpolicy for other nonpass-throughseparately payable drugs andbiologicals, and to continue our policyfor payment of the furnishing fee usingan updated amount. Our rationale forthis proposed policy was firstarticulated in the CY 2006 OPPS finalrule <strong>with</strong> comment period (70 FR68661) and then later discussed in theCY 2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66765). Theproposed furnishing fee update wasbased on the percentage increase in theConsumer Price Index (CPI) for medicalcare for the 12-month period ending<strong>with</strong> June of the previous year. Becausethe Bureau of Labor Statistics releasesthe applicable CPI data after the MPFSand OPPS/ASC proposed rules arepublished, we are not able to includethe actual updated furnishing fee in theproposed rules. Therefore, inaccordance <strong>with</strong> our policy, as finalizedin the CY 2008 OPPS/ASC final rule<strong>with</strong> comment period (72 FR 66765), wewould announce the actual figure forthe percent change in the applicable CPIand the updated furnishing feecalculated based on that figure throughapplicable program instructions andposting on the CMS Web site at:http://www.cms.gov/McrPartBDrugAvgSalesPrice/.<strong>Comment</strong>: A few commenterssupported CMS’ proposal to continue toapply the furnishing fee for bloodclotting factors provided in the OPD.One commenter stated that thefurnishing fee helps ensure patientaccess to blood clotting factors byincreasing the payment rate for theseitems. Other commenters supportedpayment for blood clotting factors at noless than ASP+6 percent for CY 2011

74330 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2and stated that payment at less thanASP+6 percent for all drugs andbiologicals, especially blood clottingfactors and all drugs and biologicals, isinappropriate.Response: We appreciate thecommenters’ support. We continue tobelieve that applying the furnishing feefor blood clotting factors is appropriatefor CY 2012. However, we see nocompelling reason to provide paymentfor blood clotting factors under adifferent methodology for OPPSpurposes at this time. For CY 2012,under this final rule <strong>with</strong> commentperiod, we will pay for blood clottingfactors under the same methodology asother separately payable drugs andbiologicals under the OPPS, and we willcontinue paying an updated furnishingfee. For the reasons we discussed insection V.B.3. of this final rule <strong>with</strong>comment period, we believe that thepayment rate of ASP+4 percent isappropriate payment for the acquisitioncost and pharmacy overhead related todrugs and biologicals that are notpackaged, which includes blood clottingfactors. In addition, because werecognize that there is additional workinvolved in acquiring the product, thatis neither acquisition cost nor pharmacyoverhead, we believe that it continues tobe appropriate to pay a furnishing feefor blood clotting factors under theOPPS as is done in the physician’soffice setting and the inpatient hospitalsetting.After consideration of the publiccomments we received, we arefinalizing our CY 2012 proposal,<strong>with</strong>out modification, to providepayment for blood clotting factors underthe same methodology as otherseparately payable drugs and biologicalsunder the OPPS and to continue payingan updated furnishing fee. We willannounce the actual figure for thepercent change in the applicable CPIand the updated furnishing feecalculation based on that figure throughthe applicable program instructions andpostings on the CMS Web site.5. Payment for Nonpass-Through Drugs,Biologicals, and RadiopharmaceuticalsWith HCPCS Codes, But Without OPPSHospital Claims DataThe Medicare Prescription Drug,Improvement, and Modernization Act of2003 (Pub. L. 108–173) does not addressthe OPPS payment in CY 2005 and afterfor drugs, biologicals, andradiopharmaceuticals that have assignedHCPCS codes, but that do not have areference AWP or approval for paymentas pass-through drugs or biologicals.Because there is no statutory provisionthat dictated payment for such drugs,biologicals, and radiopharmaceuticals inCY 2005, and because we had nohospital claims data to use inestablishing a payment rate for them, weinvestigated several payment options forCY 2005 and discussed them in detailin the CY 2005 OPPS final rule <strong>with</strong>comment period (69 FR 65797 through65799).For CYs 2005 to 2007, weimplemented a policy to provideseparate payment for new drugs,biologicals, and radiopharmaceuticals<strong>with</strong> HCPCS codes (specifically thosenew drug, biological, andradiopharmaceutical HCPCS codes ineach of those calendar years that did notcrosswalk to predecessor HCPCS codes)but which did not have pass-throughstatus, at a rate that was equivalent tothe payment they received in thephysician’s office setting, established inaccordance <strong>with</strong> the ASP methodologyfor drugs and biologicals, and based oncharges adjusted to cost forradiopharmaceuticals. For CYs 2008 and2009, we finalized a policy to providepayment for new drugs (excludingcontrast agents and diagnosticradiopharmaceuticals) and biologicals(excluding implantable biologicals forCY 2009) <strong>with</strong> HCPCS codes, but whichdid not have pass-through status andwere <strong>with</strong>out OPPS hospital claimsdata, at ASP+5 percent and ASP+4percent, respectively, consistent <strong>with</strong>the final OPPS payment methodologyfor other separately payable drugs andbiologicals. New therapeuticradiopharmaceuticals were paid atcharges adjusted to cost based on thestatutory requirement for CY 2008 andCY 2009 and payment for newdiagnostic radiopharmaceuticals waspackaged in both years.For CY 2010, we continued to providepayment for new drugs (excludingcontrast agents) and nonimplantablebiologicals <strong>with</strong> HCPCS codes that donot have pass-through status and are<strong>with</strong>out OPPS hospital claims data atASP+4 percent, consistent <strong>with</strong> the CY2010 payment methodology for otherseparately payable nonpass-throughdrugs and nonimplantable biologicals.We also finalized a policy to extend theCY 2009 payment methodology to newtherapeutic radiopharmaceutical HCPCScodes, consistent <strong>with</strong> our final policyin the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period (74 FR 60581through 60526), providing separatepayment for therapeuticradiopharmaceuticals that do notcrosswalk to CY 2009 HCPCS codes, donot have pass-through status, and are<strong>with</strong>out OPPS hospital claims data atASP+4 percent. This policy wascontinued in the CY 2011 OPPS/ASCVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00210 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2final rule <strong>with</strong> comment period (75 FR71970 through 71973), paying for newdrugs, nonimplantable biologicals, andradiopharmaceuticals that do notcrosswalk to CY 2010 HCPCS codes, donot have pass-through status, and are<strong>with</strong>out OPPS hospital claims data atASP+5 percent.In the CY 2012 OPPS/ASC proposedrule (76 FR 42264 through 42266), weproposed to continue our paymentpolicies for new drugs (excludingcontrast agents and diagnosticradiopharmaceuticals), nonimplantablebiologicals, and therapeuticradiopharmaceuticals that have HCPCScodes that do not crosswalk to CY 2011HCPCS codes, do not have pass-throughstatus, and are <strong>with</strong>out OPPS hospitalclaims data. We proposed to providepayment for new CY 2012 drugs(excluding contrast agents anddiagnostic radiopharmaceuticals),nonimplantable biologicals, andtherapeutic radiopharmaceuticals, atASP+4 percent, consistent <strong>with</strong> theproposed CY 2012 paymentmethodology for other separatelypayable nonpass-through drugs,nonimplantable biologicals, andtherapeutic radiopharmaceuticals. Webelieved this proposed policy wouldensure that new nonpass-through drugs,nonimplantable biologicals andtherapeutic radiopharmaceuticals wouldbe treated like other drugs,nonimplantable biologicals, andtherapeutic radiopharmaceuticals underthe OPPS, unless they are granted passthroughstatus. Only pass-throughdrugs, nonimplantable biologicals, ortherapeutic radiopharmaceuticals wouldreceive a different payment for CY 2012,which would be generally equivalent tothe payment these drugs and biologicalswould receive in the physician’s officesetting, consistent <strong>with</strong> therequirements of the statute.We also proposed to continue our CY2011 policy of packaging payment forall new nonpass-through diagnosticradiopharmaceuticals, contrast agents,and implantable biologicals <strong>with</strong>HCPCS codes but <strong>with</strong>out claims data(those new CY 2012 diagnosticradiopharmaceuticals, contrast agents,and implantable biological HCPCScodes that do not crosswalk topredecessor HCPCS codes). This isconsistent <strong>with</strong> the proposed policypackaging all existing nonpass-throughdiagnostic radiopharmaceuticals,contrast agents and implantablebiologicals, as discussed in more detailin sections V.B.2.d. and IV.A.2. of thisfinal rule <strong>with</strong> comment period.In accordance <strong>with</strong> the OPPS ASPmethodology, in the absence of ASPdata, for CY 2012, we proposed to

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74331jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2continue the policy we implementedbeginning in CY 2005 of using the WACfor the product to establish the initialpayment rate for new nonpass-throughdrugs and biologicals <strong>with</strong> HCPCScodes, but which are <strong>with</strong>out OPPSclaims data. However, we noted that ifthe WAC is also unavailable, we wouldmake payment at 95 percent of theproduct’s most recent AWP. We alsoproposed to assign status indicator ‘‘K’’(for separately paid nonpass-throughdrugs and nonimplantable biologicals,including therapeuticradiopharmaceuticals) to HCPCS codesfor new drugs and nonimplantablebiologicals <strong>with</strong>out OPPS claims dataand for which we have not granted passthroughstatus. With respect to new,nonpass-through drugs, nonimplantablebiologicals, and therapeuticradiopharmaceuticals for which we donot have ASP data, we proposed thatonce their ASP data become available inlater quarterly submissions, theirpayment rates under the OPPS would beadjusted so that the rates would bebased on the ASP methodology and setto the finalized ASP-based amount(proposed for CY 2012 at ASP+4percent) for items that have not beengranted pass-through status. Thisproposed policy, which is consistent<strong>with</strong> prior years’ policies for theseitems, would ensure that new nonpassthroughdrugs, nonimplantablebiologicals, and therapeuticradiopharmaceuticals would be treatedlike other drugs, nonimplantablebiologicals, and therapeuticradiopharmaceuticals under the OPPS,unless they are granted pass-throughstatus. Only pass-through drugs,nonimplantable biologicals, ortherapeutic radiopharmaceuticals wouldreceive a different payment for CY 2012,which would be generally equivalent tothe payment these drugs and biologicalswould receive in the physician’s officesetting, consistent <strong>with</strong> therequirements of the statute.Similarly, we proposed to continueour CY 2011 policy to base the initialpayment for new therapeuticradiopharmaceuticals <strong>with</strong> HCPCScodes, but which do not have passthroughstatus and are <strong>with</strong>out claimsdata, on the WACs for these products ifASP data for these therapeuticradiopharmaceuticals are not available.If the WACs are also unavailable, weproposed to make payment for newtherapeutic radiopharmaceuticals at 95percent of the products’ most recentAWP because we would not have meancosts from hospital claims data uponwhich to base payment. As we proposed<strong>with</strong> new drugs and biologicals, weproposed to continue our policy ofassigning status indicator ‘‘K’’ to HCPCScodes for new therapeuticradiopharmaceuticals <strong>with</strong>out OPPSclaims data for which we have notgranted pass-through status.Consistent <strong>with</strong> other ASP-basedpayment, we proposed to announce anychanges to the payment amounts fornew drugs and biologicals in this CY2012 OPPS/ASC final rule <strong>with</strong>comment period and also on a quarterlybasis on the CMS Web site during CY2012 if later quarter ASP submissions(or more recent WACs or AWPs)indicate that changes to the paymentrates for these drugs and biologicals arenecessary. The payment rates for newtherapeutic radiopharmaceuticals wouldalso be changed accordingly based onlater quarter ASP submissions. We notethat the new CY 2012 HCPCS codes fordrugs, biologicals and therapeuticradiopharmaceuticals were not availableat the time of development of theproposed rule. However, these agentsare included in Addendum B to this CY2012 OPPS/ASC final rule <strong>with</strong>comment period (which is referenced insection XVII. of this final rule <strong>with</strong>comment period and available via theInternet on the CMS Web site) wherethey are assigned comment indicator‘‘NI.’’ This comment indicator reflectsthat their interim final OPPS treatmentis open to public comment in this CY2012 OPPS/ASC final rule <strong>with</strong>comment period.There are several nonpass-throughdrugs and biologicals that were payablein CY 2010 and/or CY 2011 for whichwe did not have CY 2010 hospitalclaims data available for the proposedrule and for which there are no otherHCPCS codes that describe differentdoses of the same drug, but which havepricing information available for theASP methodology. We note that thereare currently no therapeuticradiopharmaceuticals in this category.In order to determine the packagingstatus of these products for CY 2012, wecalculated an estimate of the per daycost of each of these items bymultiplying the payment rate of eachproduct based on ASP+4 percent,similar to other nonpass-through drugsand biologicals paid separately underthe OPPS, by an estimated averagenumber of units of each product thatwould typically be furnished to apatient during one day in the hospitaloutpatient setting. This rationale wasfirst adopted in the CY 2006 OPPS/ASCfinal rule <strong>with</strong> comment period (70 FR68666 and 68667).We proposed to package items forwhich we estimated the per dayadministration cost to be less than orVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00211 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2equal to $80, which is the generalpackaging threshold that we proposedfor drugs, nonimplantable biologicals,and therapeutic radiopharmaceuticals inCY 2012. We proposed to pay separatelyfor items <strong>with</strong> an estimated per day costgreater than $80 (<strong>with</strong> the exception ofdiagnostic radiopharmaceuticals,contrast agents, and implantablebiologicals, which we proposed tocontinue to package regardless of cost asdiscussed in more detail in sectionV.B.2.d. of this final rule <strong>with</strong> commentperiod) in CY 2012. We proposed thatthe CY 2012 payment for separatelypayable items <strong>with</strong>out CY 2010 claimsdata would be ASP+4 percent, similar topayment for other separately payablenonpass-through drugs and biologicalsunder the OPPS. In accordance <strong>with</strong> theASP methodology paid in thephysician’s office setting, in the absenceof ASP data we proposed to use theWAC for the product to establish theinitial payment rate. However, we notedthat if the WAC is also unavailable, wewould make payment at 95 percent ofthe most recent AWP available.The proposed estimated units per dayand status indicators for these items aredisplayed in Table 33 of the proposedrule (76 FR 42265).<strong>Comment</strong>: One commenter stated thatit had been advised by the AmericanHospital Association Central office onHCPCS to report HCPCS code J1826(Injection, interferon beta-1A-1A, 30mcg). The commenter noted that HCPCScode J1826 currently has a statusindicator of ‘‘E’’ and is not payableunder OPPS but, because it isreportable, believed that it shouldreceive a status indicator of ‘‘K’’ and beassigned to an APC. The commenternoted that HCPCS code Q3025 (KInterferon beta 1-a, 11 mcg for IM use)is reportable and is assigned to APC9022 <strong>with</strong> a CY 2011 rate ofapproximately $222.Response: HCPCS code J1826 wasmade effective January 1, 2011, andassigned a status indicator of ‘‘E’’ underthe hospital OPPS and given a coverageindicator of ‘‘Not payable by Medicare’’by the HCPCS Work Group. Althoughthe HCPCS code is not payable byMedicare, other insurers may recognizeit. Therefore, we advise hospitals tocontact their health insurers for furtherreporting and/or payment informationrelated to HCPCS code J1826.The commenter is correct thathospitals can report HCPCS codeQ3025, which is separately reportableunder the OPPS. HCPCS code Q3025 isassigned to APC 9022, and for the July2011 update, its payment rate isapproximately $235. Hospitals arereminded that payments for OPPS drugs

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274332 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsare updated quarterly and posted on theCMS OPPS Web site, specifically athttps://www.cms.gov/HospitalOutpatientPPS/AU/list.asp#TopOfPage. Because paymentsfor OPPS drugs are updated on aquarterly basis, hospitals are advised torefer to either Addendum A, which is inAPC order, or Addendum B, which is inHCPCS code order, for the latestpayment information for items andservices paid under the OPPS.<strong>Comment</strong>: One commenter remarkedthat the ‘‘list of acceptable analgesics forlong bone fractures’’ does not includeproducts such as Motrin and ibuprofen.The commenter recommended that CMSadd these products to the ‘‘list ofacceptable medications’’ to treat pain forlong bone fractures.Response: We are uncertain what thecommenter means in reference to a listof acceptable medications to treat longbone fractures as we are not aware ofany such list established for Medicarepayment in the hospital outpatientdepartment for such injuries. In the CY2012 OPPS/ASC proposed rule, we didnot make any specific proposalsregarding a list of analgesics, nor havewe finalized any policies that pertain toa list of analgesics. Therefore, webelieve that this comment is outside thescope of this final rule <strong>with</strong> commentperiod. However, we note that thisdiscussion of drugs and biologicalsdiscusses payment for all medicallynecessary drugs and therefore applies tothose that are necessary for thetreatment of pain in the HOPD,including NSAIDS such as ibuprofen.We further note that, although in mostcases drugs necessary for the treatmentof pain, including NSAIDS such asibuprofen, do not receive separatepayment under OPPS, their costs, as<strong>with</strong> costs associated <strong>with</strong> othersupplies necessary during the visit, maybe packaged into emergency departmentor clinic visit codes.Although we did not receive anyspecific public comments regarding ourproposed payment for nonpass-throughdrugs, biologicals, andradiopharmaceuticals <strong>with</strong> HCPCScodes, but <strong>with</strong>out OPPS hospitalclaims data, many commenterssupported our proposal to pay forseparately payable drugs at ASP+4percent in CY 2012, and othercommenters recommended that we payno less than ASP+6 percent forseparately payable drugs in CY 2012.However, these comments were notspecific to new drugs and biologicals<strong>with</strong> HCPCS codes but <strong>with</strong>out OPPSclaims data. For more informationregarding payment for separatelypayable drugs, including general publiccomments and our responses, we referreaders to section V.B.3.b. of this finalrule <strong>with</strong> comment period. In addition,commenters on the CY 2012 OPPS/ASCproposed rule objected to packagingpayment for diagnosticradiopharmaceuticals and contrastagents in general, but these commentswere not directed to new diagnosticradiopharmaceuticals or contrast agents<strong>with</strong> HCPCS codes but <strong>with</strong>out OPPSclaims data. We summarize thesecomments and provide our response insection V.A.2.d. of this final rule <strong>with</strong>comment period.We are finalizing our CY 2012proposal, <strong>with</strong>out modification, asfollows: Payment for new drugs(excluding contrast agents anddiagnostic radiopharmaceuticals),nonimplantable biologicals, andtherapeutic radiopharmaceuticals <strong>with</strong>HCPCS codes that do not crosswalk toCY 2011 HCPCS codes, but which donot have pass-through status and forwhich we do not have OPPS hospitalclaims data, will be made at ASP+4percent for CY 2012, consistent <strong>with</strong> thefinal CY 2012 payment methodology forother new separately payable nonpassthroughdrugs, nonimplantablebiologicals and therapeuticradiopharmaceuticals, described insection V.B.3.b. of this final rule <strong>with</strong>comment period. In cases where ASPinformation is not available, paymentwill be made using WAC, and, if WACis also unavailable, payment will bemade at 95 percent of the product’smost recent AWP. Further, payment forall new nonpass-through diagnosticradiopharmaceuticals, contrast agents,and implantable biologicals <strong>with</strong>HCPCS codes but for which we do nothave OPPS claims data will be packagedfor CY 2012. <strong>Final</strong>ly, we are assigningstatus indicator ‘‘K’’ to HCPCS codes fornew drugs and nonimplantablebiologicals for which we do not haveOPPS claims data and for which wehave not granted pass-through status forCY 2012. With respect to new items forwhich we do not have ASP data, oncetheir ASP data becomes available inlater quarterly submissions, theirpayments will be adjusted so that therates will be based on the ASPmethodology and set to the finalizedASP amount of ASP+4 percent. Thispolicy will ensure that payment is madefor actual acquisition cost and pharmacyoverhead for these new products.For CY 2012, we also proposed tocontinue our CY 2011 policy to basepayment for new therapeuticradiopharmaceuticals <strong>with</strong> HCPCScodes, but which do not have passthroughstatus and for which we do nothave claims data, on the WACs for theseVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00212 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2products if ASP data for thesetherapeutic radiopharmaceuticals arenot available. If the WACs are alsounavailable, we proposed to makepayment for a new therapeuticradiopharmaceutical at 95 percent of theproduct’s most recent AWP because wewould not have mean costs fromhospital claims data upon which to basepayment. Analogous to new drugs andbiologicals, we proposed to continueour policy of assigning status indicator‘‘K’’ to HCPCS codes for newtherapeutic radiopharmaceuticals<strong>with</strong>out OPPS claims data for which wehave not granted pass-through status.We did not receive any publiccomments specific to our proposal fornew therapeutic radiopharmaceuticals<strong>with</strong> HCPCS codes but <strong>with</strong>out passthroughstatus. However, commenterson the CY 2012 OPPS/ASC proposedrule were generally supportive of theASP methodology for payment fortherapeutic radiopharmaceuticals in theHOPD, and we are finalizing an ASPpayment methodology for separatelypayable therapeuticradiopharmaceuticals for CY 2012, asdiscussed in section V.B.3.c. of this finalrule <strong>with</strong> comment period.We are finalizing our CY 2012proposals, <strong>with</strong>out modification, toprovide payment based on WAC for newtherapeutic radiopharmaceuticals <strong>with</strong>HCPCS codes but <strong>with</strong>out pass-throughstatus and for which we do not haveclaims data, if ASP data for thesetherapeutic radiopharmaceuticals is notavailable. If WAC information is alsounavailable, we will make payment fornew therapeutic radiopharmaceuticalsat 95 percent of the product’s mostrecent AWP. In addition, we areassigning status indicator ‘‘K’’ to HCPCScodes for new therapeuticradiopharmaceuticals <strong>with</strong>out claimsdata in CY 2012 that do not have passthroughstatus.Consistent <strong>with</strong> other ASP-basedpayments, for CY 2012, we proposed toannounce any changes to the paymentamounts for new drugs and biologicalsin the CY 2012 OPPS/ASC final rule<strong>with</strong> comment period and also on aquarterly basis on the CMS Web siteduring CY 2012 if later quarter ASPsubmissions (or more recent WACs orAWPs) indicate that changes to thepayment rates for these drugs andbiologicals are necessary. The paymentrates for new therapeuticradiopharmaceuticals will also bechanged accordingly, based on laterquarter ASP submissions. We note thatthe new CY 2012 HCPCS codes fordrugs, biologicals, and therapeuticradiopharmaceuticals were not availableat the time of development of the

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74333proposed rule. However, they areincluded in Addendum B to this CY2012 OPPS/ASC final rule <strong>with</strong>comment period. They are assignedcomment indicator ‘‘NI’’ in AddendumB to reflect that their interim final OPPStreatment is open to public comment onthis CY 2012 OPPS/ASC final rule <strong>with</strong>comment period.We did not receive any publiccomments on our proposal to announce,via the CMS Web site, any changes tothe OPPS payment amounts for newdrugs and biologicals on a quarterlybasis. Therefore, for the reasonsdescribed in the CY 2012 proposed rule,we are finalizing our proposal and willupdate payment rates for new drugs,biologicals, and therapeuticradiopharmaceuticals, as necessary, inassociation <strong>with</strong> our quarterly updateprocess and provide this information onthe CMS Web site.There are several nonpass-throughdrugs and biologicals that were payablein CY 2010 and/or CY 2011, for whichwe did not have CY 2010 hospitalclaims data available for the proposedrule and for which there were no otherHCPCS codes that describe differentdoses of the same drug. These drugs andbiologicals do have pricing informationavailable for the ASP methodology. Inthe CY 2012 OPPS/ASC proposed rule(76 FR 42265), we noted that there arecurrently no therapeuticradiopharmaceuticals in this category.In order to determine the packagingstatus of these products for CY 2012, wecalculated an estimate of the per daycost of each of these items bymultiplying the payment rate for eachproduct based on ASP+4 percent,similar to other nonpass-through drugsand biologicals paid separately underthe OPPS, by an estimated averagenumber of units of each product thatwould typically be furnished to apatient during one day in the hospitaloutpatient setting. We proposed topackage items for which we estimatedthe per day cost to be less than or equalto $80, which was the general packagingthreshold that we proposed for drugs,nonimplantable biologicals, andtherapeutic radiopharmaceuticals in CY2012. We proposed to pay separately foritems <strong>with</strong> an estimated per day costgreater than $80 (<strong>with</strong> the exception ofdiagnostic radiopharmaceuticals,contrast agents, and implantablebiologicals, which we proposed tocontinue to package regardless of cost(as discussed in more detail in sectionV.B.2.d. of this final rule <strong>with</strong> commentperiod)) in CY 2012. We proposed thatthe CY 2012 payment for separatelypayable items <strong>with</strong>out CY 2010 claimsdata would be ASP+4 percent, similar topayment for other separately payablenonpass-through drugs and biologicalsunder the OPPS. In accordance <strong>with</strong> theASP methodology used in thephysician’s office setting, in the absenceof ASP data, we proposed to use theWAC for the product to establish theinitial payment rate. However, we notedthat if the WAC is also unavailable, wewould make payment at 95 percent ofthe most recent AWP available.We did not receive any publiccomments on our proposal to useestimated per day costs for these drugsand biologicals or on the resultingpackaging status of these drugs andbiologicals. However, upon receivingupdated CY 2011 claims data for HCPCScodes J0364 (Injection, apomorphinehydrochloride, 1 mg), J0630 (Injection,calcitonin salmon, up to 400 units), andJ9216 (Injection, interferon, gamma 1-b,3 million units) for this final rule <strong>with</strong>comment period, we determined that weno longer needed to calculate anestimated average number of units forthese three items because we now havesufficient data upon which to basepayment. Therefore, for CY 2011, wecalculated the packaging status forHCPCS codes J0364, J0630, and J9216using our standard methodology asdescribed above. These codes and theirpackaging status are discussed further insection V.B.2.b. of this final rule <strong>with</strong>comment period. Therefore, for thereasons described in our proposed rule,we are finalizing our CY 2012 proposal,<strong>with</strong> modification, to use the estimatednumber of units per day included inTable 40 below to determine estimatedper day costs for the correspondingdrugs and biologicals for CY 2012.Further, as we note in section V.B.2.b.of this final rule <strong>with</strong> comment period,the packaging threshold for CY 2012 haschanged from $80 in the proposed ruleto $75 in this final rule <strong>with</strong> commentperiod. As a result of this change, whichoccurred because of our use of the mostrecent forecast of the quarterly PPIindex levels in our update of the CY2012 packaging threshold for the finalrule <strong>with</strong> comment period, we willpackage those drugs <strong>with</strong> an estimatedper day cost less than or equal to $75and provide separate payment for thosedrugs and biologicals (other thandiagnostic radiopharmaceuticals,contrast agents and implantablebiologicals) <strong>with</strong> estimated per day costsover $75 for CY 2012. For those drugsand biologicals <strong>with</strong>out CY 2010 claimsdata that we determine to be separatelypayable in CY 2012, payment will bemade at ASP+4 percent. If ASPinformation is not available, paymentwill be based on WAC, or 95 percent ofthe most recently published AWP ifWAC is not available. The finalestimated units per day and statusindicators for these items are displayedin Table 40 below.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00213 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74334 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2<strong>Final</strong>ly, there were five drugs andbiologicals, shown in Table 34 of theproposed rule (76 FR 42266), that werepayable in CY 2010, but for which welacked CY 2010 claims data and anyother pricing information for the ASPmethodology for the CY 2012 OPPS/ASC proposed rule. In CY 2009, forsimilar items <strong>with</strong>out CY 2007 claimsdata and <strong>with</strong>out pricing information forthe ASP methodology, we previouslystated that we were unable to determinetheir per day cost and we packagedthese items for the year, assigning theseitems status indicator ‘‘N.’’For CY 2010, we finalized a policy tochange the status indicator for drugsand biologicals previously assigned apayable status indicator to statusindicator ‘‘E’’ (Not paid by Medicarewhen submitted on outpatient claims(any outpatient bill type)) whenever welacked claims data and pricinginformation and were unable todetermine the per day cost. In addition,we noted that we would provideseparate payment for these drugs andbiologicals if pricing informationreflecting recent sales becomes availablemid-year in CY 2010 for the ASPmethodology. If pricing informationbecame available, we would assign theproducts status indicator ‘‘K’’ and payfor them separately for the remainder ofCY 2010. In the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71973), for CY 2011, we continued ourCY 2010 policy to assign statusindicator ‘‘E’’ to drugs and biologicalsthat lacked CY 2009 claims data andpricing information for the ASPmethodology. We also continued ourpolicy to change the status indicator forthese products to ‘‘K’’ if pricinginformation became available, and payfor them separately for the remainder ofCY 2011.For CY 2012, we proposed to continueour CY 2011 policy to assign statusindicator ‘‘E’’ to drugs and biologicalsthat lack CY 2010 claims data andpricing information for the ASPmethodology. All drugs and biologicals<strong>with</strong>out CY 2010 hospital claims dataand data based on the ASP methodologythat are assigned status indicator ‘‘E’’ onthis basis at the time of the proposedrule for CY 2012 are displayed in Table34 of the proposed rule (76 FR 42266).If pricing information becomesavailable, we proposed to assign theproducts status indicator ‘‘K’’ and payfor them separately for the remainder ofCY 2012. We did not receive any publiccomments on these proposals.We did not receive any publiccomments on our proposal to change thestatus indicators of drugs andbiologicals <strong>with</strong>out CY 2010 claims dataor pricing information for the ASPmethodology. After the proposed rulewas published, we received pricinginformation for HCPCS code J9213(Injection, interferon, alfa-2a,recombinant, 3 million units) for CY2012, and it is included in AddendumB to this CY 2012 OPPS/ASC final rule<strong>with</strong> comment period (which isreferenced in section XVII. of this finalrule <strong>with</strong> comment period and availableVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00214 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2via the Internet on the CMS Web site)<strong>with</strong> an assigned CY 2012 statusindicator of ‘‘N.’’Further, as we have used updatedclaims data and ASP pricinginformation for this final rule <strong>with</strong>comment period, we have newlyidentified HCPCS codes J2265(Injection, minocycline hydrochloride,1 mg), Q4123 (Alloskin RT), Q4125(Arthroflex), Q4126 (Memoderm),Q4127 (Talymed), Q4128 (Flexhd oralopatch hd), and Q4129 (Unitebiomatrix) as lacking CY 2010 claimsdata and any other pricing informationfor the ASP methodology. Therefore, inaddition to the HCPCS codes for whichwe proposed to assign status indicator‘‘E’’ for CY 2012 due to a lack of claimsdata and any other pricing informationin the proposed rule, we are assigningstatus indicator ‘‘E’’ to HCPCS codesJ2265, Q4123, Q4125, Q4126, Q4127,Q4128, and Q4129. We are finalizingour CY 2012 proposal, <strong>with</strong>outmodification, to assign status indicator‘‘E’’ to these drugs and biologicals. Aswas our policy in CY 2011, if pricinginformation becomes available for theseproducts in CY 2012 we will assign theproducts status indicator ‘‘K’’ and payfor them separately for the remainder ofCY 2012.All drugs and biologicals <strong>with</strong>out CY2010 hospital claims data and databased on the ASP methodology that areassigned status indicator ‘‘E’’ on thisbasis at the time of this final rule <strong>with</strong>comment period for CY 2012 aredisplayed in Table 41 below.ER30NO11.066

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74335jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs,Biologicals, Radiopharmaceuticals, andDevicesA. BackgroundSection 1833(t)(6)(E) of the Act limitsthe total projected amount oftransitional pass-through payments fordrugs, biologicals,radiopharmaceuticals, and categories ofdevices for a given year to an‘‘applicable percentage’’ (currently 2.0percent, as stated below) of totalprogram payments estimated to be madefor all covered services under thehospital OPPS furnished for that year.For a year (or portion of a year) beforeCY 2004, the applicable percentage was2.5 percent; for CY 2004 and subsequentyears, the applicable percentage is apercentage specified by the Secretary upto (but not to exceed) 2.0 percent.If we estimate before the beginning ofthe calendar year that the total amountof pass-through payments in that yearwould exceed the applicable percentage,section 1833(t)(6)(E)(iii) of the Actrequires a uniform prospectivereduction in the amount of each of thetransitional pass-through paymentsmade in that year to ensure that thelimit is not exceeded. We make anestimate of pass-through spending todetermine not only whether paymentsexceed the applicable percentage, butalso to determine the appropriate prorata reduction to the conversion factorfor the projected level of pass-throughspending in the following year in orderto ensure that total estimated passthroughspending for the prospectivepayment year is budget neutral, asrequired by section 1883(t)(6)(E) of theAct.For devices, developing an estimate ofpass-through spending in CY 2012entails estimating spending for twogroups of items. The first group of itemsconsists of device categories that wererecently made eligible for pass-throughpayment and that will continue to beeligible for pass-through payment in CY2012. The CY 2008 OPPS/ASC final rule<strong>with</strong> comment period (72 FR 66778)describes the methodology we haveused in previous years to develop thepass-through spending estimate forknown device categories continuing intothe applicable update year. The secondgroup contains items that we know arenewly eligible, or project may be newlyeligible, for device pass-throughpayment in the remaining quarters ofCY 2011 or beginning in CY 2012.Beginning in CY 2010, the pass-throughevaluation process and pass-throughpayment for implantable biologicalsnewly approved for pass-throughpayment beginning on or after January1, 2010, that are surgically inserted orimplanted (through a surgical incisionor a natural orifice; also referred toherein as ‘‘implantable biologicals’’) isthe device pass-through process andpayment methodology only (74 FR60476). In the CY 2012 OPPS/ASCproposed rule (76 FR 42266), weproposed for the CY 2012 OPPS that theestimate of pass-through spending forVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00215 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2implantable biologicals newly eligiblefor pass-through payment beginning inCY 2012 be included in the passthroughspending estimate for thissecond group of device categories. Thesum of the CY 2012 pass-throughestimates for these two groups of devicecategories would equal the total CY2012 pass-through spending estimate fordevice categories <strong>with</strong> pass-throughstatus.For devices eligible for pass-throughpayment, section 1833(t)(6)(D)(ii) of theAct establishes the pass-throughpayment amount as the amount bywhich the hospital’s charges for thedevice, adjusted to cost, exceeds theportion of the otherwise applicableOPPS fee schedule payment that theSecretary determines is associated <strong>with</strong>the device. As discussed in sectionIV.A.2. of the proposed rule and thisfinal rule <strong>with</strong> comment period, wededuct from the pass-through paymentfor an identified device category eligiblefor pass-through payment an amountthat reflects the portion of the APCpayment amount that we determine isassociated <strong>with</strong> the cost of the device,defined as the device APC offsetamount, when we believe that thepredecessor device costs for the devicecategory newly approved for passthroughpayment are already packagedinto the existing APC structure. For eachdevice category that becomes newlyeligible for device pass-throughpayment, including implantablebiologicals from CY 2010 forward, weestimate pass-through spending to beER30NO11.067

74336 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2the difference between payment for thedevice category and the device APCoffset amount, if applicable, for theprocedures that would use the device. Ifwe determine that the predecessordevice costs for the new device categoryare not already included in the existingAPC structure, the pass-throughspending estimate for the devicecategory is the full payment at chargesadjusted to cost.For drugs and biologicals eligible forpass-through payment, section1833(t)(6)(D)(i) of the Act establishes thepass-through payment amount as theamount by which the amountauthorized under section 1842(o) of theAct (or, if the drug or biological iscovered under a competitive acquisitioncontract under section 1847B of the Act,an amount determined by the Secretaryequal to the average price for the drugor biological for all competitiveacquisition areas and year establishedunder such section as calculated andadjusted by the Secretary) exceeds theportion of the otherwise applicable feeschedule amount that the Secretarydetermines is associated <strong>with</strong> the drugor biological. Because we proposed topay for most nonpass-through separatelypayable drugs and nonimplantablebiologicals under the CY 2012 OPPS atASP+4 percent, which represented theotherwise applicable fee scheduleamount associated <strong>with</strong> most passthroughdrugs and biologicals, andbecause we proposed to pay for CY 2012pass-through drugs and nonimplantablebiologicals at ASP+6 percent or the PartB drug CAP rate, if applicable, ourestimate of drug and nonimplantablebiological pass-through payment for CY2012 would not be zero, as discussedbelow. Furthermore, payment for certaindrugs, specifically diagnosticradiopharmaceuticals, contrast agents,and implantable biologicals <strong>with</strong>outpass-through status, will always bepackaged into payment for theassociated procedures because theseproducts will never be separately paid.However, all pass-through diagnosticradiopharmaceuticals and contrastagents <strong>with</strong> pass-through statusapproved prior to CY 2012 would bepaid at ASP+6 percent or the Part B drugCAP rate, if applicable, like other passthroughdrugs and biologicals.Therefore, our estimate of pass-throughpayment for all diagnosticradiopharmaceuticals and contrastagents <strong>with</strong> pass-through statusapproved prior to CY 2012 is also notzero. We note that there are noimplantable biologicals proposed tocontinue on pass-through status for CY2012 and, therefore, we did not proposeto include implantable biologicals inour estimate of pass-through payment.Payment for nonpass-throughimplantable biologicals will continue tobe packaged into the payment for theassociated procedure as described insection V.B.2.d of the proposed rule.In section V.A.4. of the proposed ruleand this final rule <strong>with</strong> commentperiod, we discuss our proposed andfinal policy to determine if the cost ofcertain ‘‘policy-packaged’’ drugs,including diagnosticradiopharmaceuticals and contrastagents, are already packaged into theexisting APC structure. If we determinethat a ‘‘policy-packaged’’ drug approvedfor pass-through payment resemblespredecessor diagnosticradiopharmaceuticals or contrast agentsalready included in the costs of theAPCs that would be associated <strong>with</strong> thedrug receiving pass-through payment, inthe proposed rule, we proposed to offsetthe amount of pass-through payment fordiagnostic radiopharmaceuticals andcontrast agents. For these drugs, theAPC offset amount would be the portionof the APC payment for the specificprocedure performed <strong>with</strong> the passthroughdiagnostic radiopharmaceuticalor contrast agent that is attributable todiagnostic radiopharmaceuticals orcontrast agents, which we refer to as the‘‘policy-packaged’’ drug APC offsetamount. If we determine that an offsetis appropriate for a specific diagnosticradiopharmaceutical or contrast agentreceiving pass-through payment, wewould reduce our estimate of passthroughpayment for these drugs by thisamount.We note that the Part B drug CAPprogram has been postponed sinceJanuary 1, 2009. We refer readers to theMedicare Learning Network (MLN)Matters Special Edition article SE0833for more information, available via theCMS Web site at: http://www.cms.gov/MLNMattersArticles/downloads/SE0833.pdf. As of the publication of theproposed rule and this final rule <strong>with</strong>comment period, the postponement ofthe Part B drug CAP program is still ineffect. As in past years, for the proposedrule and this final rule <strong>with</strong> commentperiod, we do not have an effective PartB drug CAP rate for pass-through drugsand biologicals.Similar to pass-through estimates fordevices, the first group of drugs andnonimplantable biologicals requiring apass-through payment estimate consistsof those products that were recentlymade eligible for pass-through paymentand that will continue to be eligible forpass-through payment in CY 2012. Thesecond group contains drugs andnonimplantable biologicals that weVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00216 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2know are newly eligible, or project willbe newly eligible, in the remainingquarters of CY 2011 or beginning in CY2012. The sum of the CY 2012 passthroughestimates for these two groupsof drugs and biologicals would equal thetotal CY 2012 pass-through spendingestimate for drugs and biologicals <strong>with</strong>pass-through status.B. Estimate of Pass-Through SpendingIn the CY 2012 OPPS/ASC proposedrule (76 FR 42267), we proposed to setthe applicable pass-through paymentpercentage limit at 2.0 percent of thetotal projected OPPS payments for CY2012, consistent <strong>with</strong> our OPPS policyfrom CY 2004 through CY 2011 (75 FR71975).At the time of the proposed rule, forthe first group of devices for passthroughpayment estimation purposes,there was one device category eligiblefor pass-through payment for CY 2012,C1749 (Endoscope, retrograde imaging/illumination colonoscope device(implantable)). We estimated that CY2012 pass-through expenditures relatedto device category C1749 would beapproximately $35 million. However,for this final rule <strong>with</strong> comment period,for the first group of devices for passthroughpayment estimate purposes,there currently are three devicecategories eligible for pass-throughpayment in CY 2012: C1749 that becameeffective October 1, 2010; C1830(Powered bone marrow biopsy needle)that became effective October 1, 2011;and C1840 (Lens, intraocular(telescopic)) that became effectiveOctober 1, 2011. For this final rule <strong>with</strong>comment period, we estimate that CY2012 pass-through expenditures relatedto these 3 categories will beapproximately $47 million.In estimating our proposed CY 2012pass-through spending for devicecategories in the second group, whichalso includes any estimate forimplantable biologicals that are eligiblefor pass-through payment, we include:Device categories that we know at thetime of the development of the proposedrule would be newly eligible for passthroughpayment in CY 2012 (of whichthere were none); additional devicecategories (including categories thatdescribe implantable biologicals) thatwe estimate could be approved for passthroughstatus subsequent to thedevelopment of the proposed rule andbefore January 1, 2012; and contingentprojections for new device categories(including categories that describeimplantable biologicals) established inthe second through fourth quarters ofCY 2012. We proposed to use thegeneral methodology described in the

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74337jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2CY 2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66778), whilealso taking into account recent OPPSexperience in approving new passthroughdevice categories. For theproposed rule, the estimate of CY 2012pass-through spending for this secondgroup of device categories was $10million. Using our establishedmethodology, we proposed that the totalestimated pass-through spending fordevice categories for CY 2012 (spendingfor the first group of device categories($35 million) plus spending for thesecond group of device categories ($10million)) be $45 million.<strong>Comment</strong>: One commenter waspleased <strong>with</strong> our estimate based on theone device category, C1749, in the CY2012 OPPS/ASC proposed rule.Response: We appreciate thiscomment.For this CY 2012 OPPS/ASC final rule<strong>with</strong> comment period, 3 devicecategories, C1749, C1830, and C1840,will be eligible for pass-throughpayment for CY 2012, as mentionedearlier, and the pass-through spendingestimate for those categories in $47million. There also are possible newdevice categories for pass-throughpayment based on current applicationsand future applications. Therefore, theestimate of CY 2011 pass-throughspending for the second group of devicecategories is $10 million.For this CY 2012 final rule <strong>with</strong>comment period, we are finalizing thecontinued use of our establishedmethodology. Employing ourestablished methodology that theestimate of pass-through devicespending in CY 2012 incorporates CY2012 estimates of pass-through spendingfor known device categories <strong>with</strong>continuing pass-through status in CY2012, those known or projected to befirst effective January 1, 2012, and thosedevice categories projected to beapproved during subsequent quarters ofCY 2011 or CY 2012, we estimate forthis CY 2012 OPPS/ASC final rule <strong>with</strong>comment period the total pass-throughspending for device categories for CY2011 to be $57 million.To estimate CY 2012 proposed passthroughspending for drugs andnonimplantable biologicals in the firstgroup, specifically those drugs(including radiopharmaceuticals andcontrast agents) and nonimplantablebiologicals recently made eligible forpass-through payment and continuingon pass-through status for CY 2012, weproposed to utilize the most recentMedicare physician’s office dataregarding their utilization, informationprovided in the respective pass-throughapplications, historical hospital claimsdata, pharmaceutical industryinformation, and clinical informationregarding those drugs or nonimplantablebiologicals, to project the CY 2012 OPPSutilization of the products.For the known drugs andnonimplantable biologicals (excludingdiagnostic radiopharmaceuticals andcontrast agents) that would becontinuing on pass-through status in CY2012, we estimated the proposed passthroughpayment amount as thedifference between ASP+6 percent orthe Part B drug CAP rate, as applicable,and the proposed payment rate fornonpass-through drugs andnonimplantable biologicals that wouldbe separately paid at ASP+4 percent,aggregated across the projected CY 2012OPPS utilization of these products.Because payment for a diagnosticradiopharmaceutical or contrast agentwould be packaged if the product werenot paid separately due to its passthroughstatus, we proposed to includein the proposed CY 2012 pass-throughestimate the difference betweenpayment for the drug or nonimplantablebiological at ASP+6 percent (or WAC+6percent, or 95 percent of AWP, if ASPor WAC information is not available)and the ‘‘policy-packaged’’ drug APCoffset amount, if we have determinedthat the diagnostic radiopharmaceuticalor contrast agent approved for passthroughpayment resembles predecessordiagnostic radiopharmaceuticals orcontrast agents already included in thecosts of the APCs that would beassociated <strong>with</strong> the drug receiving passthroughpayment. For the CY 2012proposed rule, we proposed to continueto use the methodology used in CY 2011to calculate a proposed spendingestimate for this first group of drugs andbiologicals to be approximately $5.7million.We did not receive any publiccomments on our proposedmethodology for calculating thespending estimate for this first group ofdrugs and nonimplantable biologicals.Therefore, for this final rule <strong>with</strong>comment period, we are finalizing ourproposed methodology. Using thatmethodology, we calculated a finalspending estimate for this first group ofdrugs and biologicals to be $21.5million.To estimate CY 2012 pass-throughspending for drugs and nonimplantablebiologicals in the second group (that is,drugs and nonimplantable biologicalsthat we knew at the time ofdevelopment of the proposed rulewould be newly eligible for passthroughpayment in CY 2012, additionaldrugs and nonimplantable biologicalsthat we estimate could be approved forVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00217 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2pass-through status subsequent to thedevelopment of this proposed rule andbefore January 1, 2012, and projectionsfor new drugs and nonimplantablebiologicals that could be initiallyeligible for pass-through payment in thesecond through fourth quarters of CY2012), we proposed to use utilizationestimates from pass-through applicants,pharmaceutical industry data, clinicalinformation, recent trends in the perunit ASPs of hospital outpatient drugs,and projected annual changes in servicevolume and intensity as our basis formaking the CY 2012 proposed passthroughpayment estimate. We alsoconsidered the most recent OPPSexperience in approving new passthroughdrugs and nonimplantablebiologicals. Using our proposedmethodology for estimating CY 2012pass-through payments for this secondgroup of drugs, we calculated aproposed spending estimate for thissecond group of drugs andnonimplantable biologicals to beapproximately $13.8 million.We did not receive any publiccomments on our proposed policy and,therefore, are finalizing our proposedmethodology for estimating CY 2012pass-through payments for this secondgroup of drugs. For this final rule <strong>with</strong>comment period, we calculated a finalspending estimate for this second groupof drugs and biologicals to be $10.6million.As discussed in section V.A. of theproposed rule and this final rule <strong>with</strong>comment period, radiopharmaceuticalsare considered drugs for pass-throughpurposes. Therefore, we includedradiopharmaceuticals in our proposedCY 2012 pass-through spendingestimate for drugs and biologicals. Ourproposed CY 2012 estimate for totalpass-through spending for drugs andbiologicals (spending for the first groupof drugs and nonimplantable biologicals($5.7 million) plus spending for thesecond group of drugs andnonimplantable biologicals ($13.8million)) equaled $19.5 million.The final estimate for pass-throughspending for the first group of drugs andbiologicals is $21.5 million for CY 2012.The final estimate for pass-throughspending for the second group of drugsand biologicals is $10.6 million for CY2012. As discussed in section V.A. ofthis final rule <strong>with</strong> comment period,radiopharmaceuticals are considereddrugs for pass-through purposes.Therefore, we includedradiopharmaceuticals in our final CY2012 pass-through spending estimate fordrugs and biologicals. Our CY 2012allocation in this final rule <strong>with</strong>comment period for total estimated

74338 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationspass-through spending for drugs andbiologicals is $32.1 million.In summary, in accordance <strong>with</strong> themethodology described above in thissection, for this final rule <strong>with</strong> commentperiod, we estimate that total passthroughspending for the devicecategories and the drugs andnonimplantable biologicals that arecontinuing to receive pass-throughpayment in CY 2012 and those devicecategories, drugs, and nonimplantablebiologicals that first become eligible forpass-through payment during CY 2012will be approximately $89.1 million(approximately $57 million for devicecategories and approximately $32.1million for drugs and nonimplantablebiologicals), which represents 0.22percent of total projected OPPSpayments for CY 2012. We estimate thatpass-through spending in CY 2012 willnot amount to 2.0 percent of totalprojected OPPS CY 2012 programspending.VII. OPPS Payment for HospitalOutpatient VisitsA. BackgroundCurrently, hospitals report HCPCSvisit codes to describe three types ofOPPS services: Clinic visits; emergencydepartment visits; and critical careservices. For OPPS purposes, werecognize clinic visit codes as thosecodes defined in the CPT code book toreport evaluation and management (E/M) services provided in the physician’soffice or in an outpatient or otherambulatory facility. We recognizeemergency department visit codes asthose codes used to report E/M servicesprovided in the emergency department.Emergency department visit codesconsist of five CPT codes that apply toType A emergency departments and fiveLevel II HCPCS codes that apply to TypeB emergency departments. For OPPSpurposes, we recognize critical carecodes as those CPT codes used byhospitals to report critical care servicesthat involve the ‘‘direct delivery by aphysician(s) of medical care for acritically ill or critically injuredpatient,’’ as defined by the CPT codebook. In Transmittal 1139, ChangeRequest 5438, dated December 22, 2006,we stated that, under the OPPS, the timethat can be reported as critical care isthe time spent by a physician and/orhospital staff engaged in active face-tofacecritical care of a critically ill orcritically injured patient. Under theOPPS, we also recognize HCPCS codeG0390 (Trauma response teamassociated <strong>with</strong> hospital critical careservice) for the reporting of a traumaresponse in association <strong>with</strong> criticalcare services.As we proposed in the CY 2012OPPS/ASC proposed rule (76 FR 42268),we are continuing to recognize theseCPT and HCPCS codes describing clinicvisits, Type A and Type B emergencydepartment visits, critical care services,and trauma team activation provided inassociation <strong>with</strong> critical care services forCY 2012. These codes are listed belowin Table 42.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00218 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74339jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00219 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.068

74340 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–CDuring the February 28–March 1,2011, APC Panel meeting, the APCPanel recommended that CMS continueto report claims data for clinic andemergency department visits andobservation, and, if CMS identifieschanges in patterns of utilization orcost, it bring those issues before theVisits and Observation Subcommitteefor future consideration. The APC Panelalso recommended that the work of theVisits and Observation Subcommitteecontinue. In the CY 2012 OPPS/ASCproposed rule (76 FR 42269), weindicated that we are adopting theserecommendations and plan to providethe requested data and analyses to theAPC Panel at an upcoming meeting.At its August 10–11, 2011, meeting,the APC Panel recommended that thework of the Visits and ObservationSubcommittee continue. We areaccepting this recommendation.B. Policies for Hospital Outpatient Visits1. Clinic Visits: New and EstablishedPatient VisitsAs reflected in Table 42, hospitals usedifferent CPT codes for clinic visitsbased on whether the patient beingtreated is a new patient or anestablished patient. Beginning in CY2009, we refined the definitions of anew patient and an established patientto reflect whether or not the patient hasbeen registered as an inpatient oroutpatient of the hospital <strong>with</strong>in thepast 3 years. A patient who has beenregistered as an inpatient or outpatientof the hospital <strong>with</strong>in the 3 years priorto a visit would be considered to be anestablished patient for that visit, whilea patient who has not been registered asan inpatient or outpatient of the hospital<strong>with</strong>in the 3 years prior to a visit wouldbe considered to be a new patient forthat visit. We refer readers to the CY2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68677 through68680) for a full discussion of therefined definitions.We stated in the CY 2012 OPPS/ASCproposed rule (76 FR 42269) that wecontinue to believe that defining new orestablished patient status based onwhether the patient has been registeredas an inpatient or outpatient of thehospital <strong>with</strong>in the 3 years prior to avisit will reduce hospitals’administrative burden associated <strong>with</strong>reporting appropriate clinic visit CPTcodes, as we stated in the CY 2009OPPS/ASC final rule <strong>with</strong> commentperiod (73 FR 68677 through 68680).For CY 2012, we proposed to continuerecognizing the refined definitions of anew patient and an established patient,and applying our policy of calculatingmedian costs for clinic visits under theOPPS using historical hospital claimsdata. As discussed in section II.A.2.e.(1)of the proposed rule and consistent <strong>with</strong>our CY 2011 policy, when calculatingthe median costs for the clinic visitAPCs (0604 through 0608), we proposedto continue to utilize our methodologythat excludes those claims for visits thatVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00220 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2are eligible for payment through theextended assessment and managementcomposite APC 8002 (Level I ExtendedAssessment and ManagementComposite). We stated in the proposedrule that we continue to believe that thisapproach results in the most accuratecost estimates for APCs 0604 through0608 for CY 2012.<strong>Comment</strong>: Some commentersrecommended that CMS remove thedistinction between new andestablished patient clinic visits, arguingthat the length of time between apatient’s hospital visits has no bearingon services or resources providedduring a specific hospital visit.According to commenters, facilitiesmust expend the same level of resourcesto evaluate, manage, and treat thepatient’s current condition, regardless ofwhether the patient was registered as aninpatient or an outpatient in thehospital <strong>with</strong>in the past 3 years. Inaddition, some commenters stated thatthere are significant operational issuesinvolved <strong>with</strong> implementing the 3-yearcriterion for hospital clinic visit billingpurposes. Some commentersacknowledged that CMS’ claims dataindicate a new patient visit involvesmore resources than an establishedpatient visit, but argued that anydifferences in costs that are evident inclaims data for new patient visits versusestablished patient visits would be theresult of hospitals’ erroneous reportingof these codes, rather than any realdifference in the level of resourcesER30NO11.069

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74341jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2expended treating a new versus anestablished patient. The commenterssuggested that CMS recognize only theestablished patient visit codes andcalculate payment rates for those codesby blending median costs for both thenew and established patient visits. Thecommenters acknowledged this mayresult in reductions to the APC paymentrates for established patient visits. Thecommenters stated that, if CMS choosesto continue to require hospitals to reportboth new and established patient visitcodes, the distinction should be basedupon whether the patient has a medicalrecord.Response: As we stated in the CY2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 71986) and theCY 2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60547), becausehospital claims data continue to showsignificant cost differences between newand established patient visits, wecontinue to believe it is necessary andappropriate to recognize the CPT codesfor both new and established patientvisits and, in some cases, providedifferential payment for new andestablished patient visits of the samelevel. Therefore, we do not believe it isappropriate to recognize only theestablished patient visit codes andcalculate payment rates for those codesby blending median costs for both thenew and established patient visits. Forexample, the final CY 2012 median costfor the Level 3 new patient clinic visit,described by CPT code 99203 andcalculated using over 259,000 singleclaims from CY 2010, is approximately$103, while the final CY 2012 mediancost for the Level 3 established patientclinic visit, described by CPT code99213 and calculated using over 5.1million single claims from CY 2010, isapproximately $75. We believe thisdifference in median costs warrantscontinued assignment of these CPTcodes to different APCs for CY 2012.Given that we have a substantialvolume of single claims from asignificant number of hospitals uponwhich to calculate the median costs forall levels of clinic visits, we do not agree<strong>with</strong> the commenters that thedifferences in costs for new versusestablished patient visits are flawed orthe result of hospitals’ erroneousreporting of these codes. We expecthospitals to report all HCPCS codes inaccordance <strong>with</strong> correct codingprinciples, CPT code descriptions, andrelevant CMS guidance, which, in thiscase, specifies that the meanings of‘‘new’’ and ‘‘established’’ patients asincluded in the clinic visit CPT codedescriptors pertain to whether or not thepatient has been registered as aninpatient or an outpatient of the hospital<strong>with</strong>in the past 3 years (73 FR 68679).As we have stated in the past (74 FR60547 and 75 FR 71986), we have noreason to believe that hospitals aresystematically disregarding theseprinciples to the extent that it wouldcause our median costs for clinic visits,which are based on data from millionsof single claims, to be artificiallyskewed.As we stated in the CY 2009 OPPS/ASC final rule <strong>with</strong> comment period (73FR 68678) and the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71986) concerning the commenters’request that the distinction betweennew and established patients be basedupon whether the patient has a medicalrecord, we continue to believe it isappropriate to include a time limitwhen determining whether a patient isnew or established because we wouldexpect that care of a patient who wasnot treated at the hospital for severalyears prior to a visit could requiresignificantly greater hospital resourcesthan care for a patient who was recentlytreated at the hospital.<strong>Comment</strong>: One commenterrecommended that CMS reassignHCPCS code G0379 (Direct admission ofpatient for hospital observation care) toAPC 0616 (Level 5 Type A EmergencyVisits) because of the consistent 2 timesrule violation in APC 0604 (Level 1Hospital Clinic Visits) and HCPCS codeG0379’s similarity in both median costand clinical characteristics to CPT code99285 (Emergency Department VisitLevel 5). The commenter stated thatCMS should create a new APC andassign HCPCS code G0379 as a singlecode to this separate APC if CMS doesnot agree <strong>with</strong> G0379’s assignment toAPC 0616. The commenter also statedthat HCPCS code G0379 should beeligible for assignment to compositeAPC 8003 (Level II ExtendedAssessment and Management) along<strong>with</strong> CPT codes 99284 (EmergencyDepartment Visit Level 4), 99285(Emergency Department Visit Level 5),99291 (Critical Care First Hour), andG0384 (Level 5 Hospital Type B EDVisit) because of the clinical similarity<strong>with</strong> the higher evaluation andmanagement level codes. According tothe commenter, the median costs forCPT codes 99205 (Office/OutpatientVisit New Level 5) and 99215 (Office/Outpatient Visit Established Level 5) aresignificantly lower than the median costfor HCPCS code G0379 and, therefore,would remain assigned to compositeAPC 8002 (Level I Extended Assessmentand Management.)Response: Consistent <strong>with</strong> ourlongstanding and established policy toVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00221 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2pay for the direct referral for observationthrough the lowest level clinic APC,originally outlined in the CY 2003 OPPSfinal rule (67 FR 66794 though 66796),we believe HCPCS code G0379 isappropriately assigned to APC 0604. Wecontinue to believe that the originalrationale set forth in the CY 2003 OPPSfinal rule (67 FR 66794 through 66796)<strong>with</strong> respect to HCPCS code G0264(Initial nursing assessment of patientdirectly admitted to observation <strong>with</strong> adiagnosis other than congestive heartfailure, chest pain, or asthma), beingassigned to the lowest level clinic visitAPC is applicable to HCPCS codeG0379, as HCPCS code G0379 may beused to describe services previouslyidentified by HCPCS code G0264.Accordingly, we disagree <strong>with</strong> thecommenter that HCPCS code G0379 isclinically similar to HCPCS codes99284, 99285, 99291, and G0384 andshould be eligible for assignment tocomposite APC 8003, and we alsodisagree that HCPCS code G0379 shouldbe assigned to APC 0616 or as a singlecode to a newly created APC. Therefore,we are finalizing our proposal tocontinue to assign HCPCS code G0379to APC 0604 and composite APC 8002.After consideration of the publiccomments we received, we arefinalizing our CY 2012 proposal,<strong>with</strong>out modification, to continue todefine new or established patient statusfor the purpose of reporting the clinicvisit CPT codes, on the basis of whetheror not the patient has been registered asan inpatient or outpatient of the hospital<strong>with</strong>in the past 3 years. We also arefinalizing our CY 2012 proposal,<strong>with</strong>out modification, to continue ourpolicy of calculating median costs forclinic visits under the OPPS usinghistorical hospital claims data. Asdiscussed in detail in section II.A.2.e.(1)of this final rule <strong>with</strong> comment periodand consistent <strong>with</strong> our CY 2011 policy,when calculating the median costs forthe clinic visit APCs (0604 through0608), we utilized our methodology thatexcludes those claims for visits that areeligible for payment through theextended assessment and managementcomposite APC 8002 (Level I ExtendedAssessment and ManagementComposite). We continue to believe thatthis approach results in the mostaccurate cost estimates for APCs 0604through 0608 for CY 2012.2. Emergency Department VisitsSince CY 2007, we have recognizedtwo different types of emergencydepartments for payment purposesunder the OPPS—Type A emergencydepartments and Type B emergencydepartments. As described in greater

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274342 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsdetail below, by providing payment fortwo types of emergency departments,we recognize, for OPPS paymentpurposes, both the CPT definition of anemergency department, which requiresthe facility to be available 24 hours aday, and the requirements foremergency departments specified in theprovisions of the Emergency MedicalTreatment and Labor Act (EMTALA)(Pub. L. 99–272), which do not stipulate24-hour availability but do specify otherobligations for Medicare-participatinghospitals <strong>with</strong> emergency departments.For more detailed information on theEMTALA provisions, we refer readers tothe CY 2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68680).In the CY 2007 OPPS/ASC final rule<strong>with</strong> comment period (71 FR 68132), wefinalized the definition of a Type Aemergency department to distinguish itfrom a Type B emergency department. AType A emergency department must beavailable to provide services 24 hours aday, 7 days a week, and meet one orboth of the following requirementsrelated to the EMTALA definition of adedicated emergency departmentspecified at 42 CFR 489.24(b),specifically: (1) It is licensed by theState in which it is located under theapplicable State law as an emergencyroom or emergency department; or (2) itis held out to the public (by name,posted signs, advertising, or othermeans) as a place that provides care foremergency medical conditions on anurgent basis <strong>with</strong>out requiring apreviously scheduled appointment. ForCY 2007 (71 FR 68140), we assigned thefive CPT E/M emergency departmentvisit codes for services provided in TypeA emergency departments to fiveEmergency Visit APCs, specifically APC0609 (Level 1 Emergency Visits), APC0613 (Level 2 Emergency Visits), APC0614 (Level 3 Emergency Visits), APC0615 (Level 4 Emergency Visits), andAPC 0616 (Level 5 Emergency Visits).We defined a Type B emergencydepartment as any dedicated emergencydepartment that incurred EMTALAobligations but did not meet the CPTdefinition of an emergency department.For example, a hospital department thatmay be characterized as a Type Bemergency department would meet thedefinition of a dedicated emergencydepartment but may not be available 24hours a day, 7 days a week. Hospitals<strong>with</strong> such dedicated emergencydepartments incur EMTALA obligations<strong>with</strong> respect to an individual whopresents to the department and requests,or has a request made on his or herbehalf, examination or treatment for amedical condition.To determine whether visits to TypeB emergency departments have differentresource costs than visits to eitherclinics or Type A emergencydepartments, in the CY 2007 OPPS/ASCfinal rule <strong>with</strong> comment period (71 FR68132), we finalized a set of five HCPCSG-codes for use by hospitals to reportvisits to all entities that meet thedefinition of a dedicated emergencydepartment under the EMTALAregulations but that are not Type Aemergency departments. These codesare called ‘‘Type B emergencydepartment visit codes.’’ In the CY 2007OPPS/ASC final rule <strong>with</strong> commentperiod (71 FR 68132), we explained thatthese new HCPCS G-codes would serveas a vehicle to capture median cost andresource differences among visitsprovided by Type A emergencydepartments, Type B emergencydepartments, and clinics. We stated thatthe reporting of specific HCPCS G-codesfor emergency department visitsprovided in Type B emergencydepartments would permit us tospecifically collect and analyze thehospital resource costs of visits to thesefacilities in order to determine if, in thefuture, a proposal for an alternativepayment policy might be warranted. Weexpected hospitals to adjust theircharges appropriately to reflectdifferences in Type A and Type Bemergency department visit costs.As we noted in the CY 2009 OPPS/ASC final rule <strong>with</strong> comment period (73FR 68681), the CY 2007 claims dataused for that rulemaking were from thefirst year of claims data available foranalysis that included hospitals’ costdata for these new Type B emergencydepartment HCPCS visit codes. Basedon our analysis of the CY 2007 claimsdata, we confirmed that the mediancosts of Type B emergency departmentvisits were less than the median costs ofType A emergency department visits forall but the Level 5 visit. In other words,the median costs from the CY 2007hospital claims represented realdifferences in the hospital resourcecosts for the same level of visits in aType A or Type B emergencydepartment. Therefore, for CY 2009, weadopted the August 2008 APC Panelrecommendation to assign Levels 1through 4 Type B emergencydepartment visits to their own APCs andto assign the Level 5 Type B emergencydepartment visit to the same APC as theLevel 5 Type A emergency departmentvisit.As discussed in the CY 2010 OPPS/ASC final rule <strong>with</strong> comment period (74FR 60548 through 60551), analyses ofCY 2008 hospitals’ cost data from claimsdata used for CY 2010 ratesetting for theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00222 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2emergency department HCPCS G-codesdemonstrated that the pattern of relativecost differences between Type A andType B emergency department visitswas largely consistent <strong>with</strong> thedistributions we observed in the CY2007 data, <strong>with</strong> the exception that, inthe CY 2008 data, we observed arelatively lower HCPCS code-specificmedian cost associated <strong>with</strong> Level 5Type B emergency department visitscompared to the HCPCS code-specificmedian cost of Level 5 Type Aemergency department visits. As aresult, for CY 2010, we finalized apolicy to continue to pay Levels 1through 4 Type B emergencydepartment visits through four levels ofAPCs, and to pay for Level 5 Type Bemergency department visits throughnew APC 0630 (Level 5 Type BEmergency Department Visit), to whichthe Level 5 Type B emergencydepartment visit HCPCS code is theonly service assigned.As we noted in the CY 2011 OPPS/ASC final rule <strong>with</strong> comment period (75FR 71987), the pattern of relative costdifferences between Type A and Type Bemergency department visits isconsistent <strong>with</strong> the distributions weobserved in the CY 2008 claims data.Therefore, we finalized our proposal tocontinue to pay for Type B emergencydepartment visits in CY 2011 based ontheir median costs through five levels ofAPCs: APC 0626 (Level 1 Type BEmergency Department Visit), APC 0627(Level 2 Type B Emergency DepartmentVisit), APC 0628 (Level 3 Type BEmergency Department Visit), APC 0629(Level 4 Type B Emergency DepartmentVisit), and APC 0630.We stated in the CY 2012 OPPS/ASCproposed rule (76 FR 42270) that wecontinue to believe that thisconfiguration pays appropriately foreach level of Type B emergencydepartment visits based on estimatedresource costs from the most recent CY2010 claims data. Therefore, weproposed to continue to pay for Type Bemergency department visits in CY 2012based on their median costs through thefive levels of Type B emergencydepartment APCs (APCs 0626 through0630). We also noted that, as discussedin section II.A.2.e.(1) of the proposedrule and consistent <strong>with</strong> our CY 2011policy, when calculating the mediancosts for the emergency department visitand critical care APCs (0609 through0617 and 0626 through 0630), weproposed to utilize our methodologythat excludes those claims for visits thatare eligible for payment through theextended assessment and managementcomposite APC 8002. We stated that wecontinue to believe that this approach

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74343will result in the most accurate costestimates for APCs 0604 through 0608for CY 2012. Table 36 of the proposedrule displayed the proposed mediancosts for each level of Type B emergencydepartment visit APCs under theproposed CY 2012 configuration,compared to the proposed CY 2012median costs for each level of clinicvisit APCs and each level of Type Aemergency department visit APCs.We did not receive any publiccomments on this proposal. We arefinalizing our CY 2012 proposal,<strong>with</strong>out modification, to continuepaying for Type B emergencydepartment visits in CY 2012, consistent<strong>with</strong> their median costs through fivelevels of Type B emergency departmentvisit APCs: APC 0626 (Level 1 Type BEmergency Visits), APC 0627 (Level 2Type B Emergency Visits), APC 0628(Level 3 Type B Emergency Visits), APC0629 (Level 4 Type B Emergency Visits),and APC 0630 (Level 5 Type BEmergency Visits). We are assigningHCPCS codes G0380, G0381, G0382,G0383, and G0384 (the levels 1, 2, 3, 4,and 5 Type B emergency departmentvisit Level II HCPCS codes) to APCs0626, 0627, 0628, 0629, and 0630,respectively, for CY 2012. We continueto believe that this configuration paysappropriately for each level of Type Bemergency department visits based onestimated resource costs from the mostrecent claims data.We also note that, as discussed insection II.A.2.e.(1) of this final rule <strong>with</strong>comment period and consistent <strong>with</strong>our CY 2011 policy, when calculatingthe median costs for the emergencydepartment visit and critical care APCs(0609 through 0617 and 0626 through0630), we utilized our methodology thatexcludes those claims for visits that areeligible for payment through theextended assessment and managementcomposite APC 8002 (Level I ExtendedAssessment and ManagementComposite). We continue to believe thatthis approach will result in the mostaccurate cost estimates for APCs 0604through 0608 for CY 2012.Table 43 below displays the finalmedian costs for each level of Type Bemergency department visit APCs underthe CY 2012 configuration, compared tothe final CY 2012 median costs for eachlevel of clinic visit APCs and each levelof Type A emergency department visitAPCs.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2For CY 2010 and in prior years, theAMA CPT Editorial Panel definedcritical care CPT codes 99291 (Criticalcare, evaluation and management of thecritically ill or critically injured patient;first 30–74 minutes) and 99292 (Criticalcare, evaluation and management of thecritically ill or critically injured patient;each additional 30 minutes (Listseparately in addition to code forprimary service)) to include a widerange of ancillary services such aselectrocardiograms, chest X-rays andpulse oximetry. As we have stated inmanual instruction, we expect hospitalsto report in accordance <strong>with</strong> CPTguidance unless we instruct otherwise.For critical care in particular, weinstructed hospitals that any servicesthat the CPT Editorial Panel indicatesare included in the reporting of CPTcode 99291 (including those servicesthat would otherwise be reported by andpaid to hospitals using any of the CPTcodes specified by the CPT EditorialPanel) should not be billed separately.Instead, hospitals were instructed toreport charges for any services providedas part of the critical care services. Inestablishing payment rates for criticalcare services, and other services, CMSpackages the costs of certain items andservices separately reported by HCPCScodes into payment for critical careservices and other services, according tothe standard OPPS methodology forpackaging costs (Medicare ClaimsProcessing Manual, Pub. 100–04,Chapter 4, Section 160.1).For CY 2011, the AMA CPT EditorialPanel revised its guidance for thecritical care codes to specifically stateVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00223 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2that, for hospital reporting purposes,critical care codes do not include thespecified ancillary services. Beginningin CY 2011, hospitals that report inaccordance <strong>with</strong> the CPT guidelinesshould report all of the ancillaryservices and their associated chargesseparately when they are provided inconjunction <strong>with</strong> critical care. Becausethe CY 2011 payment rate for criticalcare services is based on hospital claimsdata from CY 2009, during which timehospitals would have reported chargesfor any ancillary services provided aspart of the critical care services, westated in the CY 2011 OPPS/ASC finalrule <strong>with</strong> comment period that webelieve it is inappropriate to payseparately in CY 2011 for the ancillaryservices that hospitals may now reportin addition to critical care services (75ER30NO11.070

74344 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2FR 71988). Therefore, for CY 2011, wecontinued to recognize the existing CPTcodes for critical care services andestablished a payment rate based onhistorical data, into which the cost ofthe ancillary services is intrinsicallypackaged. We also implemented claimsprocessing edits that conditionallypackage payment for the ancillaryservices that are reported on the samedate of service as critical care servicesin order to avoid overpayment. Wenoted in the CY 2011 OPPS/ASC finalrule <strong>with</strong> comment period that thepayment status of the ancillary serviceswill not change when they are notprovided in conjunction <strong>with</strong> criticalcare services. We assigned statusindicator ‘‘Q3’’ (Codes That May BePaid Through a Composite APC) to theancillary services to indicate thatpayment for them is packaged into asingle payment for specificcombinations of services and madethrough a separate APC payment orpackaged in all other circumstances, inaccordance <strong>with</strong> the OPPS paymentstatus indicated for status indicator‘‘Q3’’ in Addendum D1 to the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod. The ancillary services that wereincluded in the definition of criticalcare prior to CY 2011 and that will beconditionally packaged into thepayment for critical care services whenprovided on the same date of service ascritical care services for CY 2011 werelisted in Addendum M to that final rule<strong>with</strong> comment period. We noted in theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period that our treatment ofthe revised CY 2011 critical care codeswas open to public comment for 60 daysfollowing issuance of the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod, and that we would respond tothe comments in the CY 2012 final rule<strong>with</strong> comment period.Because the proposed CY 2012median costs for critical care serviceswere based upon CY 2010 claims data,which reflect the CPT billing guidancethat was in effect prior to CY 2011, inthe CY 2012 OPPS/ASC proposed rule(76 FR 42271), we proposed to continuethe methodology established in the CY2011 OPPS/ASC final rule <strong>with</strong>comment period of calculating apayment rate for critical care servicesbased on our historical data, into whichthe cost of the ancillary services isintrinsically packaged. We proposed tocontinue to implement claimsprocessing edits that conditionallypackage payment for the ancillaryservices that are reported on the samedate of service as critical care servicesin order to avoid overpayment.<strong>Comment</strong>: Several commenters whoresponded to the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period and theCY 2012 OPPS/ASC proposed rulesupported the proposed policy tocontinue to conditionally packagepayment for ancillary services that arereported on the same date of service ascritical care services. Some commentersrecommended that a modifier beimplemented to allow the identificationof ancillary services provided to criticalcare patients during the same date ofservice as critical care services, butoutside the critical care period, so thatthose services are not inappropriatelypackaged into the critical care servicespayment. <strong>Comment</strong>ers alsorecommended that CMS, in setting thepayment rate for critical care services byestimating the costs of the packagedancillary services, establish amethodology that includes review ofmultiple cost report revenue centers andthat CMS consult <strong>with</strong> the hospitalindustry on the appropriatemethodology used to calculate theactual cost related to the provision ofcritical care services.Response: We believe all servicesprovided in conjunction <strong>with</strong> criticalcare, as part of a single clinicalencounter, are included in the criticalcare period and, therefore, do notsupport the commenters’recommendation that a modifier beimplemented to allow the identificationof ancillary services provided to criticalcare patients during the same date ofservice as critical care services, butoutside the critical care period.Hospitals may use HCPCS modifier ‘‘-59’’ to indicate when an ancillaryprocedure or service is distinct orindependent from critical care whenperformed on the same day but duringa different encounter. For CY 2012, CMSwill continue to conditionally packagepayment for the ancillary servicespreviously included in CPT’s definitionof critical care prior to CY 2011, whenthey are reported on the same date ofservice as critical care services.In regard to the commenter whosuggested that CMS include review ofmultiple cost report revenue centerswhen calculating the costs of thepackaged ancillary services, we notethat the methodology the commentersrecommended is consistent <strong>with</strong> themethodology we already have in place.As discussed in section II.A.1.c. of thisfinal rule <strong>with</strong> comment period, wecalculate hospital-specific overallancillary CCRs and hospital-specificdepartmental CCRs for each hospital forwhich we have claims data. We applythe hospital-specific CCR to thehospital’s charges at the most detailedVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00224 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2level possible, based on a revenue codeto-costcenter crosswalk that contains ahierarchy of CCRs used to estimate costsfrom charges for each revenue code.Therefore, we base our cost estimationof each packaged ancillary service onthe most specific cost center to whichthe revenue code reported <strong>with</strong> thatservice maps. We then package the costthat we estimate as a result of thatprocess into the median cost calculationfor critical care.After consideration of the publiccomments we received, we arefinalizing our CY 2012 proposal,<strong>with</strong>out modification, to continue themethodology established in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod of calculating a payment rate forcritical care services based on ourhistorical data, into which the cost ofthe ancillary services is intrinsicallypackaged. We also will continue toimplement claims processing edits thatconditionally package payment for theancillary services that are reported onthe same date of service as critical careservices in order to avoid overpayment.3. Visit Reporting GuidelinesSince April 7, 2000, we haveinstructed hospitals to report facilityresources for clinic and emergencydepartment hospital outpatient visitsusing the CPT E/M codes and to developinternal hospital guidelines forreporting the appropriate visit level.Because a national set of hospitalspecificcodes and guidelines do notcurrently exist, we have advisedhospitals that each hospital’s internalguidelines that determine the levels ofclinic and emergency department visitsto be reported should follow the intentof the CPT code descriptors, in that theguidelines should be designed toreasonably relate the intensity ofhospital resources to the different levelsof effort represented by the codes.As noted in detail in the CY 2008OPPS/ASC final rule <strong>with</strong> commentperiod (72 FR 66802 through 66805), weobserved a normal and stabledistribution of clinic and emergencydepartment visit levels in hospitalclaims over the past several years. Thedata indicated that hospitals, onaverage, were billing all five levels ofvisit codes <strong>with</strong> varying frequency, in aconsistent pattern over time. Overall,both the clinic and emergencydepartment visit distributions indicatedthat hospitals were billing consistentlyover time and in a manner thatdistinguished between visit levels,resulting in relatively normaldistributions nationally for the OPPS, aswell as for specific classes of hospitals.The results of these analyses were

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74345jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2generally consistent <strong>with</strong> ourunderstanding of the clinical andresource characteristics of differentlevels of hospital outpatient clinic andemergency department visits. In the CY2008 OPPS/ASC proposed rule (72 FR42764 through 42765), we specificallyinvited public comment as to whetherthere was still a pressing need fornational guidelines at this point in thematuration of the OPPS, or if the currentsystem where hospitals create and applytheir own internal guidelines to reportvisits was more practical andappropriately flexible for hospitals. Weexplained that, although we havereiterated our goal since CY 2000 ofcreating national guidelines, thiscomplex undertaking for theseimportant and common hospitalservices was proving more challengingthan we initially anticipated as wereceived new and expanded informationfrom the public on current hospitalreporting practices that led toappropriate payment for the hospitalresources associated <strong>with</strong> clinic andemergency department visits. We statedour belief that many hospitals hadworked diligently and carefully todevelop and implement their owninternal guidelines that reflected thescope and types of services theyprovided throughout the hospitaloutpatient system. Based on publiccomments, as well as our ownknowledge of how clinics operate, itseemed unlikely that one set ofstraightforward national guidelinescould apply to the reporting of visits inall hospitals and specialty clinics. Inaddition, the stable distribution of clinicand emergency department visitsreported under the OPPS over the pastseveral years indicated that hospitals,both nationally in the aggregate andgrouped by specific hospital classes,were generally billing in an appropriateand consistent manner as we wouldexpect in a system that accuratelydistinguished among different levels ofservice based on the associated hospitalresources.Therefore, we did not propose toimplement national visit guidelines forclinic or emergency department visitsfor CY 2008. As we have done sincepublication of the CY 2008 OPPS/ASCfinal rule <strong>with</strong> comment period, weagain examined the distribution ofclinic and Type A emergencydepartment visit levels based uponupdated CY 2010 claims data availablefor the CY 2012 proposed rule and thisfinal rule <strong>with</strong> comment period.Analysis of these data confirm that wecontinue to observe a normal andrelatively stable distribution of clinicand emergency department visit levelsin hospital claims compared to CY 2009data. As we did in the proposed rule (76FR 42272), we note that we haveobserved a slight shift over time towardhigher numbers of Level 4 and Level 5visits relative to the lower level visits,when comparing the distributions ofType A emergency department visitlevels from CY 2005 claims data to thosefrom CY 2010. We also note that, inaggregate, hospitals’ charges for thesehigher level emergency departmentvisits seem to be trending upward yearover year. In the CY 2012 proposed rule,we welcomed comment on whether thisis consistent <strong>with</strong> individual hospitals’experiences in developing,implementing, and refining their ownguidelines over the last several years.<strong>Comment</strong>: <strong>Comment</strong>ers requestedthat, <strong>with</strong> respect to the slight shift overtime toward higher numbers of Level 4and Level 5 visits relative to the lowervisit levels, CMS provide data regardingwhether it has observed any shift inreporting ‘‘new’’ versus ‘‘established’’patient visits after instituting the newdefinition of established patient in CY2009, noting that CMS has 2 years ofclaims data since the definition change.According to commenters, if hospitalschanged their reporting based on thenew definition, the data should reflecta shift toward the higher level visits,because more patients would have been‘‘established’’ patients under the newdefinition. The commenters stated thatif CMS has not noticed this shift in theproportion of new and establishedpatient visits beginning <strong>with</strong> CY 2009claims, it suggested that hospitals maynot have begun applying the reviseddefinition and a shift in level 4 and 5visits may have occurred more inresponse to the increasing trend ofcomorbid conditions in emergencydepartment visits than from hospitals’response to CMS’ visit guidelines. Thecommenters suggested that CMSevaluate secondary diagnoses on Level 4and Level 5 Type A emergencydepartment visit claims.Another commenter stated that thistrend is consistent <strong>with</strong> its observationsand listed the following as possiblereasons for the higher Medicare acuity:Some patients <strong>with</strong> low acuity problemsare seeking care elsewhere because oflong emergency department wait timesand higher copayments; increasingoptions for faster, less expensive care forlower acuity problems (retail andhospital-based clinics and extendedphysician and urgent care office hours);public education regarding appropriatereasons for going to the emergencydepartment; and patients delaying carefor the above reasons and thenVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00225 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2presenting to the emergency departmentin a relatively sicker condition.Response: We appreciate thecommenters’ discussion of possiblecontributing factors to the shift towardincreasing numbers of higher level TypeA emergency department visits. We willcontinue to examine our data andexplore any changes or trends thatcorrelate to the slight shift over timetoward higher numbers of Level 4 andLevel 5 Type A emergency departmentvisits relative to the lower Type Aemergency department visit levels. Wenote that information about claimsvolume for particular HCPCS codes fora given calendar year, including newand established patient visits, ispublicly available in the median costfile made available for each OPPS finalrule <strong>with</strong> comment period and locatedon the CMS Web site. As we stated inthe proposed rule, we continue tobelieve that, generally, hospitals arebilling in an appropriate and consistentmanner that distinguishes amongdifferent levels of visits based on theirrequired hospital resources.<strong>Comment</strong>: Some commenterssupported CMS’ proposal to continue torecognize hospital-specific visitguidelines rather than implementnational guidelines because hospitalshave grown accustomed to using theirown coding systems to assign visitlevels. In contrast, many commentersurged CMS to move forward <strong>with</strong> theimplementation of national guidelinesfor hospitals to report visits, assertingthat CMS has poor data upon which tocalculate visit APC payment ratesbecause there are no standarddefinitions, and citing the challenges ofhaving different guidelines in place bydifferent payers. The commentersrecommended that, in the absence ofnational guidelines for hospital visitreporting, CMS support a request to theAmerican Medical Association CPTEditorial Panel to create unique CPTcodes for hospital reporting ofemergency department and clinic visitsbased on internally developedguidelines. In addition, somecommenters expressed theirappreciation for CMS’ encouragement ofits contractors to use a hospital’s ownguidelines when auditing andevaluating the appropriateness of codesassigned, but requested that hospitals beexempt from audits of visit billing untilnational guidelines are implemented.Response: As we have in the past (74FR 60553 and 75 FR 71989 through71990), we acknowledge that it wouldbe desirable to many hospitals to havenational guidelines. However, we alsounderstand that it would be disruptiveand administratively burdensome to

74346 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2other hospitals that have successfullyadopted internal guidelines toimplement any new set of nationalguidelines while we address theproblems that would be inevitable in thecase of any new set of guidelines thatwould be applied by thousands ofhospitals. We will continue to regularlyreevaluate patterns of hospitaloutpatient visit reporting at varyinglevels of disaggregation below thenational level to ensure that hospitalscontinue to bill appropriately anddifferentially for these services. Wereiterate our expectation that hospitals’internal guidelines fully comply <strong>with</strong>the principles listed in the CY 2008OPPS/ASC final rule <strong>with</strong> commentperiod (72 FR 68805), and we encouragehospitals <strong>with</strong> more specific questionsrelated to the creation of internalguidelines to contact their servicingfiscal intermediary or MAC. Also, asoriginally noted in detail in the CY 2008OPPS/ASC final rule <strong>with</strong> commentperiod (72 FR 66648 through 66649), wecontinue to expect that hospitals willnot purposely change their visitguidelines or otherwise upcode clinicand emergency department visits forpurposes of extended assessment andmanagement composite APC payment.We continue to encourage fiscalintermediaries and MACs to review ahospital’s internal guidelines when anaudit occurs, as indicated in the CY2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66806). As wehave stated in the past (75 FR 71990),if the AMA were to create facilityspecificCPT codes for reporting visitsprovided in HOPDs [based on internallydeveloped guidelines], we wouldconsider such codes for OPPS use.After consideration of the publiccomments we received, we arecontinuing to encourage hospitals to usetheir own internal guidelines todetermine the appropriate reporting ofdifferent levels of clinic and emergencydepartment visits. We note that itremains our goal to ensure that OPPSnational or hospital-specific visitguidelines continue to facilitateconsistent and accurate reporting ofhospital outpatient visits in a mannerthat is resource-based and supportive ofappropriate OPPS payments for theefficient and effective provision of visitsin hospital outpatient settings.VIII. Payment for PartialHospitalization ServicesA. BackgroundPartial hospitalization is an intensiveoutpatient program of psychiatricservices provided to patients as analternative to inpatient psychiatric carefor individuals who have an acutemental illness. Sections 1861(ff)(1) and(ff)(2) of the Act specify the items andservices that are defined as partialhospitalization services and someconditions under which Medicarepayment for the items and services willbe made. Section 1861(ff)(3) of the Actspecifies that a partial hospitalizationprogram (PHP) is a program furnishedby a hospital or community mentalhealth center (CMHC) that meets therequirements specified under thatsubsection of the Act.In CY 2011, in accordance <strong>with</strong>section 1301(b) of the Health Care andEducation Reconciliation Act of 2010(HCERA 2010), we amended thedescription of a PHP in our regulationsto specify that the program must be adistinct and organized intensiveambulatory treatment program offeringless than 24-hour daily care ‘‘other thanin an individual’s home or in aninpatient or residential setting.’’ Inaddition, in accordance <strong>with</strong> section1301(a) of HCERA 2010, we revised thedefinition of a CMHC in the regulationsto conform to the revised definition nowset forth at section 1861(ff)(3)(B) of theAct. We discussed our finalized policiesfor these two provisions of HCERA 2010under section X.C. of the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 71990). Section1833(t)(1)(B)(i) of the Act provides theSecretary <strong>with</strong> the authority to designatethe OPD services to be covered underthe OPPS. The existing Medicareregulations that implement thisprovision specify, at 42 CFR 419.21, thatpayments under the OPPS will be madefor partial hospitalization servicesfurnished by CMHCs as well as thoseservices furnished by hospitals to theiroutpatients. Section 1833(t)(2)(C) of theAct, in pertinent part, requires theSecretary to ‘‘establish relative paymentweights for covered OPD services (andany groups of such services described insubparagraph (B)) based on median (or,at the election of the Secretary, mean)hospital costs’’ using data on claimsfrom 1996 and data from the most recentavailable cost reports. In pertinent part,subparagraph (B) provides that theSecretary may establish groups ofcovered OPD services, <strong>with</strong>in aclassification system developed by theSecretary for covered OPD services, sothat services classified <strong>with</strong>in eachgroup are comparable clinically and<strong>with</strong> respect to the use of resources. Inaccordance <strong>with</strong> these provisions, CMSdeveloped the APCs. Section1833(t)(9)(A) of the Act requires theSecretary to ‘‘review not less often thanannually and revise the groups, theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00226 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2relative payment weights, and the wageand other adjustments described inparagraph (2) to take into accountchanges in medical practice, changes intechnology, the addition of newservices, new cost data, and otherrelevant information and factors.’’Because a day of care is the unit thatdefines the structure and scheduling ofpartial hospitalization services, weestablished a per diem paymentmethodology for the PHP APCs,effective for services furnished on orafter August 1, 2000 (65 FR 18452through 18455). Under thismethodology, the median per diem costsare used to calculate the relativepayment weights for PHP APCs.From CY 2003 through CY 2006, themedian per diem cost for CMHCsfluctuated significantly from year toyear, while the median per diem cost forhospital-based PHPs remained relativelyconstant. We were concerned thatCMHCs may have increased anddecreased their charges in response toMedicare payment policies. Therefore,we began efforts to strengthen the PHPbenefit through extensive data analysisand policy and payment changes in theCY 2008 update (72 FR 66670 through66676). We made two refinements to themethodology for computing the PHPmedian: The first remapped 10 revenuecodes that are common among hospitalbasedPHP claims to the mostappropriate cost centers; and the secondrefined our methodology for computingthe PHP median per diem costs bycomputing a separate per diem cost foreach day rather than for each bill. Acomplete discussion of theserefinements can be found in the CY2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66671 through66676).In CY 2009, we implemented severalregulatory, policy, and paymentchanges, including a two-tieredpayment approach for PHP servicesunder which we paid one amount fordays <strong>with</strong> 3 services (APC 0172 (LevelI Partial Hospitalization)) and a higheramount for days <strong>with</strong> 4 or more services(APC 0173 (Level II PartialHospitalization)). We refer readers tosection X.C.2. of the CY 2009 OPPS/ASC final rule <strong>with</strong> comment period (73FR 68688 through 68693) for a fulldiscussion of the two-tiered paymentsystem. In addition, for CY 2009, wefinalized our policy to deny payment forany PHP claims for days when fewerthan 3 units of therapeutic services areprovided.Furthermore, for CY 2009, we revisedthe regulations at 42 CFR 410.43 tocodify existing basic PHP patienteligibility criteria and to add a reference

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74347jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2to current physician certificationrequirements at 42 CFR 424.24 toconform our regulations to ourlongstanding policy (73 FR 68694through 68695). These changes havehelped to strengthen the PHP benefit.We also revised the partialhospitalization benefit to includeseveral coding updates. We refer readersto section X.C.2. of the CY 2009 OPPS/ASC final rule <strong>with</strong> comment period (73FR 68695 through 68697) for a fulldiscussion of these requirements.For CY 2010, we retained the twotieredpayment approach for PHPservices and used only hospital-basedPHP data in computing the per diempayment rates. We used only hospitalbasedPHP data because we wereconcerned about further reducing bothPHP APC per diem payment rates<strong>with</strong>out knowing the impact of thepolicy and payment changes we madein CY 2009. Because of the 2-year lagbetween data collection and rulemaking,the changes we made in CY 2009 werereflected for the first time in the claimsdata that we used to determine paymentrates for the CY 2011 rulemaking.In the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period (75 FR 71994), weestablished four separate PHP APC perdiem payment rates, two for CMHCs (forLevel I and Level II services) and two forhospital-based PHPs (for Level I andLevel II services). We proposed thatCMHC APC rates would be based onlyon CMHC data and hospital-based PHPAPC rates would be based only onhospital-based PHP data (75 FR 46300).As stated in the CY 2011 OPPS/ASCproposed rule (75 FR 46300) and finalrule <strong>with</strong> comment period (75 FR71991), for CY 2011, using CY 2009 costdata, CMHC costs had significantlydecreased again. We attributed thedecrease to the lower cost structure ofCMHCs compared to hospitals, and notthe impact of CY 2009 policies. CMHCshave a lower cost structure thanhospital-based PHP providers, in partbecause the data showed that CMHCsprovide fewer PHP services in a day anduse less costly staff than hospital-basedPHPs. Therefore, it was inappropriate tocontinue to treat CMHCs and hospitalbasedproviders in the same mannerregarding payment, particularly in lightof such disparate differences in costs.We were concerned that payinghospital-based PHP programs at a lowerrate than their cost structure reflectscould lead to closures and possibleaccess problems for hospital-basedprograms for Medicare beneficiaries.Creating the four payment rates (two forCMHCs and two for hospital-basedPHPs) supported continued access tothe PHP benefit, while also providingappropriate payment based on theunique cost structures of CMHCs andhospital-based PHPs. In addition,separation of cost data by provider typewas supported by several hospital-basedPHP commenters who responded to theCY 2011 OPPS/ASC proposed rule (75FR 71992).For CY 2011, we instituted a 2-yeartransition period for CMHC providers tothe CMHC APC per diem payment ratesbased solely on CMHC data. For CY2011, under the transition methodology,CMHC APC Level I and Level II rateswere calculated by taking 50 percent ofthe difference between the CY 2010final hospital-based medians and the CY2011 final CMHC medians and thenadding that number to the CY 2011 finalCMHC medians. A 2-year transitionunder this methodology moved us in thedirection of our goal, which is to payappropriately for PHP services based oneach provider type’s cost data, while atthe same time allowing providers timeto adjust their business operations andprotect access to care for beneficiaries.We also stated that we would reviewand analyze the data during the CY 2012rulemaking cycle and may, based onthese analyses, further refine thepayment mechanism. We refer readersto section X.B. of the CY 2011 OPPS/ASC final rule <strong>with</strong> comment period (75FR 71991 through 71994) for a fulldiscussion of these four payment rates.After publication of the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod, a CMHC and one of its patientsfiled an application for a preliminaryinjunction, challenging the OPPS ratesfor PHP services provided by CMHCs inCY 2011 as adopted in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 71995). See Paladin Cmty.Mental Health Ctr. v. Sebelius, No. 10–949, 2011 WL 3102049 (W.D.Tex.),appeal docketed, No. 11–50682 (5th Cir.July 29, 2011) (Paladin). The plaintiffsin the Paladin case challenged theagency’s use of cost data derived fromboth hospitals and CMHCs (indetermining the relative paymentweights for the OPPS rates for PHPservices furnished by CMHCs), allegingthat section 1833(t)(2)(C) of the Actrequires that such relative paymentweights be based on cost data derivedsolely from hospitals. As discussedabove, section 1833(t)(2)(C) of the Actrequires CMS to ‘‘establish relativepayment weights for covered OPDservices (and any groups of suchservices * * *) * * * based on * * *hospital costs.’’ Numerous courts haveheld that ‘‘based on’’ does not mean‘‘based exclusively on.’’ Thus, on July25, 2011, the district court dismissedthe plaintiffs’ complaint and dismissedVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00227 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2the plaintiffs’ application forpreliminary injunction. The Court foundthat ‘‘the Secretary has exercised herstatutory authority and broad discretionto establish the 2011 payment rates forPHP services based on her interpretationof the terms of the Act.’’ (Paladin at *4).For CY 2012, as discussed in the CY2012 OPPS/ASC proposed rule (76 FR42274 through 42275), we proposed todetermine the relative payment weightsfor PHP services by CMHCs based oncost data derived solely from CMHCsand the relative payment weights forhospital-based PHP services basedexclusively on hospital cost data. Thestatute is reasonably interpreted toallow the relative payment weights forthe OPPS rates for PHP servicesprovided by CMHCs to be based solelyon CMHC cost data and relativepayment weights for hospital-based PHPservices to be based exclusively onhospital cost data. Section 1833(t)(2)(C)of the Act requires the Secretary to‘‘establish relative payment weights forcovered OPD services (and any groupsof such services described insubparagraph (B)) based on * * *hospital costs.’’ In pertinent part,subparagraph (B) provides that ‘‘theSecretary may establish groups ofcovered OPD services * * * so thatservices classified <strong>with</strong>in each group arecomparable clinically and <strong>with</strong> respectto the use of resources.’’ In accordance<strong>with</strong> subparagraph (B), CMS developedthe APCs, as set forth in § 419.31 of theregulations (65 FR 18446 and 18447; 63FR 47559 and 47560). As discussed inthe CY 2012 OPPS/ASC proposed rule(76 FR 42274) and this final rule <strong>with</strong>comment period, PHP services aregrouped into APCs.Based on section 1833(t)(2)(C) of theAct, we believe that the word‘‘establish’’ can be interpreted asapplying to APCs at the inception of theOPPS in 2000 or whenever a new APCis added to the OPPS. In creating theoriginal APC for PHP services (APC0033), we did ‘‘establish’’ the initialrelative payment weight for PHPservices, provided in hospital-based andCMHC-based settings, on the basis ofonly hospital data. Subsequently, fromCY 2003 through CY 2008, the relativepayment weights for PHP services werebased on a combination of hospital andCMHC data. Similarly, we subsequentlyestablished new APCs for PHP servicesbased exclusively on hospital costs. ForCY 2009, we adopted a two-tiered APCmethodology (in lieu of the original APC0033) under which CMS paid one ratefor days <strong>with</strong> 3 services (APC 0172) anda different payment rate for days <strong>with</strong> 4or more services (APC 0173). These twonew APCs were established using only

74348 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationshospital data. For CY 2011, we addedtwo new APCs (APCs 0175 and 0176)for PHP services provided by hospitalsand based the relative payment weightsfor these APCs solely on hospital data.APCs 0172 and 0173 were designatedfor PHP services provided by CMHCsand were based on a mixture of hospitaland CMHC data. As the Secretaryargued in the Paladin case, the courtshave consistently held that the phrase‘‘based on’’ does not mean ‘‘basedexclusively on.’’ Thus, the relativepayment weights for the two APCs forCMHC-provided PHP services in CY2011 were ‘‘based on’’ hospital data, noless than the relative payment weightsfor the two APCs for hospital-providedPHP services.Although we used only hospital datato establish the original relativepayment weights for APC 0033 and laterused hospital data to establish four newrelative payment weights for PHPservices, we believe that we have theauthority to discontinue the use ofhospital data after the originalestablishment of the relative paymentweights for a given APC. Other parts ofsection 1833(t)(2)(C) of the Act makeplain that the data source for the relativepayment weights is subject to changefrom one period to another. Section1833(t)(2)(C) of the Act provides that, inestablishing the relative paymentweights, ‘‘the Secretary shall [ ] us[e]data on claims from 1996 and us[e] datafrom the most recent available costreports.’’ However, we used 1996 data(plus 1997 data) in determining only theoriginal relative payment weights for2000; in the ensuing calendar yearupdates, we continually used morerecent cost report data.Moreover, section 1833(t)(9)(A) of theAct requires the Secretary to ‘‘reviewnot less often than annually and revisethe groups, the relative paymentweights, and the wage and otheradjustments described in paragraph (2)to take into account changes in medicalpractice, changes in technology, theaddition of new services, new cost data,and other relevant information andfactors.’’ For purposes of the CY 2012update, we exercised our authorityunder section 1833(t)(9)(A) of the Act tochange the data source for the relativepayment weights for PHP services byCMHCs based on ‘‘new cost data, andother relevant information and factors.’’B. PHP APC Update for CY 2012In the CY 2012 OPPS/ASC proposedrule (76 FR 42274), to develop theproposed payment rates for the PHPAPCs for CY 2012, we used CY 2010claims data and computed median perdiem costs in the following categories:Days <strong>with</strong> 3 services; and days <strong>with</strong> 4or more services. These proposedmedian per diem costs were computedseparately for CMHCs and hospitalbasedPHPs, as shown in Table 37 of theproposed rule, which is reprintedbelow.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Using updated CY 2010 claims dataand the refined methodology forcomputing PHP per diem costs adoptedin the CY 2008 OPPS/ASC final rule<strong>with</strong> comment period (72 FR 66671through 66676), we computed proposedmedian per diem costs for CY 2012 foreach provider type using providerspecificclaims data. The data indicatethat both CMHCs and hospital-basedPHPs have a decrease in costs for LevelI and Level II services from CY 2011 toCY 2012. However, the median per diemcosts for CMHCs continue to besubstantially lower than the median perdiem costs for hospital-based PHPs forthe same units of service. For CY 2012,the proposed median per diem costs fordays <strong>with</strong> 3 services (Level I) wereapproximately $98 for CMHCs andapproximately $162 for hospital-basedPHPs. The proposed median per diemcosts for days <strong>with</strong> 4 or more services(Level II) were approximately $114 forCMHCs and approximately $190 forhospital-based PHPs. The difference incosts between CMHC PHPs andhospital-based PHPs underscores theneed to pay each provider type based onuse of its own data.As stated in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71991 through 71994), CMHCs’ costsdecreased from approximately $139 inCY 2009 (using CY 2007 data) toapproximately $108 for CY 2011 (usingCY 2009 data) for Level I services (days<strong>with</strong> 3 services) and from approximately$172 for CY 2009 to approximately $116for CY 2011 for Level II services (days<strong>with</strong> 4 or more services) using onlyCMHC data. For the CY 2012 proposedrule, our analysis of claims data (usingCY 2010 claims data) showed thatCMHCs’ approximate median per diemcosts continued to decrease toapproximately $98 for CY 2012 for LevelI services (days <strong>with</strong> 3 services), and toapproximately $114 for CY 2012 forLevel II services (days <strong>with</strong> 4 or moreVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00228 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2services). We reasonably attributedsome of the decrease in costs to targetedfraud and abuse efforts implemented bythe Department’s Center for ProgramIntegrity and the Office of InspectorGeneral, and by the U.S. Department ofJustice, collectively (76 FR 42275). Inthe CY 2012 OPPS/ASC proposed rule(76 FR 42275), we also noted thathospital-based PHPs showed a decreasein costs for CY 2012 (using CY 2010claims data). Although hospital-basedPHPs have been historically consistentin their median costs since theinception of the OPPS, the CY 2010claims data indicated a decrease in theirproposed median per diem costs sincelast year. In the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (usingCY 2009 claims data), hospital-basedPHPs’ median per diem costs wereapproximately $203 for Level I services(days <strong>with</strong> 3 services) andapproximately $236 for Level II services(days <strong>with</strong> 4 or more services). In the CYER30NO11.071

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74349jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES22012 OPPS/ASC proposed rule (usingCY 2010 claims data), these numbersdecreased to approximately $162 forLevel I services (days <strong>with</strong> 3 services)and to approximately $190 for Level IIservices (days <strong>with</strong> 4 or more services).As explained in the CY 2012 OPPS/ASCproposed rule (76 FR 42275), weattributed this decrease in costs for CY2012 to one provider whose costsinflated the CY 2011 hospital-based costdata and increased the CY 2011hospital-based PHP median for Level IIservices by approximately $30. Weincluded this provider in the CY 2011ratesetting because this provider hadpaid claims in CY 2009. Subsequently,this provider did not bill for PHPservices during CY 2010 and, therefore,was not included in the proposed CY2012 rate setting.Based on the results of our analysis ofthe CY 2010 claims data, in the OPPS/ASC proposed rule (76 FR 42275) for CY2012, we proposed to calculate theCMHC PHP APC per diem paymentrates for Level I and Level II servicesusing only CMHC data and to calculatethe hospital-based PHPs APC per diempayment rates for Level I and Level IIservices using only hospital-based PHPdata. Basing payment rates specific toeach type of provider’s own data wouldcontinue to support access to the PHPbenefit, including a more intensive levelof care, while also providingappropriate payment commensurate<strong>with</strong> the cost structures of CMHC PHPsand hospital-based PHPs. We invitedpublic comment on our proposal tocalculate the CMHC PHP APC per diempayment rates using only CMHC claimsdata and the hospital-based PHP APCper diem payment rates using onlyhospital data.<strong>Comment</strong>: Both hospital-based PHPproviders and CMHCs expressedconcern regarding the proposed ratereductions. Several commentersrequested that CMS freeze the PHP ratesat current CY 2011 levels or mitigate therate reductions for both CMHCs andhospital-based PHPs. These commentersstated that, by freezing the rates ormitigating any payment reductions,providers would be allowed time toassess the impact of the rate reductionswhile ensuring continued beneficiaryaccess to the PHP benefit.Response: We understand theconcerns raised by commenters aboutthe proposed CMHC and hospital-basedPHP per diem rate reductions and thepotential impact the reductions mayhave on access to the PHP benefit inboth provider settings. In response tohospital-based PHP providers’ concernsregarding the proposed rate reductions,we believe that the CY 2012 mediansreflect hospital-based PHP providers’typical medians. For example, the CY2009 median per diem costs (using CY2007 claims data) were approximately$157 for Level I services and $200 forLevel II services (73 FR 68689) and theCY 2010 median per diem costs (usingCY 2008 claims data) wereapproximately $148 for Level I servicesand $209 for Level II services. The CY2011 median per diem costs (using CY2009 claims data) were approximately$203 for Level I services andapproximately $236 for Level II services.In the CY 2012 proposed rule (using CY2010 data), these numbers decreased toapproximately $162 for Level I services(for days <strong>with</strong> 3 services) and toapproximately $190 for Level II services(for days <strong>with</strong> 4 or more services). Weattributed the majority of the decrease incosts for CY 2012 to one provider whosecosts inflated the CY 2011 hospitalbasedcost data and increased the CY2011 hospital-based PHP median forLevel II services by approximately $30.For this CY 2012 final rule <strong>with</strong>comment period, our analysis of claimsdata (using CY 2010 claims data) showsthat hospital-based PHP median perdiem costs are approximately $161 forLevel I services (for days <strong>with</strong> 3services) and approximately $191 forLevel II services (for days <strong>with</strong> 4 ormore services). Again, these median perdiem costs are more consistent <strong>with</strong> pastmedian per diem costs for this providertype and we believe accurately reflectthe cost data of the hospital-based PHPprovider.In response to CMHCs concerns aboutthe rate reductions, in the past, we haveattempted to control the costfluctuations in CMHCs in order toprotect access to care and <strong>with</strong> the hopethat the cost structures for both providertypes would eventually become moreconsistent. However, the data continueto show the decline in costs for CMHCs.We believe that the proposed medianper diem costs for CMHCs accuratelyreflect the cost data of the CMHCs.For example, for this CY 2012 finalrule <strong>with</strong> comment period, our analysisof claims data (using CY 2010 claimsdata for CMHCs only) shows thatCMHCs’ median per diem costscontinue to decrease fromapproximately $108 for CY 2011 (usingCY 2009 claims data for CMHCs only)to approximately $98 for CY 2012 forLevel I services (days <strong>with</strong> 3 services),and from approximately $116 for CY2011 (using CY 2009 claims data forCMHCs only) to approximately $114 forCY 2012 for Level II services (days <strong>with</strong>4 or more services). Although we are notexactly clear about why the CMHC costscontinue to decrease, we can reasonablyVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00229 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2attribute some of the decrease in coststo targeted fraud and abuse effortsimplemented by the Department’sCenter for Program Integrity and theOffice of Inspector General, and by theU.S. Department of Justice, collectively.We have considered all suggestions,including the request to freeze the PHPpayment rates at the CY 2011 levels orto mitigate rate reductions. However, wecannot continue to establish paymentrates that do not accurately reflect thecost data, particularly given a furtherdecline in the data for CY 2012.Moreover, we believe we have alreadyallowed numerous opportunities forproviders to adjust their businessoperations, including mitigating the ratereductions for CY 2011.For these reasons, for CY 2012, we arenot mitigating or freezing the paymentrates and are finalizing our proposal tocalculate the CMHC PHP APC per diempayment rates for Level I and Level IIservices using only CMHC data and tocalculate the hospital-based PHP APCper diem payment rates for Level I andLevel II services using only hospitalbasedPHP data. The CY 2012 PHPmedian per diem costs are as follows:For CMHCs, $97.64 for Level I servicesand $113.83 for Level II services and forhospital-based PHPs, $160.74 for LevelI services and $191.16 for Level IIservices. We remain committed to thePHP benefit, including preservingaccess for our Medicare beneficiaries,and we plan to continue to monitoraccess to care for the benefit.<strong>Comment</strong>: Almost all commentersexpressed some concern that theproposed rate reductions would resultin adverse outcomes, including programclosures and subsequent access to careissues, exacerbating an existing problemof inadequate inpatient and outpatienthospital capacities in manycommunities caring for individuals <strong>with</strong>mental illness. The commentersreasoned that if closures were to result,this would have substantial and seriousconsequences for hospitals and forMedicare beneficiaries requiring PHPservices. Several commenters stated thatthe reduction in CMHC rates will leadto closures, where critical access pointsfor Medicare beneficiaries would nolonger be available. The commentersreasoned that if this ‘‘vulnerablepopulation’’ of Medicare beneficiarieswere to go untreated, these patientscould end up in inpatient hospitals, orin emergency departments. Becausethese are Medicare aged and disabledbeneficiaries, their care in the inpatientor emergency room setting couldpotentially be more expensive than theirPHP treatment would have been, thusincreasing the overall Medicare costs if

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274350 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and RegulationsPHP care is eliminated due to closures.Other commenters also reasoned that,<strong>with</strong>out the PHP services, thisvulnerable population may also enterprison systems, or wind up dead if theydo not receive their medication. Somecommenters asserted that CMS hasessentially contradicted its principles,by acknowledging a patient’s disability;but on the other hand, reducing the rateof reimbursement for their care. Thecommenters stated that this has theeffect of denying access to treatment,which runs counter to ensuringessential care.Response: The proposed median perdiem costs for CY 2012 reflect each PHPprovider type’s (hospital-based andCMHC) costs, derived from CY 2010claims data. We discussed in ourproposed rule (76 FR 42274 and 42275)how the data results indicate that,although both CMHCs and hospitalbasedPHPs have decreased costs forLevel I and Level II services from CY2011 to CY 2012, the median per diemcosts for CMHCs continue to besubstantially lower than the median perdiem costs for hospital-based PHPs. Wealso noted that hospital-based PHPsshow a decrease in costs for CY 2012based on CY 2010 claims data (76 FR42275). Payment rates are basedaccording to each specific providertype’s own data, that is, CMHC rates arebased on CMHC cost data and hospitalbasedPHP providers are based on theirown cost data. The rates reflect the costof what each provider type expends tomaintain such programs so it is unclearwhy this would lead to program closure.The closure of PHPs may be due to anynumber of reasons, such as poorbusiness management or marketingdecisions, competition, over-saturationof certain geographic areas, Federal andState fraud and abuse efforts, amongothers. However, it does not directlyfollow that closure could be due toreduced reimbursement rates alone,especially when these rates reflectactual costs of PHP providers. CMSremains steadfast in its concern overaccess to care for all beneficiaries whilealso providing appropriate payments forsuch care. In terms of access to care,PHP for mental health treatment is notthe only manner in which a Medicarebeneficiary is able to receive neededcare. Although not the equivalent ofPHP, Medicare provides payment foroutpatient mental health services inaddition to PHP. Many beneficiaries inneed of mental health treatment receiveother outpatient services, and noevidence suggests that there is anincrease in adverse outcomes, as thecommenters suggested, due to lack ofaccess to care. Other forms of access tomental health services remain available.If certain PHP providers decide forwhatever reason to close their doors, wedo not believe that access to care willbecome an issue, and we do not believewe have acted in a manner that iscontradictory to our principles. Inaddition, the Social SecurityAdministration has the authority todetermine a person’s disability, notCMS.<strong>Comment</strong>: Some commenters notedthat CMS recently issued the proposedconditions of participation (CoPs) forCMHCs that they will need to observeand, as a result of the Affordable CareAct, will now have to provide at least40 percent of their services to non-Medicare patients. The commentersbelieved that, by adding a paymentreduction on top of these requirements,CMHCs would be potentially facingclosure.Response: We acknowledge thecommenters’ concerns <strong>with</strong> section1301 of HCERA, a component of theAffordable Care Act (Pub. L. 111–152,enacted on March 30, 2010). Section1301 requires CMHCs to provide at least40 percent of their services to non-Medicare patients. On June 17, 2011,CMS published a proposed rule toenforce this provision (76 FR 35684,35693) as well as to propose conditionsof participation addressing basic healthand safety issues in CMHCs. By law,CMS must update the OPPS paymentrates on an annual basis using the mostcurrent cost data.<strong>Comment</strong>: Some commentersrecommended that CMS establish aratesetting task force to develop a newrate methodology that captures allrelevant data and reflects real-time coststo providers. The commenters suggestedthat the recommended ratesetting taskforce be composed of CMS staff and adiverse group of stakeholders thatinclude front-line providers of partialhospitalization services, representativesfrom the National Council forCommunity Behavioral Healthcare, theNational Association of PsychiatricHealth Systems, the AmericanAssociation of Behavioral Healthcare,the National Alliance for the MentallyIll, and the Medicare Payment AdvisoryCommittee.Response: CMS already has positiveworking relationships <strong>with</strong> variousindustry leaders representing bothCMHCs and hospital-based PHPproviders <strong>with</strong> whom we haveconsistently met <strong>with</strong> over the years todiscuss industry concerns and ideas.These relationships have providedsignificant and valued input into PHPrate setting. Furthermore, CMS holdsVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00230 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Hospital Outpatient Open Door Forumcalls monthly, when individuals arewelcome to participate and/or submitquestions regarding specific issues,including questions related to PHPprograms. Given the relationships thatCMS has already established <strong>with</strong>various industry leaders, we believe thatwe receive adequate input regarding ratesetting and take that input intoconsideration when applying thepayment rates. We continue to welcomeany input and information that theindustry is willing to provide.<strong>Comment</strong>: A few commenters statedthat CMS misinterpreted the originalintent of section 1833(t)(2)(C) of the Actand is now making a new interpretationof the statute by eliminating therequirement in section 1833(t)(2)(C) ofthe Act.Response: As discussed above in thissection, we believe the statute isreasonably interpreted to allow therelative payment weights for the OPPSrates for PHP services provided byCMHCs to be based solely on CMHCcost data and the relative paymentweights for hospital-provided PHPservices to be based exclusively onhospital cost data. Section 1833(t)(2)(C)of the Act requires the Secretary to‘‘establish relative payment weights forcovered OPD services (and any groupsof such services described insubparagraph (B)) based on * * *hospital costs.’’ In pertinent part,subparagraph (B) provides that ‘‘theSecretary may establish groups ofcovered OPD services * * * so thatservices classified <strong>with</strong>in each group arecomparable clinically and <strong>with</strong> respectto the use of resources.’’ In accordance<strong>with</strong> subparagraph (B), CMS developedthe APCs, as set forth in § 419.31 of theregulations (65 FR 18446 and 18447; 63FR 47559 and 47560). PHP services aregrouped into APCs.Based on section 1833(t)(2)(C) of theAct, we believe that the word‘‘establish’’ can be interpreted asapplying to APCs at the inception of theOPPS in 2000 or whenever a new APCis added to the OPPS. In creating theoriginal APC for PHP services (APC0033), we did ‘‘establish’’ the initialrelative payment weight for PHPservices, provided in hospital-based andCMHC-based settings, on the basis ofonly hospital data. Subsequently, fromCY 2003 through CY 2008, the relativepayment weights for PHP services werebased on a combination of hospital andCMHC data. Similarly, we subsequentlyestablished new APCs for PHP servicesbased exclusively on hospital costs. ForCY 2009, we adopted a two-tiered APCmethodology (in lieu of the original APC0033) under which CMS paid one rate

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74351for days <strong>with</strong> 3 services (APC 0172) anda different payment rate for days <strong>with</strong> 4or more services (APC 0173). These twonew APCs were established using onlyhospital data. For CY 2011, we addedtwo new APCs (APCs 0175 and 0176)for PHP services provided by hospitalsand based the relative payment weightsfor these APCs solely on hospital data.APCs 0172 and 0173 were designatedfor PHP services provided by CMHCsand were based on a mixture of hospitaland CMHC data. As the Secretaryargued in the Paladin case, the courtshave consistently held that the phrase‘‘based on’’ does not mean ‘‘basedexclusively on.’’ Thus, the relativepayment weights for the two APCs forCMHC-provided PHP services in CY2011 were ‘‘based on’’ hospital data, noless than the relative payment weightsfor the two APCs for hospital-providedPHP services.Although we used only hospital datato establish the original relativepayment weights for APC 0033 and laterused hospital data to establish four newrelative payment weights for PHPservices, we believe that we have theauthority to discontinue the use ofhospital data after the originalestablishment of the relative paymentweights for a given APC. Other parts ofsection 1833(t)(2)(C) of the Act makeplain that the data source for the relativepayment weights is subject to changefrom one period to another. Section1833(t)(2)(C) of the Act provides that, inestablishing the relative paymentweights, ‘‘the Secretary shall [ ] us[e]data on claims from 1996 and us[e] datafrom the most recent available costreports.’’ However, we used 1996 data(plus 1997 data) in determining only theoriginal relative payment weights for2000; in the ensuing calendar yearupdates, we continually used morerecent cost report data.Moreover, section 1833(t)(9)(A) of theAct requires the Secretary to ‘‘reviewnot less often than annually and revisethe groups, the relative paymentweights, and the wage and otheradjustments described in paragraph (2)to take into account changes in medicalpractice, changes in technology, theaddition of new services, new cost data,and other relevant information andfactors.’’ For purposes of the CY 2012update, we exercised our authorityunder section 1833(t)(9)(A) of the Act tochange the data source for the relativepayment weights for PHP services byCMHCs based on ‘‘new cost data, andother relevant information and factors.’’<strong>Comment</strong>: Several commentersquestioned how one provider’s cost datacould impact the rates so dramaticallyand how can CMS reasonably attributesome of the rate fluctuation to targetedfraud and abuse efforts on the part ofCMS and other agencies. <strong>Comment</strong>ersstated that fraud and abuse efforts didnot decrease the operating cost ofproviders, but instead resulted ineliminating fraudulent providers fromthe program. <strong>Comment</strong>ers also posedthe question of whether CMS took intoaccount the number of CMHCs thatclosed their doors in CY 2010 or onlypartially operated in CY 2010 due toinability to continue to operate.Response: We calculate the PHP perdiem medians using all PHP claimsdata. However, a provider who has ahigh volume of claims will impact themedians by either increasing themedians or decreasing the medians,depending on its cost data. For example,if a provider that has high cost data anda high volume of claims will saturatethe overall cost data, resulting in highmedians. Although fraud and abuseefforts do not decrease the operatingcost of providers, the removal of aparticular provider may have dramaticresults on the overall medians. Weacknowledge the commenters’ concernsand plan to continue monitoring thedata.We do study the number of PHPprovider closings and openings. We willcontinue to monitor any potential accessproblems.<strong>Comment</strong>: A few commentersexpressed concerns that the technicaldata on which CMS relies during theratesetting process are fundamentallyflawed, in that the data do not reflectthe full scope of CMHC costs. Thesecommenters also stated that, due toinsufficient cost reporting instructionsfor CMHCs, they continue to incorrectlyexclude owner’s salary costs from theircost reports, contributing to their lowmedian costs.Response: Data <strong>with</strong>in the cost reportremain an essential component for CMSrate setting, and it is imperative thatcost reports be completed <strong>with</strong>accuracy. Medicare cost reports areFederal documents in which providerscertify and attest that the informationcontained in them is accurate. As aMedicare participating provider, it is theresponsibility of the provider tocomplete and submit an accurateMedicare cost report. Because allproviders must certify and attest to theaccuracy of the report, we trust that thedata are, in fact, accurate. We calculaterates using the data submitted to us.There are several free resourcesavailable to providers who havequestions or need help completing costreports. Providers are alwaysencouraged to work <strong>with</strong> their fiscalintermediaries/MACs to resolve anyquestions, including those related tocost reports. CMS provides manualinstructions in Chapter 18 of theProvider Reimbursement Manual, PartII, located on the CMS Web site at:https://www.cms.gov/Manuals/PBM/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=1&sortOrder=ascending&itemID=CMS021935&intNumPerPage=10.CMS regional office and central officeemployees, including those in theDivision of Cost Reporting, are alsoavailable resources who can answerquestions. Furthermore, CMS offers costreporting software free of charge at:http://www.mutualmedicare.com/star/providers/.All of the abovementioned resourcesare free of charge. A provider may alsopurchase the services of accountingprofessionals to help <strong>with</strong> completingcost reports. We do caution thatproviders should choose a trustedaccountant. We have become aware ofsome providers purchasing the servicesof accountants who profess to knowMedicare cost reporting requirements,but in reality do not. Again, if anaccountant completes the cost report,the provider is still responsible for thecontent of the cost report viacertification and attestation.In summary, after consideration of thepublic comments we received, we arefinalizing our CY 2012 proposal,<strong>with</strong>out modification, to update the fourPHP per diem payment rates based onthe median cost levels calculated usingthe most recent claims data for eachprovider type. The updated PHP APCsmedian per diem costs for PHP servicesthat we are finalizing for CY 2012 areshown in Tables 44 and 45 below:jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00231 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74352 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2C. Separate Threshold for OutlierPayments to CMHCsIn the CY 2004 OPPS final rule <strong>with</strong>comment period (68 FR 63469 through63470), we indicated that, given thedifference in PHP charges betweenhospitals and CMHCs, we did notbelieve it was appropriate to makeoutlier payments to CMHCs using theoutlier percentage target amount andthreshold established for hospitals. Priorto that time, there was a significantdifference in the amount of outlierpayments made to hospitals and CMHCsfor PHP services. In addition, furtheranalysis indicated that using the sameOPPS outlier threshold for bothhospitals and CMHCs did not limitoutlier payments to high-cost cases andresulted in excessive outlier paymentsto CMHCs. Therefore, beginning in CY2004, we established a separate outlierthreshold for CMHCs. The separateoutlier threshold for CMHCs hasresulted in more commensurate outlierpayments.The separate outlier threshold forCMHCs resulted in $1.8 million inoutlier payments to CMHCs in CY 2004and $0.5 million in outlier payments toCMHCs in CY 2005. In contrast, in CY2003, more than $30 million was paidto CMHCs in outlier payments. Webelieve this difference in outlierpayments indicates that the separateoutlier threshold for CMHCs has beensuccessful in keeping outlier paymentsto CMHCs in line <strong>with</strong> the percentage ofOPPS payments made to CMHCs.In the CY 2012 OPPS/ASC proposedrule (76 FR 42275), we proposed tocontinue our policy of identifying 1.0percent of the aggregate total paymentsunder the OPPS for outlier payments forCY 2012. We proposed that a portion ofthat 1.0 percent, an amount equal to0.14 percent of outlier payments (or0.0014 percent of total OPPS payments),would be allocated to CMHCs for PHPoutlier payments. In section II.G. of theproposed rule, for hospital outpatientoutlier payments policy, we proposed toset a dollar threshold in addition to anAPC multiplier threshold. Because thePHP APCs are the only APCs for whichCMHCs may receive payment under theOPPS, we would not expect to redirectoutlier payments by imposing a dollarthreshold. Therefore, we did notpropose to set a dollar threshold forCMHC outlier payments. We proposedto set the outlier threshold for CMHCsfor CY 2012 at 3.40 times the APCpayment amount and the CY 2012outlier payment percentage applicableto costs in excess of the threshold at 50percent. Specifically, we proposed toestablish that if a CMHC’s cost forpartial hospitalization services, paidunder either APC 0172 or APC 0173,exceeds 3.40 times the payment for APC0173, the outlier payment would beVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00232 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2calculated as 50 percent of the amountby which the cost exceeds 3.40 timesthe APC 0173 payment rate.We did not receive any publiccomments regarding our proposedoutlier policy. Therefore, we arefinalizing our CY 2012 proposal to seta separate outlier threshold for CMHCs.As discussed in section II.G. of this finalrule <strong>with</strong> comment period, using morerecent data for this final rule <strong>with</strong>comment period, we set the target forhospital outpatient outlier payments at1.00 percent of total estimated OPPSpayments. We allocated a portion of that1.00 percent, an amount equal to 0.12percent of outlier payments or 0.0012percent of total estimated OPPSpayments to CMHCs for PHP outlierpayments. For CY 2012, as proposed, weare setting the outlier threshold at 3.40multiplied by the APC payment amountand the CY 2012 outlier percentageapplicable to costs in excess of thethreshold at 50 percent.IX. Procedures That Will Be Paid Onlyas Inpatient ProceduresA. BackgroundSection 1833(t)(1)(B)(i) of the Actgives the Secretary broad authority todetermine the services to be coveredand paid for under the OPPS. Beforeimplementation of the OPPS in August2000, Medicare paid reasonable costs forservices provided in the HOPD. TheER30NO11.072

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74353jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2claims submitted were subject tomedical review by the fiscalintermediaries to determine theappropriateness of providing certainservices in the outpatient setting. Wedid not specify in our regulations thoseservices that were appropriate toprovide only in the inpatient setting andthat, therefore, should be payable onlywhen provided in that setting.In the April 7, 2000 final rule <strong>with</strong>comment period (65 FR 18455), weidentified procedures that are typicallyprovided only in an inpatient settingand, therefore, would not be paid byMedicare under the OPPS. Theseprocedures comprise what is referred toas the ‘‘inpatient list.’’ The inpatient listspecifies those services for which thehospital will be paid only whenprovided in the inpatient settingbecause of the nature of the procedure,the underlying physical condition of thepatient, or the need for at least 24 hoursof postoperative recovery time ormonitoring before the patient can besafely discharged. As we discussed inthat rule and in the November 30, 2001final rule <strong>with</strong> comment period (66 FR59884), we may use any of a number ofcriteria we have specified whenreviewing procedures to determinewhether or not they should be removedfrom the inpatient list and assigned toan APC group for payment under theOPPS when provided in the hospitaloutpatient setting. Those criteriainclude the following:• Most outpatient departments areequipped to provide the services to theMedicare population.• The simplest procedure describedby the code may be performed in mostoutpatient departments.• The procedure is related to codesthat we have already removed from theinpatient list.In the November 1, 2002 final rule<strong>with</strong> comment period (67 FR 66741), weadded the following criteria for use inreviewing procedures to determinewhether they should be removed fromthe inpatient list and assigned to anAPC group for payment under theOPPS:• A determination is made that theprocedure is being performed innumerous hospitals on an outpatientbasis; or• A determination is made that theprocedure can be appropriately andsafely performed in an ASC, and is onthe list of approved ASC procedures orhas been proposed by us for addition tothe ASC list.The list of codes that will be paid byMedicare in CY 2012 only as inpatientprocedures is included as Addendum Eto this final rule <strong>with</strong> comment period(which is referenced in section XVII. ofthis final rule <strong>with</strong> comment period andavailable via the Internet on the CMSWeb site).B. Changes to the Inpatient ListIn the CY 2012 OPPS/ASC proposedrule (76 FR 42276), we proposed to usethe same methodology for the CY 2012OPPS described in the November 15,2004 final rule <strong>with</strong> comment period (69FR 65835) to identify a subset ofprocedures currently on the inpatientlist that are being performed asignificant amount of the time on anoutpatient basis. Using thismethodology, we identified twoprocedures that met the criteria forpotential removal from the inpatient listfor CY 2012. We then clinicallyreviewed these two potential proceduresfor possible removal from the inpatientlist and found them to be appropriatecandidates for removal from theinpatient list. During the February 8–March 1, 2011 meeting of the APCPanel, we solicited the APC Panel’sinput on the appropriateness ofremoving these two procedures from theCY 2012 inpatient list: CPT codes 21346(Open treatment of nasomaxillarycomplex fracture (Lefort II type); <strong>with</strong>wiring and/or local fixation) and 54411(Removal and replacement of allcomponents of a multi-componentinflatable penile prosthesis through aninfected field at the same operativesession, including irrigation anddebridement of infected tissue).As we indicated in the CY 2011 finalrule <strong>with</strong> comment period (75 FR71996), we solicited the APC Panel’sinput on the appropriateness ofremoving the procedures described byCPT codes 35045 (Direct repair ofaneurysm, pseudoaneurysm, or excision(partial or total) and graft insertion, <strong>with</strong>or <strong>with</strong>out patch graft; for aneurysm,pseudoaneurysm, and associatedocclusive disease, radial or ulnar artery)and 54650 (Orchiopexy, abdominalapproach, for intra-abdominal testis(e.g., Fowler-Stephens)), from the CY2012 inpatient list. We also solicited theAPC Panel’s input on theappropriateness of removing thefollowing procedures identified in acomment letter addressed to the APCPanel: CPT codes 61154 (Burr hole(s)<strong>with</strong> evacuation and/or drainage ofhematoma, extradural or subdural);61156 (Burr hole(s); <strong>with</strong> aspiration ofhematoma or cyst, intracerebral); and61210 (Burr hole(s); for implantingventricular catheter, reservoir, eegelectrode(s), pressure recording device,or other cerebral monitoring device(separate procedure)). Following thediscussion at its February 28–March 1,VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00233 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR22011 meeting, the APC Panelrecommended that CMS remove fromthe CY 2012 inpatient list CPT codes21346, 54411, 35045, 54650, and 61210.The APC Panel made norecommendation regarding CPT codes61154 and 61156.Additionally, during the February 28–March 1, 2011 meeting of the APCPanel, an APC Panel member requestedremoval of the following CPT codesfrom the CY 2012 inpatient list: 22551(Arthrodesis, anterior interbody,including disc space preparation,discectomy, osteophytectomy anddecompression of spinal cord and/ornerve roots; cervical below C2); 22552(Arthrodesis, anterior interbody,including disc space preparation,discectomy, osteophytectomy anddecompression of spinal cord and/ornerve roots; cervical below C2, eachadditional interspace (List separately inaddition to code for separateprocedure)); 22554 (Arthrodesis,anterior interbody technique, includingminimal discectomy to prepareinterspace (other than fordecompression); cervical below C2);22585 (Arthrodesis, anterior interbodytechnique, including minimaldiscectomy to prepare interspace (otherthan for decompression); cervical belowC2, each additional interspace (Listseparately in addition to code forprimary procedure)); 61107 (Twist drillhole(s) for subdural, intracerebral, orventricular puncture; for implantingventricular catheter, pressure recordingdevice, or other intracerebral monitoringdevice); and 63267 (Laminectomy forexcision or evacuation of intraspinallesion other than neoplasm, extradural;lumbar). Following the discussion at itsFebruary 28–March 1, 2011 meeting, theAPC Panel recommended that CMSremove from the CY 2012 inpatient listCPT codes 22551, 22552, 22554, 22585,61107, and 63267.In the CY 2012 OPPS/ASC proposedrule, for CY 2012, we proposed to acceptthe APC Panel’s recommendation toremove the procedures described byCPT codes 21346, 35045, and 54650from the inpatient list because we agree<strong>with</strong> the APC Panel that the proceduresmay be appropriately provided ashospital outpatient procedures for someMedicare beneficiaries, based upon theevaluation criteria mentioned above. Wealso proposed to not accept the APCPanel’s recommendations to remove theprocedures described by CPT codes22551, 22552, 22554, 22585, 54411,61107, 61210, and 63267 from the CY2012 inpatient only list because uponfurther clinical review subsequent to theFebruary 28–March 1, 2011 APC Panelmeeting, we did not believe that these

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274354 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsprocedures may be appropriatelyprovided as hospital outpatientprocedures for some Medicarebeneficiaries, based upon the evaluationcriteria mentioned above, due to theclinical intensity of the servicesprovided. Furthermore, according to ourutilization data, the proceduresdescribed by CPT codes 22551, 22552,22554, 22585, 54411, 61107, 61210, and63267 have very low volume in theoutpatient hospital setting. We notedthat despite its low overall volume, CPTcode 54411 is performed a significantpercentage of the time in the outpatienthospital setting; however, we do notbelieve that the outpatient proceduresbeing performed are truly reflective ofthe intensity of services requisite whenperforming the procedure as describedby the CPT code’s long descriptor. Weinvited public comment on theinclusion of CPT code 54411 on the CY2012 inpatient list.At its August 10–12, 2011 meeting,the APC Panel recommended again thatCMS remove CPT codes 22551, 22552,22554, 22585, and 63267 from the CY2012 inpatient only list and that CMSprovide the APC Panel <strong>with</strong> clinicalinformation on the appropriateness ofremoving HCPCS code 43279(Laparoscopy, surgical,esophagomyotomy (Heller type), <strong>with</strong>fundoplasty, when performed) from theinpatient-only list and, if removed, towhich APC it should be assigned.<strong>Comment</strong>: <strong>Comment</strong>ers supported theCMS proposal to accept the APCrecommendation to remove CPTprocedures codes 21346, 35045, and54650 from the CY 2012 inpatient onlylist.Response: We appreciate thecommenters’ support.<strong>Comment</strong>: One commenter requestedthat CMS remove CPT code 54411 fromthe CY 2012 inpatient only list based onthe specialty society’s experience andadditionally requested that CMS removeCPT code 54417 (Removal andreplacement of a non-inflatable (semirigid)or inflatable (self-contained)penile prosthesis through an infectedfield at the same operative session) fromthe inpatient only list.Response: We reevaluated data onCPT codes 54411 and 54417, utilizingfurther clinical review by CMS’ medicaladvisors, and we remain convinced thatthese procedures can be safelyperformed only in the inpatient settingdue to the invasive and complicatednature of these procedures.<strong>Comment</strong>: One commenter requestedthat CMS create a modifier similar tomodifier-CA (procedure payable only inthe inpatient setting when performedemergently on an outpatient whoexpires prior to admission) to indicateprocedure payable only in the inpatientsetting when performed emergently onan outpatient who is transferred toanother acute care facility prior toadmission.Response: We appreciate thiscomment. However, the issuesdiscussed <strong>with</strong>in this comment areoutside the scope of the provisions ofthe proposed rule. We will take thiscomment into consideration indeveloping future rulemaking.<strong>Comment</strong>: Several commentersrequested that CMS remove all of theCPT codes recommended by the APCPanel, as well as remove 42 additionalCPT codes from the CY 2012 inpatientonly list based on their own experience,specialty society recommendation, ordesignation of a procedure as safe in theoutpatient setting under one of themany clinical guidelines available, suchas Milliman Care Guidelines.Response: We reevaluated data on the42 additional CPT codes requested bythe commenters using more recentutilization data and further clinicalreview by CMS medical advisors. Thesecodes are listed in Table 47 below. Asa result of the reevaluation, we agree<strong>with</strong> the commenters that it would beappropriate to remove the followingseven CPT codes from the CY 2012inpatient only list because patientsundergoing these procedures cantypically be managed postoperatively asoutpatients: 0184T (Excision of rectaltumor, transanal endoscopicmicrosurgical approach (ie, TEMS),including muscularis propria (ie, fullthickness)); 20930 (Allograft for spinesurgery; morselized); 20931 (Allograftfor spine surgery only; structural (Listseparately in addition to code forprimary procedure)); 43281(Laparoscopy, surgical, repair ofparaesophageal hernia, includesfundoplasty, when performed; <strong>with</strong>outimplantation of mesh); 43770(Laparoscopy, surgical, gastricrestrictive procedure; placement ofadjustable gastric restrictive device (eg,gastric band and subcutaneous portcomponents)); 22551 (Arthrodesis,anterior interbody, including disc spacepreparation, discectomy,osteophytectomy and decompression ofspinal cord and/or nerve roots; cervicalbelow C2); and 22554 (Arthrodesis,anterior interbody technique, includingminimal discectomy to prepareinterspace (other than fordecompression); cervical below C2). Wealso note that although commentersrequested that CPT code37221(Revascularization, endovascular,open or percutaneous, iliac artery,unilateral, initial vessel; <strong>with</strong>VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00234 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2transluminal stent placement(s),includes angioplasty <strong>with</strong>in the samevessel, when performed) be removedfrom the CY 2012 inpatient only list,CPT code 37221 is not on the currentinpatient only list, but is currentlyassigned a status indicator of ‘‘T.’’ Inregard to the other 36 CPT codes thatthe commenters requested to beremoved from the CY 2012 inpatientonly list, we remain convinced thatthese procedures can be safelyperformed only in the inpatient settingdue to the complexity and intensity ofthese services and the need forpostoperative inpatient monitoring.<strong>Comment</strong>: A number of commenterssuggested that regulations should notsupersede the physician’s level ofknowledge and assessment of thepatient’s condition, and that thephysician can appropriately determinewhether a procedure can be performedin a hospital outpatient setting. Othercommenters stated that physician’spayment should be aligned <strong>with</strong> thehospital payment; if the hospital is notpaid, the physician payment should notbe allowed. The commenters furtherstated that physicians have littleincentive to ensure that inpatient onlyprocedures are performed in the correctsetting because their payments are notimpacted by an incorrect site of service.One commenter believed that CMS andhospital efforts to educate physicianshave not been effective. Manycommenters suggested that the inpatientonly list be eliminated in its entirety.The commenters indicated thathospitals already meet minimum safetystandards through Joint Commissionaccreditation and the Medicare hospitalconditions of participation. <strong>Comment</strong>erssuggested that, if the inpatient only listcannot be eliminated in its entirety, anappeals process be developed.<strong>Comment</strong>ers believed that an appealprocess would give the hospital theopportunity to submit documentationon the physician’s intent, the patient’sclinical condition, and thecircumstances that enabled the patientto be sent home safely <strong>with</strong>out aninpatient stay. One commenterrequested that CMS push its Medicarecontractors’ medical directors todevelop local coverage determinations(LCDs) that define when selectedprocedures should be performed asinpatient or outpatient and that CMSdevelop a process to more quicklyevaluate procedures for removal fromthe inpatient only list outside of therulemaking process.Response: We appreciate thesecomments and thoughtful suggestions.We continue to believe that theinpatient only list is a valuable tool for

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74355ensuring that the OPPS only pays forservices that can safely be performed inthe hospital outpatient setting, and wewill not eliminate the inpatient only listat this time. We believe that there aremany surgical procedures that are neversafely performed for a Medicarebeneficiary in the hospital outpatientsetting. Therefore, it would beinappropriate for us to assign themseparately payable status indicators andestablish payment rates in the OPPS. Werecognize that hospitals already meetminimum safety standards throughaccreditation or State surveys whichassure compliance <strong>with</strong> the Medicarehospital conditions of participation.However, while accreditation or Statesurvey and certification of compliance<strong>with</strong> the hospital conditions ofparticipation ensure that a hospital isgenerally a safe and appropriateenvironment for providing care, they donot determine whether a particularservice can be safely provided in theoutpatient setting to Medicarebeneficiaries.Although the commenters suggestedthat we apply the same paymentrestrictions to physicians and hospitalswhen inpatient procedures areperformed inappropriately, payment forphysicians’ services is outside the scopeof the payment policies governed by theOPPS and the provisions of this OPPS/ASC final rule <strong>with</strong> comment period.Not<strong>with</strong>standing concern that educationhas not yet been able to stop somephysicians from performing a procedureon the inpatient only list in the hospitaloutpatient setting, we continue tobelieve that education is critical toensuring that physicians do notinadvertently provide services in ahospital outpatient setting that are paidfor only during an inpatient stay. Weexpect hospitals to be aware of theservices that are being provided in theoutpatient setting. Therefore, we do notbelieve that it is appropriate to pay thehospital for the ancillary servicesfurnished when the patient receives aninpatient only service in the hospitaloutpatient setting. Further, we expecthospitals to use this knowledge and toeducate physicians <strong>with</strong> regard to theappropriate setting for the proceduresthey furnish. We recognize that there arecases in which the patient expiresbefore he or she can be admitted andhas received an inpatient only service<strong>with</strong>out being admitted. In these cases,we have a longstanding policy ofmaking payment for the ancillaryservices provided to Medicarebeneficiaries under APC 0375.As we have stated in the past, we alsoare concerned about the impact ofeliminating the inpatient only list onMedicare beneficiary liability.Elimination of the inpatient only listmight lead to longer periods of stay inthe hospital outpatient setting, duringwhich Medicare beneficiaries areresponsible for copayments for acomplex surgery and any individualservices supporting that surgery, as wellas financial liability for most selfadministrabledrugs which are notcovered under Medicare Part B. Costsharingis very different between thehospital inpatient setting and thehospital outpatient setting, andMedicare beneficiaries may incur higherout-of-pocket costs in the hospitaloutpatient setting for complex surgicalprocedures. We do not plan to adopt aspecific appeals process for claimsrelated to inpatient only proceduresperformed in the HOPD. Stakeholderscan request changes to the inpatientonly list through annual rulemaking, butthey are responsible for knowing whatprocedures are currently on the list. Wedo not believe that a dedicated appealsprocess for cases involving inpatientonly procedures performed in theoutpatient setting is warranted and sucha process could potentially underminethe disincentive for performinginpatient only procedures in anoutpatient setting. We remaincommitted to reviewing the inpatientonly list timely to reflect changes inmedical practice, and we plan tocontinue our current practice ofreviewing procedures for removal fromthe inpatient only list through thenotice-and-comment rulemakingprocess.After consideration of the publiccomments received, for CY 2012, we aremodifying our proposal to accept theAPC Panel’s recommendations toremove the procedures described byCPT codes 22551 and 22554 from theCY 2012 inpatient only list because afteradditional discussion during the August10–12, 2011 APC Panel meeting andfurther clinical review subsequent to theAugust 10–12, 2011 APC Panel meeting,we agree <strong>with</strong> the APC Panel that theprocedures may be appropriatelyprovided as hospital outpatientprocedures for some Medicarebeneficiaries, based upon the evaluationcriteria mentioned above. We also areaccepting the APC Panel’srecommendation to provide the APCPanel <strong>with</strong> clinical information on theappropriateness of removing HCPCScode 43279 from the inpatient-only listand, if removed, to which APC it shouldbe assigned. However, we are notaccepting the APC Panel’srecommendations to remove theprocedures described by CPT codes,22552, 22585, 54411, 61107, 61210, and63267, because, upon further clinicalreview subsequent to the August 10–12,2011 APC Panel meeting, we do notbelieve that these procedures may beappropriately provided as hospitaloutpatient procedures for someMedicare beneficiaries, based upon theevaluation criteria mentioned above,due to the clinical intensity of servicesprovided.We are finalizing our proposal, <strong>with</strong>modifications, to remove CPT codes0184T, 20930, 20931, 21346, 22551,22554, 35045, 43281, 43770, and 54650from the inpatient only list. The 10procedures we are removing from theinpatient only list for CY 2012 and theirCPT codes, long descriptors, APCassignments, and status indictors aredisplayed in Table 46 below.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00235 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

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74358 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00238 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.075

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74360 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–CX. Policies for the Supervision ofOutpatient Services in Hospitals andCAHsA. BackgroundIn the CY 2000 OPPS final rule <strong>with</strong>comment period, CMS established thehospital OPPS and indicated that directsupervision is the standard for allhospital outpatient therapeutic servicescovered and paid by Medicare inhospitals and in provider-baseddepartments (PBDs) of hospitals (65 FR18524 through 18526). Currently, asdiscussed in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR72008), this standard requires thesupervisory practitioner to beimmediately available to furnishassistance and direction throughout theperformance of a hospital outpatienttherapeutic service or procedure. In theCY 2000 OPPS final rule <strong>with</strong> commentperiod, we established in the regulationat § 410.28(e) that outpatient diagnosticservices furnished in PBDs of hospitalsmust be supervised at the levelindicated in the Medicare Physician FeeSchedule (MPFS) for each service, thatis, general, direct or personalsupervision. Since that time, we haveclarified and refined these rules inseveral ways. In the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR71998 through 72001), we provided acomprehensive review of the history ofthe supervision policies for bothoutpatient therapeutic and diagnosticservices from the inception of the OPPSthrough CY 2010. In this section, weprovide a more condensed overview ofour supervision policy during that timeperiod, and present background onissues that have arisen during the CY2011 payment year.By way of overview, we have definedsupervision in the hospital outpatientsetting by using the three levels ofsupervision that CMS defined for thephysician office setting at § 410.32(b)prior to establishment of the OPPS:General, direct, and personalsupervision. Over time, we have tailoredthese definitions as needed to applythem in the hospital outpatient setting,so the definitions or applications in theOPPS may differ slightly from those inthe physician office setting. This is thecase in defining direct supervision,where the MPFS requires presence ‘‘inthe office suite,’’ and the OPPScurrently does not require presence<strong>with</strong>in any specific physical boundary(in the past, the OPPS rules for directsupervision required presence on thehospital campus or in the PBD) (75 FR72008, 72012).To date, for purposes of the hospitaloutpatient setting, we have only defineddirect and general supervision, and wehave only defined general supervisioninsofar as it applies to the provision ofnonsurgical extended durationtherapeutic services (extended durationservices) for which we require directsupervision during an initiation period,followed by a minimum standard ofgeneral supervision for the duration ofthe service (75 FR 72012). Under theOPPS, general supervision means thatVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00240 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2the service is furnished under theoverall direction and control of thephysician or appropriate nonphysicianpractitioner (NPP), but his or herphysical presence is not required duringthe performance of the service. Directsupervision means that the physician orappropriate NPP is immediatelyavailable to furnish assistance anddirection throughout the performance ofa therapeutic service or procedure;however, he or she does not have to bepresent in the room where the service orprocedure is being performed.In the CY 2000 OPPS final rule <strong>with</strong>comment period (65 FR 18524 through18526), we adopted physiciansupervision policies as a condition ofpayment under the OPPS to ensure thatMedicare pays for high quality hospitaloutpatient services that are furnished ina safe and effective manner andconsistent <strong>with</strong> Medicare requirements.The agency has long divided hospitaloutpatient services into the twocategories of ‘‘diagnostic’’ services and‘‘therapeutic’’ services that aid thephysician in the treatment of patients(Section 3112 of the Medicare Part AIntermediary Manual (July 1987)). Thus,we considered all nondiagnosticservices to be ‘‘therapeutic services’’which would include, but not be limitedto, the services listed under section1861(s)(2)(B) of the Act as incident tothe services of physicians. As early as1985, the agency defined therapeuticservices as those services and supplies(including the use of hospital facilities)that are incident to the services ofER30NO11.077

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74361jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2physicians in the treatment of patients(Section 3112.4 of the Medicare Part AIntermediary Manual (May 1985)). Inrecognition of this historic classificationof services, we established a directsupervision standard for outpatienttherapeutic services under ourregulation at § 410.27, which establishesthe conditions for payment foroutpatient hospital services provided‘‘incident to’’ physicians’ services. Inthe text of § 410.27, we also establishedstandards requiring that these servicesbe furnished either by or underarrangements made by the participatinghospital (§ 410.27(a)(1)(i)), and either inthe hospital or in a location that theagency designates as a department of aprovider under § 413.65 of theregulations (§ 410.27(a)(1)(iii)). Since2000, we have maintained theclassification of services as eitherdiagnostic or therapeutic in our manualguidance that establishes the conditionsof payment for hospital outpatientservices under the OPPS (Sections 20.4and 20.5, Chapter 6 of the MedicareBenefit Policy Manual (Pub. 100–02)). Inthe requirements for therapeuticservices, in addition to the directsupervision standard, we applied therequirements of § 410.27(a)(1)(i) and(a)(1)(iii) regarding under arrangementand provider-based site of service to alloutpatient therapeutic services that arepaid under the OPPS (Section 20.5,Chapter 6 of the Medicare Benefit PolicyManual (Pub. 100–02)).In the CY 2000 OPPS final rule <strong>with</strong>comment period, we amended ourregulation at § 410.27 to specify thatdirect supervision is required foroutpatient hospital services andsupplies furnished incident to aphysician’s service in a location wedesignate as a department of a providerunder § 413.65 of our regulations. Wespecified further in the regulation thatdirect supervision means the physicianmust be present on the premises of thelocation and immediately available tofurnish assistance and directionthroughout the performance of theservice or procedure. The requirementto be ‘‘immediately available’’ wasincluded in the regulation, although atthat time we did not define the term.Although the regulation required thephysician to be present on the premisesof the location where services werebeing furnished, it specified that thephysician did not have to be present inthe room when the procedure wasperformed. In the CY 2000 OPPS finalrule <strong>with</strong> comment period (65 FR18525), we emphasized the importanceof establishing a supervision standardfor services furnished in departments ofthe hospital that are not located oncampus, indicating that our amendmentapplies to services furnished at an entitythat is located off the campus of ahospital that we designate as havingprovider-based status in accordance<strong>with</strong> the provisions of § 413.65. Inresponse to a commenter, we stated that,in accordance <strong>with</strong> Section 3112.4(A) ofthe Intermediary Manual, we assumethat the direct supervision standard ismet when outpatient therapeuticservices are provided incident to aphysician’s service in an on-campusdepartment of a hospital.In the CY 2000 OPPS final rule <strong>with</strong>comment period, we also defined thesupervision standards for outpatienthospital diagnostic services furnished inPBDs of hospitals in § 410.28(e) of ourregulations. The regulation at§ 410.28(e) provided that diagnosticservices furnished at facilities havingprovider-based status must beperformed under the level ofsupervision indicated for the diagnostictest under the MPFS in accordance <strong>with</strong>the definitions in §§ 410.32(b)(3)(i),(b)(3)(ii), and (b)(3)(iii). In the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod (74 FR 60588 through 60591, and60680), we revised § 410.28(e) to extendthe supervision standards we hadestablished for hospital outpatientdiagnostic tests furnished in PBDs toalso apply to services furnished in thehospital setting or any other locationwhere diagnostic services may beprovided under arrangement. Thesupervision rules for diagnostic servicesunder the regulation at § 410.28(e)explicitly apply to hospitals that arepaid in accordance <strong>with</strong> section 1833(t)of the Act, which is the statutoryauthority for the OPPS. As noted in theCY 2010 OPPS/ASC final rule <strong>with</strong>comment period, Medicare makespayments to CAHs in accordance <strong>with</strong>section 1834(g) of the Act. Accordingly,CAHs are not subject to the supervisionrequirements for hospital outpatientdiagnostic services at this time. Thesupervision requirements for hospitaloutpatient diagnostic services were alsoset forth in Section 20.4, Chapter 6, ofthe Medicare Benefit Policy Manual.In the years following establishmentof the initial OPPS regulations, webegan to receive inquiries fromproviders about the supervisionrequirements. Many of these inquiriesled us to believe that some hospitalsmay have misunderstood our statementto the effect that we assume physiciansupervision requirements are met forservices furnished on the hospitalpremises, and that some hospitals wereproviding either general supervision orno supervision for therapeutic servicesVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00241 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2furnished incident to physicians’services in the outpatient setting and forwhich we had established a requirementof direct supervision. Therefore, in theCY 2009 OPPS/ASC proposed rule andfinal rule <strong>with</strong> comment period (73 FR41518 through 41519 and 73 FR 68702through 68704, respectively), weclarified and restated the varioussupervision requirements for outpatienthospital therapeutic and diagnosticservices. We clarified that outpatienttherapeutic services furnished in thehospital and in all PBDs of the hospital,specifically both on-campus and offcampusPBDs, must be provided underthe direct supervision of physicians. Wealso reiterated that all outpatientdiagnostic services furnished in PBDs,whether on or off the hospital’s maincampus, should be supervised accordingto the levels assigned for the individualtests under the MPFS. We received veryfew public comments regarding thisclarification and restatement during thecomment period.In response to concerns about ourpolicy restatement articulated bystakeholders after publication of the CY2009 OPPS/ASC final rule <strong>with</strong>comment period, we further refined oursupervision policies in the CY 2010OPPS/ASC proposed rule and final rule<strong>with</strong> comment period (74 FR 35365 and74 FR 60679 through 60680,respectively). We established rules forhospital outpatient diagnostic servicesfurnished in locations other than PBDs(that is, in the hospital and underarrangement in nonhospital facilities).Accordingly, we expanded and refinedthe regulatory language regarding directsupervision of diagnostic services inthose locations to refer to presence ofthe supervisory practitioner in thehospital or PBD (for services furnishedin those locations) or in the office suite(for services furnished underarrangement in nonhospital space). Fortherapeutic services, we increasedhospitals’ flexibility regarding the directsupervision requirement by allowing allNPPs whose services are those thepractitioner is legally authorized toperform under State law that ‘‘wouldotherwise be covered if furnished by aphysician or as an incident to aphysician’s service’’ (‘‘would bephysicians’ services’’) to supervisehospital outpatient therapeutic servicesthat are <strong>with</strong>in their scope of practiceunder State law and their hospitalgrantedor CAH-granted privileges(sections 1861(s)(2)(K) through (N) ofthe Act; §§ 410.71 through 410.77 of theregulations). However, in implementingthe new benefits for pulmonaryrehabilitation (PR), cardiac

74362 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2rehabilitation (CR) and intensive cardiacrehabilitation (ICR) services, werequired that direct supervision of thoseservices furnished in the hospitaloutpatient setting must be provided bya doctor of medicine or a doctor ofosteopathy because, as we discussed inthe CY 2010 and CY 2011 OPPS/ASCfinal rules <strong>with</strong> comment period (74 FR60573 and 60582 and 75 FR 72009,respectively), the statute specifies thatthese services are physician-supervised(section 144(a) of the MedicareImprovements for Patients andProviders Act of 2008, Pub. L. 110–275).In addition, in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period, werevised our regulations at § 410.27 toremove the physical boundaryrequirements for direct supervision ofhospital outpatient therapeutic services,and instead allow the supervisorypractitioner to be ‘‘immediatelyavailable,’’ meaning physically present,interruptible, and able to furnishassistance and direction throughout theperformance of the procedure, but<strong>with</strong>out reference to any particularphysical boundary.In the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period, we finalized atechnical correction to the regulation at§ 410.27 to clarify that the directsupervision requirement under thatsection applies to services furnished inCAHs as well as other types of hospitals.Specifically, we added the phrase ‘‘orCAH’’ in the title and throughout theregulation text wherever the textreferred only to ‘‘hospital,’’ to clarifythat the requirements for payment ofhospital outpatient therapeutic servicesin that section apply to CAHs as well asother types of hospitals. As wediscussed in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR72000), we viewed this as a technicalcorrection because the Act applies thesame regulations to hospitals and CAHswhen appropriate (CAHs are included if‘‘the context otherwise requires’’ undersection 1861(e) of the Act).In response to our clarification thatCAHs are subject to the directsupervision standard for payment ofoutpatient therapeutic services, CAHsand the hospital community at largesuggested that CAHs should be exemptfrom this requirement because therequirement is at odds <strong>with</strong>longstanding and prevailing practices ofmany CAHs. For example, commentersnoted that, due to a low volume ofservices, a practitioner retained on thecampus of a small rural hospital or CAHto meet supervision requirements maynot have other concurrentresponsibilities or patient care, whichcould lead to inefficiencies. In theircorrespondence and discussion inpublic forums, CAHs and small ruralhospitals explicitly raised concernsabout services that extend after regularoperating hours, especially observationservices. They asserted that directsupervision is not clinically necessaryfor some outpatient services that have asignificant monitoring component thatis typically performed by nursing orother auxiliary staff, including IVhydration, blood transfusions, andchemotherapy. They stated that theirfacilities have protocols to safely deliverall of these services, relying on nursingor other hospital staff to provide theservice and having a physician or NPPavailable by phone to furnish assistanceand direction throughout the duration ofthe therapeutic service.We provided guidance regarding theflexibility that we believe exists <strong>with</strong>inour requirement for direct supervisionfor an emergency physician or NPP,who would be the most likelypractitioners staffing a small ruralhospital or CAH, to provide thesupervision, on the CMS Web site at:http://www.cms.gov/HospitalOutpatientPPS/05_OPPSGuidance.asp#TopOfPage.However, these hospitals continued toexpress that they have difficulty inmeeting the standard. Small ruralhospitals and CAHs indicated that,regulations not<strong>with</strong>standing, many ofthem did not have appropriate staffarrangements to provide the requiredsupervision of some services,particularly services being providedafter hours or consisting of a significantmonitoring component that last for anextended period of time. In addition, thebroader hospital community beganrequesting that we modify our policy topermit a lower level of supervision foroutpatient therapeutic services for allhospitals.After consideration of these requests,on March 15, 2010, we issued a FederalRegister notice of nonenforcement ofthe requirement for direct supervision ofoutpatient therapeutic services in CAHs(which is available on the CMS Web siteat: http://www.cms.gov/HospitalOutpatientPPS/Downloads/CMS_1504FC_OPPS_2011_FR_Physician_Supervision_Nonenf_Notice.pdf). While CAHs remainedsubject to the direct supervisionstandard, we instructed our contractorsnot to evaluate or enforce the standardin CY 2010 until the agency couldrevisit the supervision policy during theCY 2011 rulemaking cycle.As indicated above, in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 71998 through 72013), wefurther adjusted the direct supervisionVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00242 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2standard for hospital outpatienttherapeutic services to increaseflexibility for hospitals whilemaintaining an appropriate level ofquality and safety and consistent <strong>with</strong>the Medicare statute. Specifically, forthese services we redefined directsupervision to remove all requirementsthat the supervisory practitioner remainpresent <strong>with</strong>in a particular physicalboundary, although we continued torequire immediate availability. We alsoestablished a new category of services,‘‘nonsurgical extended durationtherapeutic services’’ (extendedduration services), which have asubstantial monitoring component. Wespecified that direct supervision isrequired for these services during aninitiation period, but once thesupervising physician or NPP hasdetermined that the patient is stable, theservice can continue under generalsupervision.In addition, in response to concernsexpressed by the industry aboutappropriate levels of supervision forcertain outpatient therapeutic servicesfurnished in various settings (forexample, chemotherapy administration,and post-operative recovery services),we stated our intent to create throughthe CY 2012 rulemaking cycle anindependent advisory review processfor consideration of stakeholder requeststhat CMS assign supervision levels otherthan direct supervision for specificoutpatient hospital therapeutic services.We stated that the review entity wouldevaluate services and recommend thatCMS assign the same level ofsupervision (direct supervision), a lowerlevel of supervision (generalsupervision), or a higher level ofsupervision (personal supervision)because in the course of evaluating agiven service, the review entity mayfind that personal supervision is themost appropriate level (75 FR 72006).We also indicated that, as an interimmeasure while we are in the process ofestablishing an advisory review body,we would extend the nonenforcementpolicy for direct supervision ofoutpatient therapeutic services providedin CAHs for a second year through CY2011 (which is available at the CMSWeb site at: http://www.cms.gov/HospitalOutpatientPPS/Downloads/CMS_1504FC_OPPS_2011_FR_Physician_Supervision_Nonenf_Notice.pdf). In addition, we expandedthe nonenforcement notice to includesmall and rural hospitals that have 100or fewer beds, as defined byTransitional Outpatient Payments(TOPs) criteria, because we believe that

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74363jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2these hospitals experience resourceconstraints that are similar to CAHs.We indicated that we would considerthe Federal Advisory Panel onAmbulatory Payment ClassificationGroups (APC Panel) as a potentialcandidate to serve as the independentreview entity to consider requests foralternative service-specific supervisionstandards, and we requested publiccomment both on that idea and on otheraspects of the review process, such asevaluation criteria and the potentialstructure of the process. We suggestedthe APC Panel could serve as the reviewentity because it is already funded andestablished by law under the FederalAdvisory Committee Act (FACA, Pub. L.92–463) to make independentrecommendations to CMS. The APCPanel membership is geographicallydiverse, and it includes members <strong>with</strong>clinical as well as administrative,hospital billing, and coding expertise.In response to our discussion in theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period, we received publiccomments and other considerable inputon these topics from the hospital andCAH community and from ruralstakeholders. In the CY 2012 OPPS/ASCproposed rule (76 FR 42277 through42285), we discussed these commentsand further developed our proposals forthe independent review process in CY2012, taking into account the commentsreceived in response to the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod.With respect to outpatient hospitaldiagnostic services, following ourrevisions to the regulation at § 410.28(e)in the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period described above,we have received very few commentsfrom stakeholders regarding our revisedpolicy. Therefore, we did not proposeany changes to those requirements inthe CY 2012 proposed rule.B. Issues Regarding the Supervision ofHospital Outpatient TherapeuticServices Raised by Hospitals and OtherStakeholders1. Independent Review ProcessIn the CY 2012 OPPS/ASC proposedrule (76 FR 42277 through 42285), weproposed to establish an independenttechnical review process to considerservice-specific requests that CMSassign supervision levels other thandirect supervision to hospital outpatienttherapeutic services. Our proposalsfocused on three primary topics: Thepotential nature of the review entity; thepotential nature and structure of thereview process; and potential means ofevaluating services.a. Selection of Review EntityWe proposed that the existing APCPanel serve as the independent reviewentity. However, we proposed to modifythe APC Panel’s scope and compositionin order to create a body that is preparedto address supervision standards andthat reflects the full range of partiessubject to the standards. Specifically,we proposed to use the discretionaryauthority in the Panel charter to expandits scope to include the topic ofsupervision standards. We proposed toadd several (2 to 4) representatives ofCAHs as Panel members because CAHsare subject to the supervision rules forpayment. We proposed that we wouldcontinue to exclude these members fromdeliberations about APC assignmentsunder the OPPS, as these assignmentsdo not affect CAHs. CAHs are not paidunder the OPPS, and we do not believethat they are ‘‘appropriate representativeproviders’’ for the Panel’s deliberationson APC groups and weights under theauthorizing section 1833(t)(9) of the Act.We proposed to use the APC Panel formany reasons. In addition to beingalready established and funded, webelieved that the APC Panel would beinclusive and well-balanced because itis subject to the FACA rules. We alsoproposed to use the APC Panel becausewe believed it will be important toobtain advice that carries the weight ofa Federal advisory recommendation,which may have greater legitimacy both<strong>with</strong> stakeholders and <strong>with</strong> CMScompared to the opinions of other typesof groups.<strong>Comment</strong>: Most commenters were infavor of the proposal to use the APCPanel, provided that CAHs and smallrural PPS hospitals received appropriaterepresentation. Many commentersrequested that CMS add 4representatives of CAHs and anadditional 4 representatives of smallrural PPS hospitals to the current 15Panel members, to ensure a strong voicefor small and rural hospitals andbecause both CAH and non-CAH ruralhospitals are having difficultycomplying <strong>with</strong> the direct supervisionrequirement. The commenters alsorecommended that small rural hospitalspaid under the OPPS be permitted toparticipate in the Panel’s deliberationsabout APC groupings and weights. Onecommenter requested an equal numberof rural and urban providerrepresentatives on the Panel. Anothercommenter urged CMS to ensureadherence to the FACA rules.Response: We agree <strong>with</strong> commentersthat the APC Panel is an appropriateentity to serve as the review body,provided CAHs and small ruralVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00243 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2hospitals are given appropriaterepresentation on the Panel. Therefore,we are finalizing the APC Panel as theentity that will advise and makeindependent recommendations to theagency regarding the appropriatesupervision level for individual hospitaloutpatient therapeutic services. Webelieve that it will be important toobtain advice that carries the weight ofa Federal advisory recommendation. Inaddition to being already establishedand funded, the Federal advisory APCPanel will, of necessity, be inclusiveand well-balanced because it is subjectto the FACA rules. Panel members bringrelevant clinical and nonclinicalexpertise to the discussions. Throughamendment of the Panel charter, thePanel will be authorized under section222 of the Public Health Service Act (42U.S.C. 217(a)) to advise the Secretary ofthe Department of Health and HumanServices and the CMS Administrator onthe appropriate supervision level forindividual hospital outpatienttherapeutic services. Under thisauthority, we will also designaterepresentatives of CAHs to serve on thePanel to advise CMS regardingsupervision but they will not adviseCMS regarding APC groups and weights.As we discuss below, a recent studyindicated significant differencesbetween CAHs and non-CAH small ruralhospitals in resources, quality of care,and outcomes (Joynt K, Harris Y, et al.Quality of Care and Patient Outcomes inCritical Access Rural Hospitals. JAMA.2011;306(1):45–52). However, as westated in our CY 2011 OPPS/ASC finalrule <strong>with</strong> comment period (75 FR72007), we believe that CAHs and smallrural PPS hospitals may, at times, facesimilar resource constraints such asworkforce shortages, which could leadto difficulty in meeting certainsupervision standards. We believe thatit would be appropriate for both smallrural PPS hospitals and CAHs to haveadded representation on the Panel in amanner that would be balanced underthe FACA rules. Therefore, as part ofour final policy we are adding four newseats to the Panel. Two of these seatswill be designated for representatives ofCAHs and the other two will bedesignated for representatives of smallrural PPS hospitals. We are defining‘‘small rural PPS hospital’’ in the samemanner as we defined ‘‘small ruralhospital’’ for the notice ofnonenforcement of direct supervision oftherapeutic services in CAHs and smallrural hospitals, that is, hospitals <strong>with</strong>100 or fewer beds and eithergeographically located in a rural area orpaid under the hospital OPPS <strong>with</strong> a

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274364 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsrural wage index (75 FR 72007; https://www.cms.gov/HospitalOutpatientPPS/downloads/CMS_1504FC_OPPS_2011_FR_Physician_Supervision_Nonenf_Notice.pdf). This is the same definitionof small rural hospital that Congressrecognizes for TOPs under section1833(t)(7) of the Act. All PPS hospitalrepresentatives on the Panel, includingthe representatives of small rural PPShospitals, will continue to advise CMSon the APC groups and weights as wellas the appropriate supervision levels forindividual hospital outpatienttherapeutic services.<strong>Comment</strong>: Several commentersaddressed the types of practitioners thatshould be appointed to the Panel, andthe degree to which CMS and the Panelshould rely on clinical and specialtyexpertise. Two commenters suggestedthat recommendations and decisionsabout supervision levels be made onlyby clinicians, and that nonclinicians notbe permitted to participate in the reviewprocess. One commenter supported theconcept of an independent reviewprocess but opposed use of the APCPanel, stating that the Panel’s membersare selected based on their knowledge ofpayment and reimbursement systemsrather than clinical judgment andexpertise. The commenter believed thatthe Panel’s recommendations should bebased solely on clinical judgment, andpointed out that several current Panelmembers do not have clinical expertise.The commenter expressed concern thatthese individuals’ recommendationswould be based upon paymentimplications rather than clinical criteria.One commenter recommended thatCMS involve its specialty society in itsreviews. Another commenterencouraged CMS to include experts onthe Panel that specialize in theparticular service that is beingevaluated, and to seek out the resourcesof specialty societies. One commenternoted that in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR72011), in making the decision toexclude chemotherapy administrationfrom the list of extended durationservices pending an independentassessment, CMS noted a safetystandard that was published by theAmerican Society of Clinical Oncologyand the Oncology Nursing Society. Thecommenter requested information as tohow CMS might consider such specialtyassociation guidelines in futuredecision-making.Response: As we stated in theproposed rule (76 FR 42280), we believethat the APC Panel is an appropriatebody to review supervision levelsbecause, under the FACA rules, it musthave a ‘‘balanced’’ composition. ThePanel members must reflect expertise inthe areas that are important forinformed, representative decisionmakingon supervision which webelieve includes both clinical and othertypes of expertise. In evaluating thesupervision levels that are required forpayment, we believe that the Panel willneed input from individuals <strong>with</strong>knowledge in hospital billing, coding,and administration, as well as clinicalmatters. For example, in the past severalOPPS rulemaking cycles, commentershave requested that CMS evaluate thesurgical recovery period for a change insupervision level from direct to generalsupervision. Several commenters to thecurrent (CY 2012) proposed rule wereseeking additional information on howto request a change in supervision levelfor a ‘‘service’’ like the recovery periodthat is not defined by a CPT code butrather by phases assigned by a specialtysociety. As we discuss below, onecommenter requested that CMSsynchronize the supervisionrequirement for the recovery period<strong>with</strong> the phases into which theAmerican Society of Anesthesiology(ASA) divides the recovery period.Individuals <strong>with</strong> billing and codingexpertise may help inform these andsimilar issues.In addition, we note that it is possiblefor both clinicians and nonclinicians tomake recommendations that areinappropriately based on paymentimplications rather than clinical orother criteria that may be set forth.Clinicians must adhere to thesupervision rules in order to receivepayment for their services, andfurnishing supervision uses resourcesthat might otherwise be devoted toincreasing payment by furnishingadditional services. Thus, we believethere is some potential among cliniciansand nonclinicians to give inappropriateweight to payment implications inmaking their recommendations.Excluding nonclinicians from the Panelwould not necessarily prevent thesetypes of considerations from affectingdecision-making.In accordance <strong>with</strong> the FACA rules,we will maintain balanced membershipon the Panel. We encourage specialtyassociations and other entities <strong>with</strong>specialized expertise in services thatmay be under the Panel’s considerationto nominate representatives to thePanel. We also encourage these groupsto participate in the public Panelmeetings, and to submit publicpresentations that would inform thePanel’s deliberations. In settingsupervision levels, CMS will continueto consider safety and other guidelinesVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00244 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2published by specialty associations, andthe Panel may consider them as well.<strong>Comment</strong>: Several commentersrequested that Panel members includeclinicians furnishing hospital outpatientservices, certified registered nurseanesthetists (CRNAs), and other NPPswho furnish high volume services,especially registered nurses (RNs),physical therapists, and respiratorytherapists. One commenter indicatedthat the Panel should seek input fromproviders who compete <strong>with</strong> physiciansin the marketplace, and not restrictopportunities to inform the Panel tomedical doctors only. Severalcommenters expressed concern aboutCMS’ policy to not allow certain NPPsto supervise hospital outpatienttherapeutic services, especially CRNAsand pharmacists. One commenterindicated that it will ask the Panel toconsider allowing pharmacists tosupervise hospital outpatienttherapeutic services as appropriate, forexample, medication management and,in States where it is authorized,collaborative drug therapy management.The commenter requested that, in thecourse of the review process, the Panelconsider pharmacists to be NPPs whomay furnish supervision. Anothercommenter believed that supervision ofRNs by physicians will not necessarilyprevent medical errors, and also statedthat physicians have been implicated inthe increase in wrong-patient andwrong-site surgical errors.Response: We note again that, inaccordance <strong>with</strong> the FACA rules, CMSwill follow a balance plan for the Panelmembership. For purposes ofsupervision deliberations, we believethat the clinicians on the Panel shouldlargely represent the types ofpractitioners who furnish hospitaloutpatient services and those <strong>with</strong>supervisory responsibilities becausethey are most directly impacted by therules. As we discussed in the proposedrule (76 FR 42282), the agency does notallow RNs to supervise hospitaloutpatient therapeutic services becausethey are not authorized under the Act toindependently furnish ‘‘would bephysicians’ services.’’ For the samereason, CMS does not permitpharmacists to supervise these services.CRNAs have a narrow scope of practice,and we typically would seekpractitioners that furnish a broader arrayof hospital outpatient services to serveas Panel members. However, thesepractitioners are eligible to serve on thePanel, depending on their areas ofexpertise. We note that, currently, onePanel member is an RN and Panelmembers in the past have beenpharmacists. While we did not receive

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74365jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2any comments directly on the number ofnurse practitioners, physician assistantsor other supervisory NPPs that shouldserve on the Panel, we would encouragenominations of these types ofpractitioners, especially for the CAHseats because these types ofpractitioners might be used morefrequently to furnish supervision inCAHs.Regarding the Panel’s supervisiondeliberations, we note that, as weproposed, the Panel’s scope of reviewwill be limited to addressing the levelof supervision that should be furnishedfor a given hospital outpatienttherapeutic service, and will not includethe type of practitioner that should bepermitted to furnish the supervision.The Panel will recommend theappropriate supervision level for aparticular service, given the type ofpractitioner that is permitted to furnishand supervise the service under thecurrent laws and regulations.b. Review ProcessWe proposed to issue agencydecisions based on APC Panelrecommendations through asubregulatory process. We proposed aprocess similar to the one currentlyused to set supervision levels fordiagnostic services under the MPFS,which are also applicable to thoseservices when furnished in the hospitaloutpatient setting. We proposed thatCMS’ decisions, which would be basedupon the Panel’s recommendations,would be posted on the OPPS Web sitefor public review and comment, andwould be effective either in July orJanuary following the most recent APCPanel meeting, or only in January of theupcoming payment year. In setting thesupervision levels for diagnosticservices under the MPFS, there is noprovision for public comment. However,given the strong stakeholder interest inthe supervision requirements and theextent of prior dialogue <strong>with</strong> the variousstakeholders, we proposed to provide aperiod of notice and comment on ourposted decisions prior to finalizingthem.We reasoned that the flexibility of asubregulatory process in comparison toannual notice and comment rulemakingwould allow stakeholders to submit,and for the APC Panel to consider,requests for evaluations of services on amore frequent basis (at least twice a yearat APC Panel meetings) rather than onlyannually, which most commenters tothe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period had requested (75 FR42280). It also would give CMS theability to respond more rapidly to anyissues that may arise in access to careor patterns of care. Subjecting CMS’decisions to notice-and-commentrulemaking would provide a morestructured, formal review of decisions,but changes could only be made once ayear due to the annual OPPS/ASCrulemaking cycle.<strong>Comment</strong>: Most commenters opposedthe agency issuing its decisions througha subregulatory process. Thecommenters requested that, to ensurethe greatest transparency and allowsufficient time and opportunity forpublic comment, CMS subject itsdecisions to notice and commentthrough rulemaking. One commenterrequested a 45- to 60-day commentperiod. A few commenters suggestedthat, to facilitate evaluations more thanonce a year, CMS could addresssupervision standards using both theOPPS rule and another non-OPPS rule.In response to the concerns expressedby the agency in the proposed rule thatthe review process should be nimbleand flexible enough to address access orother urgent needs, several commentersnoted that the agency possesses othermeans of assuring access, for examplenotices of nonenforcement, additionalrulemaking, and other administrativepowers. Several commenters requestedthat CMS not use any information thatis presented by stakeholders in thecourse of the review process forenforcement purposes.Response: As we indicated in theproposed rule, we believe thatemploying a subregulatory process toestablish our final decisions will bestserve the interests of beneficiaries andalso meet the needs of otherstakeholders. While rulemaking wouldarguably provide some additionalprocedural protections to stakeholdersin terms of a more formal opportunityfor notice and comment, due to practicalconsiderations involved in rulemaking,it is very likely that we would only beable to accomplish changes insupervision levels once a year. We agree<strong>with</strong> commenters that the agency hasseveral administrative means to respondto urgent problems associated <strong>with</strong>supervision levels, for exampleexercising our enforcement discretion.However, we believe it is preferable tohave a more nimble means of addressingaccess or pattern-of-care concerns<strong>with</strong>in a short timeframe. In addition, aswe noted in the proposed rule, CMS hashistorically used subregulatoryprocesses rather than rulemaking toissue changes in certain administrativespecifications at the level of individualCPT codes due to a need for agility inmaking such changes. For example,CMS has used a subregulatory processto set supervision levels for individualVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00245 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2diagnostic services under the MPFS,which are also applicable to thoseservices when furnished in the hospitaloutpatient setting.Given the strong stakeholder interestin our consideration of changes insupervision levels for hospitaloutpatient therapeutic services, wecontinue to believe that we shouldprovide an opportunity for publiccomment on our decisions (which willbe based upon the Panel’srecommendations) prior to finalizingthem. Therefore, we are finalizing ourproposal to issue our decisions based onPanel recommendations at thesubregulatory level. We will post ourpreliminary decisions on the OPPS Website for public review and comment.Given that the issues will be servicespecificand therefore narrow, we willallow for a 30-day public commentperiod. We will give carefulconsideration to the comments that wereceive, and we anticipate finalizingdecisions <strong>with</strong>in 60 days of the end ofthe comment period. Our final decisionswill be effective either in July or Januaryfollowing the most recent APC Panelmeeting.c. Evaluation CriteriaTo begin evaluating services in CY2012, we proposed to use the same APCPanel process that is currently used tosolicit requests from stakeholders forAPC and status indicator changes forservices or categories of services toconstruct the agenda to solicit potentialservices for consideration of a change insupervision level. In addition, weproposed that CMS would have theability to request that the Panel reviewthe supervision level for services asnecessary. If we receive anunmanageable number of requests, weproposed to prioritize requests byservice volume, total expenditures and/or frequency of requests. We alsoproposed to give priority to servicesrequested for review through publiccomment on the CY 2010 and CY 2011OPPS/ASC rules. We proposed torequire that requests include ajustification for the change insupervision level that is sought,supported to the extent possible <strong>with</strong>clinical evidence. We also proposed thatwe would consider these justificationsin deciding which services to forward tothe APC Panel for evaluation.We proposed to charge the Panel <strong>with</strong>recommending a supervision level(general, direct, or personal) to ensurean appropriate level of quality andsafety for delivery of a given service, asdefined by a CPT code. We proposedthat the Panel should take intoconsideration the context in which the

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274366 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsservice is delivered, that is, the clinical,payment, and quality context of apatient encounter. In recommending asupervision level to CMS, we proposedthat the Panel assess whether there is asignificant likelihood that thesupervisory practitioner would need toreassess the patient and modifytreatment during or immediatelyfollowing the therapeutic intervention,or provide guidance or advice to theindividual who provides the service. Inanswering that question, the Panelwould consider the following:• Complexity of the service;• Acuity of the patients receiving theservice;• Probability of unexpected oradverse patient event; and• Expectation of rapid clinicalchanges during the therapeutic serviceor procedure.We noted that these criteria include,but extend well beyond, the likelihoodof the need to manage medicalemergencies during or after theprovision of the service. As we havestated in previous rules (74 FR 60580,75 FR 72007, and 75 FR 72010 through72012), the supervisory responsibility ismore than the mere capacity to respondto an emergency. It also includes beingavailable to reassess the patient andpotentially modify treatment as neededon a nonemergency basis. Thesupervisory practitioner must have,<strong>with</strong>in his or her State scope of practiceand hospital-granted privileges, theknowledge, skills, ability, and privilegesto perform the service or procedure.Specially trained ancillary staff andtechnicians are the primary operators ofsome specialized diagnostic ortherapeutic equipment, and while insuch cases CMS does not expect thesupervisory practitioner to operate thisequipment instead of a technician, CMSdoes expect the practitioner thatsupervises provision of the service to beknowledgeable about the test andclinically appropriate to furnish the test.The supervisory responsibility includesthe ability to furnish assistance anddirection throughout the performance ofa procedure and, as appropriate to thesupervisory practitioner and the patient,to change a procedure or the course ofcare for a particular patient. CMS wouldnot expect that the supervisorypractitioner would make all decisionsunilaterally <strong>with</strong>out consulting thepatient’s treating physician or NPP. Thesupervisory practitioner should have thetraining and knowledge to clinicallyredirect the service or provideadditional orders.We proposed that, in the event therehas been a previous consideration anddecision on the supervision standard fora service, we would consider the requestand, as warranted, forward the requestto the APC Panel for its review. Weproposed to require the requestor tosubmit new evidence to support achange in policy, for example, evidenceof a change in clinical practice patternsdue to new techniques or newtechnology. We proposed that ifsufficient new information wasprovided <strong>with</strong> the request, CMS wouldsend the request to the APC Panel, andthe Panel would reconsider the serviceand make another recommendation toCMS, which could be the same or adifferent level of supervision than thecurrent level for the service.<strong>Final</strong>ly, we stated that we anticipatedextending through CY 2012 the notice ofnonenforcement of the requirement fordirect supervision in CAHs and smallrural hospitals as defined by the notice(available on the CMS Web site at:http://www.cms.gov/HospitalOutpatientPPS/01_overview.asp). This extension wouldallow these facilities time to meet theappropriate supervision standard andallow us to complete supervision policydecisions on many key services during2012.<strong>Comment</strong>: <strong>Comment</strong>ers largelysupported the proposed four clinicalcriteria. One commenter requested thatCMS expand these criteria to allowexceptions based on changes intechnology.Response: We believe that a change intechnology or practice patterns thataffects a procedure’s level of safety is anappropriate additional criterion.Therefore, as part of our final policy, weare adding a fifth criterion, ‘‘Recentchanges in technology or practicepatterns that affect a procedure’ssafety.’’ This criterion is similar to thecriteria CMS will use to determinewhether there is a need forreconsideration of a particular service asdiscussed below.<strong>Comment</strong>: Several commenterscontinued to request that CMS establisha default supervision standard ofgeneral supervision for all hospitaloutpatient therapeutic services, andassign direct supervision only asrecommended by the review entity. Thecommenters reiterated public commentson prior rules, stating that the reviewentity and CMS should not considerservices for assignment of personalsupervision because many services thatmight qualify for personal supervisionare already personally performed by aphysician or NPP. They again noted thatcertain services are not furnishedpersonally by these practitioners andinstead are furnished personally byauxiliary personnel such as techniciansVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00246 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2or RNs. However, the commentersmaintained that hospitals currentlyfurnish adequate supervision of thoseservices by higher level practitioners.Further, they requested that anyevaluation for personal supervision bebased on clinical evidence and evidenceof a current deficiency in the quality ofcare. In contrast, one commentersuggested that, to shorten the list ofservices that need consideration, CMSassign personal supervision to allservices that require the practitioner topersonally furnish the service and limitthe Panel’s scope to consideration ofany remaining services. One commenterrequested that the Panel be permitted toadvise the agency on ‘‘alternative’’forms of supervision such as satelliteoffices and telemedicine.Response: In the CY 2012 OPPS/ASCproposed rule and the CY 2011 OPPS/ASC final rule <strong>with</strong> comment period (76FR 42281 and 75 FR 72006,respectively), we expressed our beliefthat direct supervision is the mostappropriate level of supervision formost hospital outpatient therapeuticservices due to the ‘‘incident to’’ natureof most hospital outpatient therapeuticservices. We discussed how ourrequirements for physician (or NPP)orders and direct physician involvementin patient care stem from ourinterpretation of the nature of incidentto physicians’ services under the law.We reviewed our regulations and otherguidance over the years which reflectthese beliefs and interpretations (75 FR71999 and 72005).We stated in the proposed rule andcontinue to believe that, while thestatute does not explicitly mandatedirect supervision, direct supervision isthe most appropriate level ofsupervision for most hospital outpatientservices that are authorized for paymentas ‘‘incident to’’ physicians’ services.We believe that the ‘‘incident to’’ natureof hospital outpatient therapeuticservices under the law permits us torecognize specific circumstances inwhich general supervision isappropriate, as we have for extendedduration services, and that CMS hasauthority to accept a recommendationby the review entity of generalsupervision for a given service.However, we continue to believe thatdirect supervision is the mostappropriate level of supervision for themajority of hospital outpatienttherapeutic services and, as such, it isthe default supervision standard.In the course of evaluating astakeholder request for review of thesupervision level required for a givenservice, the APC Panel may recommendthat personal supervision is the most

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74367jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2appropriate level of supervision for thatservice. It may also be appropriate forthe Panel to recommend personalsupervision for certain services toensure that auxiliary personnel orpersonnel in training (such as medicalstudents) are adequately supervised. Aswe indicated in last year’s final rule<strong>with</strong> comment period, our supervisionpolicy is designed to preserve both thequality and safety of the hospitaloutpatient services that are paid for byMedicare. Accordingly, we believe thatthe APC Panel should have authority torecommend personal supervision for aservice if, in the course of its evaluation,it believes that personal supervision ismost appropriate and safe. Therefore,we are finalizing our proposal that thePanel shall recommend general, director personal supervision for a service.For situations where the supervisorypractitioner is not available in person,but only by ‘‘telemedicine’’ or in alocation such as a ‘‘satellite office,’’ thePanel shall apply the definitions ofdirect, general and personal supervisionin accordance <strong>with</strong> the regulations. Forexample, if a supervisory practitioner isonly available via telemedicine,meaning telephone or Internet, and isnot able to be immediately physicallypresent, the supervisory practitionerwould be furnishing generalsupervision. If a supervisorypractitioner is present in a satelliteoffice such as an off-campus PBD and isable to be immediately physicallypresent but is not present in the roomwhere the service is being furnished, heor she would be furnishing directsupervision. As we previously noted inthe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 72008), <strong>with</strong>regard to recognizing availability byphone or modes other than in-person,we believe that the requirement forphysical presence distinguishes directsupervision from general supervisionbecause the regulations define generalsupervision as ‘‘the procedure isfurnished under the physician’s overalldirection and control, but thephysician’s presence is not requiredduring the performance of theprocedure’’ (§ 410.32(b)(3)(i)). Webelieve that it would be out of the APCPanel’s scope of activities for it todeliberate on the underlying definitionsof direct, general or personalsupervision, or for it to considerrecommending yet another type ofsupervision based on a supervisorypractitioner’s location. Any changes tothe definitions would be proposed andfinalized through the notice andcomment rulemaking process.The APC Panel must base itsrecommendations on the availableclinical evidence. It shall also take intoconsideration any known impacts of thelevel of supervision on the quality ofcare. As we have previously noted (75FR 72005), while literature or clinicalopinions may exist on the risk ofadverse outcomes and susceptibility tomedical error associated <strong>with</strong> theprovision of specific hospital outpatientprocedures when a physician is notpresent, we do not know of any analysesthat have directly examined levels ofsupervision and patient outcomes in thehospital outpatient setting. This may bean area for future study.<strong>Comment</strong>: With respect to a startingagenda, several commenters continuedto request that the Panel begin byevaluating all therapeutic services <strong>with</strong>a work RVU < 1.0 under the MPFS,which includes many extended durationservices. Many commenters requestedthat the Panel review surgicalprocedures and the surgical recoveryperiod, chemotherapy administration,and blood transfusions. A fewcommenters also requested that thePanel evaluate therapies thataccompany chemotherapyadministration such as hydration andanti-emetics. One commenter asked howstakeholders could request evaluation ofservices that are not defined by CPTcodes, notably the surgical recoveryperiod. The commenter requested thatCMS allow general supervision after‘‘phase 1’’ of the recovery period asdesignated by the AmericanAnesthesiology Association (ASA), andasked that CMS synchronize itssupervision requirements for therecovery period <strong>with</strong> the phasesestablished by the ASA. Anothercommenter requested that CMS place onthe agenda services that are high volumeor of high priority for CAHs and smallrural hospitals.Response: In considering our finalpolicy for the appropriate unit of serviceevaluation, we noted that the HCPCScode is a broader unit of service than theCPT code, and concluded that it wouldbe more appropriate for use to identifyservices that do not have an assignedCPT code. Therefore, we will considerrequests, and forward them to the APCPanel for evaluation as described above,for service(s) that are identified byeither a HCPCS code or a CPT code.With regard to setting an agenda, wenoted in the proposed rule that we mayreceive more requests for evaluationthan can be addressed at a given Panelmeeting. We did not receive any publiccomments regarding criteria forprioritizing requests and services to bereviewed at each meeting. Therefore, wewill prioritize requests based on servicevolume, total expenditures for theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00247 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2service, and frequency of requests. Asproposed, we will also give priority toservices that the public has requestedfor evaluation in the CY 2010 throughCY 2012 OPPS/ASC rules. In addition,we will give priority to services thathave not previously been evaluated bythe Panel. As we proposed, requestsmust include justification for the changein supervision level that is sought,supported to the extent possible <strong>with</strong>clinical evidence. In prioritizingservices for review, we also will takethese justifications into consideration.We did not receive any publiccomments on our proposal that theagency would retain the independentdiscretion to request that the Panelevaluate supervision levels for one ormore services. Therefore, we arefinalizing that provision.<strong>Comment</strong>: Several commentersrequested that CMS explicitly includethe place of service as an evaluationcriterion, especially when the service isfurnished in a CAH or rural facility.However, several other commentersrecommended that supervisionrequirements should be applied basedon service type and safety requirements,irrespective of location.Response: We continue to believe thatthe overall patient experience for agiven encounter may differ significantlyby facility depending on physicianpractice patterns, the facility’s patientand payer mix, Medicare paymentstructure for the facility, applicableregulations, quality of care, availableresources and practitioners, and manyother factors. In recent years,researchers have noted an undesirableamount of variation in the care that isfurnished to Medicare patients in bothmetropolitan and nonmetropolitan areasof the country (MedPAC Report to theCongress: Regional Variation inMedicare Service Use, January 2011,available at: http://www.medpac.gov/documents/Jan11_RegionalVariation_report.pdf). Inaddition, according to a recent study,the quality of care that is furnished inCAHs appears to be worse incomparison to small rural hospitals(Joynt K, Harris Y, et al.: Quality of Careand Patient Outcomes in Critical AccessRural Hospitals, JAMA. 2011; 306(1):45–52). Joynt et al. found significantdifferences between CAHs and non-CAH small rural hospitals in resources,quality of care, and outcomes. In publiccomments to date, there has not beenconsensus on whether or not CMSshould set supervision levels forindividual services that are unique toCAHs or rural facilities. Manycommenters opposed the agency’srequirement of direct supervision of

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274368 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsoutpatient chemotherapy administrationin rural areas, citing access concernsand potentially lengthy patientcommutes for care. However, as wediscussed above, published safetystandards appear to recommend directsupervision of chemotherapyadministration.We continue to believe that in makingits recommendations, the Panel shouldconsider the context in which care isfurnished and that CMS should seekbalanced input from various groups onthese issues, and this belief is reflectedin our proposed charge to the Panel. Toemphasize this point, in our finalpolicy, we are incorporating the clinicalsetting as a specific evaluation criterion,thereby instructing the Panel to considerthe clinical context in which the serviceis delivered when makingrecommendations on supervision levels.<strong>Comment</strong>: One commenterrecommended that, to ensureconsistency among settings, the Panelshould be allowed to set supervisionrequirements no higher than thesupervision requirements for a givenservice under the MPFS. Severalcommenters recommended that CMSrequire the same supervision levels inthe hospital outpatient setting andASCs, or among the hospital outpatientsetting, ASCs, and physician offices.Response: We disagree <strong>with</strong> thiscommenter. We do not believe thatsupervision requirements shouldnecessarily be the same in the hospitaloutpatient setting and the physicianoffice setting for therapeutic services.Various factors contribute to theappropriate level of supervision that isneeded in different settings, forexample, differences in patientpopulations. Patients receivingtreatment in a hospital are generallysicker that patients treated in physicianoffices. Therefore, in some cases theappropriate level of supervision wouldbe higher in the hospital than in aphysician office setting.<strong>Comment</strong>: One commenter suggestedthat CMS allow reconsiderationrequests. One commenter requested thatCMS expand its proposed criteria toinclude unique circumstances generally,rather than limiting the criteria forconducting another evaluation tochanges in technology or practicepatterns.Response: As we indicated in theproposed rule, conducting evaluationsof services that the Panel has previouslyconsidered <strong>with</strong>out new evidencesupporting a change in the supervisionlevel could become burdensome andconsume a disproportionate amount ofthe Agency’s and the Panel’s resources.As our final policy, we are providingthat the Panel may consider requests forre-review of a service that has alreadybeen evaluated. The public may requestreconsideration of a service if newinformation indicates recent changes intechnology or practice patterns thataffect a procedure’s safety. Such arequest must be substantiated <strong>with</strong> newinformation such as a change in clinicalpractice patterns due to new techniquesor new technology. If CMS believes thatanother evaluation is warranted, thePanel shall review the service againusing the same process that it uses toevaluate new requests, and shall makeanother recommendation to CMS thatcould be the same or a different level ofsupervision.<strong>Comment</strong>: Most commenterssupported extending through CY 2012the notice of nonenforcement of therequirement for direct supervision ofhospital outpatient therapeutic servicesin CAHs and small rural hospitals <strong>with</strong>100 or fewer beds.Response: Because we will notcomplete supervision policy decisionson many key services until sometime inCY 2012, we are extending the notice ofnonenforcement for CAHs and smallrural hospitals <strong>with</strong> 100 or fewer bedsas defined in the notice another year,through CY 2012. The purpose of thenonenforcement extension is to allowthese facilities time to meet theappropriate supervision standard, andto give us an opportunity to use the newAPC Panel review process to considercertain changes in required supervisionlevels. We will post a notice of theextension on the CMS Web site at:http://www.cms.gov/HospitalOutpatientPPS/01_overview.asp.We noted in the proposed rule that wehave not yet defined the terms‘‘personal supervision’’ or ‘‘generalsupervision’’ for the hospital outpatientsetting, except, as explained above, forgeneral supervision in relation toextended duration services in§ 410.27(a)(1)(v)(A). Because weproposed to allow the independentreview entity to recommend that CMSassign either personal or generalsupervision to hospital outpatienttherapeutic services, we proposed todefine these terms in the regulations.We proposed to use the definitionsestablished for purposes of the MPFS asspecified at § 410.32(b)(3). Specifically,we proposed that ‘‘personalsupervision’’ would have the samemeaning as the definition specified at§ 410.32(b)(3)(iii) and ‘‘generalsupervision’’ would have the samemeaning as the definition specified in§ 410.32(b)(3)(i), which is the definitionthat we established for the generalVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00248 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2supervision portion of an extendedduration service.We did not receive any publiccomments on this proposal. Therefore,in § 410.27(a)(1)(iv)(B), we are finalizingour proposed definitions of ‘‘personalsupervision’’ for hospital outpatienttherapeutic services to mean thedefinition specified at § 410.32(b)(3)(iii),and ‘‘general supervision’’ for hospitaloutpatient therapeutic services to meanthe definition specified in§ 410.32(b)(3)(i). In addition, we arerevising the language in§ 410.27(a)(1)(iv)(C) to clarify that theNPPs that are authorized in this sectionto furnish direct supervision may alsofurnish general or personal supervision(as required by CMS). Specifically, weare removing the word ‘‘directly’’ andinserting ‘‘the required’’ to provide that‘‘nonphysician practitioners mayprovide the required supervision ofservices that they may personallyfurnish in accordance <strong>with</strong> State lawand all additional requirements,including those specified in §§ 410.71,410.73, 410.74, 410.75, 410.76, and410.77.’’<strong>Comment</strong>: One commenter raised anissue that CMS has discussed in recentOPPS rules, namely that under the CAHCoP at § 485.618 governing standards foremergency personnel, in most areas, aphysician or NPP <strong>with</strong> training orexperience in emergency care must beon call and immediately available onlyby telephone or radio contact, andavailable on site <strong>with</strong>in 30 minutes. Thecommenter suggested that hospitals areonly required to adhere to the CoPs inorder to submit a claim; therefore, theyare not required to follow the more strictdirect supervision rule for payment ofservices. The commenter alsorecommended that CMS require thesame level of supervision for paymentas the level that is required under theCAH CoP.Response: We refer readers to the CY2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 72000 through72010) for a more detailed discussion ofthis issue. We continue to believe thatthe supervision rules are a condition ofpayment for CAH services, irrespectiveof their CoP staffing standard. In the CY2011 final rule, we also discussed ourposition that the CoP is a generalcondition of the CAH’s participation inthe Medicare program, while thesupervision standards apply toparticular individual services furnishedby the CAH. The CoP and thesupervision requirements serve differentpurposes and are not inconsistent <strong>with</strong>each other. As such, there is no need toreconcile them.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74369jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES22. Conditions of Payment and HospitalOutpatient Therapeutic ServicesDescribed by Different BenefitCategoriesAnother issue that we addressed inthe CY 2012 OPPS/ASC proposed rule(76 FR 42277 through 42285) is theapplicability of the payment conditionsfor hospital outpatient therapeuticservices in § 410.27 to servicesdescribed in paragraphs orsubparagraphs of section 1861(s) of theAct other than section 1861(s)(2)(B) ofthe Act, which describes outpatienthospital services incident to physicians’services. Over the years, andparticularly in recent months, we havereceived inquiries asking that weexplain or clarify our application of thepayment conditions under ourregulation at § 410.27, which explicitlyapplies to ‘‘hospital services andsupplies furnished incident to aphysician service to outpatients,’’ tooutpatient therapeutic services otherthan those specified under section1861(s)(2)(B) of the Act. For example,we have received inquiries as towhether it is permissible for hospitals tofurnish radiation therapy (describedunder section 1861(s)(4) of the Act) orambulatory surgical center services(described under section 1832(a)(2)(F)(i)of the Act) under arrangement inlocations that are not provider-based.Some inquirers have suggested that thelanguage in § 410.27 is not applicable toservices described by benefit categoriesin section 1861(s) of the Act other thansection 1861(s)(2)(B) of the Act because§ 410.27 only refers to ‘‘incident to’’services.In the proposed rule, weacknowledged that the language of§ 410.27 could be read as limited toservices and supplies described undersection 1861(s)(2)(B) of the Act, hospitalservices incident to physicians’ servicesfurnished to outpatients. However, wenoted that CMS has not interpreted theregulation so narrowly. For instance, inthe CY 2010 OPPS/ASC final rule <strong>with</strong>comment period, we noted that, longbefore the OPPS, we required thathospital services and supplies furnishedto outpatients incident to a physician’sservice must be furnished ‘‘on aphysician’s order by hospital personneland under a physician’s supervision’’(section 3112.4 of the MedicareIntermediary Manual). We also clearlytreated all nondiagnostic services thatare furnished to hospital outpatients as‘‘incident to services’’ (sections 3112and 3112.4 of the MedicareIntermediary Manual; Section 20.5,Chapter 6, of the Medicare BenefitPolicy Manual (Pub. 100–02)). While wehave not delineated this position asclearly in the regulations, and while theregulation text of § 410.27 onlyexplicitly refers to ‘‘incident to’’services, we noted that our policy islongstanding and, in fact, predates theOPPS. In longstanding manualguidance, we have expressed our viewthat direct supervision is required forhospital outpatient therapeutic services,and suggested that this requirementstems from the ‘‘incident to’’ nature ofthose services. In the CY 2010 OPPS/ASC final rule <strong>with</strong> comment period, westated, ‘‘Therapeutic services andsupplies which hospitals provide on anoutpatient basis are those services andsupplies (including the use of hospitalfacilities) which are incident to theservices of physicians and practitionersin the treatment of patients’’ (74 FR60584 through 60585). We indicatedthat outpatient therapeutic services andsupplies must be furnished under theorder of a physician or other appropriateNPP, and by hospital personnel underthe direct supervision of a physician orappropriate NPP.Thus, we have long maintained thatall hospital outpatient therapeuticservices are, according to our policy,furnished ‘‘incident to’’ a physician’sservice even when described by benefitcategories other than the specific‘‘incident to’’ provision in section1861(s)(2)(B) of the Act. Becausehospital outpatient therapeutic servicesare furnished ‘‘incident to’’ aphysician’s professional service, webelieve the conditions for payment,including the direct supervisionstandard, should apply to all hospitaloutpatient therapeutic services. Asdiscussed above, because the statuteincludes specific requirements forphysician supervision of PR, CR, andICR, we believe that those statutoryspecifications take precedence over theagency’s general requirements.In the CY 2012 OPPS/ASC proposedrule, we proposed to amend ourregulations to clarify our policy asfollows. Therapeutic services andsupplies described by benefit categoriesother than the hospital outpatient‘‘incident to’’ services under section1861(s)(2)(B) of the Act are subject tothe conditions of payment in § 410.27when they are furnished to hospitaloutpatients and paid under the OPPS orto CAHs under section 1834(g) of theAct.We stated our belief that thisclarification could most readily beaccomplished by more specificallydefining the services and suppliesdescribed in the regulation text to whichthe requirements at § 410.27 apply.Accordingly, we proposed to revise theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00249 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2description of the services and suppliesaddressed in § 410.27(a) by adding theterm ‘‘therapeutic’’ so that paragraph (a)would read, ‘‘Medicare Part B pays fortherapeutic hospital or CAH servicesand supplies furnished incident to aphysician’s or nonphysicianpractitioner’s service’’ to outpatients.We proposed to define these services,similar to the way they are currentlydefined in Section 20.5, Chapter 6, ofthe Medicare Benefit Policy Manual, tomean ‘‘all services and suppliesfurnished to hospital outpatients thatare not diagnostic services and that aidthe physician or practitioner in thetreatment of the patient.’’ We alsoproposed to add the term ‘‘therapeutic’’to the title of § 410.27 so that it wouldread, ‘‘Therapeutic outpatient hospitalor CAH services and supplies incidentto a physician’s or nonphysicianpractitioner’s service: Conditions.’’<strong>Comment</strong>: Several commentersrequested that CMS clarify that certainservices which are not paid under theOPPS are excluded from therequirements of § 410.27 and thus fromour proposed clarification, especiallyphysical therapy (PT), speech languagepathology (SLP) and occupationaltherapy (OT); diabetes self managementtraining (DSMT); medical nutritiontherapy; end-stage renal disease (ESRD)services; and services paid under theMPFS or the Clinical Laboratory FeeSchedule (CLFS).Response: The requirements of§ 410.27 must be met for payment of thefacility component of hospitaloutpatient therapeutic services. They donot apply to the professional componentof the services or to services that arepaid under other fee schedules such asthe CLFS.<strong>Comment</strong>: One commenter noted thatbecause CAHs are paid based onreasonable cost and not under the OPPSor the MPFS for outpatient PT/SLP/OTservices, under the proposedclarification, the supervision and otherrequirements of § 410.27 would apply toCAHs but not to hospitals that are paidfor those services under the MPFS. Theyexpressed concern that CAHs will bedisproportionately affected by CMS’clarification regarding the applicabilityof the requirements of § 410.27 tooutpatient therapeutic servicesfurnished in CAHs.Response: CAHs have long been paidat reasonable cost rather than under theMPFS for PT/SLP/OT services, and, asdiscussed above, CAHs and otherhospitals have long been subject to therequirements of § 410.27. We are notimposing any new requirements onCAHs through this clarification. We arefinalizing our proposed amendment to

74370 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2our regulations to clarify our policy asfollows. Hospital outpatient therapeuticservices and supplies, including thoseservices described by benefit categoriesother than the hospital outpatient‘‘incident to’’ category under section1861(s)(2)(B) of the Act, are subject tothe conditions of payment in § 410.27when they are paid under the OPPS orpaid to CAHs under section 1834(g) ofthe Act.We proposed to define morespecifically in the regulation text theservices and supplies to which therequirements at § 410.27 apply.Accordingly, we are finalizing ourproposed revision of the description ofthe services and supplies addressed in§ 410.27(a) by adding the term‘‘therapeutic’’ so that paragraph (a)reads, ‘‘Medicare Part B pays fortherapeutic hospital or CAH servicesand supplies furnished incident to aphysician’s or nonphysicianpractitioner’s service’’ to outpatients.We are defining these services, similarto the way they are defined in Section20.5, Chapter 6, of the Medicare BenefitPolicy Manual, to mean ‘‘all servicesand supplies furnished to hospitaloutpatients that are not diagnosticservices and that aid the physician orpractitioner in the treatment of thepatient.’’ Also, as we proposed, we areadding the term ‘‘therapeutic’’ to thetitle of § 410.27 so that it reads,‘‘Therapeutic outpatient hospital orCAH services and supplies incident toa physician’s or nonphysicianpractitioner’s service: Conditions.’’3. Technical Corrections to theSupervision Standards for HospitalOutpatient Therapeutic ServicesFurnished in Hospitals or CAHsIn the proposed rule, we noted thatCAHs are not specifically named in thedefinition of nonsurgical extendedduration therapeutic services at§ 410.27(a)(1)(v). We proposed to makea technical correction to insert thewords ‘‘or CAH’’ after ‘‘hospital’’ in thisparagraph. This is the same technicalcorrection that we made throughout§ 410.27 in the CY 2010 OPPS/ASC finalrule <strong>with</strong> comment period, discussedabove. We did not receive any publiccomments on this proposal. Therefore,we are inserting the words ‘‘or CAH’’after ‘‘hospital’’ in revised§ 410.27(a)(1)(iv)(E) to clarify that CAHsare subject to all of the requirements of§ 410.27 in the same manner as othertypes of hospitals.As we discussed in the proposed rule(76 FR 42284 through 42285), werecently noted that the text of§ 410.27(b) and (c) includes crossreferencesto section § 410.168 of theregulations, which is obsolete. Webelieve that § 410.27(b) refers to§ 410.168 in error and should insteadreference § 410.29 (Limitations on drugsand biologicals). We proposed to correct§ 410.27(b) so that it cross-references§ 410.29. It would then read, ‘‘Drugs andbiological are also subject to thelimitations specified in § 410.29.’’ Inaddition, we proposed to update§ 410.27(c) to cross-reference thesections of the regulation that havereplaced § 410.168, that is, Part 424,Subparts G and H. For this update, weproposed to revise paragraph (c) to read,‘‘<strong>Rule</strong>s on emergency services furnishedto outpatients by nonparticipatinghospitals are specified in subpart G ofPart 424 of this chapter’’ and to add anew paragraph (d) to read, ‘‘<strong>Rule</strong>s onemergency services furnished tooutpatients in a foreign country arespecified in subpart H of Part 424 of thischapter’’. Accordingly, we proposed toredesignate the existing paragraphs (d)through (f) of § 410.27 as paragraphs (e)through (g), respectively.We did not receive any publiccomments on this proposal. Therefore,we are finalizing our proposal to correct§ 410.27(b) so that it cross-references§ 410.29 rather than § 410.168 and nowreads, ‘‘Drugs and biological are alsosubject to the limitations specified in§ 410.29.’’ In addition, we are updating§ 410.27(c) to cross-reference thesections of the regulation that havereplaced § 410.168, that is, Part 424,Subparts G and H. For this update, aswe proposed, we are revising paragraph(c) to read, ‘‘<strong>Rule</strong>s on emergencyservices furnished to outpatients bynonparticipating hospitals are specifiedin subpart G of Part 424 of this chapter’’and are adding a new paragraph (d) toread, ‘‘<strong>Rule</strong>s on emergency servicesfurnished to outpatients in a foreigncountry are specified in subpart H ofPart 424 of this chapter’’. Accordingly,as we proposed, we are redesignatingthe existing paragraphs (d) through (f) of§ 410.27 as paragraphs (e) through (g),respectively.C. Summary of CY 2012 <strong>Final</strong> Policieson Supervision Standards forOutpatient Therapeutic Services inHospitals and CAHsAs we have indicated earlier in thissection, after consideration of the publiccomments we received, we arefinalizing the following policies.1. Independent Review ProcessWe are designating the APC Panel asthe body that will review and advise theagency regarding the appropriate levelof supervision for individual hospitaloutpatient therapeutic services. We willVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00250 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2amend the Panel Charter to add theappropriate statutory authority and toallow representatives of CAHs to serveon the Panel for purposes of thesupervision deliberations. We will add4 voting seats to the Panel (for a currenttotal of 19), and will designate two ofthese seats for representatives of CAHsand two for representatives of smallrural PPS hospitals. ‘‘Small rural PPShospital’’ means the definition of smallrural hospital that is used by theCongress for purposes of TOPs, and thatis used in CMS’ notice ofnonenforcement of direct supervision ofoutpatient therapeutic services in CAHsand small rural hospitals. With respectto supervision policy, the scope of thePanel’s activity is limited torecommending to CMS the appropriatelevel of supervision (general, direct, orpersonal) for individual hospitaloutpatient therapeutic services.We will issue agency decisions basedon Panel recommendations through asubregulatory process. We will post ourpreliminary decisions on the OPPS Website for a 30-day period of public reviewand comment. After consideration ofany public comments that we receive,we will issue our final decisions whichwill be effective either in July or Januaryfollowing the most recent APC Panelmeeting.The Panel will be charged <strong>with</strong>recommending to CMS a supervisionlevel (general, direct, or personal) thatwill ensure an appropriate level ofquality and safety for delivery of a givenservice, as defined by a HCPCS or CPTcode. In recommending a supervisionlevel to CMS, the Panel will assesswhether there is a significant likelihoodthat the supervisory practitioner wouldneed to reassess the patient and modifytreatment during or immediatelyfollowing the therapeutic intervention,or provide guidance or advice to theindividual who provides the service. Inanswering that question, the Panel willconsider the following factors but mayalso consider others as appropriate:• Complexity of the service.• Acuity of the patients receiving theservice.• Probability of unexpected oradverse patient event.• Expectation of rapid clinicalchanges during the therapeutic serviceor procedure.• Recent changes in technology orpractice patterns that affect aprocedure’s safety.• The clinical context in which theservice is delivered.As we have discussed above, thesecriteria include, but extend wellbeyond, the likelihood of the need tomanage medical emergencies during or

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74371after the provision of the service. Thesupervisory responsibility is more thanthe mere capacity to respond to anemergency, and includes being availableto reassess the patient and potentiallymodify treatment as needed on anonemergency basis. We will prioritizestakeholder requests for APC Panelreview of specific services based uponservice volume, total expenditures forthe service and frequency of requests.We also will give priority to servicesthat the public has requested weevaluate in the CY 2010 through CY2012 OPPS/ASC rules, and to servicesthat have not been previously evaluatedby the Panel. All requests must includejustification for the change insupervision level that is sought,supported to the extent possible <strong>with</strong>clinical evidence. In prioritizingservices for the agenda, we also willtake these justifications intoconsideration.We may ask the Panel to considerrequests for review of a service that hasalready been evaluated. If there has beena previous consideration and decisionon the supervision standard for aservice, the requestor should submitnew evidence to support a change inpolicy. For example, the public couldrequest another review of a previouslyreviewed service if new informationindicates recent changes in technologyor practice patterns that affect aprocedure’s safety. Such a request mustbe substantiated <strong>with</strong> new informationsuch as a change in clinical practicepatterns due to new techniques or newtechnology. If CMS believes that anotherevaluation is warranted, the agency willask the APC Panel to review the serviceagain using the same process that it usesto evaluate new requests. The Panel willthen make another recommendation toCMS that could be the same or adifferent level of supervision than theprevious recommendation.Because the agency will not completeAPC Panel review or consideration ofchanges to supervision levels for manykey services until sometime in CY 2012,we are extending the notice ofnonenforcement of the requirement fordirect supervision of outpatienttherapeutic services in CAHs and smallrural hospitals as defined by the notice(available on the CMS Web site at:http://www.cms.gov/HospitalOutpatientPPS/01_overview.asp) another year, through CY 2012. Thepurpose of this nonenforcementextension is to allow these facilitiestime to meet the appropriatesupervision standard, and to allow ustime to complete our review ofsupervision levels for at least someservices.Because the APC Panel mayrecommend that CMS assign eitherpersonal or general supervision toservices, we are defining these terms forhospital outpatient therapeutic servicesin the regulations at new§ 410.27(a)(1)(iv)(B). We are revising thelanguage in § 410.27(a)(1)(iv)(C) toprovide that the NPPs that areauthorized in this section to furnishdirect supervision may also furnishgeneral or personal supervision asrequired by CMS.2. Conditions of Payment and HospitalOutpatient Therapeutic ServicesDescribed by Different BenefitCategoriesWe are finalizing our clarification thattherapeutic services and suppliesdescribed by benefit categories otherthan the hospital outpatient ‘‘incidentto’’ services under section 1861(s)(2)(B)of the Act are subject to the conditionsof payment in § 410.27 when they arefurnished to hospital outpatients andpaid under the OPPS or paid to CAHsunder section 1834(g) of the Act. To thatend, we are redefining the servicesdescribed in § 410.27 to clarify thenature and scope of the includedservices.3. Technical CorrectionsWe are correcting § 410.27(b) so thatit cross-references § 410.29 rather than§ 410.168 and now reads, ‘‘Drugs andbiological are also subject to thelimitations specified in § 410.29.’’ Inaddition, we are updating § 410.27(c) tocross-reference the sections of theregulation that have replaced § 410.168,that is, Part 424, Subparts G and H. Forthis update, we are revising paragraph(c) to read, ‘‘<strong>Rule</strong>s on emergencyservices furnished to outpatients bynonparticipating hospitals are specifiedin subpart G of Part 424 of this chapter’’and are adding a new paragraph (d) toread, ‘‘<strong>Rule</strong>s on emergency servicesfurnished to outpatients in a foreigncountry are specified in subpart H ofPart 424 of this chapter’’. Accordingly,we are redesignating the existingparagraphs (d) through (f) of § 410.27 asparagraphs (e) through (g), respectively.We are inserting the words ‘‘or CAH’’after ‘‘hospital’’ in the revised§ 410.27(a)(1)(iv)(E) to clarify that CAHsare subject to the requirements of§ 410.27 in the same manner as othertypes of hospitals.XI. <strong>Final</strong> CY 2012 OPPS Payment Statusand <strong>Comment</strong> IndicatorsA. <strong>Final</strong> CY 2012 OPPS Payment StatusIndicator DefinitionsPayment status indicators (SIs) thatwe assign to HCPCS codes and APCsplay an important role in determiningpayment for services under the OPPS.They indicate whether a servicerepresented by a HCPCS code is payableunder the OPPS or another paymentsystem and also whether particularOPPS policies apply to the code. TheCY 2012 status indicator assignmentsfor APCs and HCPCS codes are shownin Addendum A and Addendum B,respectively, on the CMS Web site at:http://www.cms.gov/HospitalOutpatientPPS. We note that, inthe past, a majority of the Addendareferred to throughout the preamble ofour OPPS/ASC proposed and final rulesappeared in the printed version of theFederal Register as part of the annualrulemakings. However, beginning <strong>with</strong>the CY 2012 proposed rule, theAddenda will no longer appear in theprinted version of the OPPS/ASC rulesthat are found in the Federal Register.Instead, these Addenda will bepublished and available only via theInternet on the CMS Web site at:http://www.cms.gov/HospitalOutpatientPPS.As we proposed in the CY 2012OPPS/ASC proposed rule (76 FR 42285through 42287), for CY 2012, we are notmaking any changes to the definitions ofstatus indicators that were listed inAddendum D1 of the CY 2011 OPPS/ASC final rule <strong>with</strong> comment period.The final CY 2012 status indicators andtheir definitions are listed in the tablesunder sections XI.A.1., 2., 3., and 4. ofthis final rule <strong>with</strong> comment period.1. Payment Status Indicators ToDesignate Services That Are Paid Underthe OPPSBILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00251 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74372 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00252 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.078

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74373BILLING CODE 4120–01–CWe did not receive any publiccomments related to the definitions ofpayment status indicators to designateservices that are paid under OPPS. Wecontinue to believe that the proposeddefinitions of the OPPS status indicatorscontinue to be appropriate, andtherefore, we are finalizing, <strong>with</strong>outmodification, our CY 2012 proposal.The final CY 2012 status indicators andtheir definitions are displayed in boththe table above and in Addendum D1 onthe CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS.2. Payment Status Indicators ToDesignate Services That Are Paid Undera Payment System Other Than the OPPSIn the CY 2012 OPPS/ASC proposedrule (76 FR 42286), we did not proposeto make any changes to the definitionsof status indicators listed below for theCY 2012 OPPS.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00253 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.079

74374 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2We did not receive any publiccomments regarding the definitions ofpayment status indicators that designateservices that are not recognized underthe OPPS but that may be recognized byother institutional providers. Wecontinue to believe that the proposeddefinitions of the OPPS status indicatorscontinue to be appropriate, andtherefore, we are finalizing, <strong>with</strong>outmodification, our CY 2012 proposal.The final CY 2012 status indicators andtheir definitions displayed in the tableabove are also displayed in AddendumVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00254 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2D1 on the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS.ER30NO11.080

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations743753. Payment Status Indicators ToDesignate Services That Are NotRecognized Under the OPPS But ThatMay Be Recognized by OtherInstitutional ProvidersIn the CY 2012 OPPS/ASC proposedrule (76 FR 42286 through 42287), wedid not propose to make changes to thedefinitions of status indicators listedbelow for the CY 2012 OPPS.We did not receive any publiccomments related to the definitions ofpayment status indicators that designateservices that are paid under a paymentsystem other than the OPPS. Wecontinue to believe that the proposeddefinitions of the OPPS status indicatorscontinue to be appropriate, andtherefore, we are finalizing, <strong>with</strong>outmodification, our proposal for CY 2012.The final status indicators and theirdefinitions listed in the table above arealso displayed in Addendum D1 on theCMS Web site at: http://www.cms.gov/HospitalOutpatientPPS.4. Payment Status Indicators ToDesignate Services That Are Not Payableby Medicare on Outpatient ClaimsIn the CY 2012 OPPS/ASC proposedrule (76 FR 42287), we did not proposeto make changes to the definitions ofpayment status indicators listed belowfor the CY 2012 OPPS.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00255 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.081

74376 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2We did not receive any publiccomments related to the definitions ofpayment status indicators that designateservices that are not payable byMedicare on outpatient claims. Wecontinue to believe that the proposeddefinitions of the OPPS status indicatorscontinue to be appropriate, andtherefore, we are finalizing, <strong>with</strong>outmodification, our proposal for CY 2012.The final CY 2012 payment statusindicators and their definitions listed inthe table above are also displayed inAddendum D1 on the CMS Web site at:http://www.cms.gov/HospitalOutpatientPPS.B. <strong>Final</strong> CY 2012 <strong>Comment</strong> IndicatorDefinitionsAs we proposed in the CY 2012OPPS/ASC proposed rule (76 FR 42287through 42288), for the CY 2012 OPPS,we are using the same two commentindicators that are in effect for the CY2011 OPPS.• ‘‘CH’’—Active HCPCS codes incurrent and next calendar year; statusindicator and/or APC assignment havechanged or active HCPCS code that willbe discontinued at the end of thecurrent calendar year.• ‘‘NI’’—New code for the nextcalendar year or existing code <strong>with</strong>substantial revision to its codedescriptor in the next calendar year ascompared to current calendar year,interim APC assignment; comments willbe accepted on the interim APCassignment for the new code.We proposed in the CY 2012 OPPS/ASC proposed rule (76 FR 42287) to usethe ‘‘CH’’ comment indicator in this CY2012 OPPS/ASC final rule <strong>with</strong>comment period to indicate HCPCScodes for which the status indicator orAPC assignment, or both, will change inCY 2012 compared to their assignmentas of December 31, 2011. We believethat using the ‘‘CH’’ indicator in this CY2012 OPPS/ASC final rule <strong>with</strong>comment period will facilitate thepublic’s review of the changes that weare making for CY 2012. The use of thecomment indicator ‘‘CH’’ in association<strong>with</strong> a composite APC indicates that theconfiguration of the composite APC ischanged in this CY 2012 OPPS/ASCfinal rule <strong>with</strong> comment period.We did not proposed any changes toour current policy regarding the use ofcomment indicator ‘‘NI.’’Any existing HCPCS code numbers<strong>with</strong> substantial revisions to the codedescriptors for CY 2012 compared to theCY 2011 descriptors is labeled <strong>with</strong>comment indicator ‘‘NI’’ in AddendumVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00256 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2B to this CY 2012 OPPS/ASC final rule<strong>with</strong> comment period. However, inorder to receive the comment indicator‘‘NI,’’ the CY 2012 revision to the codedescriptor (compared to the CY 2011descriptor) must be significant such thatthe new code descriptor describes a newservice or procedure for which theOPPS treatment may change. We usecomment indicator ‘‘NI’’ to indicate thatthese HCPCS codes are open tocomment on this CY 2012 OPPS/ASCfinal rule <strong>with</strong> comment period. Like allcodes labeled <strong>with</strong> comment indicator‘‘NI,’’ we will respond to publiccomments and finalize their OPPStreatment in the CY 2013 OPPS/ASCfinal rule <strong>with</strong> comment period.In accordance <strong>with</strong> our usual practice,CPT and Level II HCPCS code numbersthat are new for CY 2012 are alsolabeled <strong>with</strong> comment indicator ‘‘NI’’ inAddendum B to this CY 2012 OPPS/ASC final rule <strong>with</strong> comment period.Only HCPCS codes <strong>with</strong> commentindicator ‘‘NI’’ in this CY 2012 OPPS/ASC final rule <strong>with</strong> comment period aresubject to comment. HCPCS codes thatdo not appear <strong>with</strong> comment indicator‘‘NI’’ in this CY 2012 OPPS/ASC finalrule <strong>with</strong> comment period are not opento public comment, unless weER30NO11.082

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74377jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2specifically request additionalcomments elsewhere in this final rule<strong>with</strong> comment period. The CY 2012treatment of HCPCS codes that appearin this CY 2012 OPPS/ASC final rule<strong>with</strong> comment period to whichcomment indicator ‘‘NI’’ is notappended were open to public commentduring the comment period for theproposed rule, and we are responding tothose comments in this CY 2012 OPPS/ASC final rule <strong>with</strong> comment period.We did not receive any publiccomments on the proposed commentindicators. We continue to believe thatthe proposed definitions of the OPPSstatus indicators continue to beappropriate, and therefore, we arefinalizing, <strong>with</strong>out modification, our CY2012 proposal and are continuing to usecomment indicators ‘‘CH’’ and ‘‘NI’’ forCY 2012. Their final definitions arelisted in Addendum D2 on the CMSWeb site at: http://www.cms.gov/HospitalOutpatientPPS.XII. OPPS Policy and PaymentRecommendationsA. MedPAC RecommendationsMedPAC was established undersection 1805 of the Act to advise theU.S. Congress on issues affecting theMedicare program. As required underthe statute, MedPAC submits reports toCongress not later than March and Juneof each year that contain its Medicarepayment policy recommendations. Thissection describes recentrecommendations relevant to the OPPSthat have been made by MedPAC.The March 1, 2011 MedPAC ‘‘Reportto Congress: Medicare Payment Policy’’included the following recommendationrelating to the Medicare hospital IPPSand, in part, to the Medicare hospitalOPPS:Recommendation 3: ‘‘The Congressshould increase payment rates for theacute care hospital inpatient andoutpatient prospective payment systemsin 2012 by 1 percent. The Congressshould also require the Secretary ofHealth and Human Services to makeadjustments to inpatient payment ratesin future years to fully recover alloverpayments due to documentationand coding improvements.’’ (page 60)MedPAC further stated that: ‘‘Foroutpatient hospital services, theCommission is concerned thatsignificant payment disparities amongMedicare’s ambulatory care settings(hospital outpatient departments,ambulatory surgical centers, andphysician offices) for similar servicesare fostering undesirable financialincentives. Physician practices andambulatory surgical centers are beingreorganized as hospital outpatiententities in part to receive higherreimbursements. The Commissionbelieves that Medicare should seek topay similar amounts for similar services,taking into account differences inquality of care and in the relative risksof the patient populations. TheCommission is concerned by the trendto reorganize for higher reimbursementand will examine this issue. However,in the interim, the modest update of 1percent is warranted in the hospitaloutpatient setting to slow the growingpayment rate disparities amongambulatory care settings.’’ (page 61)CMS Response: We note thatMedPAC’s recommendation is for theCongress to increase IPPS and OPPSpayment rates by 1 percent in 2012.Absent action by Congress, we arefollowing the statutory requirementsthat govern the amount of the annualOPD fee schedule increase factor to theOPPS for CY 2012. We discuss the CY2012 OPD fee schedule increase factorin section II.B. of this final rule <strong>with</strong>comment period.We look forward to reviewing theresults of MedPAC’s examination ofwhat it perceives as a trend towardsreorganization of ambulatory surgicalcenters and physician offices as hospitaloutpatient departments to maximizeprogram payment.The full March 2011 MedPAC reportcan be downloaded from MedPAC’sWeb site at: http://www.medpac.gov/documents/Mar11_EntireReport.pdf.On June 15, 2011, MedPAC releaseda report to Congress entitled ‘‘Medicareand the Health Care Delivery System.’’The report did not containrecommendations <strong>with</strong> regard topayment under the OPPS or the ASCpayment system. The full report can bedownloaded from MedPAC’s Web siteat: http://www.medpac.gov/documents/Jun11_EntireReport.pdf.On August 30, 2011, MedPACsubmitted comments to CMS on the CY2012 OPPS/ASC proposed rule.MedPAC submitted comments on thefollowing topics, each of which isdiscussed in the indicated section ofthis final rule <strong>with</strong> comment period.• Adjustment to payments fordedicated cancer hospitals (section II.F.of this final rule <strong>with</strong> comment period)• Payment for pharmacy overhead(section V.B. of this final rule <strong>with</strong>comment period)• Hospital wage index policy (sectionII.C. of this final rule <strong>with</strong> commentperiod)• Composite APC 8009 cardiacresynchronization therapy (sectionII.A.2.e.(6) of this final rule <strong>with</strong>comment period)VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00257 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2• Hospital outpatient qualityreporting measures (section X.G. of thisfinal rule <strong>with</strong> comment period)• Ambulatory surgical center qualityreporting measures (section X.K. of thisfinal rule <strong>with</strong> comment period)• Hospital inpatient value basedpurchasing (section XVI. of this finalrule <strong>with</strong> comment period)B. APC Panel RecommendationsRecommendations made by the APCPanel meeting held on February 28 andMarch 1, 2011 and August 10–12, 2011are discussed in the sections of this finalrule <strong>with</strong> comment period thatcorrespond to topics addressed by theAPC Panel. The reports andrecommendations from the APC Panel’sFebruary 28 and March 1, 2011 andAugust 10–12, 2011 meetings regardingpayment under the OPPS for CY 2012are available on the CMS Web site at:http://www.cms.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp.C. OIG RecommendationsThe mission of the Office of theInspector General (OIG), as mandated byPublic Law 95–452, as amended, is toprotect the integrity of the U.S.Department of Health and HumanServices (HHS) programs, as well as thehealth and welfare of beneficiariesserved by those programs. This statutorymission is carried out through anationwide network of audits,investigations, and inspections.On October 22, 2010, the OIGpublished a memorandum reportentitled ‘‘Payment for Drugs under theHospital Outpatient ProspectivePayment System’’ (OIG–03–09–00420).The report may be viewed on the Website at: http://oig.hhs.gov/oei/reports/oei-03-09-00420.pdf. The OIG did notmake any recommendations to CMSregarding Medicare payment for drugsand biologicals under the OPPS.CMS Response: We appreciate thework of the OIG regarding the paymentfor drugs under the OPPS, and we havetaken the findings in its report intoconsideration in the development of ourfinal payment policy for CY 2012.XIII. Updates to the AmbulatorySurgical Center (ASC) Payment SystemA. Background1. Legislative Authority for the ASCPayment SystemSection 1832(a)(2)(F)(i) of the Actprovides that benefits under MedicarePart B include payment for facilityservices furnished in connection <strong>with</strong>surgical procedures specified by theSecretary that are performed in an

74378 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Ambulatory Surgical Center (ASC). Toparticipate in the Medicare program asan ASC, a facility must meet thestandards specified in section1832(a)(2)(F)(i) of the Act, which are setforth in 42 CFR Part 416, Subpart B andSubpart C of our regulations. Theregulations at 42 CFR Part 416, SubpartB describe the general conditions andrequirements for ASCs, and theregulations at Subpart C explain thespecific conditions for coverage forASCs.Section 141(b) of the Social SecurityAct Amendments of 1994, Public Law103–432, required establishment of aprocess for reviewing theappropriateness of the payment amountprovided under section 1833(i)(2)(A)(iii)of the Act for intraocular lenses (IOLs)that belong to a class of new technologyintraocular lenses (NTIOLs). Thatprocess was the subject of a final ruleentitled ‘‘Adjustment in PaymentAmounts for New TechnologyIntraocular Lenses Furnished byAmbulatory Surgical Centers,’’published on June 16, 1999, in theFederal Register (64 FR 32198).Section 626(b) of the MedicarePrescription Drug, Improvement, andModernization Act of 2003 (MMA),Public Law 108–173, addedsubparagraph (D) to section 1833(i)(2) ofthe Act, which required the Secretary toimplement a revised ASC paymentsystem to be effective not later thanJanuary 1, 2008. Section 626(c) of theMMA amended section 1833(a)(1) of theAct by adding new subparagraph (G),which requires that, beginning <strong>with</strong>implementation of the revised ASCpayment system, payment for surgicalprocedures furnished in ASCs shall be80 percent of the lesser of the actualcharge for the services or the amountdetermined by the Secretary under therevised payment system.Section 109(b) of the MedicareImprovements and Extension Act of2006 of the Tax Relief and Health CareAct of 2006 (MIEA–TRHCA), PublicLaw 109–432, amended section 1833(i)of the Act by redesignating clause (iv) asclause (v) and adding a new clause (iv)to paragraph (2)(D) and by adding newparagraph (7).Section 1833(i)(2)(D)(iv) of the Actauthorizes, but does not require, theSecretary to implement the revised ASCpayment system ‘‘in a manner so as toprovide for a reduction in any annualupdate for failure to report on qualitymeasures in accordance <strong>with</strong> paragraph(7).’’ Section 1833(i)(7)(A) of the Actstates that the Secretary may providethat any ASC that does not submitquality measures to the Secretary inaccordance <strong>with</strong> paragraph (7) willincur a 2.0 percentage point reductionto any annual increase provided underthe revised ASC payment system forsuch year.Section 1833(i)(7)(B) of the Actprovides that, ‘‘[e]xcept as the Secretarymay otherwise provide,’’ the hospitaloutpatient quality data provisions ofsubparagraphs (B) through (E) of section1833(t)(17) of the Act, added by section109(a) of the MIEA–TRHCA, shall applyto ASCs in a similar manner to themanner in which they apply underthese paragraphs to hospitals under theHospital OQR Program.Sections 4104 and 10406 of theAffordable Care Act, Pub. L. 111–148,amended section 1833(a)(1) and (b)(1) ofthe Act to waive the coinsurance andthe Part B deductible for thosepreventive services under section1861(ddd)(3)(A) of the Act as describedin section 1861(ww)(2) of the Act(excluding electrocardiograms) that arerecommended by the United StatesPreventive Services Task Force(USPSTF) <strong>with</strong> a grade of A or B for anyindication or population and that areappropriate for the individual. Section4104(c) of the Affordable Care Actamended section 1833(b)(1) of the Act towaive the Part B deductible forcolorectal cancer screening tests thatbecome diagnostic. These provisionsapply to these items and servicesfurnished in an ASC on or after January1, 2011.Section 3401(k) of the Affordable CareAct amended section 1833(i)(2)(D) of theAct to require that, effective for CY 2011and subsequent years, any annualupdate under the ASC payment systembe reduced by a productivityadjustment, which is equal to the 10-year moving average of changes inannual economy-wide private nonfarmbusiness multi-factor productivity (asprojected by the Secretary for the 10-year period ending <strong>with</strong> the applicablefiscal year, year, cost reporting period,or other annual period). Application ofthis productivity adjustment to the ASCpayment system may result in theupdate to the ASC payment systembeing less than zero for a year and mayresult in payment rates under the ASCpayment system for a year being lessthan such payment rates for thepreceding year.For a detailed discussion of thelegislative history related to ASCs, werefer readers to the June 12, 1998proposed rule (63 FR 32291 through32292).2. Prior <strong>Rule</strong>makingOn August 2, 2007, we published inthe Federal Register (72 FR 42470) thefinal rule for the revised ASC paymentVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00258 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2system, effective January 1, 2008 (the‘‘August 2, 2007 final rule’’). In thatfinal rule, we revised our criteria foridentifying surgical procedures that areeligible for Medicare payment whenfurnished in ASCs and adopted themethod we would use to set paymentrates for ASC covered surgicalprocedures and covered ancillaryservices furnished in association <strong>with</strong>those covered surgical proceduresbeginning in CY 2008. We alsoestablished a policy for treating new andrevised Healthcare Common ProcedureCoding System (HCPCS) and CurrentProcedural Terminology (CPT) codesunder the ASC payment system. Thispolicy is consistent <strong>with</strong> the OPPS tothe extent possible (72 FR 42533).In addition, we established a standardASC ratesetting methodology that basespayment for most services on the list ofASC covered surgical procedures on theOPPS relative payment weightmultiplied by the ASC conversionfactor. We also establishedmodifications to this methodology forsubsets of services, such as deviceintensiveservices (where the estimateddevice portion of the ASC payment isthe same as that paid under the OPPS)and services that are predominantlyperformed in the office setting andcovered ancillary radiology services(where ASC payment may be based onthe MPFS nonfacility practice expense(PE) Relative Value Units (RVUs)).Additionally, we established a policyfor updating the conversion factor, therelative payment weights, and the ASCpayment rates on an annual basis. Wealso annually update the list ofprocedures for which Medicare does notmake an ASC payment.In the CY 2008 OPPS/ASC final rule<strong>with</strong> comment period (72 FR 66827), weupdated and finalized the CY 2008 ASCrates and lists of covered surgicalprocedures and covered ancillaryservices. We also made regulatorychanges to 42 CFR Parts 411, 414, and416 related to our final policies toprovide payments to physicians whoperform non-covered ASC procedures inASCs based on the facility PE RVUs, toexclude covered ancillary radiologyservices and covered ancillary drugsand biologicals from the categories ofdesignated health services (DHS) thatare subject to the physician self-referralprohibition, and to reduce ASCpayments for surgical procedures whenthe ASC receives full or partial credittoward the cost of the implantabledevice.In the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period (73 FR 68722), weupdated and finalized the CY 2009 ASCrates and lists of covered surgical

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74379jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2procedures and covered ancillaryservices.In the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period (74 FR 60596), weupdated and finalized the CY 2010 ASCrates and lists of covered surgicalprocedures and covered ancillaryservices. We also corrected some ofthose ASC rates in a correction noticepublished in the Federal Register onDecember 31, 2009 (74 FR 69502). Inthat correction notice, we revised theASC rates to reflect changes in theMPFS conversion factor and PE RVUslisted for some CPT codes in AddendumB to the CY 2010 MPFS final rule <strong>with</strong>comment period (74 FR 62017), whichwere incorrect due to methodologicalerrors and were subsequently correctedin a correction notice to that final rule<strong>with</strong> comment period (74 FR 65449). Wealso published a second correctionnotice in the Federal Register to addresschanges to the ASC rates resulting fromcorrections to the PE RVUs identifiedsubsequent to publication of theDecember 31, 2009 correction notice (75FR 45700). <strong>Final</strong>ly, we published anotice in the Federal Register to reflectchanges to CY 2010 ASC payment ratesfor certain ASC services due to changesto the OPPS and MPFS under theAffordable Care Act and to reflecttechnical changes to the ASC paymentrates announced in prior correctionnotices (75 FR 45769).In the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period (75 FR 71800), weupdated and finalized the CY 2011 ASCrates and lists of covered surgicalprocedures and covered ancillaryservices. We corrected some of the ASCrates that were published in AddendaAA and BB, as well as errors in thepreamble text, in a correction noticepublished in the Federal Register onMarch 11, 2011 (76 FR 13292). Thecorrections to the ASC Addenda wereprimarily due to changes to the MPFSconversion factor and PE RVUs listedfor some CPT codes in Addendum Band Addendum C to the MPFS for CY2011 which, in turn, affected officebasedand ancillary radiology paymentunder the ASC payment system.Following legislative changes to theMPFS for CY 2011 associated <strong>with</strong>passage of section 101 of the Medicareand Medicaid Extenders Act of 2010that occurred after publication of the CY2011 OPPS/ASC and MPFS final rules<strong>with</strong> comment periods, we postedrevised ASC Addenda on our Web siteto reflect associated changes to officebasedand ancillary radiology paymentunder the ASC payment system.3. Policies Governing Changes to theLists of Codes and Payment Rates forASC Covered Surgical Procedures andCovered Ancillary ServicesThe August 2, 2007 final ruleestablished our policies for determiningwhich procedures are ASC coveredsurgical procedures and coveredancillary services. Under § 416.2 and§ 416.166 of the regulations, subject tocertain exclusions, covered surgicalprocedures are surgical procedures thatare separately paid under the OPPS, thatwould not be expected to pose asignificant risk to beneficiary safetywhen performed in an ASC, and thatwould not be expected to require activemedical monitoring and care atmidnight following the procedure(‘‘overnight stay’’). We adopted thisstandard for defining which surgicalprocedures are covered surgicalprocedures under the ASC paymentsystem as an indicator of the complexityof the procedure and its appropriatenessfor Medicare payment in ASCs. We usethis standard only for purposes ofevaluating procedures to determinewhether or not they are appropriate forMedicare beneficiaries in ASCs. Wedefine surgical procedures as thosedescribed by Category I CPT codes inthe surgical range from 10000 through69999, as well as those Category III CPTcodes and Level II HCPCS codes thatcrosswalk or are clinically similar toASC covered surgical procedures (72 FR42478). We note that we added over 800surgical procedures to the list of coveredsurgical procedures for ASC payment inCY 2008, the first year of the revisedASC payment system, based on thecriteria for payment that we adopted inthe August 2, 2007 final rule asdescribed above in this section.In the August 2, 2007 final rule, wealso established our policy to makeseparate ASC payments for thefollowing ancillary items and serviceswhen they are provided integral to ASCcovered surgical procedures:Brachytherapy sources; certainimplantable items that have passthroughstatus under the OPPS; certainitems and services that we designate ascontractor-priced, including, but notlimited to, procurement of cornealtissue; certain drugs and biologicals forwhich separate payment is allowedunder the OPPS; and certain radiologyservices for which separate payment isallowed under the OPPS. These coveredancillary services are specified in§ 416.164(b) and, as stated previously,are eligible for separate ASC payment(72 FR 42495). Payment for ancillaryitems and services that are not paidseparately under the ASC paymentVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00259 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2system is packaged into the ASCpayment for the covered surgicalprocedure.We update the lists of, and paymentrates for, covered surgical proceduresand covered ancillary services inconjunction <strong>with</strong> the annual proposedand final rulemaking process to updatethe OPPS and the ASC payment system(§ 416.173; 72 FR 42535). In addition, asdiscussed in detail in section XIII.B. ofthe proposed rule and this final rule<strong>with</strong> comment period, because we baseASC payment policies for coveredsurgical procedures, drugs, biologicals,and certain other covered ancillaryservices on the OPPS payment policies,we also provide quarterly updates forASC services throughout the year(January, April, July, and October). Theupdates are to implement newly createdLevel II HCPCS and Category III CPTcodes for ASC payment and to updatethe payment rates for separately paiddrugs and biologicals based on the mostrecently submitted ASP data. NewCategory I CPT codes, except vaccinecodes, are released only once a year and,therefore, are implemented through theJanuary quarterly update. New CategoryI CPT vaccine codes are released twicea year and thus are implementedthrough the January and July quarterlyupdates.In our annual updates to the ASC listof, and payment rates for, coveredsurgical procedures and coveredancillary services, we undertake areview of excluded surgical procedures(including all procedures newlyproposed for removal from the OPPSinpatient list), new procedures, andprocedures for which there is revisedcoding, to identify any that we believemeet the criteria for designation as ASCcovered surgical procedures or coveredancillary services. Updating the lists ofcovered surgical procedures andcovered ancillary services, as well astheir payment rates, in association <strong>with</strong>the annual OPPS rulemaking cycle isparticularly important because theOPPS relative payment weights and, insome cases, payment rates, are used asthe basis for the payment of coveredsurgical procedures and coveredancillary services under the revised ASCpayment system. This joint updateprocess ensures that the ASC updatesoccur in a regular, predictable, andtimely manner.<strong>Comment</strong>: Several commentersprovided a number of generalsuggestions related to the ASC list ofcovered surgical procedures. Thecommenters contended that CMSshould not restrict which procedures arepayable in ASCs any more than CMSrestricts which procedures are payable

74380 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2in HOPDs. According to thecommenters, when CMS declines to adda service to the ASC list that can beperformed in hospitals and physicianoffices, CMS should articulate a clinicalrationale for why the procedure shouldbe excluded from the ASC setting.<strong>Comment</strong>ers also stated that thefrequency that a surgical procedure isperformed in an office setting should beincluded as one of the criteria forinclusion on the ASC list of coveredsurgical procedures. Some commentersurged CMS to eliminate unlisted codesfrom the exclusionary criteria at§ 416.166(c), and other commentersrequested that ASCs be allowed to useunlisted codes to bill for procedures thatare from anatomic sites that could notpossibly pose a potential risk tobeneficiary safety. The commentersreported that unlisted codes enablesurgeons to utilize innovativetechniques or new technologies and arepaid under the OPPS and bycommercial insurers.Response: We appreciate thecommenters’ suggestions related to ourdecisions about which procedures areexcluded from the ASC list of coveredsurgical procedures. However, as weexplained in the August 2, 2007 finalrule (72 FR 42479), we do not believethat all procedures that are appropriatefor performance in HOPDs areappropriate in ASCs. HOPDs are able toprovide much higher acuity care thanASCs. ASCs have neither patient safetystandards consistent <strong>with</strong> those in placefor hospitals, nor are they required tohave the trained staff and equipmentneeded to provide the breadth andintensity of care that hospitals arerequired to maintain. Therefore, thereare some procedures that we believemay be appropriately provided in theHOPD setting that are unsafe forperformance in ASCs. Thus, we are notmodifying our policy and will continueto exclude certain procedures for whichpayment is made in HOPDs from theASC list of covered surgical procedures.We do not agree <strong>with</strong> the commenters’request that we provide specific reasonsfor our decisions to exclude eachprocedure from the ASC list of coveredsurgical procedures that can beperformed in hospitals and physicianoffices. Our decisions to excludeprocedures from the ASC list are basedon a number of the criteria listed at§ 416.166 of the regulations, and webelieve that it would be unnecessaryand overly burdensome to list eachreason for those decisions. As we havestated in the past (74 FR 60598), wecontinue to believe that these reasonsare sufficiently specific to enable thepublic to provide meaningful commentson our decisions to exclude proceduresfrom the list of covered surgicalprocedures.We believe that we should not use thefrequency that a procedure is performedin the office setting as one of our criteriafor additions to the ASC list of coveredsurgical procedures. Because a surgicalprocedure is performed in significantvolume in the office setting does notautomatically mean that the procedurewould not be expected to pose asignificant risk to beneficiary safetywhen performed in an ASC or wouldnot be expected to require activemedical monitoring and care atmidnight following the procedure. Webelieve that such procedures still needto be evaluated using the criteria listedat § 416.166 of the regulations.We also do not agree <strong>with</strong> thecommenters’ recommendation that weinclude unlisted codes or unlisted codesfor procedures from certain anatomicsites on the list of covered surgicalprocedures. Even though it may behighly unlikely that procedures reportedby unlisted codes or by unlisted codesfor procedures from certain anatomicsites would be expected to pose a riskto beneficiary safety when performed inan ASC or would be expected to requirean overnight stay, we cannot knowexactly what surgical procedure is beingreported by an unlisted code. Therefore,as we have explained in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 72026 and 72027),because we cannot evaluate any suchprocedure, we continue to believe thatwe must exclude unlisted codes as agroup from the list of covered surgicalprocedures.After consideration of the publiccomments we received, we arecontinuing our established policies<strong>with</strong>out modification for determiningwhich procedures are ASC coveredsurgical procedures and coveredancillary services.B. Treatment of New Codes1. Process for Recognizing New CategoryI and Category III CPT Codes and LevelII HCPCS CodesCPT and Level II HCPCS codes areused to report procedures, services,items, and supplies under the ASCpayment system. Specifically, werecognize the following codes on ASCclaims: (1) Category I CPT codes, whichdescribe medical services andprocedures; (2) Category III CPT codes,which describe new and emergingtechnologies, services, and procedures;and (3) Level II HCPCS codes, which areused primarily to identify products,supplies, temporary procedures, andVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00260 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2services not described by CPT codes.CPT codes are established by theAmerican Medical Association (AMA)and the Level II HCPCS codes areestablished by the CMS HCPCSWorkgroup. These codes are updatedand changed throughout the year. CPTand HCPCS code changes that affectASCs are addressed both through theASC quarterly update Change Requests(CRs) and through the annualrulemaking cycle. CMS releases newLevel II HCPCS codes to the public orrecognizes the release of new CPT codesby the AMA and makes these codeseffective (that is, the codes arerecognized on Medicare claims) outsideof the formal rulemaking process viaASC quarterly update CRs. Thisquarterly process offers ASCs access tocodes that may more accurately describeitems or services furnished and/orprovides payment or more accuratepayment for these items or services ina more timely manner than if we waitedfor the annual rulemaking process. Wesolicit comments on the new codesrecognized for ASC payment andfinalize our proposals related to thesecodes through our annual rulemakingprocess.We finalized a policy in the August 2,2007 final rule to evaluate each year allnew Category I and Category III CPTcodes and Level II HCPCS codes thatdescribe surgical procedures, and tomake preliminary determinations in theannual OPPS/ASC final rule <strong>with</strong>comment period regarding whether ornot they meet the criteria for paymentin the ASC setting as covered surgicalprocedures and, if so, whether they areoffice-based procedures (72 FR 42533through 42535). In addition, we identifynew codes as ASC covered ancillaryservices based upon the final paymentpolicies of the revised ASC paymentsystem.In Table 41 of the CY 2012 OPPS/ASCproposed rule (76 FR 42291), wesummarized our process for updatingthe HCPCS codes recognized under theASC payment system.This process is discussed in detailbelow. We have separated ourdiscussion into two sections based onwhether we proposed to solicit publiccomments in the CY 2012 OPPS/ASCproposed rule (and respond to thosecomments in this CY 2012 OPPS/ASCfinal rule <strong>with</strong> comment period) orwhether we are soliciting publiccomments in this CY 2012 OPPS/ASCfinal rule <strong>with</strong> comment period (andresponding to those comments in the CY2013 OPPS/ASC final rule <strong>with</strong>comment period). We note that wesought public comment in the CY 2011OPPS/ASC final rule <strong>with</strong> comment

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74381period on the new CPT and Level IIHCPCS codes that were effectiveJanuary 1, 2011. We also sought publiccomments in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period on thenew Level II HCPCS codes effectiveOctober 1, 2010. These new codes, <strong>with</strong>an effective date of October 1, 2010, orJanuary 1, 2011, were flagged <strong>with</strong>comment indicator ‘‘N1’’ in AddendaAA and BB to the CY2011 OPPS/ASCfinal rule <strong>with</strong> comment period toindicate that we were assigning them aninterim payment status and paymentrate, if applicable, which were subject topublic comment following publicationof the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period. We stated that wewould respond to public comments andfinalize our proposed ASC treatment ofthese codes in this CY 2012 OPPS/ASCfinal rule <strong>with</strong> comment period.We did not receive any publiccomments regarding our process forrecognizing new HCPCS codes underthe ASC payment system and areimplementing our proposed policy asfinal, <strong>with</strong>out modification, for CY2012.2. Treatment of New Level II HCPCSCodes and Category III CPT CodesImplemented in April and July 2011 forWhich We Solicited Public <strong>Comment</strong>s inthe CY 2012 OPPS/ASC Proposed <strong>Rule</strong>In the April and July CRs, we madeeffective for April 1 or July 1, 2011, atotal of 13 new Level II HCPCS codesand 6 new Category III CPT codes thatwere not addressed in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod. The 13 new Level II HCPCScodes describe covered ancillaryservices.In the April 2011 ASC quarterlyupdate (Transmittal 2185, CR 7343,dated March 25, 2011), we added fournew drug and biological Level II HCPCScodes to the list of covered ancillaryservices. Specifically, as displayed inTable 42 of the CY 2012 OPPS/ASCproposed rule (76 FR 42292), theseincluded HCPCS codes C9280(Injection, eribulin mesylate, 1 mg),C9281 (Injection, pegloticase, 1 mg),C9282 (Injection, ceftaroline fosamil, 10mg), and Q2040 (Injection,incobotulinumtoxin A, 1 unit). We notethat HCPCS code Q2040 replacedHCPCS code C9278 (Injection,incobotulinumtoxin A, 1 unit)beginning April 1, 2011. HCPCS codeC9278 was effective January 1, 2011,and deleted for dates of service April 1,2011 and forward, because it wasreplaced <strong>with</strong> HCPCS code Q2040.In the July 2011 quarterly update(Transmittal 2235, Change Request7445, dated June 03, 2011), we addednine new drug and biological Level IIHCPCS codes to the list of coveredancillary services. Specifically, asdisplayed in Table 43 of the CY 2012OPPS/ASC proposed rule (76 FR 42292),we provided separate payment forHCPCS codes C9283 (Injection,acetaminophen, 10 mg), C9284(Injection, ipilimumab, 1 mg), C9285(Lidocaine 70 mg/tetracaine 70 mg, perpatch), C9365 (Oasis Ultra Tri-Layermatrix, per square centimeter), C9406(Iodine I–123 ioflupane, diagnostic, perstudy dose, up to 5 millicuries), Q2041(Injection, von willebrand factorcomplex (human), Wilate, 1 i.u.vwf:rco), Q2042 (Injection,hydroxyprogesterone caproate, 1 mg),Q2043 (Sipuleucel-t, minimum of 50million autologous cd54+ cells activated<strong>with</strong> pap-gm-csf, includingleukapheresis and all other preparatoryprocedures, per infusion), and Q2044(Injection, belimumab, 10 mg). We notethat HCPCS code Q2041 replacedHCPCS code J7184 and HCPCS codeQ2043 replaced HCPCS code C9273beginning July 1, 2011.We assigned payment indicator ‘‘K2’’(Drugs and biologicals paid separatelywhen provided integral to a surgicalprocedure on the ASC list; paymentbased on OPPS rate) to these 13 newLevel II HCPCS codes to indicate thatthey are separately paid when providedin ASCs. In the CY 2012 OPPS/ASCproposed rule, we solicited publiccomment on the proposed CY 2012 ASCpayment indicators and payment ratesfor the drugs and biologicals, as listedin Tables 42 and 43 of the CY 2012OPPS/ASC proposed rule (76 FR 42292).Those HCPCS codes became payable inASCs, beginning in April or July 2011,and are paid at the ASC rates posted forthe appropriate calendar quarter on theCMS Web site at http://www.cms.gov/ASCPayment/.The HCPCS codes listed in Table 42were included in Addendum BB to theCY 2012 OPPS/ASC proposed rule. Wenote that all ASC addenda were onlyavailable via the Internet on the CMSWeb site. Because HCPCS codes thatbecame effective for July (listed in Table43 of the CY 2012 OPPS/ASC proposedrule) were not available to us in time forincorporation into the Addenda to theOPPS/ASC proposed rule, our policy isto include these HCPCS codes and theirproposed payment indicators andpayment rates in the preamble to theproposed rule but not in the Addendato the proposed rule. These codes andtheir final payment indicators and ratesare included in the appropriateAddendum to this CY 2012 OPPS/ASCfinal rule <strong>with</strong> comment period. Thus,the codes implemented by the July 2011ASC quarterly update CR and theirproposed CY 2012 payment rates (basedon July 2011 ASP data) that aredisplayed in Table 43 of the CY 2012OPPS/ASC proposed rule were notincluded in Addendum BB to thatproposed rule. The final list of coveredancillary services and the associatedpayment weights and paymentindicators is included in Addendum BBto this CY 2012 OPPS/ASC final rule<strong>with</strong> comment period, consistent <strong>with</strong>our annual update policy.We did not receive any publiccomments regarding our proposals. Weare continuing our established policy forrecognizing new mid-year HCPCScodes. We also are adopting as final forCY 2012 the ASC payment indicators forthe ancillary services described by thenew Level II HCPCS codes implementedin April and July 2011 through thequarterly update CRs as shown below,in Tables 48 and 49, respectively. Thesenew HCPCS codes also are displayed inAddendum BB to this final rule <strong>with</strong>comment period. We note that afterpublication of the CY 2012 OPPS/ASCproposed rule, the CMS HCPCSWorkgroup created permanent HCPCSJ-codes for CY 2012 to replace certaintemporary HCPCS C-codes madeeffective for CY 2011. These permanentCY 2012 HCPCS J-codes are listedalongside the temporary CY 2011HCPCS C-codes in Tables 48 and 49below.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00261 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74382 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Through the July 2011 quarterlyupdate CR, we also implemented ASCpayment for six new Category III CPTcodes as ASC covered surgicalprocedures, effective July 1, 2011. Thesecodes were listed in Table 44 of the CY2012 OPPS/ASC proposed rule (76 FR42292 and 42293), along <strong>with</strong> theirproposed payment indicators andproposed payment rates for CY 2012.Because new Category III CPT and LevelII HCPCS codes that became effective forJuly were not available to us in time forincorporation into the Addenda to theOPPS/ASC proposed rule, our policy isto include the codes, their proposedpayment indicators, and proposedpayment rates in the preamble to theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00262 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2proposed rule but not in the Addendato the proposed rule. These codes andtheir final payment indicators and ratesare included in Addendum AA to thisCY 2012 OPPS/ASC final rule <strong>with</strong>comment period. We proposed to assignpayment indicator ‘‘G2’’ (Non-officebasedsurgical procedure added in CY2008 or later; payment based on OPPSER30NO11.083

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74383relative payment weight) to all six of thenew Category III CPT codes to beimplemented in July 2011. We believethat these procedures would not pose asignificant safety risk to Medicarebeneficiaries or would not require anovernight stay if performed in ASCs. Wesolicited public comment on theseproposed payment indicators and thepayment rates for the new Category IIICPT codes that were newly recognizedas ASC covered surgical procedures inJuly 2011 through the quarterly updateCR, as listed in Table 44 of the CY 2012OPPS/ASC proposed rule (76 FR 42292and 42293). We proposed to finalizetheir payment indicators and theirpayment rates in this CY 2012 OPPS/ASC final rule <strong>with</strong> comment period.We did not receive any publiccomments regarding this proposal. Weare continuing our established policy forrecognizing new mid-year CPT codes forCY 2012. We also are adopting as finalfor CY 2012 the ASC payment indicatorsfor the covered surgical proceduresdescribed by the new Category III CPTcodes implemented in the July 2011 CRas shown below in Table 50. The newCPT codes implemented in July 2011are also displayed in Addendum AA tothis final rule <strong>with</strong> comment period(which is available via the Internet onthe CMS Web site).jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00263 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.084

74384 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations3. Process for New Level II HCPCSCodes and Category I and III CPT Codesfor Which We Are Soliciting Public<strong>Comment</strong>s in This CY 2012 OPPS/ASC<strong>Final</strong> <strong>Rule</strong> With <strong>Comment</strong> <strong>Period</strong>As has been our practice in the past,we incorporate those new Category Iand Category III CPT codes and newLevel II HCPCS codes that are effectiveJanuary 1 in the final rule <strong>with</strong>comment period updating the ASCpayment system for the followingcalendar year. These codes are releasedto the public via the CMS HCPCS (forLevel II HCPCS codes) and AMA Websites (for CPT codes), and also throughthe January ASC quarterly update CRs.In the past, we also have released newLevel II HCPCS codes that are effectiveOctober 1 through the October ASCquarterly update CRs and incorporatedthese new codes in the final rule <strong>with</strong>comment period updating the ASCpayment system for the followingcalendar year. All of these codes areflagged <strong>with</strong> comment indicator ‘‘NI’’ inAddenda AA and BB to the OPPS/ASCfinal rule <strong>with</strong> comment period toindicate that we are assigning them aninterim payment status which is subjectto public comment. The paymentindicator and payment rate, ifapplicable, for all such codes flagged<strong>with</strong> comment indicator ‘‘NI’’ are opento public comment in the OPPS/ASCfinal rule <strong>with</strong> comment period, and werespond to these comments in the finalrule <strong>with</strong> comment period for the nextcalendar year’s OPPS/ASC update. Inthe CY 2012 OPPS/ASC proposed rule(76 FR 42293), we proposed to continuethis process for CY 2012. Specifically,for CY 2012, we proposed to include inAddenda AA and BB to the CY 2012OPPS/ASC final rule <strong>with</strong> commentperiod the new Category I and III CPTcodes effective January 1, 2012 thatwould be incorporated in the January2012 ASC quarterly update CR and thenew Level II HCPCS codes, effectiveOctober 1, 2011 or January 1, 2012, thatwould be released by CMS in itsOctober 2011 and January 2012 ASCquarterly update CRs. We stated thatthese codes would be flagged <strong>with</strong>comment indicator ‘‘NI’’ in AddendaAA and BB to this CY 2012 OPPS/ASCfinal rule <strong>with</strong> comment period toindicate that we have assigned them aninterim payment status. We also statedthat their payment indicators andpayment rates, if applicable, would beopen to public comment in the CY 2012OPPS/ASC final rule <strong>with</strong> commentperiod and would be finalized in the CY2013 OPPS/ASC final rule <strong>with</strong>comment period.We did not receive any publiccomments regarding this proposedprocess. For CY 2012, we are finalizingour proposal, <strong>with</strong>out modification, tocontinue our established process forrecognizing and soliciting publiccomments on new Level II HCPCS codesand Category I and III CPT codes thatbecome effective for the following year,as described above.C. Update to the Lists of ASC CoveredSurgical Procedures and CoveredAncillary Services1. Covered Surgical Proceduresa. Additions to the List of ASC CoveredSurgical ProceduresWe conducted a review of all HCPCScodes that currently are paid under theOPPS, but not included on the ASC listof covered surgical procedures, todetermine if changes in technology and/or medical practice changed the clinicalappropriateness of these procedures forthe ASC setting. Upon review, we didnot identify any procedures that arecurrently excluded from the ASC list ofprocedures that met the definition of acovered surgical procedure based on ourexpectation that they would not pose asignificant safety risk to Medicarebeneficiaries or would require anovernight stay if performed in ASCs.Therefore, in the CY 2012 OPPS/ASCproposed rule (76 FR 42293) we did notpropose additions to the list of ASCcovered surgical procedures for CY2012.<strong>Comment</strong>: <strong>Comment</strong>ers requested thatCMS add the procedures described bythe 232 CPT codes displayed in Table51 below to the list of ASC coveredsurgical procedures as well as severalCPT unlisted codes. The commentersargued that these procedures are lesscomplex and/or as safe as proceduresalready paid for when performed in theASC setting.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00264 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74385jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00265 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.085

74386 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00266 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.086

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74387jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00267 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.087

74388 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00268 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.088

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74389jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00269 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.089

74390 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00270 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.090

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74391jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00271 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.091

74392 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00272 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.092

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74393jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00273 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.093

74394 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00274 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.094

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74395jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00275 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.095

74396 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00276 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.096

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74397jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00277 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.097

74398 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00278 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.098

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74399BILLING CODE 4120–01–CResponse: We reviewed all of thesurgical procedures that commentersrequested be added to the ASC list ofcovered surgical procedures. We did notreview any of the procedures that maybe reported by the CPT unlisted codesbecause those codes are not eligible foraddition to the ASC list, consistent <strong>with</strong>our final policy which is discussed indetail in the August 2, 2007 final rule(72 FR 42484 through 42486). We do notagree that most of the proceduresrecommended by the commenters areappropriate for provision to Medicarebeneficiaries in ASCs. Although thecommenters asserted that theprocedures they were requesting foraddition to the list are less complexthan and as safe as procedures alreadyon the list, our review did not supportthose assertions. We exclude from ASCpayment any procedure for whichstandard medical practice dictates thatthe beneficiary who undergoes theprocedure would typically be expectedto require active medical monitoringand care at midnight following theprocedure (overnight stay) as well as allsurgical procedures that our medicaladvisors determine may be expected topose a significant safety risk to Medicarebeneficiaries when performed in anASC. The criteria used under therevised ASC payment system to identifyprocedures that would be expected topose a significant safety risk whenperformed in an ASC include, but arenot limited to, those procedures that:generally result in extensive blood loss;require major or prolonged invasion ofbody cavities; directly involve majorblood vessels; are emergent or lifethreatening in nature; commonly requiresystemic thrombolytic therapy; aredesignated as requiring inpatient careunder § 419.22(n); can only be reportedusing a CPT unlisted surgical procedurecode; or are otherwise excluded under§ 411.15 (we refer readers to § 416.166).In our review of the procedures listedin Table 51, we found that most of theprocedures either may be expected topose a threat to beneficiary safety orrequire active medical monitoring atmidnight following the procedure.Specifically, we found that prevailingmedical practice called for inpatienthospital stays for beneficiariesundergoing many of the procedures andthat some of the procedures directlyinvolve major blood vessels and/or mayresult in extensive blood loss. However,we do agree <strong>with</strong> commenters that theprocedures described by CPT codes37201, 37202, 37207, 37208, 59074, andHCPCS code G0365 meet the criteriaunder § 416.166 and would be safelyperformed in the ASC setting and wouldnot require overnight stays. We areadding these CPT/HCPCS codes to theASC list of covered surgical proceduresfor CY 2012.After consideration of the publiccomments we received, we are addingsix of the procedures requested by thecommenters to the CY 2012 ASC list ofcovered surgical procedures. Theprocedures, their descriptors, andpayment indicators are displayed inTable 52 below.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00279 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.099

74400 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–Cb. Covered Surgical ProceduresDesignated as Office-Based(1) BackgroundIn the August 2, 2007 ASC final rule,we finalized our policy to designate as‘‘office-based’’ those procedures that areadded to the ASC list of coveredsurgical procedures in CY 2008 or lateryears that we determine are performedpredominantly (more than 50 percent ofthe time) in physicians’ offices based onconsideration of the most recentavailable volume and utilization data foreach individual procedure code and/or,if appropriate, the clinicalcharacteristics, utilization, and volumeof related codes. In that rule, we alsofinalized our policy to exempt allprocedures on the CY 2007 ASC listfrom application of the office-basedclassification (72 FR 42512). Theprocedures that were added to the ASClist of covered surgical proceduresbeginning in CY 2008 that wedetermined were office-based wereidentified in Addendum AA to that ruleby payment indicator ‘‘P2’’ (Officebasedsurgical procedure added to ASClist in CY 2008 or later <strong>with</strong> MPFSnonfacility PE RVUs; payment based onOPPS relative payment weight); ‘‘P3’’(Office-based surgical procedures addedto ASC list in CY 2008 or later <strong>with</strong>MPFS nonfacility PE RVUs; paymentbased on MPFS nonfacility PE RVUs); or‘‘R2’’ (Office-based surgical procedureadded to ASC list in CY 2008 or later<strong>with</strong>out MPFS nonfacility PE RVUs;payment based on OPPS relativepayment weight), depending on whetherwe estimated it would be paid accordingto the standard ASC paymentmethodology based on its OPPS relativeVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00280 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2payment weight or at the MPFSnonfacility PE RVU-based amount.Consistent <strong>with</strong> our final policy toannually review and update the list ofsurgical procedures eligible for paymentin ASCs, each year we identify surgicalprocedures as either temporarily officebased,permanently office-based, or nonoffice-based,after taking into accountupdated volume and utilization data.(2) Changes for CY 2012 to CoveredSurgical Procedures Designated asOffice-BasedIn developing the CY 2012 OPPS/ASCproposed rule (76 FR 42293 through42296), we followed our policy toannually review and update the surgicalprocedures for which ASC payment ismade and to identify new proceduresthat may be appropriate for ASCpayment, including their potentialdesignation as office-based. WeER30NO11.100

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74401reviewed CY 2010 volume andutilization data and the clinicalcharacteristics for all surgicalprocedures that are assigned paymentindicator ‘‘G2’’ in CY 2011, as well asfor those procedures assigned one of thetemporary office-based paymentindicators, specifically ‘‘P2*,’’ ‘‘P3*,’’ or‘‘R2*’’ in the CY 2011 OPPS/ASC finalrule <strong>with</strong> comment period (75 FR 72033through 72038).In the CY 2012 OPPS/ASC proposedrule (76 FR 42294), we stated that ourreview of the CY 2010 volume andutilization data resulted in ouridentification of 10 surgical proceduresthat we believe meet the criteria fordesignation as office-based. We statedthat the data indicated that theprocedures are performed more than 50percent of the time in physicians’offices, and that our medical advisorsbelieved the services are of a level ofcomplexity consistent <strong>with</strong> otherprocedures performed routinely inphysicians’ offices. The 10 CPT codeswe proposed to permanently designateas office-based are listed in Table 45 ofthe CY 2012 OPPS/ASC proposed rule(76 FR 42294), and are listed in Table53 below.<strong>Comment</strong>: Some commentersexpressed their continued disagreement<strong>with</strong> the policy to make payment at thelower of the ASC rate or the MPFSnonfacility PE RVU payment amount forprocedures we identify as office-basedand requested that these services besubject to the same paymentmethodology as all other Medicarecovered ASC procedures. <strong>Comment</strong>ersalso recommended that CMS establish aminimum volume threshold beforedesignating a procedure office-basedand use multiple years of data in thecalculation in order to ensure that thedata used to apply this policy arereliable.Response: We have responded to thiscomment in the past and we continue tobelieve that our policy of identifyinglow complexity procedures that areusually provided in physicians’ officesand limiting their payment in ASCs tothe physician’s office payment amountis necessary and valid. We believe thisis the most appropriate approach topreventing the creation of paymentincentives for services to move fromphysicians’ offices to ASCs for the manynewly covered low complexityprocedures on the ASC list. We referreaders to our response to this commentin final rules <strong>with</strong> comment period fromprior years: 74 FR 60605 through 60606and 75 FR 72034 through 72035.After consideration of the publiccomments we received, we arefinalizing our CY 2012 proposal todesignate the procedures displayed inTable 53 below as permanently officebasedfor CY 2012.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00281 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74402 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00282 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.101

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74403jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00283 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.102

74404 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–CWe also reviewed CY 2010 volumeand utilization data and otherinformation for the 23 proceduresfinalized for temporary office-basedstatus in the CY 2011 OPPS/ASC finalrule <strong>with</strong> comment period (75 FR 72036through 72038). Among these 23procedures, there were very few claimsdata for eight procedures: CPT code0099T (Implantation of intrastromalcorneal ring segments); CPT code 0124T(Conjunctival incision <strong>with</strong> posteriorextrascleral placement ofpharmacological agent (does not includesupply of medication)); CPT code 0226T(Anoscopy, high resolution (HRA) (<strong>with</strong>magnification and chemical agentenhancement); diagnostic, includingcollection of specimen(s) by brushing orwashing when performed); CPT code0227T (Anoscopy, high resolution(HRA) (<strong>with</strong> magnification and chemicalagent enhancement); <strong>with</strong> biopsy(ies));CPT code 0232T (Injection(s), plateletrich plasma, any tissue, including imageguidance, harvesting and preparationwhen performed); CPT code C9800(Dermal injection procedure(s) for faciallipodystrophy syndrome (LDS) andprovision of Radiesse or Sculptradermal filler, including all items andsupplies); CPT code 37761 (Ligation ofperforator vein(s), subfascial, open,including ultrasound guidance, whenperformed, 1 leg); and CPT code 67229(Treatment of extensive or progressiveretinopathy, one or more sessions;preterm infant (less than 37 weeksgestation at birth), performed from birthup to 1 year of age (eg, retinopathy ofprematurity), photocoagulation orcryotherapy). Consequently, weproposed in the CY 2012 OPPS/ASCproposed rule (76 FR 42294) to maintaintheir temporary office-baseddesignations for CY 2012.As a result of our review of theremaining 15 procedures that havetemporary office-based designations forCY 2011 for which we do have claimsdata, we proposed that none of theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00284 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2procedures be designated as office-basedin CY 2012. The 15 surgical procedurecodes are:• CPT code 21015 (Radical resectionof tumor (eg, malignant neoplasm), softtissue of face or scalp; less than 2 cm);• CPT code 21555 (Excision, tumor,soft tissue of neck or anterior thorax,subcutaneous; less than 3 cm);• CPT code 21930 (Excision, tumor,soft tissue of back or flank,subcutaneous; less than 3 cm);• CPT code 23075 (Excision, tumor,soft tissue of shoulder area,subcutaneous; less than 3 cm);• CPT code 24075 (Excision, tumor,soft tissue of upper arm or elbow area,subcutaneous; less than 3 cm);• CPT code 25075 (Excision, tumor,soft tissue of forearm and/or wrist area,subcutaneous; less than 3 cm);• CPT code 26115 (Excision, tumor orvascular malformation, soft tissue ofhand or finger, subcutaneous; less than1.5 cm);ER30NO11.103

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74405• CPT code 27047 (Excision, tumor,soft tissue of pelvis and hip area,subcutaneous; less than 3 cm);• CPT code 27327 (Excision, tumor,soft tissue of thigh or knee area,subcutaneous; less than 3 cm);• CPT code 27618 (Excision, tumor,soft tissue of leg or ankle area,subcutaneous; less than 3 cm);• CPT code 28039 (Excision, tumor,soft tissue of foot or toe, subcutaneous;1.5 cm or greater);• CPT code 28041 (Excision, tumor,soft tissue of foot or toe, subfascial (eg,intramuscular); 1.5 cm or greater);• CPT code 28043 (Excision, tumor,soft tissue of foot or toe, subcutaneous;less than 1.5 cm);• CPT code 28045 (Excision, tumor,soft tissue of foot or toe, subfascial (eg,intramuscular); less than 1.5 cm); and• CPT code 28046 (Radical resectionof tumor (eg, malignant neoplasm), softtissue of foot or toe; less than 3 cm).The volume and utilization data forthese CPT codes are sufficient toindicate that these procedures are notperformed predominantly in physicians’offices and, therefore, should not beassigned an office-based paymentindicator in CY 2012.The CY 2012 payment indicatordesignations that we proposed for the 23procedures that were temporarilydesignated as office-based in CY 2011were displayed in Table 46 of the CY2012 OPPS/ASC proposed rule (76 FR42295). The procedures for which theproposed office-based designations forCY 2012 are temporary also wereindicated by asterisks in Addendum AAto the proposed rule (which wasavailable via the Internet on the CMSWeb site).We did not receive any publiccomments that addressed our proposalto continue to designate the eightprocedures listed in Table 46 of the CY2012 OPPS/ASC proposed rule (76 FR42294) as temporarily office-based forCY 2012. Therefore, we are finalizingour proposal to designate the eightprocedures listed in Table 46 of the CY2012 OPPS/ASC proposed rule andrestated in Table 54 below, which weredesignated as temporarily office-basedfor CY 2011, as temporarily office-basedfor CY 2012. In addition, we did notreceive any public comments thataddressed our proposal to not designateany of the remaining 15 procedures asoffice-based for CY 2012 that were listedin Table 46 of the CY 2012 OPPS/ASCproposed rule (76 FR 42295) anddesignated as temporarily office-basedin CY 2011. Therefore, we are finalizingour proposal to not provide an officebaseddesignation to the 15 procedureslisted in Table 46 of the CY 2012 OPPS/ASC proposed rule, and restated belowin Table 54, which were designated astemporarily office-based for CY 2011.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00285 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74406 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00286 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.104

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74407jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00287 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.105

74408 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–Cc. ASC Covered Surgical ProceduresDesignated as Device-Intensive(1) BackgroundAs discussed in the August 2, 2007final rule (72 FR 42503 through 42508),we adopted a modified paymentmethodology for calculating the ASCpayment rates for covered surgicalprocedures that are assigned to thesubset of OPPS device-dependent APCs<strong>with</strong> a device offset percentage greaterthan 50 percent of the APC cost underthe OPPS, in order to ensure thatpayment for the procedure is adequateto provide packaged payment for thehigh-cost implantable devices used inthose procedures. We assigned paymentindicators ‘‘H8’’ (Device-intensiveprocedure on ASC list in CY 2007; paidat adjusted rate) and ‘‘J8’’ (Deviceintensiveprocedure added to ASC listin CY 2008 or later; paid at adjustedrate) to identify the procedures thatwere eligible for ASC paymentcalculated according to the modifiedmethodology, depending on whether theprocedure was included on the ASC listof covered surgical procedures prior toCY 2008 and, therefore, subject totransitional payment as discussed in theCY 2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68739 through68742).As discussed in section XIII.F.2. of theCY 2012 OPPS/ASC proposed rule (76FR 42309 and 42310), because the 4-year transition to the ASC payment ratesunder the standard methodology iscomplete and, therefore, identificationof device-intensive procedures that aresubject to transitional paymentmethodology is no longer necessary, weproposed to delete payment indicator‘‘H8’’ (Device-intensive procedure onASC list in CY 2007; paid at adjustedrate). We proposed that the deviceintensiveprocedures for which thedevice-intensive payment methodologywould apply in CY 2012 or later wouldbe assigned payment indicator ‘‘J8’’(Device-intensive procedure; paid atadjusted rate).(2) Changes to List of Covered SurgicalProcedures Designated as Device-Intensive for CY 2012In the CY 2012 OPPS/ASC proposedrule (76 FR 42296), we proposed toupdate the ASC list of covered surgicalprocedures that are eligible for paymentaccording to the device-intensiveprocedure payment methodology for CY2012, consistent <strong>with</strong> the proposedOPPS device-dependent APC update,reflecting the proposed APCassignments of procedures, designationof APCs as device-dependent, and APCdevice offset percentages based on theCY 2010 OPPS claims and cost reportdata available for the proposed rule. TheOPPS device-dependent APCs werediscussed further in section II.A.2.d.(1)of the proposed rule (76 FR 42190through 42191).The ASC covered surgical proceduresthat we proposed to designate as deviceintensiveand that would be subject tothe device-intensive procedure paymentmethodology for CY 2012 were listed inTable 47 of the CY 2012 OPPS/ASCproposed rule (76 FR 42296 through42297). The CPT code, the CPT codeshort descriptor, the proposed CY 2012ASC payment indicator, the proposedVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00288 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2CY 2012 OPPS APC assignment andtitle, and the proposed CY 2012 OPPSAPC device offset percentage were alsolisted in Table 47 of the proposed rule.All of these procedures were includedin Addendum AA to the proposed rule(which was available via the Internet onthe CMS Web site).We invited public comments on theseproposals.<strong>Comment</strong>: Some commentersexpressed the same general concernsmade in prior rulemakings—that isconcerns regarding the sufficiency ofASC payment for device-related servicesand recommended modifications to theASC device-intensive paymentmethodology. The commenters arguedthat CMS should not apply the ASCconversion factor to the device-relatedportion of the payment for allprocedures for which CMS can establisha median device cost, regardless ofwhether they are designated as deviceintensiveunder the establishedmethodology. In a related suggestion,the commenters urged CMS to lower thethreshold used to determine deviceintensiveprocedures stating that thedesignation of a device-intensiveprocedure based on whether the deviceportion of the cost is greater than 50percent of the APC median costexcludes too many procedures from areasonable modification to the standardASC payment methodology.<strong>Comment</strong>ers suggested that APCs <strong>with</strong> adevice offset percentage greater than 23percent of the APC median cost underthe OPPS may be a more appropriatethreshold to determine device-intensiveprocedures in ASCs. The commentersalso made the same argument as madeER30NO11.106

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74409jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2in prior rulemakings—that CMS shouldnot adjust the device portion of the ASCpayment for device-intensiveprocedures by the wage index.According to the commenters, theacquisition of devices occurs on anational market, and the price is thesame regardless of the location of theASC. <strong>Comment</strong>ers also suggested thatapplication of device-intensive statusshould supersede the office-baseddesignation. <strong>Comment</strong>ers believed thatCMS has misapplied its policy in alimited number of cases by designatinga device-intensive procedure as officebasedand setting the payment for theprocedure at the physician fee schedulerate.Response: In the August 2, 2007 finalrule (72 FR 42504), we established thatthe modified payment methodology forcalculating ASC payment rates fordevice-intensive procedures shall applyto ASC covered surgical procedures thatare assigned to device-dependent APCsunder the OPPS for the same calendaryear, where those APCs have a devicecost of greater than 50 percent of theAPC cost (that is, the device offsetpercentage is greater than 50). Wecontinue to believe these criteria ensurethat ASC payment rates are adequate toprovide packaged payment for high costimplantable devices and ensureMedicare beneficiaries have access tothese procedures in all appropriatesettings of care.As we have stated in the past, we donot agree that we should change ourcriteria and treat device-intensiveservices that are assigned to APCs forwhich the device offset percentage isless than 50 percent or ASC servicesthat are not assigned to devicedependentAPCs and we continue tobelieve that when device costs compriseless than 50 percent of total procedurecosts, those costs are less likely to be aspredictable across sites-of-service.Accordingly, we believe that it ispossible for ASCs to achieve efficienciesrelative to HOPDs when providing thoseprocedures, and that the application ofthe ASC conversion factor to the entireASC payment weight is appropriate. Werefer readers to our response to thiscomment in final rules <strong>with</strong> commentperiod from prior years: 74 FR 60608and 60609; 75 FR 72039.We also continue to believe it wouldnot be appropriate to vary the portion ofthe national payment that is wageadjusted for different services, such asapplying the wage index only to theservice portion of the ASC payment fordevice-intensive procedures, as thecommenters requested. Consistent <strong>with</strong>the OPPS, we apply the ASC geographicwage adjustment to the entire ASCpayment rate for device-intensiveprocedures. We refer readers to ourresponse to this comment in final rules<strong>with</strong> comment period from prior years:73 FR 68735; 74 FR 60608 and 60609;75 FR 72039.As we have noted in the past (73 FR68735; 74 FR 60609; 75 FR 72039),MedPAC has indicated its intent toevaluate CMS’ method for adjustingpayments for variations in labor costs inlight of differences in labor-related costsfor device-implantation services. Welook forward to reviewing the results ofits evaluation, as well as anyrecommendations it may provide,regarding the OPPS or ASC wageadjustment policy.Although the commenter suggestedthat CMS has applied the office-basedpayment methodology to proceduresthat have been designated as deviceintensive,the commenter did notprovide examples where this situationhas occurred. If a device-intensiveprocedure were to meet the criteria forthe office-based payment methodology,we note that the designation of aprocedure as device-intensive doessupersede the office-based designationwhen setting the ASC payment rates.We have reviewed all procedures thatare on the ASC list of covered services,are in device-dependent APCs, and havedevice offset percentages greater than 50percent and have ensured that all ofthese device-intensive procedures havea payment indicator of ‘‘J8.’’<strong>Comment</strong>: One commenter expressedappreciation for the proposed increasein payment rates calculated according tothe ASC device-intensive paymentmethodology for procedures involvingauditory osseointegrated devices.However, the commenter indicated thatthe proposed payment rates remaininsufficient for covering ASCs’ costs forproviding the procedures and requestedthat CMS further increase these rates forCY 2012. The commenter believed thatthe rates might have a negative impacton the availability of these services inan ASC setting and therefore might limitpatient access.Response: We appreciate thecommenter’s support of the proposedpayment rates for procedures involvingauditory osseointegrated devices, but wedisagree <strong>with</strong> the commenters’ assertionthat we should increase payment ratesfor these procedures further in order tomaintain beneficiary access. We believethat the final CY 2012 ASC paymentrates for these procedures, calculatedaccording to the ASC device-intensiveratesetting methodology, are appropriateand adequate to cover costs forproviding the procedures and to ensurebeneficiaries have access to theseprocedures in the ASC setting.After consideration of the publiccomments we received, we aredesignating the ASC covered surgicalprocedures displayed in Table 55 belowas device-intensive for CY 2012. TheCPT code, the CPT code shortdescriptor, the final CY 2012 ASCpayment indicator, the final CY 2012OPPS APC assignment, the CY 2012OPPS APC Title, and the final CY 2012device-dependent APC offset percentageare listed in Table 55. As we discuss insection XIII.B.3. of the CY 2012 OPPS/ASC proposed rule (76 FR 42293) andthis final rule <strong>with</strong> comment period, weincorporate new Category I and CategoryIII CPT codes and new Level II HCPCScodes that are effective October 1, 2011and January 1, 2012 in this final rule<strong>with</strong> comment period. Because thesecodes were not available to us until afterthe CY 2012 OPPS/ASC proposed rulewas published, these codes were notincluded in that rule. We have reviewedthese new codes and have added twelveof these CPT codes to Table 55 becausethey are ASC covered surgicalprocedures and are assigned to devicedependentAPCs that meet the ASCdevice-intensive criteria. It is also ourstandard methodology to review deletedCPT codes annually and remove themfrom all relevant tables in the OPPS/ASC final rule <strong>with</strong> comment period.Therefore, we have also removed CPTcodes 64560 (percutaneous implantationof neurostimulator electrodes;autonomic nerve) and 64577 (Incisionfor implantation of neurostimulatorelectrodes; autonomic nerve) becausethese CPT codes have been deleted forCY 2012. Each device-intensiveprocedure is assigned payment indicator‘‘J8.’’ All of these procedures areincluded in Addendum AA to this finalrule <strong>with</strong> comment period (which isavailable via the Internet on the CMSWeb site). The OPPS device-dependentAPCs are discussed further in sectionII.A.2.d.(1) of this final rule <strong>with</strong>comment period.BILLING CODE 4120–01–PVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00289 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74410 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00290 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.107

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74411jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00291 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.108

74412 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00292 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.109

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74413jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00293 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.110

74414 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00294 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.111

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74415jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00295 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.112

74416 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–Cd. ASC Treatment of SurgicalProcedures Removed From the OPPSInpatient List for CY 2012As we discussed in the CY 2009OPPS/ASC final rule <strong>with</strong> commentperiod (73 FR 68724), we adopted apolicy to include in our annualevaluation of the ASC list of coveredsurgical procedures, a review of theprocedures that are being proposed forremoval from the OPPS inpatient list forpossible inclusion on the ASC list ofVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00296 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2covered surgical procedures. For the CY2012 OPPS/ASC proposed rule, weevaluated each of the three procedureswe proposed to remove from the OPPSinpatient list for CY 2012 according tothe criteria for exclusion from the list ofcovered ASC surgical procedures (76 FRER30NO11.113

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations7441742298). We stated in the CY 2012 OPPS/ASC proposed rule (76 FR 42298) thatwe believe that these three proceduresshould continue to be excluded from theASC list of covered surgical proceduresfor CY 2012 because they would beexpected to pose a significant risk tobeneficiary safety or to require anovernight stay in ASCs. A fulldiscussion about the APC Panel’srecommendations regarding theprocedures we proposed to remove fromthe OPPS inpatient list for CY 2012 maybe found in section IX.B. of the CY 2012OPPS/ASC proposed rule (76 FR 42276and 42277). The CPT codes for thesethree procedures and their longdescriptors were listed in Table 48 ofthe CY 2012 OPPS/ASC proposed rule(76 FR 42298).We did not receive any publiccomments regarding the proceduresproposed for exclusion from the ASClist of covered procedures for CY 2012,that were proposed for removal from theCY 2012 OPPS inpatient list. Therefore,we are finalizing our proposal, <strong>with</strong>outmodification, to continue to exclude theprocedures described by the CPT codeslisted in Table 48 of the CY 2012 OPPS/ASC proposed rule, and restated inTable 56 below, from the ASC list ofcovered surgical procedures.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES22. Covered Ancillary ServicesConsistent <strong>with</strong> the established ASCpayment system policy, in the CY 2012OPPS/ASC proposed rule (76 FR 42298),we proposed to update the ASC list ofcovered ancillary services to reflect theproposed payment status for theservices under the CY 2012 OPPS.Maintaining consistency <strong>with</strong> the OPPSmay result in proposed changes to ASCpayment indicators for some coveredancillary items and services because ofchanges that are being proposed underthe OPPS for CY 2012. For example, acovered ancillary service that wasseparately paid under the revised ASCpayment system in CY 2011 may beproposed for packaged status under theCY 2012 OPPS and, therefore, alsounder the ASC payment system for CY2012. <strong>Comment</strong> indicator ‘‘CH,’’discussed in section XIII.F. of the CY2012 OPPS/ASC proposed rule (76 FR42309), was used in Addendum BB tothat proposed rule (which is availablevia the Internet on the CMS Web site)to indicate covered ancillary services forwhich we proposed a change in the ASCpayment indicator to reflect a proposedchange in the OPPS treatment of theservice for CY 2012.Except for the Level II HCPCS codeslisted in Table 43 of the CY 2012 OPPS/ASC proposed rule (76 FR 42292), allASC covered ancillary services and theirproposed payment indicators for CY2012 were included in Addendum BB tothat proposed rule.We did not receive any publiccomments on our proposal. Therefore,we are finalizing, <strong>with</strong>out modification,our proposal to update the ASC list ofcovered ancillary services to reflect thepayment status for the services underthe OPPS. All CY 2012 ASC coveredancillary services and their finalpayment indicators are included inAddendum BB to this final rule <strong>with</strong>comment period (which is available viathe Internet on the CMS Web site).D. ASC Payment for Covered SurgicalProcedures and Covered AncillaryServices1. Payment for Covered SurgicalProceduresa. BackgroundOur ASC payment policies forcovered surgical procedures under therevised ASC payment system are fullydescribed in the CY 2008 OPPS/ASCfinal rule <strong>with</strong> comment period (72 FR66828 through 66831). Under ourVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00297 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2established policy for the revised ASCpayment system, the ASC standardratesetting methodology of multiplyingthe ASC relative payment weight for theprocedure by the ASC conversion factorfor that same year is used to calculatethe national unadjusted payment ratesfor procedures <strong>with</strong> payment indicator‘‘G2.’’ For procedures assigned paymentindicator ‘‘A2,’’ our final policyestablished blended rates to be usedduring the transitional period and,beginning in CY 2011, ASC ratescalculated according to the ASCstandard ratesetting methodology. Therate calculation established for deviceintensiveprocedures (payment indicator‘‘J8’’) is structured so that the packageddevice payment amount is the same asunder the OPPS, and only the serviceportion of the rate is subject to the ASCstandard ratesetting methodology. In theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 72024 through72064), we updated the CY 2010 ASCpayment rates for ASC covered surgicalprocedures <strong>with</strong> payment indicators of‘‘A2,’’ ‘‘G2,’’ ‘‘H8,’’ and ‘‘J8’’ using CY2009 data, consistent <strong>with</strong> the CY 2011OPPS update. Payment rates for deviceintensiveprocedures also were updatedto incorporate the CY 2011 OPPS deviceER30NO11.115

74418 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2offset percentages. Because transitionalpayments were no longer required in CY2011, we calculated CY 2011 paymentsfor procedures formerly subject to thetransitional payment methodology(payment indicators ‘‘A2’’ and ‘‘H8’’)using the standard rate settingmethodology, incorporating the deviceintensivemethodology, as appropriate.Payment rates for office-basedprocedures (payment indicators ‘‘P2,’’‘‘P3,’’ and ‘‘R2’’) are the lower of theMPFS nonfacility PE RVU-basedamount (we refer readers to the CY 2012MPFS final rule <strong>with</strong> comment period)or the amount calculated using the ASCstandard ratesetting methodology for theprocedure. In the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR72024 through 72064), we updated thepayment amounts for office-basedprocedures (payment indicators ‘‘P2,’’‘‘P3,’’ and ‘‘R2’’) using the most recentavailable MPFS and OPPS data. Wecompared the estimated CY 2011 ratefor each of the office-based procedures,calculated according to the ASCstandard ratesetting methodology, to theMPFS nonfacility PE RVU-basedamount to determine which was lowerand, therefore, would be the CY 2011payment rate for the procedureaccording to the final policy of therevised ASC payment system(§ 416.171(d)).b. Update to ASC-Covered SurgicalProcedure Payment Rates for CY 2012In the CY 2012 OPPS/ASC proposedrule (76 FR 42298 and 42299), weproposed to update ASC payment ratesfor CY 2012 using the established ratecalculation methodologies under§ 416.171. Under § 416.171(c)(4), thetransitional payment rates are no longerused for CY 2011 and subsequentcalendar years for a covered surgicalprocedure designated in accordance<strong>with</strong> § 416.166. Thus, we proposed tocalculate CY 2012 payments forprocedures formerly subject to thetransitional payment methodology(payment indicators ‘‘A2’’ and ‘‘H8’’)using the proposed CY 2012 ASC ratecalculated according to the ASCstandard ratesetting methodology,incorporating the device-intensiveprocedure methodology, as appropriate.We proposed to continue to use theamount calculated under the ASCstandard ratesetting methodology forprocedures assigned payment indicator‘‘G2.’’ We proposed to modify or deletethe payment indicators for proceduresthat were subject to transitionalpayment prior to CY 2011 (we referreaders to our discussion in sectionXIII.F.2. of the proposed rule (76 FR42309 through 42310).We proposed that payment rates foroffice-based procedures (paymentindicators ‘‘P2,’’ ‘‘P3,’’ and ‘‘R2’’) anddevice-intensive procedures that werenot subject to transitional payment(payment indicator ‘‘J8’’) be calculatedaccording to our established policies,incorporating the device-intensiveprocedure methodology as appropriate.Thus, we proposed to update thepayment amounts for device-intensiveprocedures based on the CY 2012 OPPSproposal that reflects updated OPPSdevice offset percentages, and to makepayment for office-based procedures atthe lesser of the proposed CY 2012MPFS nonfacility PE RVU-basedamount or the proposed CY 2012 ASCpayment amount calculated accordingto the standard ratesetting methodology.We did not receive any comments onour proposal to calculate CY 2012payment rates for ASC-covered surgicalprocedures according to our establishedmethodologies. Therefore, we arefinalizing our CY 2012 proposal,<strong>with</strong>out modification, to calculate theCY 2012 final ASC payment rates forASC-covered surgical proceduresaccording to our establishedmethodologies.c. Adjustment to ASC Payments for NoCost/Full Credit and Partial CreditDevicesOur ASC policy <strong>with</strong> regard topayment for costly devices implanted inASCs at no cost/full credit or partialcredit as set forth in § 416.179 isconsistent <strong>with</strong> the OPPS policy. Theproposed CY 2012 OPPS APCs anddevices subject to the adjustment policyare discussed in section IV.B.2. of theproposed rule and this final rule <strong>with</strong>comment period. The established ASCpolicy includes adoption of the OPPSpolicy for reduced payment to providerswhen a specified device is furnished<strong>with</strong>out cost/full credit or partial creditfor the cost of the device for those ASCcovered surgical procedures that areassigned to APCs under the OPPS towhich this policy applies. We referreaders to the CY 2009 OPPS/ASC finalrule <strong>with</strong> comment period for a fulldiscussion of the ASC paymentadjustment policy for no cost/full creditand partial credit devices (73 FR 68742through 68745).In the CY 2012 OPPS/ASC proposedrule (76 FR 42299 through 42301),consistent <strong>with</strong> the OPPS, we proposedto update the list of ASC covereddevice-intensive procedures and devicesthat would be subject to the no cost/fullcredit and partial credit deviceadjustment policy for CY 2012. Table 49of the CY 2012 OPPS/ASC proposedrule (76 FR 42299 through 42301)VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00298 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2displayed the ASC covered deviceintensiveprocedures that we proposedwould be subject to the no cost/fullcredit or partial credit deviceadjustment policy for CY 2012.Specifically, when a procedure that islisted in Table 49 is performed toimplant a device that is listed in Table50 of the CY 2012 OPPS/ASC proposedrule (76 FR 42301), where that device isfurnished at no cost or <strong>with</strong> full creditfrom the manufacturer, the ASC wouldappend the HCPCS ‘‘FB’’ modifier onthe line <strong>with</strong> the procedure to implantthe device. The contractor would reducepayment to the ASC by the device offsetamount that we estimate represents thecost of the device when the necessarydevice is furnished <strong>with</strong>out cost to theASC or <strong>with</strong> full credit. We wouldprovide the same amount of paymentreduction based on the device offsetamount in ASCs that would apply underthe OPPS under the samecircumstances. We stated in the CY2012 OPPS/ASC proposed rule (76 FR42299) that we continue to believe thatthe reduction of ASC payment in thesecircumstances is necessary to payappropriately for the covered surgicalprocedure being furnished by the ASC.We also proposed to reduce thepayment for implantation procedureslisted in Table 49 of the CY 2012 OPPS/ASC proposed rule (76 FR 42299through 42301) by one-half of the deviceoffset amount that would be applied ifa device was provided at no cost or <strong>with</strong>full credit, if the credit to the ASC is 50percent or more of the cost of the newdevice. The ASC would append theHCPCS ‘‘FC’’ modifier to the HCPCScode for a surgical procedure listed inTable 49 when the facility receives apartial credit of 50 percent or more ofthe cost of a device listed in Table 50of the proposed rule (76 FR 42301). Inorder to report that they received apartial credit of 50 percent or more ofthe cost of a new device, ASCs wouldhave the option of either: (1) Submittingthe claim for the device replacementprocedure to their Medicare contractorafter the procedure’s performance butprior to manufacturer acknowledgmentof credit for the device, andsubsequently contacting the contractorregarding a claim adjustment once thecredit determination is made; or (2)holding the claim for the deviceimplantation procedure until adetermination is made by themanufacturer on the partial credit andsubmitting the claim <strong>with</strong> the ‘‘FC’’modifier appended to the implantationprocedure HCPCS code if the partialcredit is 50 percent or more of the costof the replacement device. Beneficiary

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74419coinsurance would continue to be basedon the reduced payment amount.We did not receive any comments onour CY 2012 proposal to continue the nocost/full credit and partial credit deviceadjustment policy for ASCs. For CY2012, as we proposed, we will reducethe payment for the device implantationprocedures listed in Table 57, below, bythe full device offset amount for no cost/full credit cases. ASCs must append themodifier ‘‘FB’’ to the HCPCS procedurecode when the device furnished <strong>with</strong>outcost or <strong>with</strong> full credit is listed in Table58, below, and the associatedimplantation procedure code is listed inTable 57. In addition, for CY 2012, wewill reduce the payment forimplantation procedures listed in Table57 by one half of the device offsetamount if a device is provided <strong>with</strong>partial credit, if the credit to the ASC is50 percent or more of the device cost.If the ASC receives a partial credit of 50percent or more of the cost of a devicelisted in Table 58, the ASC must appendthe modifier ‘‘FC’’ to the associatedimplantation procedure code if theprocedure is listed in Table 57.As we discuss in section XIII.B.3. ofthe CY 2012 OPPS/ASC proposed rule(76 FR 42293) and this final rule <strong>with</strong>comment period, we incorporate newCategory I and Category III CPT codesand new Level II HCPCS codes that areeffective October 1, 2011 and January 1,2012 in this final rule <strong>with</strong> commentperiod. Because these codes were notavailable to us until after the CY 2012OPPS/ASC proposed rule waspublished, these codes were notincluded in that rule. We have reviewedthese new codes and have added elevenof these CPT codes to Table 57 becausethey are ASC covered surgicalprocedures that are assigned to APCsunder the OPPS to which the no cost/full credit and partial credit deviceadjustment policy applies. It is also ourstandard methodology to review deletedCPT codes annually and remove themfrom all relevant tables in the OPPS/ASC final rule <strong>with</strong> comment period.Therefore, we have also removed CPTcodes 64560 (Percutaneous implantationof neurostimulator electrodes;autonomic nerve) and 64577 (Incisionfor implantation of neurostimulatorelectrodes; autonomic nerve) becausethese CPT codes have been deleted forCY 2012. We also have added twodevice HCPCS codes to Table 58, C1777(Lead, cardioverter-defibrillator,endocardial single coil (implantable))and C1895 (Lead, cardioverterdefibrillator,endocardial dual coil(implantable)) because these devices arenow associated <strong>with</strong> CPT code 33249(Insertion or replacement of permanentpacing cardioverter-defibrillator system<strong>with</strong> transvenous lead(s), single or dualchamber) due to a descriptor changeeffective January 1, 2012.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 19:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00299 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

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74424 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00304 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.120

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74425jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00305 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.121

74426 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00306 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.123

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74427jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–Cd. Waiver of Coinsurance andDeductible for Certain PreventiveServicesAs discussed in the CY 2012 OPPS/ASC proposed rule (76 FR 42301),sections 1833(a)(1) and (b)(1) of the Actwaives the coinsurance and the Part Bdeductible for those preventive servicesunder section 1861(ddd)(3)(A) of theAct as described in section 1861(ww)(2)of the Act (excludingelectrocardiograms) that arerecommended by the United StatesPreventive Services Task Force(USPSTF) <strong>with</strong> a grade of A or B for anyindication or population and that areappropriate for the individual. Section1833(b) of the Act also waives the PartB deductible for colorectal cancerscreening tests that become diagnostic.In the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period, we finalized ourpolicies <strong>with</strong> respect to these provisionsand identified the ASC covered surgicaland ancillary services that arepreventive services that arerecommended by the USPSTF <strong>with</strong> agrade of A or B for which thecoinsurance and the deductible arewaived. For a complete discussion ofour policies and identified services, werefer readers to the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR72047 through 72049). We did notpropose any changes to our policies orthe list of services in the CY 2012 OPPS/ASC proposed rule. We identify theseservices <strong>with</strong> a double asterisk inAddenda AA and BB to this CY 2012OPPS/ASC final rule <strong>with</strong> commentperiod.e. Payment for the CardiacResynchronization Therapy CompositeCardiac resynchronization therapy(CRT) uses electronic devices tosequentially pace both sides of the heartto improve its output. CRT utilizes apacing electrode implanted incombination <strong>with</strong> either a pacemaker oran implantable cardioverter defibrillator(ICD). CRT performed by theimplantation of an ICD along <strong>with</strong> apacing electrode is referred to as ‘‘CRT–D.’’ As detailed in section II.A.2.e.(6) ofthe CY 2012 OPPS/ASC proposed rule(76 FR 42203 through 42206), weproposed to create an OPPS compositeAPC (Composite APC 8009 (CardiacResynchronization Therapy—ICD PulseGenerator and Leads)) which would beused when CPT code 33225 (Insertion ofpacing electrode, cardiac venoussystem, for left ventricular pacing, attime of insertion of pacing cardioverterdefibrillatoror pacemaker pulsegenerator (including upgrade to dualchamber system)) and CPT code 33249(Insertion or repositioning of electrodelead(s) for single or dual chamberpacing cardioverter-defibrillator andinsertion of pulse generator) areperformed on the same date of service.We also proposed to cap the OPPSpayment rate for composite APC 8009 atthe most comparable Medicare severitydiagnosis-related group (MS–DRG)payment rate established under the IPPSthat would be provided to acute carehospitals for providing CRT–D servicesto hospital inpatients. In other words,we proposed to pay APC 8009 at thelesser of the APC 8009 median cost orthe IPPS standardized payment rate forMS–DRG 227 (Cardiac DefibrillatorImplant <strong>with</strong>out Cardiac Catheterization<strong>with</strong>out Major Complication orComorbidity). This would ensureappropriate and equitable payment tohospitals and that we do not create aninappropriate payment incentive toprovide CRT–D services in one settingof care over another by paying more forCRT–D services in the outpatient settingcompared to the inpatient setting.Because CPT code 33225 and CPTcode 33249 are on the list of ASCcovered surgical procedures, in theproposed rule (76 FR 42302), weVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00307 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2proposed to establish an ASC paymentrate that is based on the OPPS paymentrate applicable to APC 8009 when theseprocedures are performed on the samedate of service in an ASC. Again, we donot want to create an inappropriatepayment incentive to provide CRT–Dservices in one setting of care overanother by paying more for CRT–Dservices furnished in ASCs compared tothose furnished in the hospitaloutpatient setting. Because CPT codes33225 and 33249 are on the proposedlist of device-intensive procedures forCY 2012, we proposed to apply theusual device-intensive methodologybased on the OPPS payment rateapplicable to APC 8009 (which is thelesser of the APC 8009 median cost thatwe will calculate for the CY 2012 OPPS/ASC final rule <strong>with</strong> comment period orthe FY 2012 IPPS standardized paymentrate for MS–DRG 227). We alsoproposed to create a HCPCS Level II G-code so that ASCs can properly reportwhen the procedures described by CPTcodes 33225 and 33249 are performedon the same date of service and,therefore, receive the appropriatepayment amount for CRT–D servicesperformed in an ASC.In a related issue, as detailed insection III.D.6 of the CY 2012 OPPS/ASC proposed rule (76 FR 42241through 42242), CPT codes 33225 and33249 are the only procedures proposedfor inclusion in APC 0108. We proposedthat these codes would be paid underAPC 0108 only if they are not reportedon the same date of service. Further, weproposed to pay the OPPS payment ratefor services that are assigned to APC0108 at the lesser of the APC 0108median cost or the IPPS standardizedpayment rate for MS–DRG 227. For ASCpayment in CY 2012, we proposed toapply the device-intensive methodologyto calculate payment for CPT codes33225 and 33249 based on the OPPSpayment rate applicable to APC 0108ER30NO11.124

74428 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2(which is the lesser of the APC 0108median cost that we would calculate forthis CY 2012 OPPS/ASC final rule <strong>with</strong>comment period or the FY 2012 IPPSstandardized payment rate for MS–DRG227).We did not receive any publiccomments on our CY 2012 proposal toestablish an ASC payment rate for CRT–D services, using the device-intensivemethodology, based on the OPPSpayment rate applicable to compositeAPC 8009 when procedures describedby CPT codes 33225 and 33249 areperformed on the same date of servicein an ASC. However, as detailed insection II.A.2.e.(6) of this final rule <strong>with</strong>comment period, after considerationpublic comments regarding OPPSpayment for CRT–D services, we are notfinalizing our proposal to implement apayment cap for CRT–D services andICD implantation procedures performedin a hospital outpatient departmentbased upon the payment rate for IPPSMS–DRG 227 as proposed. Instead,under the OPPS, we will recognize CPTcodes 33225 and 33249 as a single,composite service when they areperformed on the same day as proposed.However, for CY 2012, rather thanassigning the procedures described byCPT codes 33225 and 33249 when theyare performed on the same day tocomposite APC 8009, we are assigningthem to existing APC 0108. When notperformed on the same day as theservice described by CPT code 33225,the service described by CPT code33249 will continue to be assigned toAPC 0108. When not performed on thesame day as the service described byCPT code 33249, the service describedby CPT code 33225 will be assigned toAPC 0655 (we note that this is amodification from our proposal toassign CPT code 33225 when it does notappear <strong>with</strong> CPT code 33249 to APC0108).Based on the above modifications toestablish the OPPS payment amount forCRT–D services, the payment rate forCRT–D services in ASCs for CY 2012will be based on the OPPS payment rateapplicable to APC 0108 whenprocedures described by CPT codes33225 and 33249 are performed on thesame date of service in an ASC. BecauseCPT codes 33225 and 33249 are on thelist of device-intensive proceduresfinalized for CY 2012, APC payment forCRT–D services will be establishedusing the device-intensive paymentmethodology. ASCs will use thecorresponding HCPCS Level II G-code(G0448) for proper reporting when theprocedures described by CPT codes33225 and 33249 are performed on thesame date of service. When notperformed on the same day as theservice described by CPT code 33225,ASC payment for the service describedby CPT code 33249 will be based onAPC 0108 using the device-intensivemethodology. When not performed onthe same day as the service described byCPT code 33249, ASC payment for theservice described by CPT code 33225will be based on APC 0655 using thedevice-intensive methodology.2. Payment for Covered AncillaryServicesa. BackgroundOur final payment policies under therevised ASC payment system forcovered ancillary services varyaccording to the particular type ofservice and its payment policy underthe OPPS. Our overall policy providesseparate ASC payment for certainancillary items and services integrallyrelated to the provision of ASC coveredsurgical procedures that are paidseparately under the OPPS and providespackaged ASC payment for otherancillary items and services that arepackaged under the OPPS. Thus, weestablished a final policy to align ASCpayment bundles <strong>with</strong> those under theOPPS (72 FR 42495). In all cases, inorder for those ancillary services also tobe paid, ancillary items and servicesmust be provided integral to theperformance of ASC covered surgicalprocedures for which the ASC billsMedicare.Our ASC payment policies provideseparate payment for drugs andbiologicals that are separately paidunder the OPPS at the OPPS rates, whilewe generally pay for separately payableradiology services at the lower of theMPFS nonfacility PE RVU-based (ortechnical component) amount or therate calculated according to the ASCstandard ratesetting methodology (72 FR42497). However, as finalized in the CY2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 72050),payment indicators for all nuclearmedicine procedures (defined as CPTcodes in the range of 78000 through78999) that are designated as radiologyservices that are paid separately whenprovided integral to a surgicalprocedure on the ASC list are set to‘‘Z2’’ so that payment is made based onthe ASC standard ratesettingmethodology rather than the MPFSnonfacility PE RVU amount, regardlessof which is lower. This modification tothe ASC payment methodology forancillary services was finalized inresponse to a comment on the CY 2011OPPS/ASC proposed rule that suggestedit is inappropriate to use the MPFS-VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00308 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2based payment methodology for nuclearmedicine procedures because theassociated diagnosticradiopharmaceutical, although packagedunder the ASC payment system, isseparately paid under the MFPS. We setthe payment indicator to ‘‘Z2’’ fornuclear medicine procedures in the ASCsetting so that payment for theseprocedures would be based on the OPPSrelative payment weight rather than theMPFS nonfacility PE RVU-basedamount to ensure that the ASC will becompensated for the cost associated<strong>with</strong> the diagnosticradiopharmaceuticals.ASC payment policy forbrachytherapy sources generally mirrorsthe payment policy under the OPPS. Wefinalized our policy in the CY 2008OPPS/ASC final rule <strong>with</strong> commentperiod (72 FR 42499) to pay forbrachytherapy sources applied in ASCsat the same prospective rates that wereadopted under the OPPS or, if OPPSrates were unavailable, at contractorpricedrates. After publication of thatrule, section 106 of the Medicare,Medicaid, and SCHIP Extension Act of2007 (Pub. L. 110–173) mandated that,for the period January 1, 2008 throughJune 30, 2008, brachytherapy sources bepaid under the OPPS at charges adjustedto cost. Therefore, consistent <strong>with</strong> ourfinal overall ASC payment policy, wepaid ASCs at contractor-priced rates forbrachytherapy sources provided inASCs during that period of time.Beginning July 1, 2008, brachytherapysources applied in ASCs were to be paidat the same prospectively set rates thatwere finalized in the CY 2008 OPPS/ASC final rule <strong>with</strong> comment period (72FR 67165 through 67188). Immediatelyprior to the publication of the CY 2009OPPS/ASC proposed rule, section 142 ofthe Medicare Improvements for Patientsand Providers Act of 2008 (Pub. L. 110–275) amended section 1833(t)(16)(C) ofthe Act (as amended by section 106 ofthe Medicare, Medicaid, and SCHIPExtension Act of 2007, Pub. L. 110–173)to extend the requirement thatbrachytherapy sources be paid underthe OPPS at charges adjusted to costthrough December 31, 2009. Therefore,consistent <strong>with</strong> final ASC paymentpolicy, ASCs continued to be paid atcontractor-priced rates forbrachytherapy sources provided integralto ASC covered surgical proceduresduring that period of time. SinceDecember 31, 2009, ASCs have beenpaid for brachytherapy sources providedintegral to ASC covered surgicalprocedures at prospective rates adoptedunder the OPPS.Other separately paid coveredancillary services in ASCs, specifically

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74429jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2corneal tissue acquisition and devicecategories <strong>with</strong> OPPS pass-throughstatus, do not have prospectivelyestablished ASC payment ratesaccording to the final policies of therevised ASC payment system (72 FR42502 and 42509; § 416.164(b)). Underthe revised ASC payment system,corneal tissue acquisition is paid basedon the invoiced costs for acquiring thecorneal tissue for transplantation.Devices that are eligible for passthroughpayment under the OPPS areseparately paid under the ASC paymentsystem. Currently, the three devices thatare eligible for pass-through payment inthe OPPS are described by HCPCS codeC1749 (Endoscope, retrograde imaging/illumination colonoscope device(Implantable), HCPCS code C1830(Powered bone marrow biopsy needle),and HCPCS code C1840 (Lens,intraocular (telescopic)). Paymentamounts for HCPCS codes C1749,C1830, and C1840 under the ASCpayment system are contractor priced.b. Payment for Covered AncillaryServices for CY 2012For CY 2012, we proposed to updatethe ASC payment rates and makechanges to ASC payment indicators asnecessary to maintain consistencybetween the OPPS and ASC paymentsystem regarding the packaged orseparately payable status of services andthe proposed CY 2012 OPPS and ASCpayment rates (76 FR 42303). Theproposed CY 2012 OPPS paymentmethodologies for separately payabledrugs and biologicals and brachytherapysources were discussed in section II.A.and section V.B. of that proposed rule,respectively, and we proposed to set theCY 2012 ASC payment rates for thoseservices equal to the proposed CY 2012OPPS rates.Consistent <strong>with</strong> established ASCpayment policy (72 FR 42497), theproposed CY 2012 payment forseparately payable covered radiologyservices was based on a comparison ofthe CY 2012 proposed MPFS nonfacilityPE RVU-based amounts (we referredreaders to the CY 2012 MPFS proposedrule) and the proposed CY 2012 ASCpayment rates calculated according tothe ASC standard ratesettingmethodology and then set at the lowerof the two amounts. Alternatively,payment for a radiology service may bepackaged into the payment for the ASCcovered surgical procedure if theradiology service is packaged under theOPPS. The payment indicators inAddendum BB to the proposed ruleindicate whether the proposed paymentrates for radiology services are based onthe MPFS nonfacility PE RVU-basedamount or the ASC standard ratesettingmethodology, or whether payment for aradiology service is packaged into thepayment for the covered surgicalprocedure (payment indicator ‘‘N1’’).Radiology services that we proposed topay based on the ASC standardratesetting methodology are assignedpayment indicator ‘‘Z2’’ (Radiologyservice paid separately when providedintegral to a surgical procedure on ASClist; payment based on OPPS relativepayment weight) and those for whichthe proposed payment is based on theMPFS nonfacility PE RVU-basedamount are assigned payment indicator‘‘Z3’’ (Radiology service paid separatelywhen provided integral to a surgicalprocedure on ASC list; payment basedon MPFS nonfacility PE RVUs).As finalized in the CY 2011 OPPS/ASC final rule <strong>with</strong> comment period (75FR 72050), payment indicators for allnuclear medicine procedures (definedas CPT codes in the range of 78000through 78999) that are designated asradiology services that are paidseparately when provided integral to asurgical procedure on the ASC list areset to ‘‘Z2’’ so that payment is madebased on the OPPS relative paymentweights rather than the MPFSnonfacility PE RVU-based amount,regardless of which is lower. In the CY2012 OPPS/ASC proposed rule (76 FR42303), we proposed to continue thismodification to the paymentmethodology and, therefore, set thepayment indicator to ‘‘Z2’’ for thesenuclear medicine procedures in CY2012. In addition, because the sameissue exists for radiology proceduresthat use contrast agents (the contrastagent is packaged under the ASCpayment system but is separately paidunder the MFPS), we proposed to setthe payment indicator to ‘‘Z2’’ forradiology services that use contrastagents so that payment for theseprocedures will be based on the OPPSrelative payment weight and will,therefore, include the cost for thecontrast agent. We made proposedchanges to the regulation text at§ 416.171(d) to reflect this proposal.Most covered ancillary services andtheir proposed payment indicators werelisted in Addendum BB to the CY 2012OPPS/ASC proposed rule (which wasavailable via the Internet on the CMSWeb site).<strong>Comment</strong>: One commenter urgedCMS to modify the paymentmethodology for separately payablecovered radiology services such that theamounts paid are equivalent to theOPPS payment rates, as is the case forbrachytherapy sources and separatelypayable drugs and biologicals, instead ofVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00309 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2the lower of the amount calculatedaccording to the standard methodologyof the ASC payment system or the MPFSnonfacility PE RVU-based amount. Thecommenter expressed concern that thepayment rates for certain separatelypayable covered radiology services thatare based on the establishedmethodology are far below the amountsnecessary to cover the costs involved inproviding the service.Response: We do not agree <strong>with</strong> thecommenter that we should alter ourestablished policy to pay for separatelypayable covered radiology services atthe lower of the MPFS nonfacility PERVU-based amounts and the ASCpayment rates calculated according tothe ASC standard ratesettingmethodology. We believe that thisapproach is the most appropriate toprevent the creation of paymentincentives for services to move fromphysicians’ offices to ASCs and that theASC payment rates established underthis methodology are adequate to thecover costs for providing coveredradiology services in ASCs.<strong>Comment</strong>: <strong>Comment</strong>ers requested thatCMS pay for low dose rate (LDR)prostate brachytherapy services underthe ASC payment system based on thecomposite APC methodology usedunder the OPPS rather than making twoseparate payments for the servicereported by CPT codes 55675(Transperineal placement of needles orcatheters into prostate for interstitialradioelement application, <strong>with</strong> or<strong>with</strong>out cystoscopy) and 77778(Interstitial radiation source application;complex). The composite APCs weredeveloped for procedures like LDRprostate brachytherapy in which twoprocedures are frequently performed ina single hospital visit. The commentersasserted that basing ASC payments forthe services on the composite APCmethodology in which one payment ismade for the combination of the twoservices would result in a more accuratepayment than is currently being made toASCs because ASC payment is based onthe median costs from single-serviceclaims that CMS has acknowledged aremostly incorrectly coded claims.Response: Although we have tried toalign the ASC and OPPS packagingpolicies to the fullest extent, we havenot done so in the case of the LDRprostate brachytherapy composite (APC8001). We will take the commenter’srequest into consideration in futurerulemaking, recognizing the lead timethat is necessary for the creation of theassociated G-code that would be used toidentify when the procedures in theLDR prostate brachytherapy composite

74430 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2are performed on the same date ofservice in an ASC.<strong>Comment</strong>: One commenter indicatedthat ASCs are experiencing problems<strong>with</strong> obtaining payment from several ofthe ASC contractors for the pass-throughdevice identified by HCPCS code C1749(Endoscope, retrograde imaging/illumination colonoscope device(Implantable)) and requests that CMSprovide further guidance in the finalrule <strong>with</strong> comment period as to the ASCpricing level for the pass-throughdevice.Response: Devices that are eligible forpass-through payment under the OPPSare separately paid under the ASCpayment system and are paid atcontractor-priced rates. CMS willremind contractors that payment forHCPCS code C1749 is not packaged intothe payment for the associatedprocedure. However, the localcontractor makes final decisionsregarding coverage determinations andthe payment amount for the passthroughdevice.After consideration of the publiccomments we received, we areproviding CY 2012 payment for coveredancillary services in accordance <strong>with</strong>the policies finalized in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 72050), <strong>with</strong> onemodification. As described above, weare setting the payment indicator to‘‘Z2’’ for radiology services that usecontrast agents so that payment for theseprocedures will be based on the OPPSrelative payment weight and, therefore,will include the cost for the contrastagent. We also are finalizing proposedchanges to § 416.171(d). However, weare making a technical change to theproposed regulation text to make it clearthat the proposed reference toparagraphs (d)(1) and (2) is a referenceto paragraphs (d)(1) and (d)(2). Coveredancillary services and their final CY2012 payment indicators are listed inAddendum BB (which is available viathe Internet on the CMS Web site) tothis final rule <strong>with</strong> comment period.E. New Technology Intraocular Lenses(NTIOLs)1. NTIOL Cycle and Evaluation CriteriaIn the CY 2007 OPPS/ASC final rule<strong>with</strong> comment period (71 FR 68176), wefinalized our current process forreviewing applications to establish newclasses of new technology intraocularlenses (NTIOLs) and for recognizingnew candidate intraocular lenses (IOLs)inserted during or subsequent tocataract extraction as belonging to anNTIOL class that is qualified for apayment adjustment. Specifically, weestablished the following process:• We announce annually in theproposed rule updating the ASC andOPPS payment rates for the followingcalendar year, a list of all requests toestablish new NTIOL classes acceptedfor review during the calendar year inwhich the proposal is published. Inaccordance <strong>with</strong> section 141(b)(3) ofPublic Law 103–432 and our regulationsat § 416.185(b), the deadline for receiptof public comments is 30 days followingpublication of the list of requests in theproposed rule.• In the final rule updating the ASCand OPPS payment rates for thefollowing calendar year, we—Æ Provide a list of determinationsmade as a result of our review of all newNTIOL class requests and publiccomments; andÆ Announce the deadline forsubmitting requests for review of anapplication for a new NTIOL class forthe following calendar year.In the CY 2007 OPPS/ASC final rule<strong>with</strong> comment period (71 FR 68227), wefinalized our proposal to base ourdeterminations on consideration of thefollowing three major criteria set out at42 CFR 416.195:• Criterion 1 (42 CFR416.195(a)(1),(2)): The IOL must havebeen approved by the FDA and claimsof specific clinical benefits and/or lenscharacteristics <strong>with</strong> established clinicalrelevance in comparison <strong>with</strong> currentlyavailable IOLs must have been approvedby the FDA for use in labeling andadvertising;• Criterion 2 (42 CFR 416.195(a)(3)):The IOL is not described by an active orexpired NTIOL class; that is, it does notshare the predominant, class-definingcharacteristic associated <strong>with</strong> theimproved clinical outcome <strong>with</strong>designated members of an active orexpired NTIOL class; and• Criterion 3 (42 CFR 416.195(a)(4)):Evidence demonstrates that use of theIOL results in measurable, clinicallymeaningful, improved outcomes incomparison <strong>with</strong> use of currentlyavailable IOLs. The statute requires usto consider the following superioroutcomes:Æ Reduced risk of intraoperative orpostoperative complication or trauma;Æ Accelerated postoperative recovery;Æ Reduced induced astigmatism;Æ Improved postoperative visualacuity;Æ More stable postoperative vision; orÆ Other comparable clinicaladvantages.Since implementation of the processfor adjustment of payment amounts forNTIOLs that was established in the JuneVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00310 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR216, 1999 Federal Register, we haveapproved three classes of NTIOLs, asshown in the table entitled CMSApproved NTIOLs, <strong>with</strong> the associatedqualifying IOL models, posted on theCMS Web site at: http://www.cms.gov/ASCPayment/08_NTIOLs.asp#TopOfPage.2. NTIOL Application Process forPayment AdjustmentFor a request to be consideredcomplete, we require submission of theinformation that is found in theguidance document entitled‘‘Application Process and InformationRequirements for Requests for a NewClass of New Technology IntraocularLens (NTIOL)’’ posted on the CMS Website at: http://www.cms.gov/ASCPayment/08_NTIOLs.asp#TopOfPage. For eachcompleted request for a new class thatis received by the established deadline,a determination is announced annuallyin the final rule updating the ASC andOPPS payment rates for the nextcalendar year.We also summarize briefly in the finalrule the evidence that we reviewed, thepublic comments we received timely,and the basis for our determinations inconsideration of applications forestablishment of a new NTIOL class.When a new NTIOL class is created, weidentify the predominant characteristicof NTIOLs in that class that sets themapart from other IOLs (including thosepreviously approved as members ofother expired or active NTIOL classes)and that is associated <strong>with</strong> an improvedclinical outcome. The date ofimplementation of a paymentadjustment in the case of approval of anIOL as a member of a new NTIOL classwould be set prospectively as of 30 daysafter publication of the ASC paymentupdate final rule, consistent <strong>with</strong> thestatutory requirement.3. Requests To Establish New NTIOLClasses for CY 2012As discussed in the CY 2012 OPPS/ASC proposed rule (76 FR 42303through 42309), we received fourrequests for review to establish a newNTIOL class for CY 2012 by the March5, 2011 due date. Below we summarizethe evidence that we reviewed, thepublic comments we received timely,and the basis for our determinations inconsideration of the applications forestablishment of a new NTIOL class. Foreach application, we invited publiccomments on certain specific questionsas well as all of the NTIOL evaluationcriteria. We thank the public for theircomments concerning our review of thefour CY 2012 NTIOL requests.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74431jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2a. Requestor/Manufacturer: AlconLaboratories, Inc. (Alcon)Lens Model Numbers: AcrySofNatural IQ and AcrySof Natural IOLs,Models SN60WF (aspheric optic, singlepiece), SN60AT (spherical optic, singlepiece), MN60MA (spherical optic,multi-piece), MN60AC (spherical optic,multi-piece).Summary of the Request: Alconsubmitted a request for CMS todetermine that its AcrySof Natural IOLsmeet the criteria for recognition asNTIOLs and to concurrently establish anew class of NTIOLs for ‘‘blue-lightfilteringIOLs that improve drivingsafety under glare conditions,’’ <strong>with</strong>these IOLs as members of the class.These IOLs will be referred to as eitherblue-light-filtering IOLs or blue blockingIOLs. We reviewed a similar request byAlcon during the CY 2011 NTIOLapplication cycle (75 FR 72052). As partof its CY 2012 request, Alcon submitteddescriptive information about thecandidate IOLs as outlined in theguidance document that is available onthe CMS Web site for the establishmentof a new class of NTIOLs, as well asinformation regarding approval of thecandidate IOLs by the FDA. Thisinformation included the approvedlabeling for the candidate IOLs, asummary of the IOLs’ safety andeffectiveness, a copy of the FDA’sapproval notifications, and instructionsfor their use.In its CY 2012 request, Alcon assertedthat its request is based on studiesdemonstrating that the AcrySof NaturalIOLs <strong>with</strong> a blue-light-filteringchromophore filter light in a mannerthat approximates the human crystallinelens in the 400–475 nm blue lightwavelength range to reduce glare thatimpairs the ability of the eye todifferentiate objects from thebackground. Alcon further stated thatglare reduction can help beneficiariesavoid hazards that can be caused byglare. Alcon also stated that at presentthere are no active or expired NTIOLclasses that describe IOLs similar to theAcrySof Natural IOLs.We established in the CY 2007 OPPS/ASC final rule <strong>with</strong> comment periodthat when reviewing a request forrecognition of an IOL as an NTIOL anda concurrent request to establish a newclass of NTIOLs, we would base ourdetermination on consideration of thethree major criteria at 42 CFR 416.195(a)and listed above. We solicited publiccomment on these candidate IOLs <strong>with</strong>respect to the established three majorNTIOL criteria and certain specificissues related to this application in theCY 2012 OPPS/ASC proposed rule (76FR 42303 through 42309). We havereviewed Alcon’s request to recognizeits AcrySof Natural IOLs as NTIOLs andconcurrently establish a new class ofNTIOLs and all of the related comments.First, for an IOL to be recognized asan NTIOL we require that the IOL musthave been approved by the FDA andclaims of specific clinical benefits and/or lens characteristics <strong>with</strong> establishedclinical relevance in comparison <strong>with</strong>currently available IOLs must have beenapproved by the FDA for use in labelingand advertising. The approved labels forthe Alcon IOLs all state the following:‘‘Alcon’s proprietary blue light filteringchromophore filters light in a mannerthat approximates the human crystallinelens in the 400–475 nm blue lightwavelength range.’’ The FDA-approvedlabeling for these IOLs do not otherwisereference specific clinical benefits ofblue-light-filtering. We were interestedin public comments on the clinicalrelevance of blue-light-filtering in anIOL. Specifically, in the proposed rule(76 FR 42303 through 42309), we statedthat we were interested in publiccomments regarding the assertion thatthe specific blue-light-filteringproperties associated <strong>with</strong> the candidateIOLs improve driving safety via thereduction of glare disability.Second, according to 42 CFR416.195(a)(3), we also require that thecandidate IOL not be described by anactive or expired NTIOL class; that is, itdoes not share the predominant, classdefiningcharacteristic associated <strong>with</strong>improved clinical outcomes <strong>with</strong>designated members of an active orexpired NTIOL class. In the CY 2007OPPS final rule, in response to acomment we explained ourinterpretation of 42 CFR 416.195(a)(3) asfollows:‘‘[R]evised § 416.195(a)(3) does notpreclude from consideration as amember of a new class of NTIOL a lensthat includes as one of its characteristicsa class-defining characteristic associated<strong>with</strong> members of an active or expiredclass. Only if that shared characteristicwere the predominant characteristic ofthe lens would it be precluded fromapproval as a new class of NTIOL.However, if the lens featured othercharacteristics, one or more of whichpredominated, that were clearly tied<strong>with</strong> improved clinical outcomes, thelens would not be disqualified fromconsideration as an NTIOL just becauseit also shared a characteristic <strong>with</strong>members of an active or expired class.’’(71 FR 68178.)As noted above, since implementationof the process for adjustment ofpayment amounts for NTIOLs that wasestablished in the June 16, 1999 FederalVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00311 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Register, we have approved threeclasses of NTIOLs: Multifocal andReduction in Preexisting Astigmatismclasses, both of which were created in2000 and expired in 2005; and theReduced Spherical Aberration class,which was created in 2006 and expiredon February 26, 2011. As mentionedabove, a table entitled CMS ApprovedNTIOLs, <strong>with</strong> the associated qualifyingIOL models, is posted on the CMS Website at: http://www.cms.gov/ASCPayment/08_NTIOLs.asp#TopOfPage. The classdefiningcharacteristic specific to IOLsthat are members of these three expiredclasses is evident in the name assignedto the class. For example, IOLsrecognized as members of the reducedspherical aberration class arecharacterized by their aspheric designthat results in reduced sphericalaberration. Based on the information inthe table entitled CMS ApprovedNTIOLs, a candidate IOL’s predominantcharacteristic may not be described byany of the three expired NTIOL classes.In the case of one of four of Alcon’scandidate IOLs, the AcrySof Natural IQAspheric IOL model SN60WF, it is amember of the expired reducedspherical aberration NTIOL class (75 FR72052). For the purposes of satisfying§ 416.195(a)(3), CMS must be able todetermine which lens characteristic ispredominant for Alcon’s modelSN60WF, asphericity (resulting inreduced spherical aberration) or bluelight-filtering.If the predominantcharacteristic is asphericity, then themodel SN60WF IOL would bedisqualified under § 416.195(a)(3). Thisdetermination is particularly relevantgiven that the clinical benefit attributedto both of these lens characteristics isimproved driving under glareconditions. In the proposed rule (76 FR42303 through 42309), we solicitedpublic comments on whether blue-lightfilteringcan be considered thepredominant IOL characteristic for themodel SN60WF IOL. We also welcomedpublic comments that addressedwhether blue-light-filtering and theassociated clinical benefits of the otherthree of Alcon’s candidate IOLs (that is,SN60AT, MN60MA, MN60AC) aredescribed by any of the expired NTIOLclasses.Third, our NTIOL evaluation criteriaalso require that an applicant submitevidence demonstrating that use of theIOL results in measurable, clinicallymeaningful, improved outcomes incomparison to currently available IOLs.Importantly, the statute specifies thefollowing outcomes: (1) Reduced risk ofintraoperative or postoperativecomplication or trauma; (2) accelerated

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274432 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationspostoperative recovery; (3) reducedinduced astigmatism; (4) improvedpostoperative visual acuity; (5) morestable postoperative vision; or (6) othercomparable clinical advantages. Wenote that in the CY 2007 OPPS/ASCfinal rule <strong>with</strong> comment period, wesought comments as to what constitutescurrently available IOLs for purposes ofsuch comparisons, and we receivedseveral comments in response to oursolicitation (71 FR 68178). We agreed<strong>with</strong> commenters that we should remainflexible <strong>with</strong> respect to our view of‘‘currently available lenses’’ forpurposes of reviewing NTIOL requests,in order to allow for consideration oftechnological advances in lenses overtime. This means that we do not expectthat ‘‘currently available lenses’’ wouldremain static over time and alwaysnecessarily default to the classicspherical monofocal IOL for everycandidate NTIOL class. Therefore, webelieve that ‘‘currently available lenses’’for purposes of reviewing NTIOLrequests should depend upon the classdefiningcharacteristic and theassociated purported improved clinicaloutcome of the candidate NTIOL. Forexample, for some candidate NTIOLsthe most appropriate comparison IOLwould be a spherical monofocal IOL,while other candidate NTIOLs may bemore appropriately compared toaspheric IOLs.For purposes of reviewing Alcon’srequest to establish a new NTIOL classfor CY 2012, in the proposed rule (76 FR42304 through 42309), we proposed thataspheric monofocal IOLs represent thecurrently available IOLs against whichthe candidate NTIOLs should becompared in order to establish a newclass. According to publicly availabledata from Market Scope, LLC, IOLs <strong>with</strong>aspheric optics accounted for over 86percent of the IOLs implanted in theUnited States during 2010. In addition,data submitted by Alcon shows that theoverwhelming majority of IOLs sold byAlcon have aspheric optics.Furthermore, the aspheric design thatresults in reduced spherical aberrationwas the class defining characteristic forIOLs recognized as members of theexpired reduced spherical aberrationNTIOL class. The primary clinicaloutcome associated <strong>with</strong> reducedspherical aberration (for purposes ofestablishing it as an NTIOL class) wassafer night driving (71 FR 4588). Alconasserted that what makes its candidateIOLs superior to other currentlyavailable IOLs is improved drivingsafety under glare conditions. Glareconditions during driving primarilyoccur at night due to headlights fromoncoming cars. The primary improvedclinical outcome from reduced sphericalaberration IOLs (an expired NTIOLclass) was safer night driving. Webelieved that Alcon was also claimingthat its blue-light-filtering IOLs resultedin safer night driving. Therefore, weproposed that the most relevant type ofcurrently available IOLs against whichthe Alcon blue-light-filtering IOLsshould be compared is aspheric IOLs. Inparticular, we proposed that therelevant comparison would be theperformance of an aspheric blue-lightfilteringIOL versus an asphericnonblue-light-filtering IOL. In theproposed rule, we sought publiccomment on our view of ‘‘currentlyavailable lenses’’ for the purposes ofevaluating Alcon’s candidate IOLsagainst currently available IOLs.We reviewed the evidence submitted<strong>with</strong> Alcon’s CY 2012 request. AlthoughAlcon submitted various types ofliterature in support of its application,it relies primarily on two studies insupport of its hypothesis that blue lightfiltering IOLs improve driving safetyunder glare conditions as compared tocurrently available IOLs. The first ofthese two submitted articles is:Hammond B, et al., ‘‘Contralateralcomparison of blue-filtering intraocularlenses: glare disability, heterochromiccontrast, and photostress recovery,’’Clinical Ophthalmology. 2010;4:1465–1473 (Hammond 2010). This articlecompared visual performance (asmeasured by glare disability,heterochromic contrast threshold, andphotostress recovery time) in eyes <strong>with</strong>blue-light-filtering IOLs versuscontralateral eyes <strong>with</strong> IOLs that do notfilter blue light. The second article,which Alcon describes as its ‘‘pivotalstudy,’’ is: Gray R, et al., ‘‘Reducedeffect of glare disability on drivingperformance in patients <strong>with</strong> blue-lightfilteringintraocular lenses,’’ J CataractRefract Surg., 2011;37:38–44. This studycompared the effects of glare on drivingperformance using a driving simulatorin patients who had implantation of ablue-light-filtering acrylic IOL and thosewho had implantation of an acrylic IOL<strong>with</strong> no blue-light-filter. Overall, theevidence submitted provides us <strong>with</strong>important information that is critical toour review of this request. However, inmaking our decision as to whether toestablish a new class of NTIOL based onthe primary characteristic of thecandidate lenses, we also wereinterested in what other information thepublic could contribute related to theasserted benefits of the blue-lightfilteringIOL. Specifically, in theproposed rule (76 FR 42304 throughVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00312 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR242309), we sought public comment andrelevant data on the following:• Are there other peer-reviewedstudies or other information that wouldsupport or disprove the claims ofclinical benefit made by Alcon?• How would you interpret theresults of the Hammond 2010 study,given that the blue-light-filtering groupincluded patients <strong>with</strong> spherical bluelight-filteringIOLs and patients <strong>with</strong>aspheric blue-light-filtering IOLs?• Does the Maxwellian optical systemthat was employed in the Hammond2010 study mitigate the impact of theaspheric optics of some of the studysubjects in the blue light-filtering group?• Is the sample size used in bothstudies sufficient to conclude that ablue-light-filtering IOL would reduceglare disability and improve drivingsafety in the Medicare population?• What kind of study design would beappropriate to prove the claim ofsignificant clinical benefit due to glarereduction on which the new classwould be based?• Are the submitted data enough toprove that the blue-light-filtering opticis responsible for reduction in glaredisability as asserted by applicant?• Did these studies use anappropriate comparator IOL?Furthermore, in accordance <strong>with</strong> ourestablished NTIOL review process, inthe proposed rule, we also sought publiccomments on all of the review criteriafor establishing a new NTIOL class thatwould be based on the ability of theAcrySof Natural IOLs to filter blue lightand subsequently help beneficiariesavoid hazards that can be caused byglare while driving. We stated that wewould give all comments fullconsideration regarding Alcon’scandidate IOLs.<strong>Comment</strong>: Regarding criterion 1, therequestor asserted that the AcrySofNatural IOLs contain a blue-lightfilteringchromophore that reduces glaredisability that impairs the ability ofindividuals to differentiate objects fromthe background. The blue-light-filteringchromophore is a characteristic of theAcrySof Natural IOLs that is listed inthe FDA-approved labeling. Whether theblue-light-filtering chromophore hasestablished clinical relevance incomparison <strong>with</strong> currently availableIOLs is discussed below under thediscussion of criterion 3, as the clinicalrelevance of the blue-light-filteringchromophore in comparison <strong>with</strong>currently available IOLs depends uponwhether, as required by criterion 3,evidence demonstrates that use of theIOL (and in particular the blue-lightfilteringchromophore) results inmeasurable, clinically meaningful,

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74433jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2improved outcomes in comparison <strong>with</strong>use of currently available IOLs. Onecommenter stated that because Alcon’ssubmission lacks the requisite FDAapprovedlabeling references regardingclinical benefit or established clinicalrelevance for the AcrySof Natural IOLs,it does not satisfy criterion 1.Response: Our current interpretationof criterion 1, which is based on 42 CFR416.195(a)(1),(2), is that the candidateIOL must have been approved by theFDA and have claims of specific clinicalbenefits and/or lens characteristics <strong>with</strong>established clinical relevance incomparison <strong>with</strong> currently availableIOLs in the FDA-approved labeling.Therefore, there can be either claims ofspecific clinical benefits in the FDAapprovedlabeling or lens characteristicsin the FDA-approved labeling <strong>with</strong>evidence of established clinicalrelevance in comparison <strong>with</strong> currentlyavailable IOLs outside of the FDAapprovedlabeling, such as in peerreviewedjournals. If the evidence forclinical relevance of the IOLcharacteristic was required to becontained in the FDA-approvedlabeling, that would be the same asrequiring a claim of specific clinicalbenefit of the IOL in the FDA-approvedlabeling, which would be redundant. Asstated above, the clinical relevance ofthe blue-light-filtering chromophorewill depend on whether Alcon’s bluelight-filteringIOLs satisfy criterion 3,which is discussed below. In futurerulemaking, we may consider exploringrefinements to the regulations such thata claim of specific clinical benefit of theIOL in comparison <strong>with</strong> currentlyavailable IOLs would be required in theFDA-approved labeling.<strong>Comment</strong>: Regarding criterion 2, theapplicant and several other commentersstated that the measured clinical benefitof Alcon’s blue-light-filtering IOLs isimproved driving safety under daytimedriving conditions <strong>with</strong> glare simulatinglow-angle sun, not nighttime drivingconditions <strong>with</strong> and <strong>with</strong>out glare. Theystated that low angle sun occurs atsunrise and sunset and cited the articleby Gray (which Alcon describes as itspivotal study) which states thefollowing: ‘‘In a real-world task such asdriving, 2 major contributors of glare arethe headlights of an oncoming carduring nighttime driving and low-anglesun conditions (e.g., sunset).’’ Insubmitted comments, Alcon clarifiedthat its blue-light-filtering IOLs only aiddrivers <strong>with</strong> glare due to low angle sun,and not that blue-light-filtering IOLs aid<strong>with</strong> glare from the headlights of anoncoming car during nighttime driving.Prior to its clarifying comments, weoriginally believed that Alcon wasclaiming that its blue-light-filtering IOLsaided drivers <strong>with</strong> both nighttime glareand daytime glare. We now understandthat the purported clinical benefit of theblue-light-filtering IOLs is improveddriving during the daytime when thesun is at a low angle and not atnighttime when headlights cause glare.This distinction is important inevaluating criterion 2, which requiresthat the blue-light-filtering IOLs not bedescribed by an active or expired NTIOLclass; that is, the blue-light-filteringIOLs do not share the predominant,class-defining characteristic associated<strong>with</strong> the improved clinical outcome<strong>with</strong> designated members of an active orexpired NTIOL class. One of the fourcandidate blue-light-filtering IOLs, theAcrySof Natural IQ Aspheric IOL modelSN60WF, is a member of the expiredreduced spherical aberration NTIOLclass (75 FR 72052).The requestor and other commentersargued that because asphericity does notcontribute to visual performance duringdaytime driving conditions due topupillary constriction during daytimedriving conditions, blue-light-filtering isthe predominant characteristic of theAcrySof Natural IQ Aspheric IOL modelSN60WF for the associated outcome ofimproved driving safety under daytimedriving conditions <strong>with</strong> glare from lowanglesun. Another commenter statedthat because no evidence exists toestablish the clinical benefit of bluelight-filtering,it is impossible toseparate the predominant characteristicof reduced spherical aberration in theAcrySof Natural IQ Aspheric IOL modelSN60WF from any other lenscharacteristic <strong>with</strong> regard to clinicalbenefit. Therefore, this commenterstated that, because the AcrySof NaturalIQ Aspheric IOL model SN60WF is amember of a recently expired category,it should be disqualified from newNTIOL category consideration.Response: For the purposes ofsatisfying § 416.195(a)(3), we mustdetermine which lens characteristic ispredominant for Alcon’s modelSN60WF, asphericity (resulting inreduced spherical aberration) or bluelight-filtering.If the predominantcharacteristic is asphericity, the modelSN60WF IOL would be ineligible under§ 416.195(a)(3). Although we brieflydiscussed our interpretation of§ 416.195(a)(3) and the concept of apredominant characteristic as it relatesto § 416.195(a)(3) in the CY 2007 finalrule (71 FR 68178), we have not furtherelaborated on the factors that influencea determination of predominanceregarding different IOL characteristics.We believe that when the clinicaloutcomes associated <strong>with</strong> different lensVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00313 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2characteristics are related, comparativeclinical data are required to demonstratethat one characteristic is predominantover another. However, when theclinical outcomes associated <strong>with</strong> thedifferent lens characteristics aresufficiently unrelated, comparativeclinical data are not required todemonstrate the predominance of acharacteristic as it relates to the clinicaloutcome associated <strong>with</strong> the lenscharacteristic that is the subject ofNTIOL review.We agree <strong>with</strong> the requestor and othercommenters that, <strong>with</strong> respect to thepurported outcome of improved drivingsafety under daytime driving conditions<strong>with</strong> glare simulating low-angle sun, thepredominant characteristic of the modelSN60WF is blue-light blocking.Pupillary constriction from the sundiminishes or negates the benefits ofasphericity, which was shown to reducespherical aberration and positivelyaffect night driving performance. If anight driving benefit were claimedinstead of only a daytime driving benefitfor Alcon’s blue-light-filtering IOLs, thedetermination of the predominantcharacteristic for the model SN60WFwould be more complicated. However,because the purported clinical benefit ofthe blue-light-filtering IOLs is limited toimproved driving safety under daytimedriving conditions <strong>with</strong> glare simulatinglow-angle sun, under these conditionsthe blue-light-filtering characteristic ispredominant. Also, the description ofthe requestor’s proposed new class ofNTIOLs should be revised as follows:‘‘Blue-light-filtering intraocular lensesthat improve driving safety underdaytime glare from low angle sunconditions.’’<strong>Comment</strong>: <strong>Comment</strong>s on the questionregarding whether the blue-lightfilteringcharacteristic has establishedclinical relevance and whether theAcrysof blue-light-filtering IOLs satisfycriterion 3, addressed that the first issueis what are the appropriate currentlyavailable IOLs to which Alcon’s blueblocking IOLs should be compared. Therequestor and several other commentersbelieved that an appropriate comparatorIOL for the blue-light-filtering IOL is aspherical monofocal IOL for thefollowing reasons:• Because market share was notmentioned as a factor in consideringwhich lenses are appropriatecomparators for other NTIOL requests, itshould not be a factor in the blue-lightfilteringrequest;• Because the requestor has notclaimed that the blue-light-filtering IOLsaffect or improve night driving, it wouldbe illogical to suggest that the blue

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274434 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsblocker IOL should be compared to anaspheric IOL;• Because in prior rulemaking cyclesCMS mentioned PMMA IOLs as part ofa group of ‘‘currently available IOLs,’’and PMMA IOLs have had a low marketshare for many years, there is aprecedent for considering low marketshare IOLs to be currently availableIOLs;• Because an aspheric colorlessAcrysof IOL does not exist, and othermanufacturers’ aspheric colorless IOLsare different from Acrysof IOLs in manyways, the model SN60WF IOL cannot beappropriately compared to an asphericcolorless IOL; and• It is unfair for CMS to propose anaspheric comparator IOL by applying anew definition of ‘‘currently availableIOLs’’ after this year’s NTIOLapplication deadline.Response: The requestor, through itscomments on the proposed rule, hasmade clear that the only claimedclinical benefit of the blue-light-filteringIOLs is improved daytime driving undersimulated low angle sun conditions andnot improved night driving under glarefrom car headlights. Therefore, we agreethat it is not necessary that the bluelight-filteringIOLs be compared to anaspheric IOL because under daytimelow angle sun glare conditions pupillaryconstriction would generally limit theeffect of the aspheric optics. However,we believe that it would be beneficial toclarify the meaning of our flexibleapproach to ‘‘currently available IOLs.’’Our flexible approach means that theappropriate comparator can varydepending upon the candidate IOL andthe associated claimed clinical outcomeand can also change over time. Withsome candidate IOLs, lens optics may bethe focus of the claimed benefit, while<strong>with</strong> others, the IOL material may be thefocus of the claimed benefit. Forexample, a new IOL material thatclaimed the elimination of posteriorcapsular opacity (PCO) would have tobe compared to IOL materials in whichPCO occurred. However, the particularoptics of the IOLs in this hypotheticalcase would likely not necessarilymatter. If the claim was that thecandidate IOL corrected some type ofhigher order optical aberration thatresulted in improved night driving, suchan IOL would have to be compared toan aspheric IOL to determine whether itimproved night driving beyond that ofan aspheric IOL.Furthermore, as IOL use patternschange over time, what is considered‘‘currently available’’ will also changeover time. Although sphericalmonofocal IOLs have represented thestandard, conventional IOL, they nowrepresent a relatively small minority ofIOLs implanted in the United States.This trend is at least partially attributedto the NTIOL program for aspheric IOLsand the CMS Rulings for presbyopiacorrecting IOLs and astigmatismcorrecting IOLs. Therefore, our flexibleapproach to currently availablecomparator IOLs means thatmanufacturers should account forcontemporary practices among U.S.cataract surgeons when designingstudies and resist the temptation toselect a comparator IOL that would mostlikely yield a statistically significantresult in a study but that may not bestfit the proposed hypothesis or NTIOLregulatory requirements.Regarding the evidence submitted bythe requestor in support of itsproposition that the blue-light-filteringcharacteristic has established clinicalrelevance and that evidencedemonstrates that use of the blue-lightfilteringIOL results in measurable,clinically meaningful, improvedoutcomes in comparison <strong>with</strong> use ofcurrently available IOLs, the requestorsubmitted a variety of supportinginformation. However, the requestorrelied primarily on the studies byHammond et al. and Gray et al. that arecited above. Therefore, although we willdiscuss other submitted supportinginformation as appropriate, we willfocus primarily on the Hammond andGray studies as they are the primarysupport for the requestor’s clinicalbenefit hypothesis. We begin <strong>with</strong> theHammond study.<strong>Comment</strong>: Some commentersremarked that the Hammond studyprovides important evidence thatsupports the requestor’s hypothesis thatblue blocking IOLs improve drivingperformance while driving in low anglesun conditions. Other commentersprovided detailed critiques of theHammond study. Because the requestorsubmitted a similar application last yearand some of the same comments weremade in response to last year’sapplication, the requestor has had anopportunity to rebut many of thesecomments. The main points made bysome of the commenters on theHammond study and the associatedrebuttals by the requestor aresummarized below:• Figure 3 in the Hammond studymislabels the gray and blue traces. Acommenter claims that Xenon’s spike isactually in the blue part of thespectrum. The commenter claims thatthis mislabeling hides a study bias ofhaving a blue glare source (which wouldbe filtered by the blue blocker) but adifferent wavelength for the targetillumination source.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00314 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Rebuttal by requestor: Although thefigure labels were inadvertentlyreversed, the glare and target sourceswere correctly described in the body ofthe Hammond paper, and a correctionhas been made through a letter to thejournal’s editor.• No IOL or optical filter can decreasedisability glare when target and glareillumination have the same spectrumbecause every filter decreases target andglare illumination in exactly the sameproportion. Thus, the retinal imagecontrast cannot be increased by a colorfilter; therefore, disability glare cannotbe decreased by the filter. Thecommenter cited several articles insupport of this proposition, including a2007 article (Optom Vis Sci 84: 859–64,2007) by Hammond et al., one of theinvestigators for the study submitted bythe requestors as primary support fortheir NTIOL application. In this 2007study macular pigment (MP) was thelight filter, and Hammond et al. statedthe following: ‘‘Increased MP densitywill also not reduce glare disabilitywhen the wavelength conditionsbetween the target and surround are thesame. If MP absorbs light from both thetarget and the surround in equalproportion, that ratio will stay the sameirrespective of the MP level. In suchinstances, high MP levels might reducephotostress and glare discomfort but itwill not make a target more visible (thatis, improve glare disability). This sameinterpretation could be applied to otheryellow filters (for example, tinted intraocularlenses) and may explain whyyellow filters improve visibility in somesituations but not in others.’’Rebuttal by requestor: In the realworld it is rare that the wavelength ofthe target and the glare source are thesame, because most glare sources arebroad spectrum and most targets have acolor such that the target absorbs certainwavelengths and reflects others.• Hammond’s heterochromaticcontrast threshold testing is designed toadvantage the blue-light-filtering IOLbecause it used a small yellow targetsurrounded by a large violet-blue glaresource, which would be preferentiallyfiltered out by blue blocking IOLs.Rebuttal by requestor: There is noextant literature suggesting that the glareand target sources should have the samespectral characteristics, and shorterwavelengths such as blue light arescattered more than longer wavelengths,which makes shorter wavelengths morecommon glare sources and thereforemore appropriate for testing.• The mix of aspheric and sphericalblue blocking IOLs in that study groupis a confounding variable.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74435jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Rebuttal by requestor: The use of theMaxwellian optical system controls forthese differences in IOL design. (Severalother commenters also stressed thispoint about the importance ofMaxwellian optics in the Hammond etal. study design.)• Hammond’s photostress tests haveno value for assessing the visualperformance of older adults in realworld situations because people do notordinarily stare directly into brilliant,uncomfortable light sources for manyseconds, and any colored or neutraldensity filter that reduces light exposurewill decrease recovery time from flashblindness.Response: We agree <strong>with</strong> therequestor that the use of the Maxwellianoptical system eliminates any potentialconfounding due to the mix of asphericand spherical lens designs in the bluelight-filteringIOL study group.However, we agree <strong>with</strong> the commentersthat a violet-blue glare sourcesurrounding a yellow target mayadvantage the blue-light-filtering IOL insome of the testing conducted in theHammond study. In the real world, itwould seem that, under somecircumstances, target and glare sourceswould have similar wavelength profiles,and therefore, according to theliterature, a filter would not affectdisability glare. Under othercircumstances, the target and glaressources may have a different wavelengthprofile, and then a filter such as the blueblocker IOL could be of some benefit.We also agree <strong>with</strong> the commenters thatthere are significant unansweredquestions regarding whether thephotostress test results are clinicallymeaningful in proving that blue-lightfilteringIOLs reduce the effects of glare.Overall, there appears to be somesignificant unanswered questions as tohow well the Hammond study supportsthe requestor’s hypothesis in the realworld situation of driving during lowangle sun conditions.While the Hammond study wasoffered as underlying support for thehypothesis that blue-light-filtering IOLsreduce the effects of glare on certainaspects of visual performance or visualfunction, we now turn to the study thatthe requestor has characterized as the‘‘pivotal’’ study for its application,which was performed by Gray et al., andis described above. The Gray study isthe primary evidence for the purportedimproved outcome attributed to theblue-light-filtering IOLs of improveddriving safety under daytime drivingconditions <strong>with</strong> glare simulating lowanglesun.<strong>Comment</strong>: The requestor and severalother commenters stated that the Graystudy is sufficient evidentiary supportfor the blue blocker NTIOL application.The requestor and several othercommenters stated that the Gray studydocuments a 0.33 second improvementin the safety margin for patients <strong>with</strong>blue-light-filtering IOLs as compared tothose <strong>with</strong> colorless IOLs. Theymaintained that the 0.33 secondimprovement is clinically significantbecause driving safety experts agree onthe safety benefits of the Center HighMounted Stop Light, which showed animprovement in stopping time of 0.11seconds, and has been demonstrated tohave prevented automobile accidents.Some commenters suggested that thereare flaws in the Gray study. (Again,because the requestor submitted asimilar application last year and some ofthe same comments were made inresponse to last year’s application, therequestor has rebutted many of thesecomments.) The key points made bysome of the commenters in critiquingthe Gray study and the associatedrebuttals by the requestor and othercommenters are summarized below:• The computer monitor simulationused by Gray et al. created an unlikelysituation in which the pseudophakicMedicare beneficiary is driving intolow-lying sun toward a 4-wayintersection on a 2 lane rural highwayat 55 miles an hour and must make a lefthand turn <strong>with</strong> one eye shut in front ofan oncoming car that is alsoapproaching the intersection at 55 milesper hour.Rebuttal by requestor: The Gray studyrepresents a real-world test of subjectperformance to determine criticalpatient safety information.• The Gray driving simulator was acomputer monitor test and not arealistic driving simulator <strong>with</strong> a carbody on a moving base <strong>with</strong> a wide-fieldviewing screen.Rebuttal by requestor: The drivingsimulator used in the Gray study is avalidated driving simulator.• The driving simulator used in theGray study did not conform toguidelines for driving simulatorsoutlined in ANSI Z80.12–2007, AnnexG. In particular, the commenters statedthat the simulation should have beenperformed binocularly instead ofmonocularly; the study did not mentionmatching on age, gender, or drivingexperience; the study did not haveexclusion criteria for medication thatmay have affected vision or motorabilities; the study did not mentionexclusion criteria for capsular haze orlarge capsulotomy.Rebuttal by requestor: Patients <strong>with</strong>pathology including PCO were excludedfrom the Gray study.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00315 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2• Sampling approach and bias may beproblematic because of the lack of detailon exactly how the subjects wererecruited into the study. Potentialconfounding due to use of aconvenience sample, meaning that thesample was chosen at the convenienceof the researcher and that there waslittle or no demonstrated attempt toensure that the sample accuratelyrepresents the target population.Rebuttal by requestor: Selection biaswas addressed by enrolling subjectswho were matched for age, time aftercataract surgery, and visual acuity.• <strong>Comment</strong>ers further stated thatdifferences in judging distance tooncoming vehicles could be attributableto motion processing differencesbetween the two groups, which isimpaired in older drivers.• The driving simulator used in theGray study is not a valid representationof on-road driving performance in olderdrivers because the validation studycited in the Gray article was done <strong>with</strong>novice drivers.Rebuttal by requestor: The trial byGray et al. used a validated drivingsimulator system that represents thereal-world visual experience by drivers.Response: We believe that thecommenters raise important questionsabout the Gray trial design and thedriving simulator. The requestor hasresponded to many of these questionsand criticisms, but some remain atissue. Questions also remain aboutwhether the Gray study accuratelyrepresents realistic driving by Medicarebeneficiaries in low angle sunconditions and whether such a smallstudy accurately represents thepopulation of Medicare beneficiaries.Furthermore, the Gray study is a single17 patient-per-study arm drivingsimulator study that is the primarysupport for the requestor’s assertion thatblue-light-filtering IOLs result insuperior outcomes for Medicarebeneficiaries as compared to other IOLs.We must evaluate this study in thecontext of the totality of the evidence ofthe impact of glare on driving and thesignificance of this problem forMedicare beneficiaries. We believe thata significant question remains as towhether the Gray study results aresufficient to support the conclusion of asignificant real world improvedoutcome for blue-light-filtering IOLs inMedicare beneficiaries. We discussthese issues below.<strong>Comment</strong>: <strong>Comment</strong>ers asserted that‘‘studies over the past two decades showthat glare problems are not associated<strong>with</strong> crash involvement in olderdrivers.’’ In support of this assertion thecommenters cited several studies,

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274436 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsincluding studies by Owsley and Cross.The requestor rebutted the commenters’assertion by stating that none of thestudies cited by the commentersinvolved driving simulation or otherreal-world situations, and that becauseof historical limitations in studyingglare, the cited studies’ methods ofdriving safety are inaccurate and thatthe studies are otherwisemethodologically flawed.Response: The commenters raise animportant issue. The followingsummary on this issue is from a veryrecent 2010 review article by Owsleyand McGwin (that was submitted by therequestor in its application) and thatsummarizes the conclusions of theliterature (some of which was cited bythe commenters): ‘‘Disability glare(increased glare sensitivity), particularlyamong older drivers, is discussed as aserious threat to the safety of olderdrivers (e.g., Wolbarsht, 1977) butstudies have not scientifically supportedthis notion (Ball, et al. 1993; Owsley,Ball, et al., 1998; Owsley, et al., 2001).This failure to find an associationbetween glare and road safety may beattributed to methodological difficultiesin defining ‘‘glare’’ and in measuring amultifaceted phenomenon (for example,discomfort glare, disability glare), aswell as to a poor understanding of whatpeople mean when they say they have‘‘glare’’ problems. Rubin et al. (2007)reported a seemingly paradoxicalrelationship between disability glareand motor vehicle collisions. Theyfound that disability glare reduced crashrisk in older drivers <strong>with</strong> good vision,which could not be attributed tochanges in driving habits (e.g., reducedexposure).’’ Section 416.195(a)(2) of ourregulations requires that the lenscharacteristic of the candidate IOL haveestablished clinical relevance incomparison to currently available IOLs.If, as stated above by Owsley andMcGwin, the association between glareand decreased driving safety among theelderly has not been supported by thepublished scientific evidence as of 2010,a significant question remains as towhether the single new 17-patient-pergroupstudy by Gray sufficientlyestablishes the clinical relevance ofblue-light-filtering IOLs for improvingdriving safety under glare conditionsfrom low angle sun. We believe that inlight of the totality of all of thepublished evidence regarding glare anddriving in older adults, as summarizedabove by Owsley and McGwin, the lonestudy by Gray is currently insufficient toestablish the clinical relevance of theblue-light-filtering IOLs.<strong>Comment</strong>: One commenter stated thatmost drivers would use the windshieldvisor and/or sunglasses, or take othercommon-sense precautions to mitigatethe effects of glare from low angle sun.Response: We believe that thiscomment introduces a topic that isworthy of further discussion. The intentof the Gray study was to test drivingability during simulated glare from lowanglesun during the daytime. Glarefrom low angle sun is encounteredwhen driving east shortly after sunriseand when driving west shortly beforesunset. We believe that there is asignificant question as to whether theresults of the experiment performed byGray (assuming for the purpose of thisresponse that the results are valid<strong>with</strong>in Gray’s experimental context)represent a real-world improved clinicaloutcome or clinical benefit in thecontext of real-world daytime drivingduring times of low angle sun byMedicare beneficiaries. Most peoplehave experienced the bothersome effectsof low angle sun (or having the ‘‘sun inyour eyes’’) during a variety of daytimeactivities including driving. As thecommenter pointed out, there arecurrently several daytime glarecountermeasures that are both widelyrecommended by ophthalmologists,optometrists, and others and that havebeen widely adopted by the public formitigating the bothersome effects of lowangle sun during daytime driving. Theseinclude (but are not necessarily limitedto) the automobile’s sun visor, tintedwindshield glass, polarized sunglasses,and antireflective (AR) coatings onglasses. Such daytime glarecountermeasures are included in thefollowing recommendations formitigation of the effects of glare fromlow angle sun during driving by theVision Council of America:• Drive cautiously and leave a properdistance to ensure ample reaction time;• Make it a habit to lower visors, tohelp block the reflected light;• Avoid using high-gloss cleaners ondashboards;• Keep the car windshield clean andthe windshield washer fluid reservoirfull;• When possible, take an alternateroute lined <strong>with</strong> trees or tall buildingsinstead of one <strong>with</strong> extreme glare;• Turn on headlights to reduce thepossible poor visibility of oncomingdrivers;• Most importantly, wear sunglassesat all times. Even more important is towear sunglasses <strong>with</strong> polarized lenses toreduce glare, and lenses <strong>with</strong> UVprotection to shield the eyes fromdamage (emphasis added).The benefits of these daytime glarecountermeasures are well known byboth eye care professionals and theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00316 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2general public. Given all of thesecommon countermeasures for managingglare from the sun during driving, we donot know, despite the Gray study,exactly what additional benefit bluelight-filteringIOLs (when combined<strong>with</strong> the common glare countermeasuresdescribed above) would provide toMedicare beneficiaries while driving attimes of low angle sun. For example, theGray study does not assess the functionof blue-light-filtering IOLs underneathpolarized sunglasses that alreadytypically absorb a broad spectrum oflight including blue light and alsoreduce glare through the polarizedproperty of the lenses in the sunglasses.We believe that it would be importantto account for these common daytimeglare countermeasures that are inwidespread use when assessing the realworldbenefit of blue-light-filtering IOLsfor problems associated <strong>with</strong> low anglesun while driving.<strong>Comment</strong>: One commenter stated thatGray’s decision to limit his experimentsto daytime conditions is a criticalproblem, because nighttime conditionsare the greatest challenge to Medicarebeneficiaries, causing many olderdrivers to self-restrict their driving toavoid driving at night.Response: The commenter raises theissue of daytime versus nighttimedriving, which we believe is animportant issue as it relates to thepurported clinical benefit of blueblocking IOLs to Medicare beneficiaries.Specifically, the issue is whetherimproved driving performance duringlow angle sun conditions is a clinicaloutcome that would satisfy 42 CFR416.195(a)(4), which states that theremust be evidence that demonstrates thatuse of the IOL results in measurable,clinically meaningful, improvedoutcomes in comparison <strong>with</strong> use ofcurrently available IOLs. The statutoryprovision that is the basis of thisregulation specifies the followingoutcomes: (1) Reduced risk ofintraoperative or postoperativecomplication or trauma; (2) acceleratedpostoperative recovery; (3) reducedinduced astigmatism; (4) improvedpostoperative visual acuity; (5) morestable postoperative vision; or (6) othercomparable clinical advantages. Thequestion is whether improved drivingperformance during low angle sunconditions is a ‘‘comparable clinicaladvantage’’ and, therefore, an outcomethat would satisfy the statutory andregulatory requirements.The most analogous clinical outcomeassociated <strong>with</strong> an expired NTIOL classis the improved night driving associated<strong>with</strong> the expired reduced sphericalaberration NTIOL class. However, there

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74437jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2are significant differences betweendaytime driving <strong>with</strong> glare from lowangle sun and nighttime driving <strong>with</strong>glare from headlights. The nighttimedriving benefit of reduced sphericalaberration IOLs was a clinical benefit toMedicare beneficiaries because (otherthan abstaining from driving at night)there is very little that drivers can do atnighttime to mitigate the effect of glarefrom headlights. Therefore, even amodest night driving benefit from areduced spherical aberration IOL canhave an overall significant impact onMedicare beneficiaries’ night drivingbecause of the lack of othercountermeasures that can assist <strong>with</strong>night driving. However, <strong>with</strong> daytimedriving during low angle sun, an IOLthat possibly mitigates the effects ofglare under these conditions appearsless significant given all of the otherglare countermeasures available to thedaytime driver.Furthermore, the most effective meansof mitigating the effects of glare isavoidance of the glare source. Duringnighttime, this is a significantinconvenience because to do so meansnot driving at night. However, for glarefrom the sun, as mentioned above, thereare many countermeasures for glarecaused by low-angle sun, which is onlya problem for certain drivers (thosedriving east in the morning and west inthe evening) during a relatively shortperiod of time each day. For thesedrivers, avoidance can be a practicalalternative to driving into the brightsun. As mentioned above, the VisionCouncil of America recommends thatdrivers take a shady route if available.However, even if an alternate non-sunnyroute is not available, Medicarebeneficiaries who are particularlybothered (despite using all of thedaytime glare countermeasures such aspolarized sunglasses, the car’s sun visor,among others) by glare from low-anglesun could simply wait a short period oftime before driving while the angle ofthe sun changes so that the sun is in aless glare-inducing position relative tothe earth. Unlike nightfall that lasts forhours each day and, therefore, isinconvenient to avoid, waiting a shortperiod of time for the sun to move a bithigher in the sky would be a relativelyminor inconvenience for those Medicarebeneficiaries who are particularlysensitive to glare from low angle sun.While this may not be true for thelarger working-age population who maybe locked into a relatively rigidcommuting schedule and, therefore,may find it difficult due to jobobligations to shift their commutingschedules even slightly, theoverwhelming majority of Medicarebeneficiaries tend to be retirees whogenerally do not face such rigidtransportation schedule restrictions. Intheir 2007 study, Gray and Reganacknowledge this point as follows: ‘‘Ourpresent study is restricted to disabilityglare produced by low sun asexperienced by very many drivers ontheir way to work or returning fromwork’’ (emphasis added). Furthermore,waiting to drive until the low-angle sunhas moved slightly in the morning couldhave a collateral benefit if doing soallowed the driver to avoid rush hourtraffic. Driving in lower density trafficwould likely lower the probability of atraffic accident thereby promotingdriving safety, which seems to be onegoal of this NTIOL application and otherrecent developments in IOL technology.Therefore, given the significantdifferences between nighttime drivingand daytime driving, we do not believethat improved driving performancelimited only to daytime underconditions of glare from low angle sunin this context is a ‘‘comparable clinicaladvantage’’ when compared to thoseoutcomes listed above and in the statuteand the outcomes associated <strong>with</strong> thethree expired NTIOL classes, includingimproved night driving underconditions of glare from headlights. Forthis reason (and others discussedelsewhere in this preamble), the requestdoes not satisfy 42 CFR 416.195(a)(4)because the purported outcome is not acomparable clinical advantage forMedicare beneficiaries.<strong>Comment</strong>: Some commentersmentioned certain detrimental effects ofblue-light-filtering IOLs, such as bluelight-filteringIOLs negatively affecting:(1) Certain aspects of photoreceptorfunction; (2) aspects of night vision; (3)sleep and mood; and (4) visual functiondue to glistenings. Other commentersstated that blue-light-filtering IOLs havenone of these detrimental effects.Response: We are aware that there hasbeen, and continues to be, a vigorousdebate in the literature regarding someof these issues. We do not have enoughinformation to evaluate these issues,which we consider important butsomewhat collateral to the issues underreview for this NTIOL application. Thedecision on the blue-light-filteringNTIOL request is not based on and doesnot take into account these particularcomments except to acknowledge themand the arguments and data supportingboth sides of these issues. Also, webelieve that FDA is best situated toaddress any problems from glistenings.In summary, we have reviewed theapplication and evidence submitted bythe requestor and the public commentsreceived. We conclude that, based onVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00317 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2the totality of the available informationand our analysis, the evidence isinsufficient to conclude that the bluelight-filteringcharacteristic of theAcrysof blue-light-filtering IOLs hasestablished clinical relevance incomparison to currently available IOLs.We also conclude that the evidence doesnot demonstrate that the use of theAcrysof blue-light-filtering IOLs resultsin measurable, clinically meaningful,improved outcomes in comparison <strong>with</strong>use of currently available IOLs.Therefore, Alcon’s request for NTIOLstatus for its Acrysof blue-light-filteringIOLs is denied.b. Requestor/Manufacturer: Bausch &Lomb, Inc. (B&L)Lens Model Numbers: Xact FoldableHydrophobic Acrylic Ultraviolet Light-Absorbing Posterior ChamberIntraocular Lenses, Models X–60 andX–70 (Xact IOLs).Summary of the Request: B&Lsubmitted a request for CMS todetermine that its Xact IOLs meet thecriteria for recognition as NTIOLs and toconcurrently establish a new class ofNTIOLs for ‘‘glistening-free’’ IOLs.Glistenings are fluid-filledmicrovacuoles that can form <strong>with</strong>in anIOL optic when the IOL is in an aqueousenvironment. According to B&L,‘‘glistenings have been associated <strong>with</strong>decreased contrast sensitivity, increasedglare, decreased visual acuity, andimpaired fundus visualization.’’ B&Lfurther states that ‘‘in some cases, thishas led to IOL explantation andexchange, which carries significant risksthat increase the longer the IOL isimplanted.’’ As part of its request, B&Lsubmitted descriptive information aboutthe candidate IOLs as outlined in theguidance document that is available onthe CMS Web site for the establishmentof a new class of NTIOLs, as well asinformation regarding approval of thecandidate IOL by the FDA. Thisinformation included draft FDAapprovedlabeling for the Xact IOLs.In its CY 2012 request, B&L assertsthat because the Xact IOLs areglistening-free, they eliminate thedecreased contrast sensitivity, increasedglare, decreased visual acuity, andimpaired fundus visualizationassociated <strong>with</strong> glistenings, and maylikewise decrease the need forexplantations associated <strong>with</strong> thoseconditions. B&L also concludes that useof a glistening-free IOL results inmeasurable, clinically meaningful,improved outcomes in comparison <strong>with</strong>currently available IOLs. B&L also statesthat the glistening-free characteristic isnot described by a previously-approvedNTIOL class.

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274438 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and RegulationsAs <strong>with</strong> the other CY 2012 NTIOLapplications discussed in the CY 2012OPPS/ASC proposed rule, we base ourdetermination of the B&L application onconsideration of the three majorevaluation criteria that are discussedabove. We reviewed B&L’s request torecognize its Xact IOLs as NTIOLs andconcurrently establish a new class ofNTIOLs, and in the proposed rule wesolicited public comment on thesecandidate IOLs <strong>with</strong> respect to theestablished NTIOL criteria as discussedabove.First, for an IOL to be recognized asan NTIOL, we require that the IOL musthave been approved by the FDA andclaims of specific clinical benefits and/or lens characteristics <strong>with</strong> establishedclinical relevance in comparison <strong>with</strong>currently available IOLs must have beenapproved by the FDA for use in labelingand advertising. The submitted FDAapprovedlabeling for the Xact IOLsstates the following:‘‘In the IDE [investigational deviceexemption] clinical trial, ‘glistenings’were observed in some cases.Glistenings, known to sometimes occurin some other hydrophobic acrylic IOLs,are microscopic vacuoles <strong>with</strong>in theoptic of the IOL that are visible throughthe slit lamp as multiple small refractilespecks. Analysis of the clinical dataconfirmed no effect of glistenings onvisual outcomes’’ [emphasis added].‘‘Testing established that glisteningswere eliminated by a change in the IOLhydration solution from 10.0% saline to0.9% saline. This was confirmed in anadditional clinical trial conductedoutside of the United States. In thisstudy, 172 eyes of 142 patients wereexamined at least once between 1 and6 months, and 123 eyes of 101 patientswere examined at least once between 6months and 2 years. No glistenings wereobserved at any time.’’The FDA-approved labeling for theXact IOLs does not otherwise referencespecific clinical benefits of theglistening-free property. In fact, theabove-quoted language on the IDE studyfrom the FDA-approved labeling statesthat an ‘‘[a]nalysis of the clinical dataconfirmed no effect of glistenings onvisual outcomes.’’ In the proposed rule(76 FR 42303 through 42309), we statedthat we were interested in publiccomments on the clinical relevance ofglistenings in IOLs, and the incidence ofglistenings severe enough to causemeasurable visual symptoms in recentlypseudophakic Medicare beneficiaries. Inaddition, we were interested in publiccomments regarding the assertion byB&L that the glistening-free propertyassociated <strong>with</strong> the Xact IOLs wouldeliminate the decreased contrastsensitivity, increased glare, decreasedvisual acuity, and impaired fundusvisualization associated <strong>with</strong>glistenings, and may likewise decreasethe need for explantations associated<strong>with</strong> those conditions.Second, we also require that thecandidate IOL not be described by anactive or expired NTIOL class; that is, itdoes not share the predominant, classdefiningcharacteristic associated <strong>with</strong>improved clinical outcomes <strong>with</strong>designated members of an active orexpired NTIOL class. We refer readers tothe discussion above for moreinformation on the three expired NTIOLclasses. The proposed class-definingcharacteristic and associated clinicalbenefits of the Xact IOLs, specificallythe glistening-free property, cannot besimilar to the class-definingcharacteristics and associated benefits ofthe three expired NTIOL classes. In theproposed rule (76 FR 42303 through42309), we welcomed public commentsthat address whether the proposedclass-defining characteristic andassociated clinical benefits of thecandidate B&L IOLs are described by theexpired NTIOL classes.Third, our NTIOL evaluation criteriaalso require that an applicant submitevidence demonstrating that use of theIOL results in measurable, clinicallymeaningful, improved outcomes incomparison to currently available IOLs.As discussed above, we remain flexible<strong>with</strong> respect to our view of ‘‘currentlyavailable lenses’’ for purposes ofreviewing NTIOL requests, in order toallow for consideration of technologicaladvances in lenses over time. We alsobelieve that ‘‘currently available lenses’’for purposes of reviewing NTIOLrequests should depend upon the classdefiningcharacteristic and theassociated purported improved clinicaloutcome of the candidate NTIOL class.For purposes of reviewing B&L’s requestto establish a new NTIOL class for CY2012, we believe that the full spectrumof currently available IOL materialsshould be represented in the comparatorIOLs, but that the particular design ofthe optic (for example, aspheric versusspherical) is less critical to evaluatingthe benefits of glistening-free IOLs asglistenings are related more to the IOLoptic material than to the optical surfacecharacteristics of the IOL. In theproposed rule (76 FR 42303 through42309), we sought public comment onour view of ‘‘currently available lenses’’for the purposes of evaluating B&L’scandidate IOLs against currentlyavailable IOLs.We reviewed the evidence submitted<strong>with</strong> B&L’s CY 2012 request. B&Lsubmitted a variety of articles includingVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00318 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2studies and case reports focused onIOLs <strong>with</strong> glistenings. It is apparentfrom these articles that glistenings are areal phenomenon and that glisteningsare primarily associated <strong>with</strong> acrylichydrophobic IOLs, but they can alsooccur to some degree in IOLs of othermaterial types. However, there areseveral significant questions <strong>with</strong>respect to glistenings, and we solicitedpublic comment on these questions asfollows:• Is there a particular IOL materialtype that is more likely to result insymptomatic glistenings relative toother material types?• What is the clinical significance(from the patient’s perspective) ofglistenings? More specifically, whatevidence is available to demonstratethat glistenings cause any of thefollowing:Æ Decreased contrast sensitivity;Æ Increased glare disability;Æ Decreased visual acuity;Æ Impaired fundus visualization;Æ Symptoms resulting in IOLexplantations.• What is the incidence of glisteningsin IOLs currently available in the UnitedStates?• If a certain level of severity ofglistenings is required before they causesymptoms, what is the incidence ofglistenings of this severity level in IOLscurrently available in the United States?<strong>Comment</strong>: The requestor asserted thatthe FDA-approved labeling for the XactIOLs states that these IOLs areglistening-free and that such a statementqualifies as a ‘‘lens characteristic’’ thatsatisfies 42 CFR 416.195(a)(2), and thatglistening-free IOLs are not described byan expired NTIOL class. Onecommenter remarked that the termglistening-free is imprecise, andwonders whether it means the completeabsence of any glistenings whatsoever,regardless of severity, and whethersubclinical glistenings could be presentto some degree in a glistening-free IOL.Another commenter argued that becausethe Xact IOL label does not identify anyapproved claim of clinical benefit or anylens characteristic <strong>with</strong> establishedclinical relevance, it does not satisfy therequirements of 42 CFR 416.195(a)(2).Response: We agree <strong>with</strong> therequestor. As stated above, 42 CFR416.195(a)(2) can be satisfied by a lenscharacteristic listed in the FDAapprovedlabeling <strong>with</strong> the evidence ofestablished clinical relevance incomparison <strong>with</strong> currently availableIOLs provided outside of the FDAapprovedlabeling, such as in peerreviewedjournals. The Xact IOL FDAapprovedlabeling states that for patientfollow-up up to 2 years, ‘‘[n]o

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74439jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2glistenings were observed at any time.’’We accept that statement to mean thatthe Xact IOLs are glistening-free, at leastfor the time period of the studyreferenced in the FDA-approvedlabeling. In response to the commenterwho remarked that the term glisteningfreeis imprecise, and asked whether itmeans the complete absence of anyglistenings whatsoever, regardless ofseverity, and whether subclinicalglistenings could be present to somedegree in a glistening-free IOL, webelieve that, although this is animportant point, it will not be discussedfurther because it is rendered moot bythe discussion below. We also agree<strong>with</strong> the requester and othercommenters that the proposedglistening-free Xact IOLs are notdescribed by an expired NTIOL class.<strong>Comment</strong>: The requestor reiterated itsbelief that glistenings causecompromised visual performance inpatients, and that ‘‘[t]he growingconcern regarding glistenings isevidenced by the high level of attentionthat has been paid to them in themedical literature. A 2010 review articlecited over 70 studies related toglistenings, most published after 2000, astaggering figure that itself demonstratesthat glistenings are widely viewed byclinicians as problematic.’’ Therefore,according to the requestor, a glisteningfreeIOL offers the clinical benefit ofavoiding visual problems associated<strong>with</strong> glistenings. The requestor offersthe following information as specificevidence that glistenings are clinicallysignificant:• A study by Gunenc et al. thatshowed a statistically significantdifference in contrast sensitivity at highspatial frequency between eyes <strong>with</strong> and<strong>with</strong>out glistenings;• A study by Christiansen et al. thatshowed decreased visual acuity <strong>with</strong> aglare source versus <strong>with</strong>out a glaresource in patients <strong>with</strong> glistenings anddecreased visual acuity in patients <strong>with</strong>severe glistenings versus patients <strong>with</strong>mild glistenings;• A case study by Werner et al. inwhich an IOL <strong>with</strong> glistenings wasexplanted due to impaired fundusvisualization;• There were 24 reports between 1997and 2011 of IOL explantation due toglistenings from the FDA medicaldevice adverse event database.Other commenters asserted that thecurrently available peer-reviewedliterature does not yield any clinicalstudies supporting a clinical benefitassociated <strong>with</strong> the ‘‘glistening-free’’property of the Xact IOLs.Response: We agree <strong>with</strong> thecommenters who conclude that theclinical significance of glistenings is notestablished in the ophthalmic literatureand, therefore, there is no provenclinical benefit of glistening-free IOLs.The requestor is correct that a high levelof attention has been paid to glisteningsin the ophthalmic literature. However,the majority of the literature onglistenings is either inconclusive <strong>with</strong>respect to the clinical significance ofglistenings or shows no effect on visualfunction from the glistenings.The limited evidence offered by therequestor is not dispositive. Therequestor is correct that the 2001Gunenc et al. study showed astatistically significant difference incontrast sensitivity at high spatialfrequency between eyes <strong>with</strong> and<strong>with</strong>out glistenings. However, that studyshowed no difference in visual acuityand contrast sensitivity at low ormedium spatial frequencies betweeneyes <strong>with</strong> and <strong>with</strong>out glistenings.Furthermore, the overall conclusion ofthe Gunenc et al. study is as follows:‘‘Although glistenings and foldingmarks were observed after theimplantation of Acrysof IOLs, they didnot significantly affect visual function’’(emphasis added).Similarly, the conclusion of the 2001Christiansen et al. study was as follows:‘‘Glistenings occurred frequently inAcrySof IOLs, <strong>with</strong> most cases mild. Alarger study of this lens is needed todetermine whether severe presentationsaffect visual function and to understandhow glistenings change over time.’’ Asnoted by some commenters, furtherstudies have been performed on theAcrySof IOLs by Colin, Monestam andothers who did not find that glisteningsaffected visual function. The 2008Werner et al. paper mentioned by therequestor is a single case report of anexplanted IOL due to glistenings.Regarding this patient, Werner statedthat ‘‘[a]lthough it was difficult toascertain the exact effect on the patient’svisual function, the pattern of glisteningformation was very unusual.’’ Theinvestigator’s characterization of theglistening pattern in this case makes thiscase seem more anomalous than typical.More importantly, considering that theWerner et al. case report is relativelyrecent, the authors state that ‘‘[t]here isstill controversy about whetherglistenings affect the visual function ofthe patient and whether they progressover time[,]’’ and they cite seven articlesin support of this statement.The lack of a consensus in theliterature regarding the clinicalsignificance of glistenings is significantfor the purposes of this NTIOLapplication because 42 CFR416.195(a)(2) requires that the lensVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00319 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2characteristic have established clinicalrelevance, not merely theoreticalclinical relevance. If glistenings are notproven through proper scientific studiesto affect visual function, the clinicalrelevance of the glistening-free lenscharacteristic is not established.Regarding this point, the requestorstated in its comment letter that ‘‘[t]heeffects of glistenings on a patient’svision are not easily captured usingexisting tests.’’ Assuming that thisstatement is true, it presents an issue forthis application, because 42 CFR416.195(a)(4) requires evidence thatdemonstrates that use of the IOL resultsin measurable, clinically meaningful,improved outcomes in comparison <strong>with</strong>use of currently available IOLs(emphasis added). If clinical visualfunction testing cannot measure theeffect of glistenings, then it isimpossible to determine the extent towhich glistenings affects patients’vision. The fourth piece of evidenceoffered by the requestor regarding theclinical significance of glistenings isthat there were 24 reports between 1997and 2011 of IOL explantation due toglistenings from the FDA medicaldevice adverse event database.Assuming that these explantations canbe accurately attributed to glistenings,24 cases, among the tens of millions ofcataract surgeries performed in theUnited States since 1997, is too small toestablish clinical relevance. In essence,the requestor corrected a perceivedproblem (glistenings) <strong>with</strong> the Xact IOLsby changing the IOL storage solutionthat eliminated the glistenings, althoughthe glistenings had no effect on visualfunction in patients <strong>with</strong> the Xact IOLs.In summary, because the applicanthas not demonstrated the establishedclinical relevance of the glistening-freecharacteristic of the Xact IOLs incomparison to currently available IOLs,these IOLs do not satisfy 42 CFR416.195(a)(2). And, because theevidence is insufficient to demonstratethat use of the Xact IOLs result inmeasurable, clinically meaningful,improved outcomes in comparison <strong>with</strong>use of currently available IOLs, they failto satisfy 42 CFR 416.195(a)(4).Therefore, the Xact IOL NTIOLapplication is denied.c. Requestor/Manufacturer: HoyaSurgical Optics, Inc. (Hoya)Lens Model Numbers: iSert IOLSystem, Model PY–60RSummary of the Request: Hoyasubmitted a request for CMS todetermine that its iSert IOL Systemsatisfies the criteria for recognition as anNTIOL and to concurrently establish anew class of NTIOLs for ‘‘aseptically

74440 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2integrated IOL and injector systems.’’The iSert IOL System is an IOLpreloaded in a plastic, sterile,disposable injection system. Accordingto Hoya, the iSert System provides alens injector <strong>with</strong> an integrated IOLinside it <strong>with</strong>in a single, sterile packagefor delivery to the operating field.According to Hoya, the iSert System hasthe following benefits, in that comparedto other IOLs it:• Eliminates the risk of complicationsassociated <strong>with</strong> improper processing ofreusable forceps or injectors used for allother foldable IOLs;• Accelerates postoperative recoverythrough decreased risk of ocular damagedue to complications associated <strong>with</strong>improper processing of reusable forcepsor injectors used for other foldable IOLs;• Provides a clinical advantagecompared to existing IOLs by allowingthe IOL to be placed in the eye <strong>with</strong>outcontacting external ocular tissues orreusable injection instruments; and• Improves overall safety of cataract/IOL surgery by reducing the number ofreusable instruments that must beproperly cleaned and sterilized betweencases.As part of its request, Hoya submitteddescriptive information about the iSertSystem as outlined in the guidancedocument described above that isavailable on the CMS Web site for theestablishment of a new class of NTIOLs,as well as information regardingapproval of the candidate IOL by theFDA. This information included theFDA-approved labeling, the FDA letterof approval, and the summary of safetyand effectiveness for the iSert System.As <strong>with</strong> the other CY 2012 NTIOLrequests, we based our determination ofthe Hoya request on consideration of thethree major criteria that are discussedabove. We reviewed Hoya’s request torecognize its iSert System as an NTIOLand concurrently establish a new classof NTIOLs. In the CY 2012 OPPS/ASCproposed rule, we solicited publiccomment on this candidate IOL <strong>with</strong>respect to the established NTIOLcriteria.First, for an IOL to be recognized asan NTIOL we require that the IOL musthave been approved by the FDA andclaims of specific clinical benefits and/or lens characteristics <strong>with</strong> establishedclinical relevance in comparison <strong>with</strong>currently available IOLs must have beenapproved by the FDA for use in labelingand advertising. The FDA-approvedlabeling for the iSert System states thefollowing under the heading ‘‘DEVICEDESCRIPTION’’:‘‘The Hoya iSert TM Model PY–60RIntraocular Lens (IOL) is an ultravioletabsorbing posterior chamber intraocularlens designed to be implanted posteriorto the iris where the lens will replacethe optical function of the naturalcrystalline lens. However,accommodation will not be replaced.PY–60R is loaded in a disposableinjector consists [sic] of Case, Tip, Body,Slider, Rod, Plunger, and Screw.’’The FDA-approved labeling for theiSert System states the following underthe heading INDICATIONS:‘‘The Hoya iSert TM Model PY–60RIntraocular Lens is indicated for primaryimplantation in the capsular bag of theeye for the visual correction of aphakiain adult patients in whom a cataractouslens has been removed.’’The FDA-approved labeling for theiSert System does not otherwisereference claims of specific clinicalbenefits and/or lens characteristics <strong>with</strong>established clinical relevance incomparison <strong>with</strong> currently availableIOLs. Section 416.195(a)(2) requires that‘‘[c]laims of specific clinical benefitsand/or lens characteristics <strong>with</strong>established clinical relevance incomparison <strong>with</strong> currently availableIOLs are approved by the FDA for usein labeling and advertising.’’ The FDAapprovedlabeling for the iSert Systemlacks any such claims. The onlystatement in the above-quoted languagefrom the FDA-approved labeling that isany different from the typical devicedescription and indications for astandard spherical monofocal IOL is thestatement that the ‘‘PY–60R is loaded ina disposable injector consists [sic] ofCase, Tip, Body, Slider, Rod, Plunger,and Screw.’’ However, this statementmerely describes the IOL as loaded in adisposable injector. It does not appear todescribe a benefit or characteristic of theIOL itself. Therefore, it would appearthat the Hoya iSert System PY–60R IOLwould not satisfy the requirements of 42CFR 416.195(a)(2). However, in theproposed rule, we solicited publiccomments on this matter and stated thatwe would give all comments fullconsideration regarding Hoya’scandidate IOL.<strong>Comment</strong>: With regard to whether theHoya iSert System PY–60R IOLdescribes a benefit or characteristic ofthe IOL itself such that it would satisfythe requirements of 42 CFR416.195(a)(2), two commenters statedthat the HOYA iSert System has neitheran approved claim of clinical benefitnor a characteristic <strong>with</strong> establishedclinical relevance attributable to theactual IOL that is a part of the HOYAiSert System, and therefore, the HOYAiSert System is not eligible for NTIOLstatus.Response: We agree <strong>with</strong> thesecommenters.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00320 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Because the IOL itself <strong>with</strong>in theHoya iSert System lacks an associatedclaim or IOL characteristic as requiredby 42 CFR 416.195(a)(2), the Hoya iSertSystem is not eligible for NTIOL status,and Hoya’s request for NTIOL status forthe Hoya iSert System is denied.d. Requestor/Manufacturer: Lenstec, Inc.(Lenstec)Lens Model Numbers: Softec HD PSSummary of the Request: Lenstecsubmitted a request for CMS todetermine that its Softec HD PS meetsthe criteria for recognition as an NTIOLand to concurrently establish a newclass of NTIOLs that result in a‘‘reduction of postoperative residualrefractive error.’’ According to Lenstec,the Softec HD PS IOL achieves a‘‘reduction of postoperative residualrefractive error’’ by its availability in0.25 diopter (D) increments <strong>with</strong> atolerance of ±0.11 D, while all othercurrent monofocal IOLs are available inonly 0.50 D increments <strong>with</strong> tolerancesallowed up to ±0.40 D. According toLenstec, patients implanted <strong>with</strong> theSoftec HD PS are much more likely tobe closer to the intended refractiveoutcome than those implanted <strong>with</strong>IOLs available only in 0.50 Dincrements. This greater refractiveaccuracy of the Softec HD PS is due tothe chosen IOL power likely beingcloser to the calculated (desired) IOLpower and because the tighter toleranceof the 0.25 D increment IOL results inthe actual power of the implanted IOLto be closer to the power that thesurgeon expects to implant into thepatient. Lenstec also asserts that becausethe 0.25 D increment IOL providesgreater IOL power accuracy, patientshave less postoperative residualrefractive error and hence reducedpostoperative blur. As part of itsrequest, Lenstec submitted descriptiveinformation about the candidate IOLs asoutlined in the guidance document thatis available on the CMS Web site for theestablishment of a new class of NTIOLs,as well as information regardingapproval of the candidate IOL by theFDA. This information included theFDA-approved labeling, FDA approvalletter, and summary of safety andeffectiveness for the Softec HD PS IOL.As <strong>with</strong> the other three CY 2012NTIOL applications discussed above,we based our determination of theLenstec application on consideration ofthe three major evaluation criteria thatare discussed above. We reviewedLenstec’s request to recognize its SoftecHD PS IOL as an NTIOL andconcurrently establish a new class ofNTIOLs. In the CY 2012 OPPS/ASCproposed rule, we solicited public

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74441jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2comment on this candidate IOL <strong>with</strong>respect to the established NTIOL criteriaas discussed above.First, for an IOL to be recognized asan NTIOL we require that the IOL musthave been approved by the FDA andclaims of specific clinical benefits and/or lens characteristics <strong>with</strong> establishedclinical relevance in comparison <strong>with</strong>currently available IOLs must have beenapproved by the FDA for use in labelingand advertising. The submitted FDAapprovedlabeling for the Softec HD PSIOL states under the heading DEVICEDESCRIPTION that ‘‘[t]he [LENSTECSoftec HD PS] IOL is offered in quarterdiopter increments from 15.0 to 25.0.’’The FDA-approved labeling for theSoftec HD PS IOL does not otherwisereference claims of specific clinicalbenefits and/or lens characteristics <strong>with</strong>established clinical relevance incomparison <strong>with</strong> currently availableIOLs. We were interested in publiccomments on whether an IOL beingoffered in quarter diopter incrementscan be considered a ‘‘lens characteristic<strong>with</strong> established clinical relevance incomparison <strong>with</strong> currently availableIOLs,’’ as required by 42 CFR416.195(a)(2), or whether IOLavailability in quarter diopterincrements is more appropriatelyconsidered not a lens characteristic perse, but instead just a manufacturerspecification. In the proposed rule (76FR 42303 through 42309), we alsosought public comments on the clinicalrelevance of an IOL being available inquarter diopter increments.Second, as required by 42 CFR416.195(a)(3), the candidate IOL mustnot be described by an active or expiredNTIOL class; that is, it does not sharethe predominant, class-definingcharacteristic associated <strong>with</strong> improvedclinical outcomes <strong>with</strong> designatedmembers of an active or expired NTIOLclass. Refer to the discussion above formore information on the three expiredNTIOL classes. Lenstec states thefollowing in its application:‘‘The Softec HD IOL, the parent to theSoftec HD PS, was first approved formarketing in the United States on April17, 2010 and on March 15, 2006 in the‘Outside the US’ (OUS) environment.This IOL is included in the just-closed‘Reduced Spherical Aberration’ NTIOLcategory. The Softec HD PS wasapproved for marketing by the FDA onFebruary 2, 2011. It is currently pendingapproval for OUS marketing. Both IOLsare single piece, hydrophilic acrylic,aspheric, monofocal IOLs. Thedifference between the two is that theSoftec HD has previously been availablein whole, 0.50 and 0.25 diopterincrements, based on dioptric power.The Softec HD PS is offered only in thedioptric range of 15.0 D to 25.0 D, in0.25 diopter increments (each of whichis manufactured to a tolerance of±0.11D).’’Based on this statement by Lenstec,the Softec HD PS is the same lens as theSoftec HD, but the Softec HD PS isavailable only in 0.25 D increments fora specific power range instead of beingavailable (as is the Softec HD) in 1.0,0.5, and 0.25 D increments. The SoftecHD was included in the expiredReduced Spherical Aberration NTIOLclass, and both of these IOLs share theasphericity characteristic that definesthe expired Reduced SphericalAberration NTIOL class. It appears thatthe predominant characteristic of theSoftec HD PS could be asphericity, as itaffects the optical characteristics of thelens. Although the availability of theSoftec HD PS in 0.25 D incrementsallows more IOL power choices for thesurgeon, it does not appear to affect thefunctionality of the IOL. In the proposedrule, we requested comments regardingwhat characteristic of the Softec HD PSis predominant, asphericity oravailability of the IOL in 0.25 Dincrements.Third, our NTIOL evaluation criteriaalso require that an applicant submitevidence demonstrating that use of theIOL results in measurable, clinicallymeaningful, improved outcomes incomparison to currently available IOLs.As discussed above, we remain flexible<strong>with</strong> respect to our view of ‘‘currentlyavailable lenses’’ for purposes ofreviewing NTIOL requests, in order toallow for consideration of technologicaladvances in lenses over time. We alsobelieve that ‘‘currently available lenses’’for purposes of reviewing NTIOLrequests should depend upon the classdefiningcharacteristic and theassociated purported improved clinicaloutcome of the candidate NTIOL class.For purposes of reviewing Lenstec’srequest to establish a new NTIOL classfor CY 2012, we believe that the fullspectrum of currently availablemonofocal IOLs should be representedin the comparator IOLs. Lenstec assertsthat what makes its candidate IOLsuperior to other currently availableIOLs is improved IOL power accuracy ascompared to IOLs available in 0.50 Dincrements, and because the Softec HDPS provides greater IOL power accuracypatients implanted <strong>with</strong> it have lesspostoperative residual refractive errorand hence reduced post-operative blur.We reviewed the evidence submitted<strong>with</strong> Lenstec’s CY 2012 request. Lenstecsubmitted information and reviewed theliterature on IOL optics related to theSoftec HD PS. Lenstec relies primarilyVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00321 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2on one study that is the subject of anarticle that is currently in press andanother unpublished study to supportits hypothesis that the Softec HD PS IOLresults in less postoperative refractiveerror than other IOLs. The first studysubmitted by Lenstec was the study thatit conducted under an IDE for FDAapproval of the Softec HD PS IOL. Thisstudy is being published in the journal,Contact Lens and Anterior Eye (BrownDC, Gills JP 3rd, et al. Prospectivemulticenter trial assessing effectiveness,refractive predictability and safety of anew aberration free, bi-asphericintraocular lens. Cont Lens Anterior Eye.2011 May 24 (electronic publication inadvance of print release), and isavailable on the Internet at http://www.sciencedirect.com/science/article/pii/S1367048411000634. Refractiveaccuracy was not a planned outcomevariable in this study. There was nocontrol group in this study that wouldhave allowed the investigators to controlfor all of the variables that impact postcataractsurgery refractive outcome and/or isolate the effect of the availability ofthe Softec HD PS IOL in quarter diopterincrements. Lenstec compared thepostoperative refractive errors of thesestudy subjects to the results from anunrelated study performed outside ofthe United States (using IOLs that wereavailable only in 0.50 D increments) andconcluded based on this comparisonthat implantation of the Softec HD PSIOL, which is available in quarterdiopter increments, results in superiorrefractive outcomes as compared toother IOLs.The second study is a retrospectivestudy of cataract cases <strong>with</strong> asphericmonofocal IOL implantation between2009 and 2011. Of the 118 eligible eyes,67 were implanted <strong>with</strong> IOLs availablein 0.25 D increments and labeled <strong>with</strong>a manufacturing tolerance of ±0.11D(the labeled group) and 51 wereimplanted <strong>with</strong> IOLs available in 0.50 Dincrements <strong>with</strong>out a labeledmanufacturing tolerance (the unlabeledgroup). Postoperative outcomes wereassessed, and prediction error wascalculated and compared betweengroups. Mean error of prediction was¥0.03 (±0.35) D for the labeled groupand ¥0.05 (±0.46) D for the unlabeledgroup (p=0.64) post optimization. Meanabsolute error of prediction wasstatistically significantly smaller in thelabeled group (0.26±0.23 D) than theunlabeled group (0.37±0.28 D, p=0.04).It was observed that <strong>with</strong>in ±0.25 Dprediction error was achieved in 63percent of the patients in the labeledgroup compared to 43 percent in theunlabeled group (p=0.03), and for

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274442 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations<strong>with</strong>in ±0.50 D, 84 percent and 69percent (p=0.06), respectively. In theproposed rule (76 FR 42303 through42309), we requested comments fromthe public regarding the Lenstec NTIOLrequest and the evidence submitted byLenstec, and in particular we requestedpublic comment on the following:• What is the clinical significance(from the patient’s perspective) of asmall amount of residual sphericalrefractive error after cataract surgery?• What is the likelihood that aMedicare beneficiary receiving amonofocal IOL will require some formof postoperative refractive correction(that is, post-cataract surgery glasses),which is a Medicare benefit?• If the overwhelming majority ofMedicare beneficiaries receiving amonofocal IOL will require some formof postoperative refractive correction(that is, post-cataract surgery glasses),does that lessen the clinical significanceof reduced postoperative residualrefractive error?• Are the studies described aboveproperly designed to test Lenstec’shypothesis?• Do the studies described aboveadequately prove Lenstec’s hypothesis?<strong>Comment</strong>: Several commenters statedthat availability in 0.25 D increments<strong>with</strong> a tolerance of ± 0.11 D is a lenscharacteristic that satisfies criterion 1.One commenter argued that lens powerincrements are not a characteristic<strong>with</strong>in the meaning of the NTIOLregulations, and, even if they are, theyhave no established clinical relevance.Response: We agree <strong>with</strong> the majorityof the commenters that, for the purposesof this NTIOL application, availabilityin 0.25 D increments <strong>with</strong> a tolerance of±0.11 D for the HD PS IOL is a lenscharacteristic <strong>with</strong>in the meaning of theregulation. Whether the requestor hasestablished the clinical relevance of thischaracteristic is discussed furtherbelow.<strong>Comment</strong>: Several commentersbelieved that, for the purposes of thisNTIOL application, the predominantcharacteristic of the HD PS IOL isavailability in 0.25 D increments <strong>with</strong> atolerance of ± 0.11 D and not asphericityresulting in reduced sphericalaberration. One commenter stated thatbecause Lenstec has not presentedevidence to distinguish the contributionof the 0.25 D increments from thecontribution of the aspheric optic (anexpired NTIOL class) to the opticalperformance of the lens, the 0.25 Dincrements cannot be considered thepredominant characteristic and theLenstec application should bedisqualified from consideration for anew NTIOL category.Response: We agree <strong>with</strong> the majorityof commenters. As discussed above, webelieve that when the clinical outcomesassociated <strong>with</strong> different lenscharacteristics are related, thencomparative clinical data are required todemonstrate that one characteristic ispredominant over another. However, ifthe clinical outcomes associated <strong>with</strong>the different lens characteristics aresufficiently unrelated, then comparativeclinical data are not required todemonstrate the predominance of acharacteristic as it relates to the clinicaloutcome associated <strong>with</strong> the lenscharacteristic that is the subject ofNTIOL review. In the case of thiscandidate IOL, the purported clinicalbenefit is greater refractive precisionwhereas the clinical benefit of reducedspherical aberration is improved nightdriving. We believe that these outcomesare sufficiently unrelated such thatcomparative clinical data are notrequired to demonstrate thepredominance of the 0.25 D incrementsas it relates to greater refractiveprecision.<strong>Comment</strong>: Many commenterssupported NTIOL designation for theHD PS IOL. The commenters areprimarily ophthalmologists who relatedtheir anecdotal experience <strong>with</strong> the HDPS lens stating that it was their beliefthat their patients benefited from thisIOL. Many commenters also believedthat the studies described above aresufficient to demonstrate a clinicalbenefit for the HD PS IOL. Some of thesecommenters reported the results of caseseries from their practices that,according to them, support greaterrefractive precision of the HD PS IOLversus another lens. One commentersummarized data to support the positionthat the HD PS remains in a more stableposition in the eye postoperatively.Several commenters stated that whetheror not a patient must wear distancecorrection postoperatively has nobearing on whether greater refractiveprecision should be considered animproved outcome for patients.Response: We appreciate thesecomments and that severalophthalmologists believe that the HD PSbenefits their patients. However, NTIOLstatus requires evidence of an improvedclinical outcome versus currentlyavailable IOLs, and the underlyingstudies must be well-controlled suchthat the improved outcome can beappropriately attributed to the candidateIOL characteristic. We discuss clinicaloutcomes and the evidentiaryrequirements in greater detail below.<strong>Comment</strong>: One commenter stated thatthe results of the HD PS are notsignificantly different than those ofVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00322 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2other currently available IOLs. Thecommenter cited studies byAristodemou et al. and Norrby et al.using IOLs available in 0.5 D incrementsshowing results that are similar toBrown et al., one of the studiessubmitted by the requestor summarizedabove. The commenter also stated thatthe results of Brown et al. are averageand that similar or better results can beobtained <strong>with</strong> lenses supplied in 0.5 Dincrements by manufacturers adheringto the ISO 11979–2 tolerances. Inaddition, the commenter remarked thatBrown et al. has several study designflaws and other deficiencies, includingrefractive predictability not being aplanned outcome of the study, nocomparator lens in the study resultingin bias, and inappropriate comparisonstudies. Also, this commenter statedthat the number of subjects required toshow a statistically significantdifference in refractive error for lensesprovided in 0.25 D steps versus 0.5 Dsteps would be many thousands for eachIOL type. The commenter also criticizedthe retrospective design of the secondstudy submitted by the requestor(summarized above), and stated that theresults are not significantly differentfrom those of published studies ofrefractive outcomes for IOLs available in0.5 D increments.Response: We agree <strong>with</strong> thiscommenter and believe that these pointsmerit further discussion. As cataractsurgery has improved in all aspects overthe past several decades, refractiveoutcomes have become even moreimportant as many of the other issuesthat historically have affected theultimate postoperative outcome, that is,how well the patient sees after surgery,have been solved. There is a certainintuitive appeal to the hypothesisproffered by the requestor that smallerdioptric increments and, therefore, agreater number of available individuallens powers requires less rounding orapproximation of the implant powerand therefore a postoperative refractivestate that is closer to the target.As intuitively appealing as thisconcept is, we believe that it should beevaluated in the context of the manyfactors that affect the ultimate refractivestate of the patient after cataract surgery.These include, but are not limited to,the anatomy and functioning of thepatient’s eye, the surgical technique,aspects of the IOL unrelated to thepower increment, preoperativerefractive error, systemic factors, A-scanmethod, IOL power calculation, andsurgeon specific factors, among others.All of these factors would have to beproperly controlled in a large,prospective randomized clinical trial in

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74443jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2order to try to prove the underlyinghypothesis. An appropriate control/comparator IOL is absolutely essential.The studies submitted by the requestorand the anecdotal reports submitted bythe commenters who use the HD PS IOLfall far short of this evidentiaryrequirement. In addition, greaterrefractive precision alone is not enough,as one would have to prove a superioroutcome of significance to the averageMedicare beneficiary, such as truespectacle independence for distancevision. Most patients would not notice(even if it were the case) that theirpostoperative refractive state was a bitcloser (that is, <strong>with</strong>in measurementerror) to their target refraction if theystill had to wear spectacles to achievefunctional distance vision.<strong>Comment</strong>: One commenter stated thatas a practical matter the variability inpostoperative refractive state due toother factors exceeds 0.25 D, and thatpatients will not benefit from this‘‘pseudo-accuracy.’’ The commentersuggested that the actual limitation inpostoperative refractive state currentlylies <strong>with</strong> the preoperative measurementtechniques, and that when the accuracyof these techniques improve, IOLs <strong>with</strong>0.25 D increments may be of benefit topatients.Response: We generally agree <strong>with</strong>this commenter, but we are not surewhether the HD PS IOL would providegreater actual refractive accuracy or, asthe commenter stated,‘‘pseudoaccuracy.’’ We also agree thatthe preoperative measurements arecritical for accuracy but suffer fromlimitations and are highly variable fromsurgeon to surgeon. That is why a large,prospective, randomized, controlledclinical trial is necessary, <strong>with</strong> carefulattention in the trial design to all of thefactors that influence refractiveoutcome.In summary, we have reviewed theapplication and evidence submitted bythe requestor and the commentsreceived. We conclude that because theevidence submitted is insufficient toconclude that the 0.25 D increment±0.11 D tolerance characteristic of theLenstec HD PS IOL has establishedclinical relevance in comparison tocurrently available IOLs, and becausethe evidence presented does notdemonstrate that the use of the HD PSIOL results in measurable, clinicallymeaningful, improved outcomes incomparison <strong>with</strong> use of currentlyavailable IOLs for Medicarebeneficiaries, Lentec’s request forNTIOL status for its HD PS IOL isdenied.<strong>Comment</strong>: One commenter suggestedcertain changes to the NTIOLregulations, including having FDA asthe only evaluator of clinical benefit forcandidate IOLs and establishing atimeframe for when a candidate IOL canbe considered new and therefore eligiblefor NTIOL payments.Response: We believe thesesuggestions may have some merit andwill consider exploring them in futurerulemaking.We would like to briefly address whatmay be a misunderstanding ormisconception among some of thecommenters regarding the purpose androle of the NTIOL payment adjustment.Several comment letters fromophthalmologists included a statementsimilar to the following: ‘‘I would liketo have lens X or a lens <strong>with</strong>characteristic X available to mypatients.’’ We want to make it clear thatthe FDA has approved all of the IOLsthat are the subject of the CY 2012NTIOL applications, and the NTIOLcandidate lenses are available on theU.S. market to ophthalmologists. Thoseophthalmologists along <strong>with</strong> ASCs canfreely choose to implant any of thisyear’s candidate IOLs, <strong>with</strong> payment forthe IOL bundled into the facilitypayment for the cataract <strong>with</strong> IOLimplantation surgery. From thecomments, it appears that at least threeof the four candidate IOLs have acurrent following amongophthalmologists. In fact, one of thisyear’s candidate IOLs is the current U.S.market leader. NTIOL status does notaffect U.S. market availability orMedicare coverage of an IOL. Instead,the NTIOL payment adjustment isreserved for new technology IOLs <strong>with</strong>sound evidence of measurable,clinically meaningful, improvedoutcomes in comparison <strong>with</strong> currentlyavailable IOLs, and these outcomesmust have a meaningful impact onMedicare beneficiaries.<strong>Final</strong>ly, we appreciate IOLmanufacturers’ interest in the NTIOLprogram, and encourage the submissionof future applications as new IOLtechnology is developed. However, westrongly encourage applicants to payclose attention to the NTIOL regulatoryrequirements, which are rigorous andare discussed extensively above in thisfinal rule <strong>with</strong> comment period and inprior OPPS/ASC rules. We emphasizethat an IOL characteristic or claim ofsuperiority and associated data that maybe useful for marketing purposes are notnecessarily sufficient for NTIOL status,which requires sound scientific proof ofmeasurable, clinically meaningful,improved outcomes in comparison <strong>with</strong>currently available IOLs for Medicarebeneficiaries.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00323 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR24. Payment AdjustmentThe current payment adjustment for a5-year period from the implementationdate of a new NTIOL class is $50 perlens. Since implementation of theprocess for adjustment of paymentamounts for NTIOLs in 1999, we havenot revised the payment adjustmentamount, and we did not propose torevise the payment adjustment amountfor CY 2012.We did not receive any publiccomments on the amount of thepayment adjustment, and we are notrevising the payment adjustmentamount for CY 2012.5. Announcement of CY 2012 Deadlinefor Submitting Requests for CMSReview of Appropriateness of ASCPayment for Insertion of an NTIOLFollowing Cataract SurgeryIn accordance <strong>with</strong> 42 CFR 416.185(a)of our regulations, CMS announces thatin order to be considered for paymenteffective January 1, 2013, requests forreview of applications for a new class ofnew technology IOLs must be receivedat CMS by 5 p.m. EST, on March 2,2012. Send requests to ASC/NTIOL,Division of Outpatient Care, MailstopC4–05–17, Centers for Medicare andMedicaid Services, 7500 SecurityBoulevard, Baltimore, MD 21244–1850.To be considered, requests for NTIOLreviews must include the informationrequested on the CMS Web site at:http://www.cms.gov/ASCPayment/downloads/NTIOLprocess.pdf.F. ASC Payment and <strong>Comment</strong>Indicators1. BackgroundIn addition to the payment indicatorsthat we introduced in the August 2,2007 final rule, we also created finalcomment indicators for the ASCpayment system in the CY 2008 OPPS/ASC final rule <strong>with</strong> comment period (72FR 66855). We created Addendum DD1to define ASC payment indicators thatwe use in Addenda AA and BB toprovide payment information regardingcovered surgical procedures andcovered ancillary services, respectively,under the revised ASC payment system.The ASC payment indicators inAddendum DD1 are intended to capturepolicy relevant characteristics of HCPCScodes that may receive packaged orseparate payment in ASCs, such aswhether they were on the ASC list ofcovered services prior to CY 2008;payment designation, such as deviceintensiveor office-based, and thecorresponding ASC paymentmethodology; and their classification asseparately payable ancillary services

74444 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2including radiology services,brachytherapy sources, OPPS passthroughdevices, corneal tissueacquisition services, drugs orbiologicals, or NTIOLs.We also created Addendum DD2 thatlists the ASC comment indicators. TheASC comment indicators used inAddenda AA and BB to the proposedrules and final rules <strong>with</strong> commentperiod serve to identify, for the revisedASC payment system, the status of aspecific HCPCS code and its paymentindicator <strong>with</strong> respect to the timeframewhen comments will be accepted. Thecomment indicator ‘‘NI’’ is used in theOPPS/ASC final rule <strong>with</strong> commentperiod to indicate new HCPCS codes forthe next calendar year for which theinterim payment indicator assigned issubject to comment. The commentindicator ‘‘NI’’ is also assigned toexisting codes <strong>with</strong> substantial revisionsto their descriptors such that weconsider them to be describing newservices, as discussed in the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod (74 FR 60622). In this CY 2012OPPS/ASC final rule <strong>with</strong> commentperiod, we respond to public commentsand finalize the ASC treatment of allcodes that are labeled <strong>with</strong> commentindicator ‘‘NI’’ in Addenda AA and BBto the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period. These addendacan be found in a file labeled ‘‘January2011 ASC Approved HCPCS Code andPayment Rates to Reflect the Medicareand Medicaid Extenders Act of 2010’’ inthe ASC Addenda Update section of theCMS Web site.The ‘‘CH’’ comment indicator wasused in Addenda AA and BB to the CY2012 OPPS/ASC proposed rule (whichwere available via the Internet on theCMS Web site) to indicate that thepayment indicator assignment haschanged for an active HCPCS code; anactive HCPCS code is newly recognizedas payable in ASCs; or an active HCPCScode is discontinued at the end of thecurrent calendar year. The ‘‘CH’’comment indicators that are publishedin the final rule <strong>with</strong> comment periodare provided to alert readers that achange has been made from onecalendar year to the next, but do notindicate that the change is subject tocomment. The full definitions of theproposed payment indicators andcomment indicators were provided inAddenda DD1 and DD2 to the CY 2012OPPS/ASC proposed rule (which wereavailable via the Internet on the CMSWeb site).2. ASC Payment and <strong>Comment</strong>IndicatorsThe revised ASC payment systemincluded a 4-year transition to paymentrates under the standard methodologyfor the procedures on the ASC list in CY2007. CY 2011 was the first year of fullpayment under the standardmethodology for the revised ASCpayment system. Payment indicators‘‘A2’’ (Surgical procedure on ASC list inCY 2007, payment based on OPPSrelative payment weight) and ‘‘H8’’(Device-intensive procedure on ASC listin CY 2007; paid at adjusted rate) weredeveloped to identify procedures thatwere included on the list of ASCcovered surgical procedures in CY 2007and were, therefore, subject totransitional payment prior to CY 2011.Because the 4-year transitionalpayment period has ended and it is nolonger necessary to identify deviceintensiveprocedures that are subject totransitional payments, in the CY 2012OPPS/ASC proposed rule (76 FR 42310),we proposed to delete the ASC paymentindicator ‘‘H8.’’ We proposed that alldevice-intensive procedures, for whichthe modified rate calculationmethodology will apply, be assignedpayment indicator ‘‘J8’’ in CY 2012 andlater. In addition, we proposed tomodify the definition for paymentindicator ‘‘J8’’ by removing ‘‘added toASC list in CY 2008 or later’’ as thisdistinction is no longer necessary.Although payment indicator ‘‘A2’’ isno longer required to identify surgicalprocedures subject to transitionalpayment, we proposed to retainpayment indicator ‘‘A2’’ because it isused to identify procedures that areexempted from application of the officebaseddesignation.As detailed in section XIV.K. of theproposed rule (76 FR 42336 through42349), we proposed to establish anASC Quality Reporting Program <strong>with</strong>the collection of seven claims-basedquality measures beginning in CY 2012.We proposed to require ASCs to reporton ASC claims a quality data code(QDC) to be used for reporting qualitydata. We proposed that an ASC wouldneed to add a QDC to any claiminvolving a proposed claims-basedquality measure. CMS is in the processof developing QDCs for each adoptedclaims-based quality measure. The QDCwill be a CPT Category II code or aHCPCS Level II G-code if an appropriateCPT code is not available. Moreinformation on the ASC QualityReporting Program is provided insection XIV.K. of this CY 2012 OPPS/ASC final rule <strong>with</strong> comment period.Additionally, CMS proposed to create aVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00324 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2new ASC payment indicator ‘‘M5’’(Quality measurement code used forreporting purposes only; no paymentmade) for assignment to the QDCs toclarify that no payment is associated<strong>with</strong> the QDC for that claim. Weproposed that this payment indicatorwould be effective January 1, 2012.We did not propose any changes tothe definitions of the ASC commentindicators for CY 2012. We refer readersto Addenda DD1 and DD2 to the CY2012 OPPS/ASC proposed rule (whichwere referenced in section XVII. of theproposed rule and available via theInternet on the CMS Web site) for thecomplete list of ASC payment andcomment indicators proposed for the CY2012 update.We did not receive any publiccomments on the ASC payment andcomment indicators. Therefore, we arefinalizing our proposed CY 2012payment and comment indicators,<strong>with</strong>out modification, in Addenda DD1and DD2 to this final rule <strong>with</strong> commentperiod (which are available via theInternet on the CMS Web site).G. ASC Policy and PaymentRecommendationsMedPAC was established undersection 1805 of the Act to adviseCongress on issues affecting theMedicare program. Subparagraphs (C)and (D) of section 1805(b)(1) of the Actrequire MedPAC to submit reports toCongress not later than March 15 andJune 15 of each year that present itsMedicare payment policy reviews andrecommendations and its examinationof issues affecting the Medicareprogram, respectively. The March 2011MedPAC ‘‘Report to the Congress:Medicare Payment Policy’’ included thefollowing recommendation relatingspecifically to the ASC payment systemfor CY 2012:Recommendation 5: The Congressshould implement a 0.5 percent increasein payment rates for ambulatory surgicalcenter services in calendar year 2012concurrent <strong>with</strong> requiring ambulatorysurgical centers to submit cost andquality data.CMS Response: In the August 2, 2007final rule (72 FR 42518 through 42519),we adopted a policy to update the ASCconversion factor for consistency <strong>with</strong>section 1833(i)(2)(C) of the Act, whichrequires that, if the Secretary has notupdated the ASC payment amounts in acalendar year, the payment amountsshall be increased by the percentageincrease in the Consumer Price Indexfor All Urban Consumers (CPI–U) asestimated by the Secretary for the 12-month period ending <strong>with</strong> the midpointof the year involved. The statute set the

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74445jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2update at zero for CY 2008 and CY 2009.We indicated that we planned toimplement the annual updates throughan adjustment to the conversion factorunder the ASC payment systembeginning in CY 2010 when thestatutory requirement for a zero updateno longer applied. Further, we notedthat that we would update theconversion factor for the CY 2010 ASCpayment system by the percentageincrease in the CPI–U (codified at§ 416.171(a)(2)).As we indicated in the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod (74 FR 60622), we did notrequire ASCs to submit cost data to theSecretary for CY 2010. We explainedthat the 2006 GAO report, ‘‘Medicare:Payment for Ambulatory SurgicalCenters Should Be Based on theHospital Outpatient Payment System’’(GAO–07–86), concluded that the APCgroups in the OPPS reflect the relativecosts of surgical procedures performedin ASCs in the same way they reflect therelative costs of the same procedureswhen they are performed in HOPDs.Consistent <strong>with</strong> the GAO findings, CMSis using the OPPS as the basis for theASC payment system, which providesfor an annual revision of the ASCpayment rates under the budget neutralASC payment system. In addition, wenoted that, under the methodology ofthe revised ASC payment system, we donot utilize ASC cost information to setand revise the payment rates for ASCs,but instead rely on the relativity ofhospital outpatient costs developed forthe OPPS, consistent <strong>with</strong> therecommendation of the GAO.Furthermore, we explained that we havenever required ASCs to routinely submitcost data and expressed our concernthat requiring this could beadministratively burdensome for ASCs.In 2009, MedPAC made a similarrecommendation to that made inRecommendation 5 above. In light ofthat MedPAC recommendation, in theCY 2010 OPPS/ASC proposed rule (74FR 35391), we solicited public commenton the feasibility of ASCs submittingcost information to CMS, includingwhether costs should be collected froma sample or the universe of ASCs, theadministrative burden associated <strong>with</strong>such an activity, the form that such asubmission could take consideringexisting Medicare requirements forother types of facilities and the scope ofASC services, the expected accuracy ofsuch cost information, and any otherissues or concerns of interest to thepublic on this topic.In the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period (74 FR 60623), wesummarized and responded to thesecomments. As noted in that final rule<strong>with</strong> comment period, commentersexpressed varied opinions regarding thefeasibility of requiring ASCs to submitcost data to the Secretary. Somecommenters believed that requiringASCs to submit such data would not bean insurmountable obstacle and pointedout that other small facilities submitcost reports to CMS. They argued thatASC cost reports are necessary to assessthe adequacy of Medicare payments andevaluate the ASC update. Othercommenters, however, opposed therequirement that ASCs submit cost datato CMS because they believed such arequirement would be unnecessary andadministratively burdensome.<strong>Comment</strong>ers generally supported arequirement that ASCs report qualitydata. We refer readers to the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod for a full discussion of thecomments we received on the feasibilityof requiring ASCs to report cost andquality data (74 FR 60623). Consistent<strong>with</strong> our CY 2010 policy, we proposednot to require ASCs to submit cost datato the Secretary for CY 2011 (75 FR46356 through 463557). We stated thatwe continue to believe that ourestablished methodology results inappropriate payment rates for ASCs. ForCY 2012, consistent <strong>with</strong> this policy andfor the same reasons, we did notpropose to require ASCs to submit costdata (76 FR 42311). However, we didpropose to require ASCs to submitquality data beginning in CY 2012.Section 109(b) of the MIEA–TRHCA(Pub. L. 109–432) gives the Secretary theauthority to implement ASC qualitymeasure reporting and to reduce thepayment update for ASCs that fail toreport those required measures. In theCY 2012 OPPS/ASC proposed rule, weproposed to require ASCs to reportseven quality measures in CY 2012.Details associated <strong>with</strong> ASC qualityreporting proposed for CY 2012 werediscussed in section XIV.K. of the CY2012 OPPS/ASC proposed rule (76 FR42336 through 42349).<strong>Final</strong>ly, in the CY 2012 OPPS/ASCproposed rule (76 FR 42311), we did notpropose to implement MedPAC’srecommended CY 2012 ASC update of0.5 percent. The annual update to theASC payment system is the CPI–U.Section 3401(k) of the Affordable CareAct requires that the annual ASCpayment update be reduced by aproductivity adjustment. As discussedin section XIII.H.2.b. of the proposedrule (76 FR 42312 through 42313), theSecretary estimated that the CPI–U is2.3 percent and the MFP adjustment is1.4 percent. Therefore, we proposed a0.9 percent update for CY 2012.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00325 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2<strong>Comment</strong>: <strong>Comment</strong>ers urged CMS torequire ASCs to routinely report costdata to allow for future validation of therelative appropriateness of ASCpayment weights and rates. MedPACcommented that ASCs should berequired to submit cost and quality data,arguing that ASC cost data are neededto examine whether an existing inputprice index is an appropriate proxy forthe costs of ASCs or whether an ASCspecificmarket basket should bedeveloped. MedPAC pointed out thatbusinesses such as ASCs typically keeprecords of their costs for filing taxes andother purposes, and other smallproviders, such as home health agenciesand hospices, submit cost data to CMS.MedPAC stated that CMS should createa streamlined process for ASCs tosubmit cost data in order to minimizethe burden on ASCs and CMS.Other commenters, however,supported CMS’ proposal not to requireASCs to routinely submit cost data, aprocess that the commenterscharacterized as administrativelyburdensome. The commenters statedthat the quality of such data, if required,would be questionable because of thevarying types of services and coststructures among ASCs and would notbe suitable for ratesetting.Response: We did not propose torequire ASCs to submit cost data to theSecretary for CY 2012 because, as notedpreviously in this section and in the CY2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 72058), wecontinue to believe that our establishedmethodology results in appropriatepayment rates for ASCs. Therefore, weare finalizing our proposal not to requirecost reporting in this final rule <strong>with</strong>comment period. We will keep thecommenters’ perspectives aboutcollecting cost information from ASCsin mind as we further consider theadequacy of the Medicare ASC paymentrates. We also appreciate thecommenters’ perspectives regardingASC quality reporting and refer readersto section XIV.K. of this final rule <strong>with</strong>comment period for more detaileddiscussion of ASC quality datareporting.H. Calculation of the ASC ConversionFactor and the ASC Payment Rates1. BackgroundIn the August 2, 2007 final rule (72 FR42493), we established our policy tobase ASC relative payment weights andpayment rates under the revised ASCpayment system on APC groups andrelative payment weights. Consistent<strong>with</strong> that policy and the requirement atsection 1833(i)(2)(D)(ii) of the Act that

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274446 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsthe revised payment system beimplemented so that it would be budgetneutral, the initial ASC conversionfactor (CY 2008) was calculated so thatestimated total Medicare paymentsunder the revised ASC payment systemin the first year would be budget neutralto estimated total Medicare paymentsunder the prior (CY 2007) ASC paymentsystem (the ASC conversion factor ismultiplied by the relative paymentweights calculated for many ASCservices in order to establish paymentrates). That is, application of the ASCconversion factor was designed to resultin aggregate Medicare expendituresunder the revised ASC payment systemin CY 2008 equal to aggregate Medicareexpenditures that would have occurredin CY 2008 in the absence of the revisedsystem, taking into consideration thecap on ASC payments in CY 2007 asrequired under section 1833(i)(2)(E) ofthe Act (72 FR 42522).We note that we consider the term‘‘expenditures’’ in the context of thebudget neutrality requirement undersection 1833(i)(2)(D)(ii) of the Act tomean expenditures from the MedicarePart B Trust Fund. We do not considerexpenditures to include beneficiarycoinsurance and copayments. Thisdistinction was important for the CY2008 ASC budget neutrality model thatconsidered payments across hospitaloutpatient, ASC, and MPFS paymentsystems. However, because coinsuranceis almost always 20 percent for ASCservices, this interpretation ofexpenditures has minimal impact forsubsequent budget neutralityadjustments calculated <strong>with</strong>in therevised ASC payment system.In the CY 2008 OPPS/ASC final rule<strong>with</strong> comment period (72 FR 66857through 66858), we set out a step-bystepillustration of the final budgetneutrality adjustment calculation basedon the methodology finalized in theAugust 2, 2007 final rule (72 FR 42521through 42531) and as applied toupdated data available for the CY 2008OPPS/ASC final rule <strong>with</strong> commentperiod. The application of thatmethodology to the data available forthe CY 2008 OPPS/ASC final rule <strong>with</strong>comment period resulted in a budgetneutrality adjustment of 0.65.For CY 2008, we adopted the OPPSrelative payment weights as the ASCrelative payment weights for mostservices and, consistent <strong>with</strong> the finalpolicy, we calculated the CY 2008 ASCpayment rates by multiplying the ASCrelative payment weights by the finalCY 2008 ASC conversion factor of$41.401. For covered office-basedsurgical procedures and coveredancillary radiology services (excludingcovered ancillary radiology servicesinvolving certain nuclear medicineprocedures or involving the use ofcontrast agents, as discussed in sectionXIII.D.2.b. of this final rule <strong>with</strong>comment period) the established policyis to set the relative payment weights sothat the national unadjusted ASCpayment rate does not exceed the MPFSunadjusted nonfacility PE RVU-basedamount. Further, as discussed in the CY2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66841 through66843), we also adopted alternativeratesetting methodologies for specifictypes of services (for example, deviceintensiveprocedures).As discussed in the August 2, 2007final rule (72 FR 42518) and as codifiedat § 416.172(c) of the regulations, therevised ASC payment system accountsfor geographic wage variation whencalculating individual ASC payments byapplying the pre-floor and prereclassifiedhospital wage indices to thelabor-related share, which is 50 percentof the ASC payment amount. Beginningin CY 2008, CMS accounted forgeographic wage variation in labor costwhen calculating individual ASCpayments by applying the pre-floor andpre-reclassified hospital wage indexvalues that CMS calculates for payment,using updated Core Based StatisticalAreas (CBSAs) issued by OMB in June2003. The reclassification provisionprovided at section 1886(d)(10) of theAct is specific to hospitals. We believethat using the most recently availableraw pre-floor and pre-reclassifiedhospital wage indices results in themost appropriate adjustment to thelabor portion of ASC costs. In addition,use of the unadjusted hospital wage dataavoids further reductions in certainrural statewide wage index values thatresult from reclassification. We continueto believe that the unadjusted hospitalwage indices, which are updated yearlyand are used by many other Medicarepayment systems, appropriately accountfor geographic variation in labor costsfor ASCs.We note that in certain instances theremight be urban or rural areas for whichthere is no IPPS hospital whose wageindex data would be used to set thewage index for that area. For these areas,our policy has been to use the averageof the wage indices for CBSAs (ormetropolitan divisions as applicable)that are contiguous to the area that hasno wage index (where ‘‘contiguous’’ isdefined as sharing a border). We haveapplied a proxy wage index based onthis methodology to ASCs located inCBSA 25980 Hinesville-Fort Stewart,GA, and CBSA 22 Rural Massachusetts.In CY 2011, we identified another area,VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00326 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2specifically, CBSA 11340 Anderson, SCfor which there is no IPPS hospitalwhose wage index data would be usedto set the wage index for that area.Generally, we would use themethodology described above; however,in this situation, all of the areascontiguous to CBSA 11340 Anderson,SC are rural. Therefore, in the CY 2011OPPS/ASC final rule <strong>with</strong> comment (75FR 72058 through 72059), we finalizedour proposal to set the ASC wage indexby calculating the average of all wageindices for urban areas in the Statewhen all contiguous areas to a CBSA arerural and there is no IPPS hospitalwhose wage index data could be used toset the wage index for that area. In othersituations, where there are no IPPShospitals located in a relevant labormarket area, we will continue ourcurrent policy of calculating an urban orrural area’s wage index by calculatingthe average of the wage indices forCBSAs (or metropolitan divisions whereapplicable) that are contiguous to thearea <strong>with</strong> no wage index.<strong>Comment</strong>: Several commenters madethe same comment that was made in theCY 2011 rulemaking—that is that CMSadopt for the ASC payment system thesame wage index values used forhospital payment under the OPPS (75FR 72059 contains an explanation ofsuch comment). At a minimum,commenters recommended that CMSapply the out-migration adjustment toASCs in qualifying counties.Response: We have responded to thiscomment in the past, and believe ourprior rationale for using unadjustedwage indices is still a sound one. Werefer readers to our response to thiscomment in last year’s final rule <strong>with</strong>comment period (75 FR 72059). Wediscuss our budget neutralityadjustment for changes to the wageindices below in section XIII.H.2.b. ofthis final rule <strong>with</strong> comment period.After consideration of the publiccomments we received, we arecontinuing our established policy toaccount for geographic wage variation inlabor cost when calculating individualASC payment by applying the pre-floorand pre-reclassified hospital wage indexvalues that CMS calculated for payment,using updated CBSAs. For CY 2012, wealso are continuing our policyestablished in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR72058 through 72059) to set the ASCwage index by calculating the average ofall wage indices for urban areas in thestate when there is no IPPS hospitalwhose wage index data could be used toset the wage index for that area, and allcontiguous areas to the CBSA are rural.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74447jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES22. Calculation of the ASC Payment Ratesa. Updating the ASC Relative PaymentWeights for CY 2012 and Future YearsWe update the ASC relative paymentweights each year using the nationalOPPS relative payment weights (andMPFS nonfacility PE RVU-basedamounts, as applicable) for that samecalendar year and uniformly scale theASC relative payment weights for eachupdate year to make them budgetneutral (72 FR 42531 through 42532).Consistent <strong>with</strong> our established policy,in the CY 2012 OPPS/ASC proposedrule (76 FR 42312), we proposed to scalethe CY 2012 relative payment weightsfor ASCs according to the followingmethod. Holding ASC utilization andthe mix of services constant from CY2010, we proposed to compare the totalpayment weight using the CY 2011 ASCrelative payment weights (calculatedunder the ASC standard ratesettingmethodology) <strong>with</strong> the total paymentweight using the CY 2012 ASC relativepayment weights (calculated under theASC standard ratesetting methodology)to take into account the changes in theOPPS relative payment weights betweenCY 2011 and CY 2012. We proposed touse the ratio of CY 2011 to CY 2012 totalpayment weight (the weight scaler) toscale the ASC relative payment weightsfor CY 2012. The proposed CY 2012ASC scaler was 0.9373 (76 FR 42312)and scaling would apply to the ASCrelative payment weights of the coveredsurgical procedures and coveredancillary radiology services for whichthe ASC payment rates are based onOPPS relative payment weights.Scaling would not apply in the caseof ASC payment for separately payablecovered ancillary services that have apredetermined national paymentamount (that is, their national ASCpayment amounts are not based onOPPS relative payment weights), suchas drugs and biologicals that areseparately paid or services that arecontractor-priced or paid at reasonablecost in ASCs. Any service <strong>with</strong> apredetermined national paymentamount would be included in the ASCbudget neutrality comparison, butscaling of the ASC relative paymentweights would not apply to thoseservices. The ASC payment weights forthose services <strong>with</strong>out predeterminednational payment amounts (that is,those services <strong>with</strong> national paymentamounts that would be based on OPPSrelative payment weights) would bescaled to eliminate any difference in thetotal payment weight between thecurrent year and the update year.For any given year’s ratesetting, wetypically use the most recent fullcalendar year of claims data to modelbudget neutrality adjustments. At thetime of the CY 2012 proposed rule, wehad available 98 percent of CY 2010ASC claims data. For this final rule <strong>with</strong>comment period, we haveapproximately 99 percent of all ASCclaims data for CY 2010.To create an analytic file to supportcalculation of the weight scalar andbudget neutrality adjustment for thewage index (discussed below), wesummarized available CY 2010 ASCclaims by provider and by HCPCS code.We used the National Provider Identifierfor the purpose of identifying uniqueASCs <strong>with</strong>in the CY 2010 claims data.We used the supplier zip code reportedon the claim to associate State, county,and CBSA <strong>with</strong> each ASC. This file,available to the public as a supportingdata file for the proposed rule, is postedon the CMS Web site at: http://www.cms.gov/ASCPayment/ASCRN/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=3&sortOrder=descending&itemID=CMS1249114&intNumPerPage=10.<strong>Comment</strong>: Many commenters againexpressed their opposition to scaling theASC relative payment weights. Many ofthe commenters on the CY 2012 OPPS/ASC proposed rule offered the sameviews as the public commenters on eachrule since the CY 2009 OPPS/ASCproposed rule CY 2009 was the yearwhen CMS first applied the scalingpolicy that was finalized in the August2, 2007 final rule. The commentersexpressed many concerns, includingthat scaling is contrary to the intent ofusing the cost-based OPPS relativepayment weights as the basis fordetermining the relative payments forthe same services in ASCs and thatscaling would continue to erode thepayment relationship between the OPPSand ASC payment system. They assertedthat, although scaling is intended tomaintain budget neutrality <strong>with</strong>in theASC payment system, it is insteadcreating increasingly large paymentdifferentials between the ASC and OPPSpayments for the same services <strong>with</strong>outevidence of growing differences incapital and operating costs between thetwo settings, and depriving ASCs of realincreases in the relative costs ofprocedures. The commenters believedthat the OPPS relative payment weightsrepresent real growth in the costs ofservices provided in HOPDs and theannual change in relative weightsshould move in the same direction inboth the ASC and HOPD setting. Thecommenters argued that the differencein payments between the ASC andHOPD services at the aggregate andVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00327 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2procedure level should be driven onlyby changes in the conversion factor.The commenters also pointed outthat, while CMS has suggested thatscaling of the relative weights is adesign element that will protect ASCsfrom changes in the OPPS relativeweights that could significantlydecrease payments for certainprocedures, the trend in the OPPSrelative weights suggests that the scalingfactor for ASCs will rarely result in anincrease in ASC relative weights.The commenters argued that CMS isnot required to scale the ASC relativeweights and that it should use itsauthority to suspend the application ofscaling the ASC relative weights for CY2012. They noted that the regulationsestablishing the revised ASC paymentsystem give CMS the flexibility to scale‘‘as needed.’’ In addition, somecommenters stated that Congressimposed a budget neutralityrequirement on the ASC paymentsystem only during the CY 2008implementation year, and that CMS isunder no legal obligation to continue toapply a scaling factor.Response: Many of these commentsare similar to public comments on theproposal for the revised ASC paymentsystem that we responded to in theAugust 2, 2007 final rule (72 FR 42531through 42533). For example, <strong>with</strong>regard to scaling, we addressed thesesame concerns raised by commentersthat annual rescaling would causedivergence of the relative weightsbetween the OPPS and the revised ASCpayment system for individualprocedures in the August 2, 2007 finalrule (72 FR 42532). We refer thecommenters to that discussion for ourdetailed response in promulgating thescaling policy that was initially appliedin CY 2009 (72 FR 42531 through42533).As we have stated in the past (74 FR60627), the ASC weight scalingmethodology is entirely consistent <strong>with</strong>the OPPS methodology for scaling therelative payment weights and, for themost part, the increasing paymentdifferentials between the ASC and OPPSpayments for the same services are notattributable to scaling ASC relativepayment weights. Considerations ofdifferences between the capital andoperating costs of ASCs and HOPDs arenot part of the ASC standard ratesettingmethodology, which relies only onmaintaining the same relativity ofpayments for services under the twopayment systems, as well as budgetneutrality <strong>with</strong>in each payment system.Furthermore, unlike HOPDs, we do nothave information about the costs of ASCservices in order to assess differences in

74448 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2capital and operating costs over timebetween the two settings. In order tomaintain budget neutrality of the ASCpayment system, we need to adjust forthe effects of changes in relativeweights. The ASC payment systemadopts the OPPS relative weights as themechanism for apportioning totalpayments, after application of theupdate factor, among all of the servicescovered by the ASC payment system.The OPPS relative weights serve thesame purpose in the OPPS. The OPPSrelative weights do not represent anestimate of absolute cost of any givenprocedure; rather, they reflect ourestimate of the cost of the procedure<strong>with</strong>in the context of our cost estimationmethodology for the OPPS. With theexception of services <strong>with</strong> apredetermined national paymentamount, the use of a uniform scalingfactor for changes in total weightbetween years in the ASC paymentsystem does not alter the relativity ofthe OPPS payment weights as used inthe ASC payment system. Differences inthe relativity between the ASC relativepayment weights and the OPPS relativepayment weights are not driven by theapplication of the uniform scalingfactor. The ASC weight scalingmethodology is entirely consistent <strong>with</strong>the OPPS weight scaling methodologyand the weights serve the same purposein both systems, to apportion totalbudget neutral payment allowed underthe update.We do not agree <strong>with</strong> commenters’assertion that we should eliminate thescaling methodology because the scalingfactor will rarely result in an increase inASC relative weights, thereforecontinuing to hurt rather than protectASCs in the future. As we stated in theAugust 2, 2007 final rule (72 FR 42532),aggregate payments to ASCs could, inthe absence of rescaling, be affected bychanges in the cost structure of HOPDsthat ought to be relevant only under theOPPS. A sudden increase in the costs ofhospital outpatient emergencydepartment or clinical visits due, forinstance, to an increase in the volumeof cases, would have the effect ofincreasing the weights for these servicesrelative to the weights for surgicalprocedures in the hospital outpatientsetting. In the absence of scaling theASC payment weights, this change inthe relative weights under the OPPSwould result in a decrease in therelative weights for surgical proceduresunder the ASC payment system, and,therefore, a decrease in aggregate ASCpayments for these same procedures.We continue to believe that changes inrelative weights each year under theOPPS should not, in and of themselves,cause aggregate payments under therevised ASC payment system to increaseor decrease. It is important to note thatthe specific adjustment factor applied inthe scaling process could be positive ornegative in any particular year; the factthat the scaler has not resulted in anincrease to the ASC payment weights inany given year or series of years doesnot mean the same trend will continue,nor does it mean that the principle ofpreventing the ASC payment weightsfrom being affected by fluctuations inthe OPPS payment weights is inherentlyflawed.As we stated in the CY 2009 OPPS/ASC final rule <strong>with</strong> comment period (73FR 68754), <strong>with</strong> respect to the use of ‘‘asneeded’’ in the text of § 416.171(e)(2)that commenters have interpreted tomean that CMS has the authority tosuspend scaling the relative paymentweights if it determines there is not aneed to do so, the phrase does not meanthat we will determine whether or notto adjust for budget neutrality. Rather, itmeans that we adjust the relativepayment weights as needed to ensurebudget neutrality. Therefore, we do notagree <strong>with</strong> the commenters’ assertionthat we are under no legal obligation tocontinue to apply a scaling factor. If wewere not to scale the ASC relativepayment weights, we estimate that theCY 2012 revisions would not be budgetneutral.Establishing budget neutrality underthe OPPS does not result in budgetneutrality under the revised ASCpayment system; it only maintainsbudget neutrality under the OPPS.Scaling the ASC relative paymentweights is an integral and separateprocess for maintaining budgetneutrality under the ASC prospectivepayment system. Scaling is the budgetneutrality adjustment that ensures thatchanges in the relative weights do not,in and of themselves, change aggregatepayment to ASCs. It ensures a specificamount of payment for ASCs in anygiven year. Without scaling, total ASCpayment could increase or decreaserelative to changes in hospitaloutpatient payment.Although the commenters believe thatscaling prevents increases in ASCspending that may be appropriatebecause ASC costs have increased overtime, increases in cost in a prospectivepayment system are handled by theupdate factor. In a budget neutralsystem, we remove the independenteffects of increases or decreases inpayments as a result of changes in therelative payment weights or the wageindices and constrain increases to theallowed update factor. Therefore,VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00328 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2changes in aggregate ASC expendituresrelated to payment rates are determinedby the update to the ASC conversionfactor, not by changes in the relativepayment weights.For this final rule <strong>with</strong> commentperiod, we used our proposedmethodology described above tocalculate the scaler adjustment usingupdated ASC claims data. The final CY2012 scaler adjustment is 0.9466. Thisscaler adjustment is necessary to budgetneutralize the difference in aggregateASC payments calculated using the CY2011 ASC relative payment weights andthe CY 2012 relative payment weights.We calculated the difference inaggregate payments due to the change inrelative payment weights (includingdrugs and biologicals) holding constantthe ASC conversion factor, the mostrecent CY 2010 ASC utilization from ourclaims data, and the CY 2011 wageindex values. For this final CY 2012calculation, we used the CY 2011 ASCconversion factor updated by the CY2012 CPI–U, which is estimated as 2.7percent, less the multifactorproductivity adjustment of 1.1 percent,as discussed below in section XV.H.2.b.of this final rule <strong>with</strong> comment period.After consideration of the publiccomments we received, we arefinalizing our CY 2012 ASC relativepayment weight scaling methodology,<strong>with</strong>out modification. The final CY 2012ASC payment weight scaler is 0.9466.b. Updating the ASC Conversion FactorUnder the OPPS, we typically applya budget neutrality adjustment forprovider level changes, most notably achange in the wage index values for theupcoming year, to the conversion factor.Consistent <strong>with</strong> our final ASC paymentpolicy, for the CY 2012 ASC paymentsystem, in the CY 2012 OPPS/ASCproposed rule (76 FR 42312 through42313), we proposed to calculate andapply the pre-floor and pre-reclassifiedhospital wage indices that are used forASC payment adjustment to the ASCconversion factor, just as the OPPS wageindex adjustment is calculated andapplied to the OPPS conversion factor.For CY 2012, we calculated thisproposed adjustment for the ASCpayment system by using the mostrecent CY 2010 claims data availableand estimating the difference in totalpayment that would be created byintroducing the proposed CY 2012 prefloorand pre-reclassified hospital wageindices. Specifically, holding CY 2010ASC utilization and service-mix and theproposed CY 2012 national paymentrates after application of the weightscaler constant, we calculated the totaladjusted payment using the CY 2011

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74449jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2pre-floor and pre-reclassified hospitalwage indices and the total adjustedpayment using the proposed CY 2012pre-floor and pre-reclassified hospitalwage indices. We used the 50-percentlabor-related share for both totaladjusted payment calculations. We thencompared the total adjusted paymentcalculated <strong>with</strong> the CY 2011 pre-floorand pre-reclassified hospital wageindices to the total adjusted paymentcalculated <strong>with</strong> the proposed CY 2012pre-floor and pre-reclassified hospitalwage indices and applied the resultingratio of 1.0003 (the proposed CY 2012ASC wage index budget neutralityadjustment) to the CY 2011 ASCconversion factor to calculate theproposed CY 2012 ASC conversionfactor.Section 1833(i)(2)(C)(i) of the Actrequires that, if the Secretary has notupdated the ASC payment amounts in acalendar year, the payment amounts‘‘shall be increased by the percentageincrease in the Consumer Price Indexfor all urban consumers (U.S. cityaverage) as estimated by the Secretaryfor the 12-month period ending <strong>with</strong> themidpoint of the year involved.’’ Becausethe Secretary does update the ASCpayment amounts annually, we adopteda policy, which we codified at§ 416.171(a)(2)(ii), to update the ASCconversion factor using the CPI–U forCY 2010 and subsequent calendar years.Therefore, the annual update to the ASCpayment system is the CPI–U (referredto as the CPI–U update factor).Section 3401(k) of the Affordable CareAct amended section 1833(i)(2)(D) of theAct by adding a new clause (v) whichrequires that ‘‘any annual update under[the ASC payment] system for the year,after application of clause (iv), shall bereduced by the productivity adjustmentdescribed in section1886(b)(3)(B)(xi)(II)’’ of the Act (whichwe refer to as the MFP adjustment)effective <strong>with</strong> the calendar yearbeginning January 1, 2011. Clause (iv)authorizes the Secretary to provide fora reduction in any annual update forfailure to report on quality measures.Clause (v) states that application of theMFP adjustment to the ASC paymentsystem may result in the update to theASC payment system being less thanzero for a year and may result inpayment rates under the ASC paymentsystem for a year being less than suchpayment rates for the preceding year. Inthe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 72062 through72064), we revised § 416.160 and§ 416.171 to reflect this provision of theAffordable Care Act (we note that theseregulations do not reflect any reductionin the annual update for failure to reporton quality measures because CMS hadnot implemented an ASC qualityreporting program).As discussed in section XIV.K. of theCY 2012 OPPS/ASC proposed rule (76FR 42336 through 42349), we proposedthat ASCs begin submitting data onquality measures in CY 2012 for the CY2014 payment determination. Becauseany reduction to the annual updateunder the ASC Quality ReportingProgram will not occur until CY 2014,we did not propose any changes to thepayment methodology. We stated thatwe intend to address payment changesbased on failure to submit quality dataunder the ASC Quality ReportingProgram in a future rulemaking.Without regard to the ASC QualityReporting Program and in accordance<strong>with</strong> section 1833(i)(2)(C)(i) of the Act,before applying the MFP adjustment,the Secretary first determines the‘‘percentage increase’’ in the CPI–U,which we interpret cannot be a negativenumber. Thus, in the instance where thepercentage change in the CPI–U for ayear is negative, in the CY 2012 OPPS/ASC proposed rule (76 FR 42313), weproposed to hold the CPI–U updatefactor for the ASC payment system tozero. Section 1833(i)(2)(D)(v) of the Act,as added by section 3401(k) of theAffordable Care Act, requires that theSecretary reduce the CPI–U updatefactor (which would be held to zero ifthe CPI–U percentage change isnegative) by the MFP adjustment, andstates that application of the MFPadjustment may reduce this percentagechange below zero. If the application ofthe MFP adjustment to the CPI–Upercentage increase would result in anMFP-adjusted CPI–U update factor thatis less than zero, the annual update tothe ASC payment rates would benegative and payments would decreaserelative to the prior year. Illustrativeexamples of how the MFP adjustmentwould be applied to the ASC paymentsystem update are found in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 72062 through 72064).In the CY 2012 OPPS/ASC proposedrule (76 FR 42313), for the 12-monthperiod ending <strong>with</strong> the midpoint of CY2012, the Secretary estimated that theCPI–U is 2.3 percent. The Secretaryestimated that the MFP adjustment is1.4 percentage points based on themethodology for calculating the MFPadjustment finalized in the CY 2011MPFS final rule <strong>with</strong> comment period(75 FR 73391 through 73399) as revisedby the proposal discussed in the CY2012 MPFS proposed rule. We proposedto reduce the CPI–U of 2.3 percent bythe MFP adjustment specific to thisCPI–U of 1.4 percentage points,VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00329 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2resulting in an MFP-adjusted CPI–Uupdate factor of 0.9 percent. Therefore,we proposed to apply a 0.9 percentMFP-adjusted update to the CY 2011ASC conversion factor.For CY 2012, we also proposed toadjust the CY 2011 ASC conversionfactor ($41.939) by the wage adjustmentfor budget neutrality of 1.0003 inaddition to the MFP-adjusted updatefactor of 0.9 percent discussed above,which resulted in a proposed CY 2012ASC conversion factor of $42.329 (76 FR42313).<strong>Comment</strong>: As in prior years, manycommenters requested that CMS adoptthe hospital market basket to update theASC payment system. The commentersexplained that not only is the CPI–Ulower than the hospital market basketbut it is not appropriate for updatinghealth care providers because, unlikethe hospital market basket whichanalyzes hospital spending, the CPI–Uis designed to capture householdspending. The commenters stated that,in the most recent years, the CPI–U hasbeen dominated by inflation in thehousing sector rather than healthcareprovider spending, and that the goodsand services provided by ASCs are verysimilar to those provided by hospitals.The commenters also argued that theCPI–U is a poor proxy of ASC costinflation, noting that the CPI–U hasfaced criticism from independentresearchers and economists, whoindicate that the CPI–U consistentlyunderestimates the rate of inflationaccording to the commenters. Inaddition, because commenters view theCPI–U as a highly volatile index, thecommenters suggested that CMS adjustfor prior year forecast errors.<strong>Comment</strong>ers stated that adopting thehospital market basket would minimizethe divergence in CY 2012 paymentbetween the ASC payment system andthe OPPS and prevent the update fromcausing further divergence when theproductivity adjustment is applied toboth settings in the future. Thecommenters asserted that CMS has theauthority to use an alternative updatemechanism, and believed CMS shouldadopt the hospital market basket as theupdate for the ASC payment system.<strong>Comment</strong>ers also indicated that thehospital market basket is a moreappropriate index to use for the ASCupdate now that CMS is required toapply the MFP adjustment to the ASCannual update. <strong>Comment</strong>ers stated that,as an output price index, the CPI–Uindex already accounts for productivitythus ASCs, in essence, are receiving aproductivity adjustment that is twicethat applied to the HOPD update.Because CMS has discretion regarding

74450 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2the index used to update ASCs, but isrequired in statute to adjust the ASCupdate by the MFP, commenters urgedCMS to use the hospital market basket,which is an input price index that doesnot already account for productivity, toupdate ASC payment rates and therebyallow the appropriate application of therequired productivity adjustment. Withregard to the MFP adjustment itself,commenters requested that, because theMFP is a volatile measure that is subjectto substantial year-to-year fluctuations,the MFP measurement period beuniform across providers.As mentioned in section XV.G. of thisfinal rule <strong>with</strong> comment period,MedPAC commented that ASCs shouldbe required to submit cost and qualitydata, concurrent <strong>with</strong> a 0.5 percentincrease in ASC payment rates for CY2012, arguing that ASC cost data areneeded to examine whether an existinginput price index is an appropriateproxy for the costs of ASCs or whetheran ASC-specific market basket shouldbe developed.Response: While commenters arguethat the items included in the CPI–Uindex may not adequately measureinflation for the goods and servicesprovided by ASCs and that use of thehospital market basket would minimizethe divergence in the payment ratesbetween the OPPS and ASC paymentsystem, we believe that the hospitalmarket basket does not align <strong>with</strong> thecost structures of ASCs. A much widerrange of services, such as room andboard and emergency services, areprovided by hospitals but are not costsassociated <strong>with</strong> providing services inASCs. Therefore, at this time, we do notbelieve that it is appropriate to use thehospital market basket for the ASCannual update. We may consider, infuture rulemaking, suggestions byMedPAC to find a way to obtain costdata from ASCs, in a manner that willminimize the burden on ASCs and CMS,so that we can examine whether analternative input price index would bean appropriate proxy for ASC costs orwhether an ASC-specific market basketshould be developed.We recognize that the CPI–U is anoutput price index that accounts forproductivity. However, the agency isrequired by law to apply the MFPadjustment to provider paymentsaccording to section 3401(k) of theAffordable Care Act and, for the reasonsstated above, we do not believe that thehospital market basket reflects the coststructures of ASCs. Regarding alignmentof the MFP adjustment across paymentsystems, for reasons stated in the CY2011 MPFS final rule (75 FR 73396), webelieve that it is more appropriate toalign the MFP adjustment <strong>with</strong> the CPI–U timeframes rather than aligning theMFP adjustment across paymentsystems. In regards to the commenters’statement on the volatility of the MFPand its year-to-year fluctuations, thestatute requires the MFP adjustment tobe equal to the 10-year moving averageof changes in annual economy-wideprivate nonfarm business multi-factorproductivity which lessens and oftennegates any large year-to-yearfluctuations.Although commenters raise concernsregarding the difference in the CPI–Uforecast and the actual inflation usinghistorical data, we do not believe it isappropriate to provide an adjustment tothe ASC annual update to correctprevious forecast errors. The ASCsystem is prospective and the updateprovided is based on the most currentdata available to establish a forecast forinflation.After consideration of the publiccomments we received, we are applyingour established methodology fordetermining the final CY 2012 ASCconversion factor. Using more completeCY 2010 data for this final rule <strong>with</strong>comment period than was available forthe proposed rule, we calculated a wageindex budget neutrality adjustment of1.0004. Based on updated data, the CPI–U for the 12-month period ending <strong>with</strong>the midpoint of CY 2012 is nowestimated to be 2.7 percent, while theMFP adjustment (using the revised IGIseries to proxy the labor index used inthe MFP forecast calculation asdiscussed and finalized in the CY 2012MPFS final rule <strong>with</strong> comment period)is 1.1 percent, resulting in an MFPadjustedCPI–U update factor of 1.6percent. The final ASC conversionfactor of $42.627 is the product of theCY 2011 conversion factor of $41.939multiplied by the wage index budgetneutrality adjustment of 1.0004 and theMFP-adjusted CPI–U payment update of1.6 percent.3. Display of CY 2012 ASC PaymentRatesAddenda AA and BB to this CY 2012OPPS/ASC final rule <strong>with</strong> commentperiod (which are available via theInternet on the CMS Web site) displaythe final updated ASC payment rates forCY 2012 for covered surgical proceduresand covered ancillary services,respectively. These addenda containseveral types of information related tothe CY 2012 payment rates. Specifically,in Addendum AA, a ‘‘Y’’ in the columntitled ‘‘Subject to Multiple ProcedureDiscounting’’ indicates that the surgicalprocedure will be subject to themultiple procedure payment reductionVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00330 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2policy. As discussed in the CY 2008OPPS/ASC final rule <strong>with</strong> commentperiod (72 FR 66829 through 66830),most covered surgical procedures aresubject to a 50-percent reduction in theASC payment for the lower-payingprocedure when more than oneprocedure is performed in a singleoperative session. Display of thecomment indicator ‘‘CH’’ in the columntitled ‘‘<strong>Comment</strong> Indicator’’ indicates achange in payment policy for the itemor service, including identifyingdiscontinued HCPCS codes, designatingitems or services newly payable underthe ASC payment system, andidentifying items or services <strong>with</strong>changes in the ASC payment indicatorfor CY 2012. Display of the commentindicator ‘‘NI’’ in the column titled‘‘<strong>Comment</strong> Indicator’’ indicates that thecode is new (or substantially revised)and that the payment indicatorassignment is an interim assignmentthat is open to comment on the finalrule <strong>with</strong> comment period.The values displayed in the columntitled ‘‘CY 2012 Payment Weight’’ arethe relative payment weights for each ofthe listed services for CY 2012. Thepayment weights for all covered surgicalprocedures and covered ancillaryservices whose ASC payment rates arebased on OPPS relative paymentweights were scaled for budgetneutrality. Thus, scaling was notapplied to the device portion of thedevice-intensive procedures, servicesthat are paid at the MPFS nonfacility PERVU-based amount, separately payablecovered ancillary services that have apredetermined national paymentamount, such as drugs and biologicalsthat are separately paid under the OPPS,or services that are contractor-priced orpaid at reasonable cost in ASCs.To derive the CY 2012 payment ratedisplayed in the ‘‘CY 2012 Payment’’column, each ASC payment weight inthe ‘‘CY 2012 Payment Weight’’ columnwas multiplied by the CY 2012conversion factor of $42.627. Theconversion factor includes a budgetneutrality adjustment for changes in thewage index values and the CPI–Uupdate factor as reduced by theproductivity adjustment (as discussed insection XV.H.2.b. of this final rule <strong>with</strong>comment period).In Addendum BB, there are norelative payment weights displayed inthe ‘‘CY 2012 Payment Weight’’ columnfor items and services <strong>with</strong>predetermined national paymentamounts, such as separately payabledrugs and biologicals. The ‘‘CY 2012Payment’’ column displays the CY 2012national unadjusted ASC payment ratesfor all items and services. The CY 2012

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74451jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2ASC payment rates listed in AddendumBB for separately payable drugs andbiologicals are based on ASP data usedfor payment in physicians’ offices inOctober 2011.We did not receive any publiccomments regarding the continuation ofour policy to provide CY 2012 ASCpayment information as detailed inAddenda AA and BB. Therefore,Addenda AA and BB to this final rule<strong>with</strong> comment period (which areavailable via the Internet on the CMSWeb site) display the updated ASCpayment rates for CY 2012 for coveredsurgical procedures and coveredancillary services, respectively, andprovide additional information relatedto the CY 2012 rates.XIV. Hospital Outpatient QualityReporting Program Updates and ASCQuality Reporting ProgramA. Background1. OverviewCMS has implemented qualitymeasure reporting programs for multiplesettings of care. These programspromote higher quality, more efficienthealth care for Medicare beneficiaries.The quality data reporting program forhospital outpatient care, known as theHospital Outpatient Quality Reporting(Hospital OQR) Program, formerlyknown as the Hospital OutpatientQuality Data Reporting Program (HOPQDRP), has been generally modeledafter the quality data reporting programfor hospital inpatient services known asthe Hospital Inpatient Quality Reporting(Hospital IQR) Program (formerlyknown as the Reporting HospitalQuality Data for Annual PaymentUpdate (RHQDAPU) Program). Both ofthese quality reporting programs forhospital services, as well as the programfor physicians and other eligibleprofessionals, known as the PhysicianQuality Reporting System (PQRS)(formerly known as the PhysicianQuality Reporting Initiative (PQRI)),have financial incentives for thereporting of quality data to CMS. CMSalso has implemented quality reportingprograms for home health agencies andskilled nursing facilities that are basedon conditions of participation, and anend-stage renal disease (ESRD) QualityIncentive Program (76 FR 628 through646) that links payment to performance.In implementing the Hospital OQRProgram and other quality reportingprograms, we have focused on measuresthat have high impact and support CMSand HHS priorities for improved qualityand efficiency of care for Medicarebeneficiaries. Our goal is ultimately toalign the clinical quality measurerequirements of the Hospital OQRProgram and various other programs,including the Hospital IQR Program,and the proposed ASC QualityReporting Program, <strong>with</strong> the reportingrequirements implemented under theHealth Information Technology forEconomic and Clinical Health (HITECH)Act, so that the burden of reporting canbe reduced. In developing this and otherquality reporting programs, as well asthe Hospital Inpatient Value-BasedPurchasing (Hospital Inpatient VBP)Program, we applied the followingprinciples for the development and useof measures:• Pay-for-reporting, public reporting,and value-based purchasing programsshould rely on a mix of standards,processes, outcomes, and patientexperience of care measures, includingmeasures of care transitions andchanges in patient functional status.Across all programs, we seek to move asquickly as possible to the use ofprimarily outcome and patientexperience of care measures. To theextent practicable and appropriate,outcome and patient experience of caremeasures should be adjusted for riskfactors or other appropriate patientpopulation or provider characteristics.• To the extent possible andrecognizing differences in paymentsystem maturity and statutoryauthorities, measures should be alignedacross public reporting and paymentsystems under Medicare and Medicaid.The measure sets should evolve so thatthey include a focused set of measuresappropriate to the specific providercategory that reflects the level of careand the most important areas of serviceand measures for that provider category.• The collection of informationburden on providers should beminimized to the extent possible. Tothis end, we continuously seek to alignour measures <strong>with</strong> the adoption ofmeaningful use standards for healthinformation technology (HIT), so thatdata can be submitted and calculatedvia certified EHR technology <strong>with</strong>minimal burden.• To the extent practicable andfeasible, and recognizing differences instatutory authorities, measures used byCMS should be endorsed by a national,multi-stakeholder organization.Measures should be aligned <strong>with</strong> bestpractices among other payers and theneeds of the end users of the measures.In the CY 2012 OPPS/ASC proposedrule (76 FR 42314), we invited publiccomment on these principles.<strong>Comment</strong>: Several commenterscommended CMS for creating thesynergy between the Hospital OQRProgram and the Hospital IQR ProgramVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00331 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2and noted that this is a greatopportunity to foster meaningful linksbetween the two Medicare programs.The commenters encouraged adherenceto the National Quality Strategy whichtransforms national priorities into thefocal point for measurement, reporting,and financial incentives. <strong>Comment</strong>ersadded that all HOPD Program measuresshould be thoroughly tested foraccuracy, validity and applicability tohospital-level care prior toimplementation. A commenterrecommended that CMS adopt onlymeasures endorsed by the NationalQuality Forum (NQF) and the MeasuresApplication Partnership (MAP), andapproved by the Hospital QualityAlliance (HQA). The commenter alsosupported public reporting and CMS’approach to propose measures well inadvance of the payment year affected.Response: We appreciate thecommenters’ support and valuableinput. Generally, we follow theframework of the National QualityStrategy to prioritize our measureselection, and implement qualityreporting initiatives. We are required bystatute to select measures for theHospital OQR Program that reflectconsensus among affected parties and,to the extent feasible and practicable,that these measures include measuresset forth by one or more nationalconsensus building entities. The NQF,MAP, and HQA are organizationscomposed of a diverse representation ofconsumer, purchaser, provider,academic, clinical, and other health carestakeholders <strong>with</strong> which we consult orconvene for their input. In instanceswhere we develop our own measures,we generally employ a rigorousconsensus-based measure developmentprocess that incorporates broadstakeholder input. Details regarding theprocess we have used in connection<strong>with</strong> some measures are available on ourWeb site at: http://www.cms.gov/MMS/19_MeasuresManagementSystemBlueprint.asp#TopOfPage. Also, we willcontinue our multi-year approach forproposing and finalizing of measures asit has been well-received by mostproviders.<strong>Comment</strong>: Several commenterspraised CMS’ shifting approach to focusmore on outcome measures but theyalso believed there is value in theprocess measures that are linked tooutcomes. One commenter specificallyurged CMS not to dismiss processmeasures when there is evidence thatsupports a direct link between theprocess being measured and the patientoutcome. One commenter suggested thatCMS follow The Joint Commission (TJC)(a not-for-profit organization that

74452 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2accredits and certifies health careorganizations and programs in the U.S.)accountability measure criteria as aguide to select quality measures for theHospital OQR Program. The commenterstated that TJC defines accountabilitymeasures as those for which there arelarge volumes of research linking themeasure to improved clinical outcomes;the measure accurately captures theevidence-based care delivered; andimplementation of the measure hasminimal unintended adverseconsequences.Response: We agree <strong>with</strong> thecommenters that evidence-basedprocess measures that are associated<strong>with</strong> better outcomes are important toinclude in the Hospital OQR Programand we have taken steps to includethese types of measures each year. Weare aware of TJC’s accountability criteriafor assessment of measures, andconsider these criteria, among others, inselecting measures for the Hospital OQRProgram because we agree thataccountability is crucial in qualityimprovement processes. We thank thecommenters for their support.<strong>Comment</strong>: A commenter expressedconcerns that the time span between thefinalization of the Hospital OQRProgram measures and theirimplementation generally does notprovide sufficient time for hospitals toimplement process changes to capturequality data. The commenter stated thatinsufficient preparation would hinderhospital performance improvement andaccurate reporting of quality data.Response: We thank the commenterfor this input. We agree that whenmeasures require the capture orcollection of new chart-abstractedmeasure information not previouslycaptured, hospitals need a sufficientamount of time to prepare operationallyto meet the new data submissionrequirements. We generally provide fourto six months lead time to hospitals tocollect and submit new data that areneeded for new measures. However, notall new measures finalized for theHospital OQR Program may require thecapture or collection of new dataelements for chart-abstracted measures.<strong>Comment</strong>: A commenter stronglyurged CMS to include an update on theNQF status of each quality measure inevery proposed and final rule, to fosteran open and transparent environment,given the significant statutory andcontractual roles that NQF plays in thehospital quality measures.Response: We thank the commenterfor the input. We note that in ourrulemakings, we provide the NQFendorsement number and endorsementstatus of each measure when applicable.<strong>Comment</strong>: One commenter urgedCMS to consider the relevance ofHospital OQR Program measures inrural hospitals and to makemodifications of the measures asnecessary to minimize the burden onthe small hospitals.Response: We believe that the currentHospital OQR Program measures arerelevant to rural hospitals because theyaddress topics that are broadlyapplicable to hospital outpatientdepartments, including rural hospitaloutpatient departments. We agree that itis important to seek to minimize thecollection burden associated <strong>with</strong>measurement, and that some types ofproviders may be more greatly impactedby collection burden than others. Inmaintaining the measures, we havesought and will continue to seek tostreamline the data elements needed forthe measures to the extent possible.<strong>Comment</strong>: A commenter requestedthat CMS clarify the patient populationto which the Hospital OQR Programmeasure applies, for example,traditional Medicare patients, MedicareAdvantage, and Medicare replacementpolicyholders.Response: The Hospital OQR chartabstractedand NHSN measures apply toall patients meeting the inclusioncriteria for the measure regardless ofpayer, while the claims-based measuresare calculated using only Medicare Feefor-Serviceclaims. The structuralmeasures apply to the hospitaloutpatient department.2. Statutory History of the HospitalOutpatient Quality Reporting (HospitalOQR) ProgramWe refer readers to the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 72064) for a detaileddiscussion of the statutory history of theHospital OQR Program.3. Technical Specification Updates andData Publicationa. Maintenance of TechnicalSpecifications for Quality MeasuresTechnical specifications for eachHospital OQR measure are listed in theHospital OQR Specifications Manual,which is posted on the CMS QualityNetWeb site at http://www.QualityNet.org.We maintain the technicalspecifications for the measures byupdating this Hospital OQRSpecifications Manual and includingdetailed instructions and calculationalgorithms. In some cases where thespecifications are available elsewhere,we may include links to Web siteshosting technical specifications. Theseresources are for hospitals to use whenVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00332 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2collecting and submitting data onrequired measures.In the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period (73 FR 68766through 68767), we established asubregulatory process for makingupdates to the technical specificationsthat we use to calculate Hospital OQRmeasures. This process is used whenchanges to the measure specificationsare necessary due to changes inscientific evidence, treatmentguidelines, or consensus among affectedparties. Changes due to these reasonsmay not coincide <strong>with</strong> the timing of ourregulatory actions, but neverthelessshould be made so that the HospitalOQR measures are calculated based onthe most up-to-date scientific andconsensus standards. We indicated thatnotification of technical changes to themeasure specifications is made via theQualityNet Web site, http://www.QualityNet.org, and in theHospital OQR Specifications Manual.The notification of changes to themeasure technical specifications occursno less than 3 months before anychanges become effective for purposesof reporting under the Hospital OQRProgram.The Hospital OQR SpecificationsManual is released every 6 months andaddenda are released as necessary. Thisrelease schedule provides at least 3months of advance notice for substantialchanges such as changes to ICD–9, CPT,NUBC, and HCPCS codes, and at least6 months of advance notice for changesto data elements that would requiresignificant systems changes.<strong>Comment</strong>: A commenter requestedthat for future new measure proposals,CMS also post the associated measurespecification publicly at least 6 monthsprior to inclusion in a proposed rule.Response: We provide specificationsor links to specifications as part of theproposal. We also seek to incorporatemeasure specifications as quickly aspossible into the Hospital OQRSpecifications Manual in order toprovide enough lead time (generally sixmonths) prior to the beginning of datacollection for the measure under theHospital OQR Program.b. Publication of Hospital OQR ProgramDataSection 1833(t)(17)(E) of the Actrequires that the Secretary establishprocedures to make data collected underHospital OQR available to the public. Italso states that such procedures mustensure that a hospital has theopportunity to review the data that areto be made public <strong>with</strong> respect to thehospital prior to such data being madepublic. To meet these requirements,

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74453jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2data that a hospital has submitted forthe Hospital OQR Program are typicallydisplayed on CMS Web sites such as theHospital Compare Web site, http://www.hospitalcompare.hhs.gov, after apreview period. The Hospital CompareWeb site is an interactive Web tool thatassists beneficiaries by providinginformation on hospital quality of care.This information motivates beneficiariesto work <strong>with</strong> their doctors and hospitalsto discuss the quality of care hospitalsprovide to patients, providingadditional incentives to hospitals toimprove the quality of care that theyfurnish.Under our current policy, we publishquality data by the correspondinghospital CCN, and indicate instanceswhere data from two or more hospitalsare combined to form the publiclyreported measures on the HospitalCompare Web site. This approach isconsistent <strong>with</strong> the approach takenunder the Hospital IQR Program.Consistent <strong>with</strong> our current policy, wemake Hospital OQR data publiclyavailable whether or not the data havebeen validated for payment purposes.In general, we strive to displayhospital quality measures on theHospital Compare Web site as soon aspossible after they have been adoptedand have been reported to CMS.However, if there are unresolved displayissues or pending design considerations,we may make the data available onother, non-interactive, CMS Web sitessuch as http://www.cms.hhs.gov/HospitalQualityInits/. Publicly reportingthe information in this manner, thoughnot on the interactive Hospital CompareWeb site, allows us to meet therequirement under section1833(t)(17)(E) of the Act for establishingprocedures to make quality datasubmitted available to the publicfollowing a preview period. When wedisplay hospital quality information onnon-interactive CMS Web sites, affectedparties will be notified via CMSlistservs, CMS email blasts, nationalprovider calls, and QualityNetannouncements regarding the release ofpreview reports followed by the postingof data on a Web site other thanHospital Compare.We also require hospitals to completeand submit a registration form(‘‘participation form’’) in order toparticipate in the Hospital OQRProgram. With submission of thisparticipation form, participatinghospitals agree that they will allow CMSto publicly report the quality measuredata submitted under the Hospital OQRProgram, including measures that wecalculate using Medicare claims.<strong>Comment</strong>: A commenter urged CMSto continue using both the stakeholderand focus groups to develop andevaluate terminology for presentingmeasurement data to the public to avoidmisleading and alarming the publicunnecessarily.Response: We appreciate thisfeedback. Prior to presenting newmeasurement topics or new types ofmeasures on the Hospital Compare Website, we strive to incorporate stakeholderfeedback into the display, and to test thedisplay <strong>with</strong> consumers in order toensure that the concepts are easilyunderstood by consumers and that thedisplay and accompanying text will notlead to misinterpretation orinappropriate comparisons.<strong>Comment</strong>: Two commenters believedthat the imaging measures displayed onthe Hospital Compare Web site havecaused confusion regarding how theyshould be interpreted.Response: Currently, we aredisplaying the imaging efficiencymeasures as rates or ratios as well asobserved averages and rates bypercentile among all those facilities thatmeet the minimum case count (aminimum case count is needed forstatistical validity purposes. We plan toevaluate whether alternative ways ofdisplaying efficiency measures, such ascategorical displays, may be moreinformative to consumers than thecurrent method of displaying themeasures.<strong>Comment</strong>: A commenter suggestedlinking cost data to publicly displayedquality data. Another commenter wasconcerned that posting data in multipleplaces other than Hospital Comparemay cause confusion. A commenterrecommended that CMS postpone thedisplay of data <strong>with</strong> issues on HospitalCompare to a later date when the issuesare resolved rather than displaying themat a different site temporary. A fewcommenters were concerned that theHospital OQR data on Hospital Comparemay be outdated, and urged CMS toconsider a more current time frame fordisplaying outpatient quality measuresto provide more timely and accurateinformation for the public. For futuredisplay of e-measures, a commenterurged CMS to indicate the method ofdata collection (that is, electronic versuschart-abstracted) on Hospital Compareso that consumers are aware of thedifferent collection methods used.Response: We use the HospitalCompare Web site as the primaryvehicle for displaying hospital qualitydata reported for the Hospital OQRProgram. As we stated in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 72070), the data wedisplay on Web sites other than HospitalCompare is displayed on a temporarybasis because of pending display designand other unresolved issues so as to notconfuse beneficiaries who intend to usedata in making healthcare decisions.Once an appropriate display mechanismhas been determined, the information isadded to the Hospital Compare Website. The data for the Hospital OQRProgram are made available on theHospital Compare Web site as soon aspossible, and the most recent timeperiods for the data that are available tous are posted on the Web site. Thechart-abstracted measure data arerefreshed on a quarterly basis, and theclaims-based and structural measuresare refreshed once annually. Wecurrently provide information on thedata sources for the various measures onHospital Compare under the‘‘information for professionals’’ link,which is accessible to the public. Wewill consider alternatives to make thisinformation more transparent to thepublic.B. Revision to Measures PreviouslyAdopted for the Hospital OQR Programfor the CY 2013, and CY 2014 PaymentDeterminations1. BackgroundWe refer readers to the followingOPPS/ASC final rules <strong>with</strong> commentperiods for a history of measuresadopted for the Hospital OQR Program,including lists of: 11 measures adoptedfor the CY 2011 payment determination(74 FR 60637); 15 measures adopted forthe CY 2012 payment determination (75FR 72083 through 72084); 23 measuresadopted for the CY 2013 paymentdetermination (75 FR 72090); and 23measures adopted for the CY 2014payment determination (75 FR 72094).The table below also shows the 23measures previously adopted for thesepayment determinations:BILLING CODE 4120–01–PVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00333 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74454 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–CWe received specific comments,discussed below, on some of thesepreviously finalized measures.• OP–3 Median time to transfer toanother facility for acute coronaryinterventionVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00334 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2<strong>Comment</strong>: One commenterrecommended the retirement of thismeasure but provided no rationale forthe recommendation.ER30NO11.125

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74455jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Response: <strong>Period</strong>ically, we performmeasure review for relevancy, potentialtopped-out status, program alignment,and harmonization. We have notobserved any evidence indicating thatthe measure should be retired at thistime. This measure is important becauseit measures the promptness of careintervention for life threateningcoronary events, which is associated<strong>with</strong> better outcomes for patientsexperiencing such events.• OP–4: Aspirin at Arrival and OP–5:Median Time to ECG<strong>Comment</strong>: A commenter disagreed<strong>with</strong> the inclusion code for ‘‘Chest PainNot Elsewhere Classified (NEC)’’ for theidentification of probable cardiac chestpain cases in these two measures.Response: We disagree <strong>with</strong> thecommenter that this code should beexcluded. By including this code, wetake into account the wide variability ofpatient symptoms and how health careproviders use codes to capturesymptoms of chest pain. According tothe ICD–9 manual, this code applies tosymptoms of discomfort in chest, chestpressure and tightness in chest. Thesesymptoms are also associated <strong>with</strong>cardiac chest pain. Because OP–4 andOP–5 are process measures which assessthe use of aspirin and ECG in patientssuspected of having cardiac chest pain,we believe that all codes in the claimsdata that indicate capture chest painshould be used to identify these typesof patients.• OP–9: Mammography Follow-upRates• OP–10: Abdomen CT—Use ofContrast Material• OP–14: Simultaneous Use of BrainComputed Tomography (CT) andSinus Computed Tomography (CT) *<strong>Comment</strong>: A few commenters urgedCMS to remove the above imagingefficiency measures because they havenot received NQF endorsement and arenot HQA-approved. A few commenterswere concerned that measures OP–9 andOP–10 may cause potential harm.Response: Many of the concernsraised by the commenters about theimaging efficiency measures we adoptedfor the CY 2011 payment determinationwere also raised at the time thesemeasures were first proposed for the CY2010 payment determination. Weresponded to these concerns when weadopted the measures (73 FR 68762through 68766). We stated that themeasures meet the statutoryrequirement of reflecting consensusamong affected parties because of theirconsensus-based development, and thatthe measures address important patientsafety concerns related to exposure tounnecessary radiation and contrastmaterials. We also stated that theSecretary is not required to limitmeasures considered for Hospital OQRProgram adoption only to those adoptedby the HQA or endorsed by the NQF.We have not found any evidence thatimplementation of these three measuresresults in patient harm.• OP–13: Cardiac imaging forpreoperative risk assessment for noncardiaclow risk surgery• OP–14: Simultaneous use of braincomputed tomography (CT) and sinuscomputed tomography (CT)• OP–15: Use of brain computedtomography (CT) in the ED foratraumatic headache<strong>Comment</strong>: A commenterrecommended that for initialimplementation of new imagingmeasures, CMS should keep the ‘‘<strong>with</strong>inrange’’ rates broad so that hospitalperformance would not be unfairlypresented.Response: Generally, the hospitaloutpatient imaging efficiency measuresthat we have implemented do notprovide for any targets or ranges.However, the OP–9: MammographyFollow-Up rates measure uses rangesbecause the literature supports specifiedranges. For the other imaging efficiencymeasures, we provide rates or ratios aswell as observed averages and rates bypercentile among all those facilities thatmeet the minimum case count (aminimum case count is needed forstatistical validity purposes).• OP–13: Cardiac imaging forpreoperative risk assessment for noncardiaclow risk surgery<strong>Comment</strong>: A commenter stated thatimaging measures included in theHospital OQR Program are claims-basedand may not indicate the exclusions andjustify the clinical information incontext to support the clinical decisionsfor the imaging studies. The commentergave the example of measure OP–13.The commenter believed that exclusionsshould be added that would recognizeappropriate use of stress imaging inpatients <strong>with</strong> certain clinical eventscoincidentally around the time of the‘‘non-cardiac’’ surgery.Response: We believe that the use ofclaims data is a non-burdensome datacollection approach because hospitalsroutinely submit claims to Medicare forbilling purposes. We are also committedto regularly review whether additionalcodes should be added to determineexclusions and related clinicalinformation.We are aware of the commenter’sconcerns for measure OP–13. Duringdevelopment of the imaging measures,VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00335 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2our technical experts determined thatadditional clinical information beyondwhat is present on claims is notnecessary to identify exclusions.However, we will further considerwhether additional clinical informationwould improve the capture ofexclusions for this and other imagingmeasures during the regularmaintenance process for these measures.• OP–14: Simultaneous use of braincomputed tomography (CT) and sinuscomputed tomography (CT)<strong>Comment</strong>: A commenter believed thatprior to measure implementation, CMSshould include explicit exclusioncriteria for patients <strong>with</strong> signs of seriousinfection.Response: We appreciate thecommenter’s concerns. During thedevelopment of this imaging efficiencymeasure, we completed extensiveliterature reviews and analyzedappropriate medical guidelines todetermine the appropriateness ofimaging studies for various medicalconditions and exclusions. Currently,we exclude claims <strong>with</strong> primary orsecondary diagnosis codes related totrauma, tumor, orbital cellulitis, orintracranial abscess from the measure aslong as these diagnoses were includedin one of the diagnoses fields on theBrain CT claim. We regularly reviewmeasures to determine whetheradditional codes should be added inorder to determine exclusions. To date,we have not identified any scientificliterature or guidelines that wouldindicate that simultaneous brain andsinus CT imaging would be necessaryfor patients <strong>with</strong> signs of seriousinfection. However, we will review thissuggestion <strong>with</strong> our technical expertsduring regular maintenance of themeasure.<strong>Comment</strong>: A commenter noted thatOP–14 has too many similarities <strong>with</strong>measure OP–15. The commenterbelieved that there is little benefit inthis measure because the sample size forpatients having both scans may be smallat many facilities and that more andmore facilities have multi-slice scannersthat are capable of reconstructing thedata to better evaluate the sinuses<strong>with</strong>out requiring rescanning <strong>with</strong>additional radiation.Response: While we recognize thatOP–14 and OP–15 may be similar, OP–14’s specific focus is reducingunnecessary scans of adjacent bodyparts, when one scan is clinicallyappropriate. We recognize that smallcase counts can be problematic forfacilities that do not perform a sufficientvolume of CT imaging studies. For thisreason, we will establish a minimum

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274456 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationscase count requirement for thesemeasures for public reporting purposes.Regarding the comment on the impact ofimaging technology on imagingefficiency measure results, currently, wedo not collect any information regardingwhat level of CT technology isemployed by a facility. Therefore, it isnot currently possible to adjust the CTmeasures in this manner.• OP–15: Use of brain computedtomography (CT) in the ED foratraumatic headache<strong>Comment</strong>: A commenter noted thatcertain conditions such as HIV/AIDS,cancer, visual disturbance, protractednausea and vomiting should be added tothe exclusions, as well as structuralpathologies and all codes forneurological signs of cerebral origin.Response: We thank the commenterfor the suggestions and will take theminto consideration in our measuremaintenance process.<strong>Comment</strong>: A few commentersopposed measure OP–15 because it isnot NQF-endorsed. <strong>Comment</strong>ers statedthat the measure is a utilization measurerather than an efficiency measure. Thecommenters added that there was noscientific basis to suggest this measureaddresses patient safety. <strong>Comment</strong>ersurged CMS to reconsider the adoption ofmeasure OP–15, considering potentialtort liability in the ED if imaging doesnot occur, and the potential positiveimpact on quality of life for patients.Response: The objective of imagingefficiency measures, including OP–15,is to promote efficient and high qualitypatient care in the hospital outpatientsetting that neither underutilizes norover utilizes healthcare resources.Unnecessary or duplicative studies areinefficient and detrimental to thepatient because CT exposes the patientto higher doses of radiation thanconventional x rays and increases thepatient’s risk for cancer. An analysis of2007 Medicare claims data indicatedthat approximately 200,000 Medicarebeneficiaries had a visit to the ED <strong>with</strong>a primary diagnosis of headache <strong>with</strong>about half of them receiving a brain CTduring the ED visit. We encourage useof this important diagnostic tool whenclinically indicated.Earlier this year, we conducted a dryrun of the measure and received manysuggestions for refinements to themeasure in order to better addresscircumstances in which such imaging isclinically indicated. We intend to haveour technical expert panel examine thesuggestions we have received regardingthe measure during the dry run as wellas the comments we have receivedduring this public comment period andduring the maintenance process for thismeasure. We intend to incorporaterefinements arising out of this process,such as the formulation andincorporation of addition exclusioncriteria to be applied to the measurespecifications and calculations, prior toimplementing public reporting of themeasure.• OP–16: Troponin results for ED acutemyocardial infarction patients orchest pain patients received <strong>with</strong>in 60minutes of arrival<strong>Comment</strong>: One commenter urgedCMS not to adopt this measure, basedon the assertion that the measure is nota good marker for quality and it mayhave the unintended consequences ofprolonging other ED patients’ wait timesfor lab results.Response: We are aware thatTroponin assessment may not be theonly component of a diagnostic workupof patients <strong>with</strong> chest pain. The focus ofthis measure is on the timeliness of thereceipt of the Troponin results and noton its use or interpretation by HOPDs.However, we believe that use of theTroponin test facilitates decisionmaking in the treatment of timesensitive conditions such as AMI. Forthis reason, we believe timeliness of theavailability of the test results is a markerof quality because it results more timelytreatment decisions and treatmentdelivery, which in turn results in betteroutcomes for patients.• OP–17: Tracking clinical resultsbetween visits<strong>Comment</strong>: A commenter suggested theinclusion of a ‘‘N/A’’ option for hospitaloutpatient departments, in the eventthat lab tests or diagnostic studies areordered by physicians or outsidevendors not working for the hospital.One commenter believed this measure ismore appropriate for the HITECH EHRIncentive Program as a meaningful usedecision support or surveillanceelement.Response: The use of a ‘‘N/A’’ optionwould be inconsistent <strong>with</strong> the intent ofthe measure. The structural measure isdesigned to assess the ability of HOPDsto track results of clinical tests betweenthe patient visits. This would be true ofthe facility even in cases where tests areordered by someone not employed bythe facility. The ability to track theseresults allows facilities to see anychanges in values or trends which mayindicate a change in a patient’scondition over time.• OP–19: Transition record <strong>with</strong>specified elements received bydischarged patient<strong>Comment</strong>: A few commenterssupported providing patients <strong>with</strong> fullVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00336 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2transition information includingdiagnosis at discharge or chiefcomplaint, patient instructions, plan forfollow-up care, and list of newmedications <strong>with</strong> quantity dispensed.However, other commenters wereconcerned about the burden ingenerating and providing patients <strong>with</strong>a copy of all major procedures and testsperformed during ED visits. Somecommenters recommended delayingimplementation of this measure untilEHRs have the functionality to generatereal time diagnosis information andcopies of all major procedures and testsperformed during an ED visit forpatients.Response: We appreciate the supportand the recommendations from thecommenters. This measure coversoutpatient ED encounters only (notother HOPD encounters), and we believethat the HOPD should be able toaccurately document diagnostic testsand procedures performed at the facilityduring the ED visit. If the principaldiagnosis has not been determined priorto discharge, the specifications state thatthe chief complaint can be used tocomply <strong>with</strong> the measure.We do not believe it is necessary todelay the implementation of thismeasure because many EDs are alreadykeeping track of patient encounters andrelated tests and procedures during theED visit. We do not believe it will incurmuch burden to report the data.Additionally, certified EHR technologyalready has the functionality to generatereal time diagnosis information andcopies of procedures and testsperformed during an ED visit.<strong>Comment</strong>: Some commentersrequested that CMS clarify on theapplicability of this measure for patientsput on observation. Some commentersnoted that observations patients may beunder the care of non-ED physicians.Response: Currently, observationpatients discharged from the ED wouldbe captured. However, not allobservation patients at the hospital maybe seen in or discharged through the ED.We believe this information should beprovided for all observation patients,regardless of whether an ED physicianwas responsible for their care. Weintend to revisit how this populationcan be better defined for the hospitaloutpatient department as a whole <strong>with</strong>our technical expert panel during themaintenance of this measure.<strong>Comment</strong>: A commenter requested theexclusion of the discontinuedmedications from the specified elementsfor this measure. The commenterrecommended that only medicationsprescribed or dispensed by the EDshould be included since changes to a

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74457jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2patient’s home medication list seldomoccur in ED visit. Another commenterinquired if all the required dataelements for this measure are includedin the Specifications Manual.Response: There is only one dataelement (Transition Record received) inthis measure and this data elementcontains several components.Discontinued medications is one of thecomponents in this data element on theED Measure Information Form: List ofnew medications and changes tocontinued medications that patientshould take after ED discharge, <strong>with</strong>quantity prescribed and/or dispensed(OR intended duration) and instructionsfor each medication. The medicationsdiscontinued as a result of the ED visitshould be listed to ensure that thepatient does not continue taking themafter discharge. This would mean achange to the list of home medications.Thus, documentation of discontinuedmedication is an essential part of theinstructions given to a patient upondischarge. Therefore, the transitionrecord should contain a summary of thecare, including discontinued medicationinstruction provided during the EDencounter.• OP–21: ED-Median time to painmanagement for long bone fracture<strong>Comment</strong>: Two commenters believedthat this measure should includeNSAIDS, such as ibuprofen on theanalgesic medication list as some EDphysicians use them to treat pain forlong bone fractures.Response: We acknowledge theimportance of listing all possibleanalgesics in the treatment of long bonefractures in the list of analgesics for OP–21 provided in Table OP 9.1 AnalgesicMedications of the Hospital OQRSpecifications Manual. We will considerincluding ibuprofen as a recommendedmedication in the list of analgesicsduring the next Specifications Manualupdate. However, we emphasize that thepurpose of OP–21 is to measure themedian time to analgesic administrationin long bone fractures rather than tomeasure the type of analgesicadministered. The list of analgesicmedications in the Specification Manualare only suggestions.<strong>Comment</strong>: A commenter contendedthat this measure does not account forthose patients that do not receive painmedication, and questioned howpatients not being treated would beappropriately captured.Response: The commenter is correct,this measure assesses whether patients<strong>with</strong> long bone fracture who receivedanalgesics did so in a timely manner.During measure development, ourtechnical expert panel decided not tocreate a measure of administration/lackof administration. We will revisitwhether a separate measure is needed,or whether lack of administrationshould be addressed in the existingmeasure <strong>with</strong> our technical expertpanel.• OP–23: ED–Head CT scan results foracute ischemic stroke or hemorrhagestroke who received head CT scaninterpretation <strong>with</strong>in 45 minutes ofarrival<strong>Comment</strong>: One commenter believedthat this measure is more appropriate asan inpatient measure rather than anoutpatient measure.Response: We believe that timelyinterpretation of head CT scan resultsfor acute ischemic stroke or hemorrhagestroke patients is important in bothinpatient and outpatient settings. Thismeasure is appropriate to measure thequality of care in the outpatient setting,given that the goals of this measure areto encourage hospitals to assess andimprove timeliness of diagnosticreports, clinical decision making, and asa result, reduce unnecessary length ofstay in the ED. We expect the measurewould reduce radiology reportturnaround times and expedite theformulation of ED patient treatmentplans.The measure is limited to patientsseen in the ED and subsequentlydischarged or transferred. This measureis designed to capture those patientsthat are not admitted to the facilityassociated <strong>with</strong> the ED that sees theminitially, which would be a significantpopulation not accounted for <strong>with</strong> aninpatient measure.<strong>Comment</strong>: One commenter supportedmeasure OP–23 but requested that CMSexclude patients who present to the EDin cardiopulmonary arrest and patientswho suffer a cardiac or pulmonary arrestrequiring resuscitation <strong>with</strong>in 45minutes of arrival to the ED forstabilization, before even consideringsending them to CT for a head CT.Response: We believe that the numberof patients who present to the ED incardiopulmonary arrest and who suffera cardiac or pulmonary arrest requiringresuscitation <strong>with</strong>in 45 minutes ofarrival to the ED for stabilization andeventually survive will be minimal(patients who expire are excluded fromthe measure). However, we will explorewhether excluding cases <strong>with</strong> diagnosiscodes for either Respiratory Arrest(799.1) or Cardiac Arrest (427.5) wouldbe feasible and appropriate during themaintenance of the measure.<strong>Comment</strong>: A commenter requestedthat CMS model measure OP–23 after aVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00337 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2TJC stroke care measure that requires abrain imaging study to be read in thehospital <strong>with</strong>in 45 minutes of the timeit was ordered, as opposed to <strong>with</strong>in 45minutes of a patient’s arrival (whichOP–23 measures).Response: We appreciate thisfeedback. Because the therapeutic timewindow for treatment possibilities iscritical, timely completion and resultsof the CT or MRI scan soon after patientarrival are imperative and will directlyimpact the quality of care a patientreceives. Because results will only bedelivered if ordered, this measureimplies that tests will be ordered timelyas well, so that they can be read <strong>with</strong>in45 minutes of a patient’s arrival.<strong>Comment</strong>: A commenter stated thatcurrent evidence indicates that as anacute stroke brain imaging modality,MRI is equally good or better than CTin diagnosing stroke. Therefore, thecommenter recommended changing thetitle of the measure to read Brain CT orMRI scan results from acute ischemicstroke or hemorrhagic stroke whoreceived brain CT or MRI scaninterpretation <strong>with</strong>in 45 minutes ofarrival.Response: We appreciate the feedbackand will consider this suggestion in ourmeasure review.<strong>Comment</strong>: Several commentersrecommended the retirement of allstructural measures adopted in theHospital OQR Program as thecommenters did not believe thesemeasures can be validated and usuallythey are not tied to quality.Response: We do not agree <strong>with</strong> thecommenters’ statements that structuralmeasures are not tied to quality.Structural measures assess operationalconditions that are associated <strong>with</strong>better quality, and therefore warrantmeasurement and inclusion in this andother quality reporting programs.2. Revision to OP–22—Left WithoutBeing SeenIn the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period, we finalized theadoption of the chart-abstractedmeasure OP–22—Left Without BeingSeen (75 FR 72088 through 72089). Thismeasure was endorsed (NQF # 0499) aspart of an NQF project entitled‘‘National Voluntary ConsensusStandards for Emergency Care.’’ Thismeasure assesses the percentage ofpatients who leave the EmergencyDepartment (ED) <strong>with</strong>out beingevaluated by qualified medicalpersonnel, which is an indication of EDovercrowding, and lack of timely accessto care. In the CY 2012 OPPS/ASCproposed rule (76 FR 42315), weproposed that beginning <strong>with</strong> the CY

74458 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES22013 payment determination, hospitalswould submit aggregate numerator anddenominator counts once a year using aWeb-based form available through theQualityNet Web site for this measure.We stated that this proposed processwould be different from that which isused to collect other chart-abstractedmeasures because it would not requirehospitals to submit patient-levelinformation for this measure, and wouldnot require quarterly submission of data.We believe this proposed process willreduce the potential data collection andsubmission burden for this measure.We proposed that for the CY 2013payment determination, datasubmission for this measure wouldoccur between July 1, 2012 and August15, 2012. We also proposed that for theCY 2013 payment determination, theaggregate counts for the numerator (thetotal number of patients who left<strong>with</strong>out being evaluated by a physician/advance practice nurse/physician’sassistant) and the denominator (totalnumber of patients who signed in to beevaluated for emergency services)would be submitted by hospitals andwould span the time period fromJanuary 1, 2011 through December 31,2011. We invited public comment onthis proposed approach to datacollection for OP–22 for the CY 2013Hospital OQR Program and subsequentpayment determinations, and on thetime period to be assessed for thismeasure for the CY 2013 paymentdetermination. We made the proposedupdated specifications for this measureavailable in the July 2011 Hospital OQRSpecifications Manual.<strong>Comment</strong>: A few commenterssupported the proposed revision for thecollection of aggregate counts of thenumerator and the denominator formeasure OP–22 for burden reductionpurposes. A commenter suggested CMSstudy the results for systematicallyhigher rates for certain types ofhospitals such as safety net hospitals sothat appropriate adjustments can bemade. One commenter was concernedabout including this measure in pay forreporting or public reporting but did notprovide a reason. Furthermore, thecommenter recommended changing thismeasure into a structural measure andhaving it reported on an annual basis.One commenter contended that themeasure is not a quality of care measureand is hard to validate since there areunderlying patient records from whichto pull the data and added that themeasure should not be implemented.Response: We thank the commentersfor their support of aggregate reportingfor this measure and their suggestionsfor monitoring this measure fordifferences by type of hospital (forexample, safety net hospitals). We pointout that the measure would be reportedonce annually by hospitals. Thismeasure is NQF-endorsed as a measureof ED quality. We have not proposed tovalidate this measure.<strong>Comment</strong>: Several commenters statedthat it is burdensome to retrieve theaggregate data retroactively sincehospitals may not have beenaccustomed to collecting the data foraggregate reporting purposes, andindicated that the time period hospitalsshould begin reporting for this measureshould begin after this final rule <strong>with</strong>comment period is issued rather thanCY 2011 as proposed. Othercommenters believed that the long lapseof time between 2011 and 2013 wouldmake the data irrelevant. Onecommenter suggested moving thereporting window to July 1, 2013 toAugust 15, 2013 instead of July 1, 2012and August 15, 2012 as proposed.Another commenter suggested delayingimplementation of this measure untilthe data can be submitted electronically.Response: We believe that mostHOPDs are already tracking the numberof patients that leave the emergencydepartment <strong>with</strong>out being seen throughvarious logs (for example, triage orpresentation logs). We note thatelectronic systems are not needed toreport the measure. However, inresponse to the public comments wereceived regarding the burden forretroactive retrieval of aggregate data,we will finalize the time window for theinitial reporting of this measure for theCY 2013 payment determination tobegin on January 1, 2012 through June30, 2012. The data submission windowfor this measure for the CY 2013payment determination will be July 1,2012 through August 15, 2012.<strong>Comment</strong>: One commenter requestedclarification regarding whether theproposed revisions to the measure areendorsed by the NQF. A commenterrequested the definitions of ‘‘beingseen,’’ ‘‘left <strong>with</strong>out being seen,’’ as wellas clarifications for the inclusion orexclusion of patients who have beentriaged but not evaluated by aphysician/advance practice nurse/physician’s assistant, for data collectionpurposes.Response: The revisions do notchange the NQF endorsed measurespecifications. Only the form, manner,and timing of data submission to CMSare changed. We have not revised thismeasure or its measure specifications. Inthe current measure specification, wedefined ‘‘being seen’’ as being evaluatedby a physician or advance practicenurse or physician’s assistant.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00338 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2After consideration of publiccomment received, we are finalizing ourproposal that for the CY 2013 paymentdetermination, <strong>with</strong> respect to OP–22–Left Without Being Seen, HOPDs will berequired to report only aggregate countsfor the numerator (the total number ofpatients who left <strong>with</strong>out beingevaluated by a physician/advancepractice nurse/physician’s assistant) andthe denominator (total number ofpatients who signed in to be evaluatedfor emergency services). In response tocomments, we are finalizing that HOPDswill be required to submit the databetween July 1, 2012 and August 15,2012 <strong>with</strong> respect to the period January1, 2012 through June 30, 2012, and willbe required to submit the data using aWeb-based form for this measureavailable on the QualityNet Web site.C. New Quality Measures for the CY2014 and CY 2015 PaymentDeterminations1. Considerations in Expanding andUpdating Quality Measures Under theHospital OQR ProgramIn general, when selecting measuresfor the Hospital OQR Program, we takeinto account several considerations andgoals. These include: (a) Expanding thetypes of measures beyond process ofcare measures to include an increasednumber of outcome measures, efficiencymeasures, and patients’ experience-ofcaremeasures; (b) expanding the scopeof hospital services to which themeasures apply; (c) considering theburden on hospitals in collecting chartabstracteddata; (d) harmonizing themeasures used in the Hospital OQRProgram <strong>with</strong> other CMS qualityprograms to align incentives andpromote coordinated efforts to improvequality; (e) seeking to use measuresbased on alternative sources of data thatdo not require chart abstraction or thatutilize data already being reported bymany hospitals, such as data thathospitals report to clinical dataregistries, or all-payer claims data bases;and (f) weighing the relevance andutility of the measures compared to theburden on hospitals in submitting dataunder the Hospital OQR Program.Specifically, we assign priority toquality measures that assessperformance on: (a) Conditions thatresult in the greatest mortality andmorbidity in the Medicare population;(b) conditions that are high volume andhigh cost for the Medicare program; and(c) conditions for which wide cost andtreatment variations have been reported,despite established clinical guidelines.We used and continue to use thesecriteria to guide our decisions regarding

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74459jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2what measures to add to the HospitalOQR Program measure set.In the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period, we adopted fourclaims–based quality measures that donot require a hospital to submit chartabstractedclinical data (73 FR 68766).This supports our goal of expanding themeasures for the Hospital OQR Programwhile minimizing the burden uponhospitals and, in particular, <strong>with</strong>outsignificantly increasing the chartabstraction burden. In addition toclaims-based measures, we areconsidering registries and EHRs asalternative ways to collect data fromhospitals.A registry is a collection of clinicaldata for purposes of assessing clinicalperformance, quality of care, andopportunities for quality improvement.Many hospitals submit data to andparticipate in existing registries. Inaddition, registries often captureoutcome information and provideongoing quality improvement feedbackto registry participants. Instead ofrequiring hospitals to submit the samedata to CMS that they are alreadysubmitting to registries, we could collectthe data directly from the registries <strong>with</strong>the permission of the hospital, therebyenabling us to expand the Hospital OQRProgram measure set <strong>with</strong>out increasingthe burden of data collection for thosehospitals participating in the registries.The data that we would receive fromregistries would be used to calculatequality measures required under theHospital OQR Program, and would bepublicly reported like other HospitalOQR Program quality measures,encouraging improvements in thequality of care. In the CY 2010 OPPS/ASC final rule <strong>with</strong> comment period (74FR 60633), we responded to publiccomments on such an approach.In the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period, we also statedour intention to explore mechanisms fordata submission using EHRs (73 FR68769). When we refer to the term‘‘Qualified EHR,’’ we intend for it tohave the same meaning as set forth bythe Office of the National Coordinatorfor Health Information Technology(ONC) (45 CFR 170.102) which hasadopted the statutory definition ofQualified EHR found in section3000(13) of the Public Health ServiceAct. That section defines a QualifiedEHR as ‘‘an electronic record of healthrelatedinformation on an individualthat—(A) includes patient demographicand clinical health information, such asmedical history and problem lists; and(B) has the capacity—(i) to provideclinical decision support; (ii) to supportphysician order entry; (iii) to captureand query information relevant to healthcare quality; and (iv) to exchangeelectronic health information <strong>with</strong>, andintegrate such information from othersources.’’ Additionally, when we referto the term, Certified EHR Technology,we intend for it to have the samemeaning as set forth by the ONC at 45CFR 170.102 as follows: ‘‘Certified EHRTechnology’’ means (1) A complete EHRthat meets the requirements included inthe definition of a Qualified EHR andhas been tested and certified inaccordance <strong>with</strong> the certificationprogram established by the NationalCoordinator as having met all applicablecertification criteria adopted by theSecretary; or (2) a combination of EHRModules in which each constituent EHRModule of the combination has beentested and certified in accordance <strong>with</strong>the certification program established bythe National Coordinator as having metall applicable certification criteriaadopted by the Secretary, and theresultant combination also meets therequirements included in the definitionof a Qualified EHR.Establishing a data submissionmechanism using EHRs will requireinteroperability between EHRs and ourdata collection systems, additionalinfrastructure development on the partof hospitals and CMS, and the adoptionof standards for the capturing,formatting, and transmission of dataelements that make up the measures.However, once these activities areaccomplished, the adoption of measuresthat rely on data obtained directly fromEHRs would enable us to expand theHospital OQR Program measure set <strong>with</strong>less cost and burden to hospitals. In theCY 2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60633 through60634), we responded to publiccomments on such an approach.Continuing to reduce our reliance onthe chart-abstraction mechanism wouldallow us and hospital outpatientdepartments to devote availableresources towards maximizing thepotential of registries and EHRs forquality measurement reporting. Bothmechanisms hold the promise of moresophisticated and timely reporting ofclinical quality measures. Clinical dataregistries allow the collection of moredetailed data, including outcomes.Registries can also provide feedback andquality improvement information basedon reported data. <strong>Final</strong>ly, clinical dataregistries can also receive data fromEHRs, and therefore, serve as analternative means to reporting clinicalquality data extracted from an EHR.In the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period (75 FR 72071through 72174), we added newVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00339 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2measures over a three year period forthe CY 2012, CY 2013, and CY 2014payment determinations. We believethis process will assist hospitals inplanning, meeting future reportingrequirements, and implementing qualityimprovement efforts. We will also havemore time to develop, align, andimplement the infrastructure necessaryto collect data on the measures andmake payment determinations. The factthat we finalized measures for a threeyear period of time (for example, for theCY 2012, CY 2013 and CY 2014payment determinations in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod) does not preclude us fromproposing to adopt additional measuresor changing the list of measures forthese payment determinations throughsubsequent rulemaking cycles that affectthese future payment determinations.We have previously expanded theHospital OQR Program measure setdramatically by adopting measures overseveral payment determinations in orderto allow hospital outpatientdepartments adequate time to plan andimplement the reporting of quality datafor the CY 2012, CY 2013 and CY 2014payment determinations. In the CY 2012OPPS/ASC proposed rule (76 FR 42317),we proposed to add new measures tothe existing Hospital OQR measure setfor the CY 2014 payment determinationand proposed to add new measures forthe CY 2015 payment determination.<strong>Comment</strong>: Many commenters stronglysupported CMS’ goal to move fromprocess measures to primarily outcomeand patient experience of care measures.<strong>Comment</strong>ers encouraged measurealignment across payers using NQFendorsedmeasures. To alleviate burdenfrom chart-abstraction, commentersprovided the following suggestions forCMS:• Identify measures suitable forregistry-based reporting in the nearfuture. <strong>Comment</strong>ers described manyadvantages in using registries such asless resources are needed to report data,and timely analysis of existing practicesto improve the quality of care.• Retire unnecessary measures.• Add measures linked to healthoutcomes.• Limit the number of new chartabstractedmeasures in the HospitalOQR Program.Response: We appreciate the valuableinput from commenters. As discussed inprevious rules, we are supportive ofregistry-based measurement whichholds promise for reducing burden.During our measure maintenanceprocess, we review the improvementpotential for a measure, the measure’scontinued support by scientific

74460 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2evidence, any new evidence indicatingthe measure may cause harm to patientsor no longer represents best practice,duplicative measures, and whether ameasure could be replaced by anoutcome measure. In our discussion ofmeasure selection criteria, we state ourintention to focus on outcome measureswhenever possible. Additionally, ourgoal is to reduce burden and minimizethe number of chart-abstractedmeasures.<strong>Comment</strong>: A commenter stronglyrecommended that in future measureproposals, CMS should: (1) Clearlyarticulate the specific patient inclusioncriteria for the measure; and (2) selectcodes that are appropriate for claimsbasedmeasures in HOPD settings.Response: We note that we providemeasure specifications or links tomeasure specifications, includingpatient inclusion criteria and theappropriate codes for claims-basedmeasures for the proposed measures, atthe time we propose them to assist thepublic, during the public commentprocess.2. New Hospital OQR Program QualityMeasures for the CY 2014 PaymentDeterminationAs stated above, the CY 2014 measureset for the Hospital OQR Programcurrently contains 23 measures that weadopted in the CY 2011 OPPS/ASC finalrule <strong>with</strong> comment period (75 FR72094). In the CY 2012 OPPS/ASCproposed rule (76 FR 42317 through42323), we proposed to adopt a numberof additional measures for the CY 2014measure set.a. Proposed National Healthcare SafetyNetwork (NHSN) Healthcare AssociatedInfection (HAI) Measure for the CY 2014Payment Determination: Surgical SiteInfection (NQF #0299)Healthcare Associated Infections(HAIs) is a topic area widelyacknowledged by HHS, the Institute ofMedicine (IOM), the National PrioritiesPartnership, and others as a highpriority requiring measurement andimprovement. HAIs are among theleading causes of death in the UnitedStates. CDC estimates that as many as 2million infections are acquired eachyear in hospitals and result inapproximately 90,000 deaths. 1 It isestimated that more Americans die eachyear from HAIs than from auto accidentsand homicides combined. HAIs not onlyput the patient at risk, but also increase1 McKibben. L., Horan, T.: Guidance on publicreporting of healthcare-associated infections:Recommendations of the Healthcare InfectionControl Practices Advisory Committee. AJIC 2005;33:217–26.the days of hospitalization required forpatients and add considerable healthcare costs. HAIs are largely preventablethrough interventions such as betterhygiene and advanced scientificallytested techniques for surgical patients.Therefore, many health care consumersand organizations are calling for publicdisclosure of HAIs, arguing that publicreporting of HAI rates provides theinformation health care consumers needto choose the safest hospitals, and giveshospitals an incentive to improveinfection control efforts. This proposedmeasure is currently collected by theNational Healthcare Safety Network(NHSN) as part of State-mandatedreporting and surveillance requirementsfor hospitals in some States.Additionally, data submission for thismeasure through EHRs may be possiblein the near future.The NHSN is a secure, Internet-basedsurveillance system maintained andmanaged by the CDC, and can be usedby all types of healthcare facilities in theUnited States, including acute carehospitals, long term acute carehospitals, psychiatric hospitals,rehabilitation hospitals, outpatientdialysis centers, ambulatory surgerycenters, and long term care facilities.The NHSN is provided free of charge tohospitals. The NHSN enables healthcarefacilities to collect and use data aboutHAIs, clinical practices known toprevent HAIs, the incidence orprevalence of multidrug-resistantorganisms <strong>with</strong>in their organizations,and other adverse events. Some Statesuse the NHSN as a means for healthcarefacilities to submit data on HAIsmandated through their specific Statestatute. Currently, 21 States requirehospitals to report HAIs using theNHSN, and the CDC supports more than4,000 hospitals that are using NHSN.Increasingly, more surgicalprocedures are being performed inhospital outpatient department settingsand ASCs. Therefore, we havedetermined that this measure is‘‘appropriate for the measurement of thequality of care furnished by hospitals inoutpatient settings’’ as required undersection 1833(t)(17)(C)(i) of the Act. Thisproposed HAI measure assesses thepercentage of surgical site infectionsoccurring <strong>with</strong>in 30 days after anNHSN-defined operative procedure if noimplant is left in place or <strong>with</strong>in oneyear if an implant is in place, and theinfection appears to be related to theoperative procedure. Infections areidentified on original admission or uponreadmission to the facility of originaloperative procedure <strong>with</strong>in the relevanttime frame (30 days for no implants;<strong>with</strong>in 1 year for implants). TheVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00340 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2specifications for this proposed HAImeasure can be found at http://www.cdc.gov/nhsn/psc.html.We also believe that this measuremeets the requirement under section1833(t)(17)(C)(i) of the Act thatmeasures selected for the Hospital OQRProgram ‘‘reflect consensus amongaffected parties and, to the extentfeasible and practicable, shall includemeasures set forth by one or morenational consensus building entities.’’This measure was NQF-endorsed in2007 and was adopted by the HospitalQuality Alliance in 2008. We note thatthis measure also was adopted for theHospital IQR Program beginning <strong>with</strong>the FY 2014 payment determination (75FR 50211) and its adoption into theHospital OQR Program would furtherour goal of aligning measures acrossprograms where feasible.We proposed that submission of datafor this proposed NHSN measure for theCY 2014 payment determination wouldrelate to infection events occurringbetween January 1, 2013 and June 30,2013. We proposed that hospitaloutpatient departments use the existingNHSN infrastructure and protocols thatalready exist for this proposed measureto report it for Hospital OQR Programpurposes. We invited public commenton our proposal to adopt this HAImeasure into the Hospital OQR Programfor the CY 2014 payment determination.<strong>Comment</strong>: Some commenters stated itis inappropriate to include the surgicalsite infection measure in the HospitalOQR Program based on the measure’sNQF endorsement status as an inpatientsetting measure. The commenters notedthat the measure is appropriate for theinpatient setting because the majority ofpatients stay in the hospital several dayspost-surgery. However, the commentersstated that, in the outpatient settings,patients are discharged <strong>with</strong>in hours ofsurgery and potential outpatient surgeryrelated infections may not haveoccurred until after discharge.<strong>Comment</strong>ers cited the examples of colonsurgery and abdominal hysterectomy,specified for reporting in the HospitalIQR Program, which are seldomperformed in hospital outpatientsettings.Response: We agree that currently, theprocedures included in the proposedsurgical site infection measure do notrepresent a large number of proceduresthat are performed in hospitaloutpatient departments or in ASCs.Based on the public comments wereceived, we are not finalizing thesurgical site infection measure forHOPDs for the CY 2014 paymentdetermination at this time. We intend tore-propose the measure through future

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74461jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2rulemaking once measurement andoperational issues for HOPDs areresolved. We will continue tocoordinate <strong>with</strong> the CDC and monitorefforts for adapting the surgical siteinfection measure to the outpatientsetting, and will propose a surgical siteinfection measure for the Hospital OQRProgram when a more suitable set ofprocedures has been defined for theoutpatient setting.<strong>Comment</strong>: A commenter contendedthat currently, less than half of theStates required hospitals to report toNHSN. The commenter soughtclarification on CMS’ plan to collectdata from facilities that do not currentlyreport to NHSN. A commenter requestedmore detailed discussion of the NHSNvalidation process for HOPDs, such aswhat kind of sample list of patients thathospitals have to provide, and whatformat would be used.Response: As of September 2011, 26States have opted to use NHSN as theoperational system for HAI reportingmandates in their State. As of January 1,2011, subsection (d) hospitalsparticipating in the Hospital IQRProgram began submitting CLABSI datato the NHSN. At this time, we are notfinalizing our adoption of the NHSN SSImeasures for HOPDs for the CY 2014payment determination. Should werequire reporting through NHSN for thisprogram in the future, facilities notcurrently participating in NHSN wouldneed to enroll and submit data to NHSNin order to meet the requirements for theHospital OQR Program. Also, in theevent that a surgical site infectionmeasure is implemented in the futurethrough the NHSN, CMS and CDC willcollaborate to develop a validationstrategy for surgical site infection data.<strong>Comment</strong>: Some commentersapplauded the addition of the surgicalsite infection measure in recognition ofthe significant negative impact of HAIson hospital patients. <strong>Comment</strong>ersrecommended that CMS adopt one totwo of the NQF-endorsed CDC/NHSNoutpatient surgical procedures initiallyand they encouraged the inclusion ofmore HAI measures in the Hospital OQRProgram in the future. A commenterindicated that proposal of this measurealigns <strong>with</strong> The Joint Commission’sNational Patient Safety Goals.Response: We thank the commentersfor their support and encouragement forHAI measures. To advance the goals ofthe HHS Action Plan to Reduce HAIs inhealthcare facilities, we will strive toinclude more HAI measures in theHospital OQR Program as appropriate inthe future. As explained above, we arenot finalizing our proposal to adopt theNHSN HAI surgical site infectionmeasure at this time. We intend topropose a surgical site infectionmeasure at such time as a set ofprocedures more suitable for theoutpatient setting is identified.<strong>Comment</strong>: A commenter was skepticalabout the CDC’s system capability tohandle the influx of NHSN measure datafrom the Hospital OQR and HospitalIQR Programs, as well as the qualityreporting programs for ASCs, LTCHsand Inpatient Rehabilitation Facilities.A commenter noted that CDC is stillconducting pilot testing of vendorcapability to electronically transfer data.Response: In preparation for theupcoming influx of data, CDC is addingcapacity, both personnel and technicalinfrastructure, to support the additionaluse of NHSN. CDC is confident thatthese upgrades will enable the system tosuccessfully accept data that is reportedunder our quality programs.<strong>Comment</strong>: A commenter stated thatsome HOPDs could have high surgicalsite infection rates because they haveadopted more comprehensive andsophisticated surveillance systems.Response: Surveillance efforts mayinitially result in an increased numberof infections being detected thatpreviously may have gone undetectedfor all HOPDS’s participating in theprogram, because they are now requiredto submit data for this measure.However, accurate measurement isnecessary in order to assess meaningfulimprovements in outcomes. Accuratemeasurement of surgical site infectionsis dependent upon standardized datacollection protocols for such things aspost-procedure follow up and datavalidation programs that are consistent<strong>with</strong> already existing post-procedureprotocols in HOPDs or that can beincorporated into those protocols wherethey need to be introduced. Withinitiation of this measure, all facilitieswill be submitting the same type of datausing a standardized collectionprotocol, and therefore morecomprehensive and sophisticatedsurveillance systems would notnecessarily equate to a greater numberof surgical site infections. In many waysthose facilities <strong>with</strong> comprehensive andsophisticated surveillance systems maybe at an advantage, relative to those<strong>with</strong>out sophisticated surveillancesystems, in the identification of surgicalsite infections earlier on.<strong>Comment</strong>: A commenter noted thatCDC is currently collaborating <strong>with</strong>surgical associations to develop andharmonize a more robust surgical siteinfection measure that would beconsistent <strong>with</strong> the approaches andexpertise of both organizations.Therefore, the commenter urgedVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00341 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2postponing the surgical site infectionmeasure until the harmonizationprocess is complete.Response: The commenter is correctin that the CDC is currently working<strong>with</strong> the American College of Surgeons(ACS) to develop a harmonized surgicalsite infection measure. When a measurethat is better suited for the HOPD settingis fully developed, we will re-proposethe measure. As previously indicated,CMS is not finalizing the surgical siteinfection measure for HOPDs at thistime.After consideration of the publiccomments we received, we are notfinalizing the surgical site infectionmeasure that we proposed to adopt forHospital OQR Program. We intend to reproposethe surgical site infectionmeasure though future rulemaking oncemeasurement and operational issues forHOPDs are resolved.b. New Chart-Abstracted Measures forthe CY 2014 Payment DeterminationIn the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period, we stated that wewould not finalize five proposed NQFendorseddiabetes care measuresbecause we were in the process ofrefining the chart-abstracted numeratordefinitions for these measures (75 FR72091). We also stated that we intendedto again propose to adopt thesemeasures for the CY 2014 paymentdetermination. In the CY 2012 OPPS/ASC proposed rule (76 FR 42317through 42319), we proposed to adoptthese five diabetes care measures for theCY 2014 payment determination aschart-abstracted measures. These fivemeasures are: (1) Hemoglobin A1cManagement (NQF #0059); (2) DiabetesMeasure Pair: A. Lipid Management:Low Density Lipoprotein Cholesterol(LDL–C) < 130, B. Lipid Management:LDL–C < 100 (NQF #0064); (3) Diabetes:Blood Pressure Management (NQF#0061); (4) Diabetes: Eye Exam (NQF#0055); and (5) Diabetes: Urine ProteinScreening (NQF #0062). We note thatthese five measures are electronicallyspecified. We hope to be able to collectsuch information via EHRs in the future,and in the proposed rule we solicitedcomments on using EHR for datacollection in the future. In addition, inthe CY 2012 OPPS/ASC proposed rule(76 FR 42319 through 42320), weproposed to adopt a sixth new chartabstractedmeasure, CardiacRehabilitation Patient Referral from anOutpatient Setting (NQF #0643), for theCY 2014 payment determination.• Five Diabetes Care MeasuresFor detailed descriptions of the fivediabetes care measures we proposed to

74462 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2adopt for the Hospital OQR Program,please refer to the CY 2012 OPPS/ASCproposed rule (76 FR 42317 through42319).<strong>Comment</strong>: A few commenterssupported the addition of the proposedchart-abstracted measures for the CY2014 payment determination.Response: We thank the commentersfor their support of these measures. Webelieve they will help assess careprovided to patients seen in hospitaloutpatient clinics for management ofchronic conditions.<strong>Comment</strong>: Many commenters notedthat the proposed addition of six chartabstractedmeasures in the HospitalOQR Program for the CY 2014 paymentdetermination does not appear to beconsistent <strong>with</strong> CMS’ goal to reduceburden for providers. One commentersuggested that CMS provide per caseabstraction time burden in the proposal.<strong>Comment</strong>ers strongly recommended thatno new chart-abstracted measuresshould be introduced while providersare in transition to ICD–10. Manycommenters were very concerned aboutthe burden from the proposed additionof chart-abstracted measures, in terms ofstaff training, coordination of datasubmission, data quality checks, andstaff resources. <strong>Comment</strong>ersrecommended delaying theimplementation of the proposed chartabstractedmeasures to the CY 2015payment determination as the targetdate. Other commenters suggested thatwe delay the implementation for thesechart-abstracted measures until NQFfinishes retooling and testing the relatedspecifications, and EHR technology canfacilitate electronic data transmission.Response: We are aware of the burdenthat HOPDs would face if we finalizedall of the proposed chart-abstractedmeasures, as well as the challenges thatproviders may face as they adopt ICD–10. Based upon consideration of thepublic comments we received regardingthis burden and the need to furtherspecify these diabetes care measures forthe hospital outpatient setting, we havedecided not to finalize the 5 proposeddiabetes care measures at this time. Weintend to further refine the measures foruse in the hospital outpatient settingand re-propose these measures at afuture date when the denominators andnumerators are more refined for theHOPD setting and they would be lessburdensome for HOPDs to implement.<strong>Comment</strong>: Many commenters stronglysupported the diabetes care measure setand believed it would improve qualityof care for diabetic patients <strong>with</strong> comorbidities.However, thesecommenters were very concerned thatdata collection may be overwhelming<strong>with</strong>out a clear definition of the targetpatient population. <strong>Comment</strong>ersasserted that CMS needs to providemore precise specifications to identifythe appropriate patient populationinclusions and exclusions for thesemeasures. The commenters explainedthat many patients that visited hospitaloutpatient departments do so to receivediagnostic reports, lab work, andtreatments ordered by their primary carephysicians. Therefore, thesecommenters believed that hospitals thatdo not have diabetes clinics should beheld accountable for outpatients’diabetes lab work ordered by primarycare physicians practice outside thehospital outpatient setting. Somecommenters opposed the diabetes caremeasure set and believed they would bebetter suited for the PQRS Programwhere patients are being followed on along-term basis whereas much of thecare in the HOPD setting is episodic oreven fragmented. One commenterrecommended that CMS use data beingsubmitted by HOPDs to diabetesregistries instead of collecting data.Response: Diabetes is prevalent in theMedicare population, and many patients<strong>with</strong> diabetes receive ongoingevaluation management services inhospital outpatient department clinics.These diabetes measures align <strong>with</strong>measures which are also currently inuse in the PQRS and HITECH EHRIncentive Program. We also believe thatboth the facility and the affiliatedphysician(s) play a role in ensuring thattheir patients received quality andcoordinated care. We thank thecommenter for the suggestion of usingregistries. Based upon consideration ofthe public comment regarding theburden and the need to further specifythese measures for the hospitaloutpatient setting, we have decided notto finalize these 5 diabetes caremeasures at this time.<strong>Comment</strong>: A few commentersprovided suggestions to modify thediabetes care measure specifications to:(1) Limit the denominator population tocapture only primary care providerbasedclinics that are under the OPPSsystem; (2) incorporate electronic labdata; (3) evaluate the appropriateness ofusing CPT-category II codes (notcurrently used in OPPS billing) or acorresponding algorithm to conveyquality data codes; (4) use NPI specialtynumbers to track associated clinicsresponsible for the diabetes caremeasures; and (5) include at least aminimum number of visits per patientbefore a patient would be included inthe denominator.Response: We thank the commentersfor the valuable suggestions and willVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00342 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2take them into consideration inrefinement of the measures for thehospital outpatient setting.After consideration of the publiccomment regarding burden and the needto further specify these measures for thehospital outpatient setting, we havedecided not to finalize these 5 diabetescare measures at this time. We intend tofurther refine the measures for use inthe hospital outpatient setting and reproposethese measures at a future date.Cardiac Rehabilitation Measure: PatientReferral From an Outpatient Setting(NQF #0643)Cardiac rehabilitation improves thequality of life, reduces modifiablecardiovascular risk factors, enhancesadherence to preventable medications,and lowers morbidity and mortality. 2Despite these benefits, cardiacrehabilitation is significantly underusedby patients <strong>with</strong> heart disease and thereis significant geographical variation inreferral rates and lower use in women,non-whites, older patients and patientson Medicaid. 3 A recent study ofMedicare beneficiaries, using 70,040matched pairs of patients hospitalizedfor coronary conditions orrevascularization procedures, found thatmortality rates were 21 percent to 34percent lower in cardiac rehabilitationusers compared to nonusers. 4 Evidencefrom registries which include a cardiacrehabilitation performance measureindicated that only about 18 percent ofeligible patients were referred to cardiacrehabilitation. 5 Under our regulations,42 CFR 410.49, cardiac rehabilitation iscovered for patients who have had oneor more of the following: An acutemyocardial infarction <strong>with</strong>in thepreceding 12 months, current stableangina, individuals who haveundergone coronary bypass surgery, apercutaneous coronary intervention orcoronary stenting, heart valve repair orreplacement, or a heart-lung transplant.In May 2010, the NQF endorsed twocardiac rehabilitation referralperformance measures as part of the call2 Wenger, N.K.: Current status of cardiacrehabilitation. J. Am Coll Cardiol 2008; 51:1619–1631.3 Suaya, J.A., Shepard, D.S., Normand, S.L., et al.:Use of cardiac rehabilitation by Medicarebeneficiaries after myocardial infarction or coronarybypass surgery. Circulation. 2007;116:1653–62.4 Suaya, J.A., Stason, W.B., Ades, P.A., et al.:Cardiac rehabilitation and survival in oldercoronary patients. J. Am Coll Cardiol. 2009;54:25–33.5 Chan, P.S., Oetgen, W.J., Buchanan, D., Mitchell,K. et al.: Cardiac performance measure complianceon outpatients: The American College of cardiologyand National Cardiovascular data registry’sPINNACLE (Practice Innovation and ClinicalExcellence) program. J. Am Coll Cardiol 2010 56(1)8–14).

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74463jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2for care coordination performancemeasures. These measures are: (1)Cardiac Rehabilitation: Patient ReferralFrom an Inpatient Setting (NQF #0642).The percentage of patients admitted tothe hospital <strong>with</strong> a qualifyingcardiovascular disease (CVD) event whoare referred to an early outpatientcardiac rehabilitation/secondaryprevention program; and (2) CardiacRehabilitation: Patient Referral From anOutpatient Setting (NQF #0643)—Thepercentage of patients evaluated in anoutpatient setting who in the previous12 months experienced an acutemyocardial infarction or chronic stableangina or who have undergone coronaryartery bypass (CABG) surgery, apercutaneous coronary intervention(PCI), cardiac valve surgery (CVS), orcardiac transplantation who have notalready participated in an earlyoutpatient cardiac rehabilitation/secondary prevention program for thequalifying event and who are referred toan early outpatient cardiacrehabilitation/secondary preventionprogram unless there is a documentedmedical or patient oriented reason whya referral was not made. We proposed toadopt the second (NQF #0643) of thesemeasures for the CY 2014 Hospital OQRProgram. The measure specifications arelocated in Appendix A (Pages A4 andA5) of the 2010 NQF consensus reportentitled ’’ Preferred Practices andPerformance Measures for Measuringand Reporting Care Coordination’’which is available at the following link:http://www.qualityforum.org/Publications/2010/10/Preferred_Practices_and_Performance_Measures_for_Measuring_and_Reporting_Care_Coordination.aspx.This proposed measure targetspatients who have experienced aqualifying cardiovascular event. Thesepatients are commonly seen in hospitaloutpatient departments and, for thisreason, we believe that the proposedmeasure is appropriate for themeasurement of the quality of care(including medication errors) furnishedby hospitals in outpatient settings asrequired under section 1833(t)(17)(C)(i)of the Act. The measure also is NQFendorsed,and therefore meets therequirement that measures selected forthe program ‘‘reflect consensus amongaffected parties and, to the extentfeasible and practicable, that thesemeasures include measures set forth byone or more national consensusbuilding entities’’ under section1833(t)(17)(C)(i) of the Act.We proposed to adopt the NQFendorsedCardiac Rehabilitation PatientReferral from an Outpatient Settingmeasure for CY 2014 paymentdetermination. The goal of this measureis to improve the delivery of cardiaccare in order to reduce cardiovascularmortality and morbidity and optimizethe health of patients suffering fromCVD.In the proposed rule we invitedpublic comment on this proposedmeasure.<strong>Comment</strong>: Many commenters werevery supportive of the cardiacrehabilitation referral measure whichthey believed would encouragehospitals to take responsibility forpatient care beyond the cardiovascularinterventions. <strong>Comment</strong>ers stated thatfacilities <strong>with</strong> electronic patientmanagement systems would generatemore physician referrals to cardiacrehabilitation. A commenterrecommended that the measure shouldbe included in the Hospital IQRProgram as well so that the continuityof care for cardiovascular events can bebetter enhanced. A commenter alertedCMS that some registries alreadyintegrate both the inpatient andoutpatient cardiac referral measures intheir systems to collect data.Response: We thank the commentersfor the support. We agree that a similarmeasure in the hospital inpatient settingwould be beneficial from a continuity ofcare perspective and we thank thecommenter for the suggestion which wewill consider in future Hospital IQRProgram rulemaking.<strong>Comment</strong>: Some commenters did notsupport this measure for variousreasons. A commenter did not see thereason for hospitals to report thismeasure because presumably, thecardiologist in the cardiac clinic wouldbe reporting this measure. Furthermore,the commenter stated the calculation ofthe percentage of patients evaluated inan outpatient setting who in theprevious 12 months experienced a majorcardiac event, such as heart attack, andreceived treatment for the event in anoutpatient setting would be veryburdensome. The commenter believedthat only highly integrated care system<strong>with</strong> well-structured coordination likeAccountable Care Organizations (ACOs)or comprehensive medical homes havethe capability to compile the dataneeded for this measure.Response: We understand that acardiologist, who works in a cardiologyclinic for a hospital outpatientdepartment, may report cardiacrehabilitation referral to other reportingprograms. However, we continue tobelieve that the measure is valuablebecause it encourages HOPDs tocoordinate the care that their patientsreceive. We want to clarify that CardiacRehabilitation: Patient Referral From anVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00343 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Outpatient Setting (NQF #0643)measures the percentage of patientsevaluated in an outpatient setting who,in the previous 12 months, experienceda qualifying cardiovascular event(which is defined in the NQF-endorsedmeasure specifications). Hospitaloutpatient departments are not requiredunder the measure specifications totrack whether these patients wereactually following the qualifyingcardiovascular event in the last 12months. The measure focuses on theprocess of referring a patient to a cardiacrehabilitation or secondary preventionprogram. The NQF measurespecification for this measure availableat the link above includes the definitionof a referral as ‘‘an officialcommunication between the healthcareprovider and the patient to recommendand carry out a referral order to an earlyoutpatient cardiac rehabilitationprogram.’’ This includes the provisionof all necessary information to thepatient that would allow the patient toenroll in an early outpatient cardiacrehabilitation program. This alsoincludes written or electroniccommunication between the healthcareprovider or healthcare system and thecardiac rehabilitation program thatincludes the patient’s enrollmentinformation for the program.<strong>Comment</strong>: A commenter believed thatthis measure would be very challengingand burdensome for a safety nethospital, because such a hospitalusually does not have an affiliation <strong>with</strong>a cardiac rehabilitation facility, tocollect patient data, since its patients donot visit the hospital on a regular basis.Another commenter viewed thismeasure as merely reporting whether areferral was made <strong>with</strong>out regard towhether the patient ultimately couldaccess or actually received cardiacrehabilitation services. Therefore, thecommenter did not see the tie of thismeasure to quality improvement.Response: We recognize that thismeasure does not focus on whether thepatient actually enrolls in a cardiacrehabilitation or secondary preventionprogram. The measure focuses on theprocess of referring a patient to a cardiacrehabilitation or secondary preventionprogram. We believe that carecoordination processes such as this arean indicator of high quality of caredelivered to HOPD patients by hospitalsincluding safety net hospitals.<strong>Comment</strong>: A commenter urgeddelaying implementation of thismeasure until it is e-specified and canbe reported via EHRs.Response: We do not believe weshould delay the implementation of thismeasure given its beneficial impact on

74464 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationspatient care. We thank the commenterfor the input for e-measure specificationand we will take this into considerationin our e-measure development.After consideration of the publiccomments we received, we arefinalizing the chart-abstracted CardiacRehabilitation Measure: CardiacRehabilitation Patient Referral from anOutpatient Setting measure for CY 2014payment determination. The datacollection requirements for this measureare detailed in the ‘‘Form, Manner, andTiming’’ section of this final rule <strong>with</strong>comment period.c. New Structural MeasuresIn the CY 2012 OPPS/ASC proposedrule (76 FR 42320 through 42323), forthe CY 2014 payment determination, weproposed to add two structuralmeasures: (1) Safe Surgery ChecklistUse; and (2) Hospital OutpatientVolume for Selected Outpatient SurgicalProcedures. In general, structuralmeasures assess the characteristics andcapacity of the provider to deliverquality health care.(1) Safe Surgery Checklist Use MeasureThis proposed structural measureassesses whether a hospital outpatientdepartment utilizes a Safe Surgerychecklist that assesses whether effectivecommunication and safe practices areperformed during three distinctperioperative periods: (1) The periodprior to the administration ofanesthesia; (2) the period prior to skinincision; and (3) the period of closure ofincision and prior to the patient leavingthe operating room. The use of suchchecklists has been credited <strong>with</strong>dramatic decreases in preventable harm,complications and post-surgicalmortality 6 . In November 2010, the NewEngland Journal of Medicine (NEJM)published a study concluding thatsurgical complications were reduced byone-third, and mortality by nearly half,when a safe surgery checklist was used. 7We believe that effectivecommunication and the use of safesurgical practices during surgicalprocedures will significantly reducepreventable surgical deaths andcomplications. For example, mistakes insurgery can be prevented by ensuringthat the correct surgery is performed onthe correct patient and at the correctplace on the patient’s body. 8 A safesurgery checklist would also reduce thepotential for human error, which webelieve would increase the safety of thesurgical environment.The safe surgery checklists of whichwe are aware typically include safesurgery practices corresponding to threecritical perioperative periods: Theperiod prior to the administration ofanesthesia, the period prior to skinincision, and the period of closure ofincision and prior to the patient leavingthe operating room. Some examples ofsafe surgery practices that can beperformed during each of these threeperioperative periods are shown in thetable below:jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2One example of a checklist that listssafe surgery practices during each ofthese three perioperative periods is the6 Haynes, A.B.; Weiser, T.G.; Berry, W.G. et. al(2009). ‘‘A Surgical Safety Checklist to ReduceMorbidity and Mortality in a Global Population.’’.New England Journal of Medicine. 360: 491–499.World Health Organization SurgicalSafety Checklist, which was adopted byThe World Federation of Societies of7 de Vries EN, Prins HA, Crolla RMPH, et al.Effect of a comprehensive surgical safety system onpatient outcomes. N Engl J Med 2010;363: 1928–37VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00344 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Anesthesiologists as an internationalstandard of practice. This checklist canbe found at: http://www.who.int/8 Hospital National Patient Safety Goals. The JointCommission Accreditation Hospital Manual, 2011.http://www.jointcommission.org/standards_information/npsgs.aspxER30NO11.126

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74465jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2patientsafety/safesurgery/ss_checklist/en/index.html. The adoption of astructural measure that assesses SafeSurgery Checklist use would align ourpatient safety initiatives <strong>with</strong> those ofseveral surgical specialty societiesincluding: The American College ofSurgeons’ Nora Institute for PatientSafety, the American Society ofAnesthesiologists, TJC, the NationalAssociation for Healthcare Quality andthe Association of periOperativeRegistered Nurses (AORN). For thisproposed structural measure, a hospitaloutpatient department would indicatewhether or not it uses a safe surgerychecklist for its surgical procedures thatincludes safe surgery practices duringeach of the three critical perioperativeperiods discussed above. The measurewould assess whether the hospital usesa safe surgery checklist in the hospitaloutpatient department for surgicalprocedures, but would not require ahospital to report whether it uses achecklist in connection <strong>with</strong> anyindividual outpatient procedures.The proposed Safe Surgery Checkliststructural measure is not NQF-endorsed.However, we believe that consensusamong affected parties can be reflectedthrough means other than NQFendorsement including: Consensusachieved during the measuredevelopment process; consensus shownthrough broad acceptance and use ofmeasures; and consensus through publiccomment. The proposed safe surgerychecklist measure assesses the adoptionof a best practice for surgical care thatis broadly accepted and in widespreaduse among affected parties. In additionto being adopted by The World Federalof Societies of Anesthesiologists, the useof a safe surgery checklist is one of thesafe surgery principles endorsed by theCouncil on Surgical and PerioperativeSafety, which is comprised of theAmerican Association of NurseAnesthetists, American College ofSurgeons, American Association ofSurgical Physician Assistants, AmericanSociety of Anesthesiologists, AmericanSociety of PeriAnesthesia Nurses,AORN, and Association of SurgicalTechnologists. Two State agencies(Oregon, South Carolina), the VeteransHealth Administration, 9 numeroushospital systems, State hospitalassociations (such as California, andSouth Carolina), national accreditingorganizations and large private insurershave endorsed the use of a safe surgerychecklist as a best practice for reducing9 Neily, J; Mills, PD, Young-Xu, Y. (2010).‘‘Association between implementation of a MedicalTeam Training Program and Surgical Mortality’’.JAMA. 304 (15): 1693–1700.morbidity, mortality, and medicalerrors. 10 11 Because the use of a safesurgery checklist is a widely acceptedbest practice for surgical care, webelieve that the proposed structuralmeasure of Safe Surgery Checklist usereflects consensus among affectedparties. We also note that TJC includedsafe surgery checklist practices amongthose to be used to achieve NationalPatient Safety Goals (NPSGs) adoptedfor 2011 for surgeries performed inambulatory settings and hospitals.For the CY 2014 paymentdetermination, we proposed that datacollection for this structural measure forhospital outpatient departments will befrom July 1, 2013 through August 15,2013 for the time period January 1, 2012through December 31, 2012. These datawill be collected via a Web-based toolavailable on the QualityNet Web sitethat is currently employed for thecollection of structural measures for theHospital IQR Program and the HospitalOQR Program. In the proposed rule weinvited public comments on ourproposal to add this new structuralmeasure to the CY 2014 Hospital OQRProgram measure set.<strong>Comment</strong>: Many commenterssupported the measure and werepleased that CMS cited the WHO’sSurgical Safety Checklist as a reference.A commenter recommendedincorporating the WHO’s Surgical SafetyChecklist as an Appendix in theSpecifications Manual. A fewcommenters commended CMS’ efforts toalign the Safe Surgery Checklistmeasure in both hospital outpatientdepartments and ASCs to ensure qualityof care across settings. Somecommenters suggested that CMS adoptthe measure in the hospital inpatientsetting.Some commenters appreciated theflexibility provided under the measurethat would allow facilities to develop asafe surgery checklist based on theirown needs and populations served. Acommenter noted that a mandatedspecific checklist may interfere <strong>with</strong> theability to rapidly implement newevidence-based processes. A commenterrequested finalization of a genericchecklist(s) that is acceptable to havedata elements contained in more thanone form (for example, intra-operativerecord, anesthesia record, etc.) asappropriate.10 Haynes, AB; Weiser, TG; Berry, WR et al.(2009) ‘‘A Surgical Safety Checklist to ReduceMorbidity and Mortality in a Global Population’’.NEJM. 360:491–499.11 Birkmeyer, JD (2010) ‘‘Strategies for ImprovingSurgical Quality—Checklists and Beyond.’’ NEJM.363: 1963–1965.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00345 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Response: We appreciate the supportfor the measure designed to assess theadoption of a best practice for surgicalcare to reduce preventable medicalerrors and mortality while givingHOPDs the flexibility to develop theirown checklist that meets their needs.We chose not to finalize any specificchecklist but will consider providinglinks to specific examples of SurgicalSafety Checklists as an Appendix in theSpecifications Manual as recommendedby the commenter. We have proposedthe same measure for ASC QualityReporting Program and will consider itsinclusion in the Hospital IQR Program,as suggested by the commenters, in thefuture.<strong>Comment</strong>: Some commentersrecommended that afterimplementation, CMS should evaluatethe appropriate implementation andutilization of the use of the safe surgerychecklist by providers as indicated inthis measure. <strong>Comment</strong>ers wereconcerned that the use of a surgicalchecklist may result in a documentationtask which does not result in theimproved delivery of care for which thechecklist is intended.Response: We agree <strong>with</strong> thecommenters that the use of a safesurgery checklist as indicated in thismeasure should be implementedappropriately to achieve improveddelivery rather than just createadditional documentation. The use of achecklist is intended to help preventserious medical errors involvingsurgical care such as anesthesia dosingerrors and allergic reactions, wrong sitesurgery, wrong procedure or wrongpatient surgery, and the retention offoreign objects in the body. During ourmeasure maintenance process, we willreview the improvement potential forthis measure, like all the measures weadopted for the Hospital OQR Program,for indication of best practices, amongother review criteria.<strong>Comment</strong>: A commenter suggestedthat this measure should only apply tosurgeries performed in an operatingroom setting because many hospitaloutpatient departments performprocedures (for example, prostatebiopsy, PEG replacement, endoscopy,etc.) in procedure units where safesurgery checklist is not used routinelyin procedure units.Response: This measure applies toany facility where a surgery or otherinvasive procedures occurs rather thanto specific surgical proceduresperformed in a HOPD or individualsurgical patients. Therefore exclusionsof this nature are not needed.<strong>Comment</strong>: A few commenters assertedthat the proposal is only a concept and

74466 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsthat it is not fully developed or NQFendorsed.Additionally, one commenternoted that the introduction of thismeasure would create an undue burdenon hospitals because Medicare NationalCoverage Determinations alreadyspecify no Medicare reimbursement forany adverse event from any aspects ofa surgery. Furthermore, The JointCommission surveys all accreditedinstitutions for surgery checklists as partof its patient safety requirements. A fewcommenters urged CMS to seek NQFendorsement. Another commenter wasskeptical that the proposed Safe SurgeryChecklist attestation could be validatedby CMS and therefore, does not warrantconsideration as a structural measure. Acommenter viewed that the managing ofthe processes around surgical care iswhat improves quality of care, not themere use of a checklist.Response: We disagree that thismeasure is only a concept and not ameasure because it highlights criticalelements that HOPDs could include intheir checklist to avoid preventablemedical errors. We believe the SafeSurgery Checklist complements themanagement of surgical care processesand ultimately contributes to betterpatient outcomes by increasing safesurgery practices and by reducingpreventable human error, andminimizing complications and postsurgicalmortality. To that end, webelieve it warrants inclusion in theHospital OQR Program. At this time wehave not proposed to validate thismeasure.We note that even though thismeasure is not NQF-endorsed, as wehad indicated in the proposed rule, themeasure reflects significant consensusamong affected parties. As stated in theCY 2012 OPPS/ASC proposed rule (76FR 42321), the adoption of thisstructural measure would align ourpatient safety initiatives <strong>with</strong> those ofseveral surgical specialty societiesincluding: The American College ofSurgeons’ Nora Institute for PatientSafety, the American Society ofAnesthesiologists, TJC, the NationalAssociation for Healthcare Quality andthe Association of PeriOperativeRegistered Nurses (AORN).Furthermore, consensus for thismeasure was reflected through broadacceptance and the use of measures. Inaddition to being adopted by the WorldFederation of Societies ofAnesthesiologists, the use of a safesurgery checklist is one of the safesurgery principles endorsed by theCouncil on Surgical and PerioperativeSafety. Some State agencies, Statehospital associations, accreditingorganizations, and the Veterans HealthAdministration also have endorsed theuse of a safe surgery checklist as a bestpractice.Although most of the measures wehave adopted for the Hospital OQRProgram are NQF-endorsed and weprefer to select NQF-endorsed measuresfor the Hospital OQR Program wheneverpossible, we are not required to adoptonly NQF-endorsed measures for theHospital OQR Program. We will take thecomment regarding seekingendorsement of this measure underconsideration.<strong>Comment</strong>: A commenter supportedthe proposed Web-based tool to submitdata as it was perceived as leastburdensome. One commenter indictedthat additional operational details of theWeb-based tool should be provided,such as specification of the file formatfor data submission, given that theformats submitted to the QualityNetwarehouse and to Medicare billing(claims data) are different.Response: We thank the commenter,and agree that this collection methodplaces minimal burden on HOPDs. TheWeb-based tool will not requireuploading files to QualityNet, rather itwill require entry of responses directlyinto a Web form. Details regardingsubmission deadlines are provided inthe ‘‘Form, Manner and Timing’’ sectionof the program requirements included inthis final rule <strong>with</strong> comment period.After consideration of the publiccomments we received, we arefinalizing the Safe Surgery ChecklistUse measure for the CY 2014 paymentdetermination. Data collection andsubmission requirements are shown inthe ‘‘Form, Manner and Timing’’ sectionof the Hospital OQR Programrequirements contained in this finalrule.(2) Hospital Outpatient DepartmentVolume for Selected Outpatient SurgicalProcedures MeasureThere is substantial evidence inrecent peer-reviewed clinical literaturethat volume of surgical procedures,particularly of high risk surgicalprocedures, is related to better patientoutcomes, including decreased surgicalerrors and mortality. 12, 13, 14 This may beattributable to greater experience and/orsurgical skill, greater comfort <strong>with</strong> and,hence, likelihood of application ofstandardized best practices, andincreased experience in monitoring andmanagement of surgical patients for theparticular procedure. For this reason,the National Quality Forum haspreviously endorsed measures of totalall-patient surgical volume for IsolatedCABG and Valve Surgeries (NQF#0124), Percutaneous CoronaryIntervention (PCI) (NQF #0165),Pediatric Heart Surgery (NQF #0340),Abdominal Aortic Aneurism Repair(NQF #357), Esophageal Resection(#0361), and Pancreatic Resection (NQF#0366). Additionally, many consumerorientedWeb sites that display healthcare quality information required to bereported under State law (California,New York, Texas, Washington, Florida,Illinois, Michigan, Oregon) and privateorganizations (Leapfrog Group, U.S.News & World Report) are reportingprocedure volume, in addition toprovider performance on surgicalprocess (SCIP measures) and outcomemeasures (surgical site infection, PatientSafety Indicators, and Mortality), inorder to provide more context toconsumers choosing a health careprovider. The current NQF-endorsedmeasures of procedure volume (notedabove) relate to surgeries performedonly in inpatient settings, and wouldnot be applicable to the types ofprocedures approved to be performed inHOPDs and ASCs.The table below, which shows theproportion of procedures during CY2010 performed in hospital outpatientdepartments stratified by broadcategories, reveals that most hospitaloutpatient procedures (99 percent) fallinto one of 8 categories: Cardiovascular,Eye, Gastrointestinal, Genitourinary,Musculoskeletal, Nervous System,Respiratory, and Skin.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES212 Livingston, E.H.; Cao, J ‘‘Procedure Volume asa Predictor of Surgical Outcomes’’. Edward H.Livingston, Jing Cao JAMA. 2010;304(1):95–97.13 David R. Flum, D.R.; Salem, L.; Elrod, J.B.;Dellinger, E.P.; Cheadle, A. Chan, L. ‘‘EarlyMortality Among Medicare BeneficiariesUndergoing Bariatric Surgical Procedures’’. JAMA.2005;294(15):1903–1908.14 Schrag, D; Cramer, L.D.; Bach, P.B.; Cohen,A.M.; Warren, J.L.; Begg, C.B ’’ Influence of HospitalVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00346 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Procedure Volume on Outcomes Following Surgeryfor Colon Cancer’’ JAMA. 2000; 284 (23): 3028–3035. Maltezou, H.C., Drancourt, M.: Nosocomialinfluenza in children. Journal of Hospital Infection2003; 55:83–91.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74467jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Because surgical volume is associated<strong>with</strong> better quality, and surgicalprocedures are performed in hospitaloutpatient departments, we believe thatsurgical volume is appropriate formeasuring the quality of these eightcategories of surgical proceduresperformed in an HOPD. For the CY 2014payment determination, we proposedthat HOPDs would report all-patientvolume data <strong>with</strong> respect to these eightcategories between the dates July 1,2013 and August 15, 2013 <strong>with</strong> respectto the time period January 1, 2012through December 31, 2012. In otherwords, under this proposal, an HOPDwould report its CY 2012 all-patientvolume data for these eight categories ofprocedures during the 45 day windowof July 1, 2013 to August 15, 2013. Thetable below lists the specific HCPCScodes for each of the 8 procedurecategories for which hospitals would berequired to report the all-patient volumedata. Like the other structural measuresin the Hospital OQR Program, data onthis proposed measure would becollected via an online Web-based toolthat will be made available to HOPDsvia the QualityNet Web site.In the proposed rule we invitedpublic comment on this proposal.<strong>Comment</strong>: A few commenters agreedthat surgical volume can be associated<strong>with</strong> quality but recommended that thevolume data should always be linked tothe corresponding surgical proceduresand not the type of broad procedurecategories as proposed. The commentersasserted that the measure as proposed<strong>with</strong>out associated information onoutcomes or patient-reportedassessment of care may have thepotential to mislead patients andMedicare about the care that providersdelivered. Another commenterrequested that CMS provide data thatindicate a correlation between all-payerdata and Medicare-specific data relatedto outpatient procedure volumes. Acommenter requested a snapshot of howthe surgical procedures volume datawould be displayed on the HospitalCompare Web site.Some commenters opposed theinclusion of the hospital outpatientvolume for selected outpatient surgicalprocedures measure because of concernsregarding the categories and because ofconcerns regarding CPT codes. Somecommenters stated that the proposedprocedures are broad based categories.The commenter stated that <strong>with</strong>out anassociated list of individual CPT codesor families of CPT codes for theseproposed surgical procedures, it wouldbe difficult to differentiate volumevariations for different procedures<strong>with</strong>in the broad surgical procedurecategories. Therefore, the broad-basedsurgical procedure volume informationmay be misinterpreted as overallVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00347 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2indicator of quality for these particularservices. The commenters urged CMS toprovide the measure specifications forthe public to review and comment priorto implementation.Response: We appreciate thecommenters’ input on selected surgicalcategories and CPT codes. As discussedin the proposed rule, our goal for thismeasure is to provide consumers <strong>with</strong>useful information on surgicalprocedure volume in order to assistpatients in making informed healthcaredecisions. Based on the public commentreceived suggesting that the eight broadcategories will not be meaningful toconsumers, we will further identifygroupings of key procedure types <strong>with</strong>inthe 8 broad categories so that they willbe more meaningful to consumers. Wewill include these refinements in thespecifications for the measure that willbe in an upcoming release of theHospital OQR Specifications Manual.<strong>Comment</strong>: Some commentersrecommended less burdensomealternatives to implement this measureas follows: (1) Implement it as a claimsbasedmeasure using the HCPCS codesor CPT codes for hospitals to countnumerators and denominators; (2) placeit in the HITECH EHR IncentiveProgram as one of the meaningful useobjectives; (3) reduce the number ofcategories; (4) expand the submissionwindow beyond the proposed 45-dayER30NO11.127

74468 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationstimeframe; (5) only collect informationon the most frequently performedoutpatient surgeries for all patients andfor Medicare patients rather than thecollection of surgical volume by bodysystem category; or (6) use a structuralmeasure to assess whether hospitalsparticipate in a surgical outcomesregistry to build the evidence base inthis area (that is, linking high volume tobetter outcomes).Response: We thank the commentersfor these suggestions. This informationwill be submitted in aggregate countsonce annually and the counts can begenerated by the HOPD usingadministrative data that is already beingcollected by the HOPD in order toobtain payment for the services theyrender. As a result, we do not believe itwould be overly burdensome forhospitals to submit this informationbased on all-patient data. Currently, weuse a standard 45-day collectionwindow for all of the structuralmeasures. As previously indicatedbased on public comment, we willfurther group procedure types <strong>with</strong>inthe 8 broad categories so that they aremore meaningful to consumers. We willinclude these refinements in thespecifications for the measure that willbe in an upcoming release of theHospital OQR Specifications Manual.<strong>Comment</strong>: A commenter stated that itis imperative that the volume ofprocedures be compared to the numberof physicians performing suchprocedures at the facility level. Thecommenter stated the qualityimplication of a hospital reporting 1,000procedures in a category <strong>with</strong> 50physicians is very different from ahospital reporting 1,000 procedures<strong>with</strong> 500 physicians.Response: We do not haveinformation about the volume ofphysicians performing the procedures<strong>with</strong>in each facility and did not proposeto collect such information fromfacilities in this year’s rule. We willconsider this comment, as well as thefeasibility and burden of HOPDsreporting this information, for futurerules.<strong>Comment</strong>: Some commenters did notsupport this measure based on theassertion that the measure is not NQFendorsed,not approved by HQA, notevidence-based, not a quality measure,and does not meet The JointCommission definition of anaccountability measure. Furthermore,the commenters stated that the data arealready available on many Statesupportedor hospital-specific Websites, and registries. In addition, somecommenters believed that datacollection for this measure would createtremendous burden if the populationinclude all patients and not justMedicare patients.A commenter contended that theproposed measure is only a crudemeasurement tool to monitor surgicalvolume. A few commenters noted thatthere is a lack of evidence linkingvolume of surgical procedure performedin HOPDs or ASCs to quality,not<strong>with</strong>standing the non-HOPD- orASC-specific literature linking volumeof specific high-risk procedures tooutcomes cited by CMS.Response: We do not agree <strong>with</strong> thecomments regarding the suitability ofthis measure. As we indicated in theproposed rule, we believe that thismeasure reflects significant consensusamong affected parties because ofevidence in the peer-reviewed literatureand because this type of information isfrequently displayed on consumerorientedWeb sites that feature qualityinformation.We do not believe that all-patientvolume is burdensome to report, ashospitals could use data to generate theaggregate counts that they would submitonce annually. In the SpecificationsManual, we will include furtherreporting instructions if hospitals do notperform certain procedures.We disagree <strong>with</strong> the concernexpressed regarding the inpatient focusof the literature we cited. We believethat this literature is also relevant toHOPDs. We note that the number ofMedicare-certified HOPDs has increaseddramatically over the years. In addition,an increasing number of procedures thatwere formerly performed primarily inthe inpatient setting are now beingperformed in outpatient settings such asHOPDs and ASCs. We believe that thisgrowth in HOPDs and proceduresperformed in HOPDs underscores theimportance of providing a context forbeneficiaries to assess the number ofselected procedures performed annuallyby any given HOPD.<strong>Comment</strong>: Several commenters askedCMS to identify which procedures areconsidered high risk in HOPDs andASCs. According to the commenters,high-risk procedures are generally notperformed in HOPDs or ASCs.Response: We disagree <strong>with</strong> thiscomment. High risk procedures areperformed in HOPD facilities. Forexample, in 2010 there were more than25,000 arterial transposition proceduresand more than 31,000 endovascularrepairs of the aorta and its branchesperformed in HOPDs. Further, there arerisks associated <strong>with</strong> all surgicalprocedures, and we believe that themore often a surgery is performed in aHOPD, the greater the incentive for theHOPD to implement standardizedpractices that can minimize these risks.At this time, a greater number and typesof surgery are being performed inHOPDs and other outpatient settings. Bycollecting volume of procedures, wewill be able to provide informationabout whether facilities perform aspecific procedure type, and how manyper year. This information is crucial forconsumers trying to make informeddecisions about where to have surgeryperformed. Based on commenters’suggestions, we will further define keyprocedure types <strong>with</strong>in each of the 8broad categories in the Hospital OQRSpecifications Manual so that theinformation will be more useful toconsumers.After consideration of the publiccomments we received, we arefinalizing the Hospital OutpatientVolume Data on Selected OutpatientSurgical Procedures measure for theHospital OQR Program CY 2014payment determination. In response toconcerns regarding the utility of the 8broadly specified categories toconsumers, we will further identify keyprocedure types <strong>with</strong>in each of the 8broad categories for hospitals to report.In summary, in addition to the 23measures we previously adopted for theCY 2014 payment determination in theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period, we are finalizing 1new chart-abstracted measure and 2new structural measures. The completemeasure set (26 measures) for theHospital OQR Program CY 2014payment determination, including themeasures we adopted in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod, is set out in the table below.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00348 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

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74470 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–C3. Hospital OQR Program Measures forthe CY 2015 Payment Determinationa. Retention of CY 2014 Hospital OQRMeasures for the CY 2015 PaymentDeterminationIn general, unless otherwise specified,we retain measures from one paymentdetermination to the next. Accordingly,in the CY 2012 OPPS/ASC proposedrule (76 FR 42323), we proposed that allof the measures we finalize for the CY2014 payment determination continueto be used for the CY 2015 paymentdetermination. We invited publiccomment on this proposal.We did not receive any commentsobjecting to the retention of CY 2014Hospital OQR Measures for the CY 2015payment determination. Therefore, weare finalizing the retention of the 26measures finalized for the CY 2014payment determination for the CY 2015payment determination.b. Proposed NHSN HAI Measure for theCY 2015 Payment DeterminationIn the CY 2012 OPPS/ASC proposedrule (76 FR 42323 through 42324), forthe measure set to be used for the CY2015 payment determination, weproposed to adopt an additional HAImeasure entitled Influenza VaccinationCoverage among Healthcare Personnel(HCP) (NQF #0431). This measure iscurrently collected by the CDC via theNHSN.Rates of serious illness and deathresulting from influenza and itscomplications are increased in high-riskpopulations such as persons over 50years or under four years of age, andpersons of any age who have underlyingconditions that put them at an increasedrisk. HCP can acquire influenza frompatients and can transmit influenza topatients and other HCP. Many HCPprovide care for, or are in frequentcontact <strong>with</strong>, patients <strong>with</strong> influenza orpatients at high risk for complications ofinfluenza. The involvement of HCP ininfluenza transmission has been a longstandingconcern. 15 16 1715 Maltezou, H.C., Drancourt, M.: Nosocomialinfluenza in children. Journal of Hospital Infection2003; 55:83–91.16 Hurley, J.C., Flockhart, S.: An influenzaoutbreak in a regional residential facility. Journal ofInfection Prevention 2010; 11:58–61.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00350 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Vaccination is an effective preventivemeasure against influenza, and canprevent many illnesses, deaths, andlosses in productivity. 18 HCP areconsidered a high priority for expandinginfluenza vaccine use. Achieving andsustaining high influenza vaccinationcoverage among HCP is intended to helpprotect HCP and their patients andreduce disease burden and healthcarecosts. Results of several studies indicatethat higher vaccination coverage amongHCP is associated <strong>with</strong> lower incidenceof nosocomial influenza. 19 20 21 Such17 Salgado, C.D., Farr, B.M., Hall, K.K., Hayden,F.G.: Influenza in the acute hospital setting. TheLancet Infectious Diseases 2002; 2:145–155.18 Wilde, J.A., McMillan, J.A., Serwint, J., Butta,J., O’Riordan, M.A., Steinhoff, M.C.: Effectiveness ofinfluenza vaccine in health care professionals: arandomized trial. The Journal of the AmericanMedical Association 1999; 281:908–913.19 Salgado, C.D., Giannetta, E.T., Hayden, F.G.,Farr, B.M.: Preventing influenza by improving thevaccine acceptance rate of clinicians. InfectionControl and Hospital Epidemiology 2004;25:923–928.20 Potter, J., Stott, D.J., Roberts, M.A., et al.:Influenza vaccination of health-care workers inlong-term-care hospitals reduces the mortality ofelderly patients. Journal of Infectious Diseases 1997;175:1–6.ER30NO11.129

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74471jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2findings have led some to call formandatory influenza vaccination ofHCP. 22 23 24 25 26Until recently, vaccination coverageamong HCP has been well below thenational Healthy People 2010 target of60 percent, 27 but preliminary datasuggest 62 percent of HCP reportedreceiving seasonal influenza vaccine in2009–2010. 28 Only 37 percent reportedreceiving the 2009 pandemic A/H1N1vaccine. 29HCP refers to all personnel working inhealthcare settings who have thepotential for exposure to patients and/or to infectious materials, includingbody substances, contaminated medicalsupplies and equipment, contaminatedenvironmental surfaces, or21 Hayward, A.C., Harling, R., Wetten, S., et al.:Effectiveness of an influenza vaccine programme forcare home staff to prevent death, morbidity, andhealth service use among residents: clusterrandomised controlled trial. British Medical Journal2006; 333:1241–1246.22 Talbot, T.R., Bradley, S.F., Cosgrove, S.E., et al.:SHEA position paper: Influenza vaccination ofhealthcare workers and vaccine allocation forhealthcare workers during vaccine shortages.Infection Control and Hospital Epidemiology 2005;26:882–890.23 American College of Physicians (ACP), ACPpolicy on influenza vaccination of health careworkers.http://www.acponline.org/running_practice/quality_improvement/projects/adult_immunization/flu_hcw.pdf.24 Greene, L.R., Cain, T.A., Dolan, S.A. et al.:APIC position paper: influenza immunization ofhealthcare personnel. Association of Professionalsin Infection Control (APIC). November 2008.http://www.apic.org/Content/NavigationMenu/PracticeGuidance/Topics/Influenza/APIC_Position_Paper_Influenza_11_7_08final_revised.pdf, http://www.apic.org/Content/NavigationMenu/PracticeGuidance/Topics/Influenza/APIC_Position_Paper_Influenza_11_7_08final_revised.pdf.25 National Patient Safety Foundation (NPSF),Mandatory flu vaccinations for healthcare workers.Press Release, November 18, 2009. http://www.npsf.org/pr/pressrel/2009-11-18.php.26 Infectious Diseases Society of America (IDSA),IDSA policy on mandatory immunization of healthcare workers against seasonal and 2009 H1N1influenza. Infectious Diseases Society of America(IDSA). September 30, 2009. http://www.idsociety.org/HCWimmunization/.27 Walker, F.J., Singleton, J.A., Lu, P., Wooten,K.G., Strikas, R.A.: Influenza vaccination ofhealthcare workers in the United States, 1989–2002.Infection Control and Hospital Epidemiology 2006;27:257–265.28 http://www.cdc.gov/mmwr/preview/mmwrhtml/rr55e209a1.htm. Influenza Vaccination of Health-Care Personnel Recommendations of the HealthcareInfection Control Practices Advisory Committee(HICPAC) and the Advisory Committee onImmunization Practices.29 Centers for Disease Control and Prevention,Interim results: Influenza A (H1N1) 2009 andMonovalent Seasonal Influenza VaccinationCoverage Among Health-Care Personnel—UnitedStates August 2009–January 2010. Morbidity andMortality Weekly Report (MMWR); 59:357–362.Available at: http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5912a1.htm.contaminated air. 30 HCP may include(but are not limited to) physicians,nurses, nursing assistants, therapists,technicians, emergency medical servicepersonnel, dental personnel,pharmacists, laboratory personnel,autopsy personnel, students andtrainees, contractual staff not employedby the healthcare facility, and persons(for example, clerical, dietary, housekeeping,laundry, security,maintenance, billing, and volunteers)not directly involved in patient care butpotentially exposed to infectious agentsthat can be transmitted to and from HCPand patients. Settings in which HCPmay work include, but are not limitedto, acute care hospitals, long-term carefacilities, skilled nursing facilities,rehabilitation centers, physicians’offices, urgent care centers, outpatientclinics, home health agencies, andemergency medical services.Currently, four States have ‘‘offer’’laws for influenza vaccination of HCP,meaning that vaccine must be offered toHCP by healthcare facilities; and threeStates (Alabama, California, and NewHampshire) have ‘‘ensure’’ laws forinfluenza vaccination of HCP, meaningthat vaccination of non-immune HCP ismandatory in the absence of a specifiedexemption or refusal; and, additionally,numerous hospitals and otherhealthcare facilities have establishedpolicies requiring mandatory influenzavaccination of their HCP. 31Currently, no State requires thathospitals report this measure to NHSN.However, approximately 13 hospitals(including long term acute care andrehabilitation), outpatient hemodialysiscenters, long term care facilities, andambulatory surgical centers arecurrently reporting HCP immunizationdata to the NHSN. In September 2009,CDC released the Healthcare PersonnelSafety (HPS) Component of the NHSN,which complements Patient Safety andBiovigilance components available inNHSN. The HPS Component replacedCDC’s National Surveillance System forHealth Care Workers (NaSH) and iscomprised of two modules: the Blood/Body Fluid Exposure Module and theInfluenza Vaccination and Management30 Adapted from: Pearson M.L., Bridges C.B.,Harper S.A.: Influenza vaccination of health-carepersonnel: Recommendations of the HealthcareInfection Control Practices Advisory Committee(HICPAC) and the Advisory Committee onImmunization Practices (ACIP). Morbidity andMortality Weekly Report (MMWR) 2006; 55:1–16.Available at: http://www.cdc.gov/mmwr/preview/mmwrhtml/rr5502a1.htm.31 For additional information regarding healthcarefacilities’ influenza vaccine policies, please see:http://www.immunize.org/honor%2Droll/.http://www.immunize.org/honor%2Droll/.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00351 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2and Exposure Module. 32 Currently,participation in either module isvoluntary. The current InfluenzaVaccination and Management andExposure Module may soon offeroptions for healthcare facilities tosubmit vaccination summary data.NHSN plans to partner <strong>with</strong> vendorbasedsurveillance systems to permitperiodic data extractions into NHSN.The modules feature basic, custom,and advanced analysis capabilitiesavailable in real-time, which allowindividual healthcare facilities tocompile and analyze their own data, aswell as benchmark these results toaggregate NHSN estimates. The HPSComponent can assist participatingfacilities in developing surveillance andanalysis capabilities to permit thetimely recognition of HCP safetyproblems and prompt interventions<strong>with</strong> appropriate measures. Influenzavaccination data submitted to CDC willultimately capture regional trends onthe yearly uptake of the vaccine,prophylaxis and treatment forhealthcare personnel, as well as theelements <strong>with</strong>in yearly influenzacampaigns that succeed or requireimprovement. At the State and nationallevels, the HPS Component will aid inmonitoring rates and trends.Due to the significant impact of HCPinfluenza vaccination on patientoutcomes, we believe this measure isappropriate for measuring the quality ofcare in hospital outpatient departments.Healthcare Personnel (HCP) InfluenzaVaccination is one of the HAI measuresthat we proposed to adopt for the FY2015 Hospital IQR Program in the FY2012 IPPS/LTCH PPS proposed rule.This measure assesses the percentage ofhealthcare personnel who have beenimmunized for influenza during the fluseason. The specifications for thismeasure are available at http://www.cdc.gov/nhsn/PDFs/HSPmanual/HPS_Manual.pdf.The proposed HCP InfluenzaVaccination measure is NQF-endorsedfor the hospital setting and applies tothe hospital outpatient setting.Therefore, this measure meets therequirement for measure selection undersection 1833(t)(17)(C)(i) of the Act. Weproposed to adopt the InfluenzaVaccination Coverage among HealthcarePersonnel measure that is collected bythe CDC via the NHSN. The NHSNproposed reporting mechanism for thisproposed HAI measure is discussed ingreater detail in sections XIV.C.2.a. ofthe proposed rule and this final rule<strong>with</strong> comment period. We proposed that32 Available at: http://www.cdc.gov/nhsn/hps.htmlhttp://www.cdc.gov/nhsn/hps.html.

74472 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationshospital outpatient departments use theNHSN infrastructure and protocol toreport the measure for Hospital OQRpurposes. We invited public commenton our proposal to adopt this HAImeasure into the Hospital OQR Programfor the CY 2015 payment determination.<strong>Comment</strong>: Many commentersapplauded the reporting of the influenzavaccination coverage among healthcarepersonnel measure in recognition of itsimportance in preventing transmissionof influenza in hospital and ASCsettings. However, commenters wereconcerned that the associated datacollection is too labor-intensive, sincethe NQF specifications for denominatorand numerator involve both employeesand non-employees. To overcome thedata collection challenges, thecommenters recommended CMS/CDCtesting of the NHSN–HCP module,which is being modified to acceptaggregate data instead of individuallevel data, in inpatient settings prior toimplementation in the outpatientsetting. <strong>Comment</strong>ers noted that themeasure should not be finalized untilNQF has finished its review on theproposed modifications for thedenominator submitted by CDC.Furthermore, commenters remarked thatdelaying the measure to CY 2016 wouldallow HOPDs to gain experience <strong>with</strong>the revised NHSN module as well assynchronize the implementation date ofthis measure <strong>with</strong> that of the ASCQuality Reporting Program.Response: We thank the commentersfor their support of the measure andrecognize its significance in preventinginfluenza transmission. CDC hassubmitted a revised measure proposal toNQF based on results of field testing, inits efforts to streamline data collection.The revised measure proposal reducesdenominator data collection toemployee healthcare personnel, definedas staff on facility payroll, and twocategories of non-employee healthcarepersonnel: (1) Licensed independentpractitioners, that is, physicians,advance practice nurses, and physicianassistants, and (2) student trainees andadult volunteers. CDC has indicated thatNQF’s final review of the NHSN–HCPmodule and an endorsement decisionare pending. Therefore, we are notfinalizing this measure for CY 2015payment determination in thisrulemaking, but intend to propose aninfluenza vaccination measure for theCY 2016 payment determination.<strong>Comment</strong>: A few commenters statedthat the influenza vaccination coverageamong healthcare personnel measurelacks the supporting evidence that linkspatients contracting influenza toambulatory procedures.Response: Several randomizedclinical trials in healthy working-ageadults have shown that influenzavaccination reduces infection, illness,antibiotic use, medical visits, and lostwork days. 33 34 Influenza vaccinationalso reduces influenza virus sheddingand reduces transmission of influenza toothers through prevention of infection.In addition, studies show thathealthcare personnel continue to workwhile ill, including when ill <strong>with</strong>influenza. 35 Therefore, preventinginfluenza illness in healthcarepersonnel is important to reduce patientexposures to influenza-infected personsin the healthcare setting.Although no studies have been donein the outpatient setting to assessreductions in illness among patients dueto healthcare personnel vaccination,studies have been done in hospitals andnursing homes demonstrating the risk ofhealthcare-acquired influenza in thesesettings. One study in a hospital andthree studies in long-term care facilitieshave demonstrated reductions in patientillness and mortality <strong>with</strong> healthcarepersonnel influenza vaccination. Theevidence that influenza vaccination ofhealthcare personnel reduces disease inhospital and nursing home residentsshould be generalizable to outpatientsettings based on knowledge of thebenefits of influenza vaccination inworking-age adults and anunderstanding of influenzatransmission.<strong>Comment</strong>: A commenter wasconcerned that hospitals may beunfairly penalized when there is ashortage of flu vaccines.Response: We are not finalizing thismeasure at this time, but we intend tore-propose this measure for a futurepayment determination in order toallow more time for CDC to addressinfrastructure capacity to accept thedata from an increasing number ofprovider types. The purpose of themeasure is to track vaccination rates;therefore, in the event of a vaccinationshortage, it is still important to monitorand track this measure. However, ifsuch a measure is adopted and a largescalevaccination shortage occurs, wewill consider temporarily suspendingdisplay of the measure on HospitalCompare.<strong>Comment</strong>: A commenter wasconcerned about potential duplicativeefforts since some States alreadymandate vaccination of healthcareworkers and public reporting ofhealthcare vaccination rates.Response: We were informed by CDCthat in the event that the measure isadopted in the Hospital OQR Program,it will strive to standardize thereportable quality measure at State andfederal levels. Standardizing reportablehealthcare quality measurements is apriority because that reduces reportingburden while preserving theopportunities to use those data fordifferent purposes at the State andfederal levels.<strong>Comment</strong>: A commenterrecommended the influenza vaccinationmeasure for healthcare personnel beinclusive of all employees of the facilityand not split out as inpatient andoutpatient settings. Another commenterstated that the measure should allowhealthcare personnel to choose thevaccination type or brand mostappropriate for them.Response: The measure does notspecify which vaccination types orbrand the healthcare personnel shouldreceive. As stated previously, we are notfinalizing this measure for the HospitalOQR Program at this time.After consideration of the publiccomments we received, we are notfinalizing the HCP InfluenzaVaccination measure for CY 2015payment determination in this final rule<strong>with</strong> comment period, but intend topropose a HCP Influenza Vaccinationmeasure for the CY 2016 paymentdetermination once measurerefinements and operational issues havebeen addressed.The complete measure set for theHospital OQR Program CY 2015payment determination is set out in thetable below.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES233 Bridges CB, Thompson WW, Meltzer MI, et al.Effectiveness and cost-benefit of influenzavaccination of healthy working adults: arandomized controlled trial. JAMA 2000; 284:1655–63. (adults employed at a manufacturingplant).34 Bridges CB, Thompson WW, Meltzer MI, et al.Effectiveness and cost-benefit of influenzavaccination of healthy working adults: Arandomized controlled trial. JAMA 2000; 284:1655–63. (adults employed at a manufacturingplant).VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00352 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR235 Wilde JA, McMillan JA, Serwint J, Butta J,O’Riordan MA, Steinhoff MC. Effectiveness ofinfluenza vaccine in health care professionals. Arandomized trial. JAMA 1999;281:908–13.

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74474 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and RegulationsBILLING CODE 4120–01–CD. Possible Quality Measures UnderConsideration for Future Inclusion inthe Hospital OQR ProgramThe current measure set for HospitalOQR includes measures that assessimaging efficiency patterns, caretransitions, and the use of HIT. In theCY 2012 OPPS/ASC proposed rule, weproposed to add measures to the CY2014 and CY 2015 measure setsaddressing care coordination, patientsafety, volume, and prevention ofinfluenza.In previous years’ rulemakings, wehave provided lists of measures that areunder consideration for future adoptioninto the Hospital OQR measure set.Below is a list of potential measurementareas that we set out in the CY 2012OPPS/ASC proposed rule that we areconsidering for future Hospital OQRpayment determinations (beginning<strong>with</strong> CY 2015) for which we solicitedpublic comment. In particular, wesought comment on the inclusion ofPatient Experience of Care Measures inthe Hospital OQR measure set for afuture payment determination, such asexisting Consumer Assessment ofHealthcare Providers and Systems(CAHPS) surveys for clinicians/groupsand the CAHPS Surgical Care Survey,sponsored and submitted by theAmerican College of Surgeons (ACS)and the Surgical Quality Alliance(SQA).We also intend to align the surgicalsafety measures across the HOPD andASC settings and would seek to utilizecomparable data to assess patient safetyin these settings. Therefore, in theproposed rule, we sought comment onthe potential submission of suchmeasures by HOPDs via quality codessubmitted on claims in the future. Wealso sought comment on the inclusion ofmeasures of Anesthesia-relatedComplications in the Hospital OQRmeasurement set.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00354 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.131

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74475jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00355 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.132

74476 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–02–CWe invited public comment on thesemeasures and other topics that we mightconsider proposing to adopt beginning<strong>with</strong> the Hospital OQR Program CY2015 payment determination. We alsosought suggestions and rationales tosupport the adoption of measures andtopics for the Hospital OQR Programwhich do not appear in the table above.We received many comments onmeasures and measurement topicsconsidered for the future. We describethem as follows:VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00356 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Æ Cancer care<strong>Comment</strong> A commenter noted that thecancer care measures listed areduplicative measures of those used inthe PQRS. A commenter did not supportthe Needle Biopsy to EstablishER30NO11.133

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74477jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Diagnosis of Cancer Precedes SurgicalExcision/Resection measure becausemany cancers do not have needle biopsyas an option for diagnosis.Response: We thank the commentersfor their views and will consider themduring future measure selection activity.Æ Heart failure<strong>Comment</strong>: A few commenterssupported the heart failure measures onthe list. Two commenters noted theOveruse of echocardiography, Leftventricular ejection fraction assessment,and the Patients <strong>with</strong> left ventricularsystolic dysfunction on combinationmedical therapy have inherentfundamental incompatibilities, giventhat the first measure would likelyprohibit the use of echocardiographywhile the latter two measures wouldpresumably encourage the use ofechocardiography. The commenterswere specifically concerned that thefirst measure may have unintendedconsequences of deterring physiciansfrom ordering echocardiography toidentify potential heart failure patients.Response: We thank the commentersfor the valuable suggestions and willtake them into consideration in ourfuture measure review and selectionactivity.Æ Patient experience-of-care<strong>Comment</strong>: Many commenters stronglysupported the inclusion of patientexperience of care measures listed.Response: We thank the commentersfor this input and will consider themduring future measure selection activity.Æ Anesthesia related complicationmeasures<strong>Comment</strong> One commenter requestedthat CMS collaborate <strong>with</strong>anesthesiologists and CRNAs to revisethe list of anesthesia-relatedcomplications to codify the definitionsof anesthesia related complications.Response: We thank the commenterfor this input and will consider it duringfuture measure selection activity.Æ Additional measure topics<strong>Comment</strong> A commenter believed theMedication reconciliation measure isinappropriate for ED setting sinceemergency room patients may not havethe ability to accurately report currentmedications taken and the datacollection process may cause a delay inpatient care. A commenter wasconcerned that the Post dischargefollow-up and the post discharge EDvisit <strong>with</strong>in 72 hours measure may leadto unintended consequences if notconstructed prudently, given there aremany variables affecting a patient’sreturn to an ED. A commentersupported the listed Breast cancerdetection rate measure for futureconsideration.Response: We thank the commentersfor these suggestions and support, andwill take them into consideration duringour future measure selection activity.E. Payment Reduction for HospitalsThat Fail To Meet the Hospital OQRProgram Requirements for the CY 2012Payment Update1. BackgroundSection 1833(t)(17)(A) of the Act,which applies to subsection (d)hospitals (as defined under section1886(d)(1)(B) of the Act), requires thathospitals that fail to report data requiredto be submitted on the measuresselected by the Secretary, in the formand manner, and at a time, required bythe Secretary under section 1833(t)(17)of the Act, incur a 2.0 percentage pointreduction to their OPD fee scheduleincrease factor, that is, the annualpayment update factor. Section1833(t)(17)(A)(ii) of the Act specifiesthat any reduction applies only to thepayment year involved and will not betaken into account in computing theapplicable OPD fee schedule increasefactor for a subsequent payment year.In the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period (73 FR 68769through 68772), we discussed how thepayment reduction for failure to meetthe administrative, data collection, anddata submission requirements of theHospital OQR Program affected the CY2009 payment update applicable toOPPS payments for HOPD servicesfurnished by the hospitals definedunder section 1886(d)(1)(B) of the Act towhich the program applies. Theapplication of a reduced OPD feeschedule increase factor results inreduced national unadjusted paymentrates that apply to certain outpatientitems and services provided byhospitals that are required to reportoutpatient quality data and that fail tomeet the Hospital OQR Programrequirements. All other hospitals paidunder the OPPS receive the full OPPSpayment update <strong>with</strong>out the reduction.The national unadjusted paymentrates for many services paid under theOPPS equal the product of the OPPSconversion factor and the scaled relativeweight for the APC to which the serviceis assigned. The OPPS conversionfactor, which is updated annually by theOPD fee schedule increase factor, isused to calculate the OPPS payment ratefor services <strong>with</strong> the following statusindicators (listed in Addendum B to thisfinal rule <strong>with</strong> comment period, whichis available via the Internet on the CMSWeb site): ‘‘P,’’ ‘‘Q1,’’ ‘‘Q2,’’ ‘‘Q3,’’ ‘‘R,’’VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00357 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2‘‘S,’’ ‘‘T,’’ ‘‘V,’’ ‘‘U,’’ or ‘‘X.’’ In the CY2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68770), weadopted a policy that payment for allservices assigned these status indicatorswould be subject to the reduction of thenational unadjusted payment rates forapplicable hospitals, <strong>with</strong> the exceptionof services assigned to New TechnologyAPCs <strong>with</strong> assigned status indicator ‘‘S’’or ‘‘T,’’ and brachytherapy sources <strong>with</strong>assigned status indicator ‘‘U,’’ whichwere paid at charges adjusted to cost inCY 2009. We excluded services assignedto New Technology APCs from the listof services subject to the reducednational unadjusted payment ratesbecause the OPD fee schedule increasefactor is not used to update the paymentrates for these APCs.In addition, section 1833(t)(16)(C) ofthe Act, as amended by section 142 ofthe Medicare Improvements for Patientsand Providers Act of 2008 (MIPPA)(Pub. L. 110–275), specifically requiredthat brachytherapy sources be paidduring CY 2009 on the basis of chargesadjusted to cost, rather than under thestandard OPPS methodology. Therefore,the reduced conversion factor also wasnot applicable to CY 2009 payment forbrachytherapy sources because paymentwould not be based on the OPPSconversion factor and, consequently, thepayment rates for these services werenot updated by the OPD fee scheduleincrease factor. However, in accordance<strong>with</strong> section 1833(t)(16)(C) of the Act, asamended by section 142 of the MIPPA,payment for brachytherapy sources atcharges adjusted to cost expired onJanuary 1, 2010. Therefore, in the CY2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60641), wefinalized our CY 2010 proposal, <strong>with</strong>outmodification, to apply the reduction topayment for brachytherapy sources tohospitals that fail to meet the qualitydata reporting requirements of theHospital OQR Program forbrachytherapy services furnished onand after January 1, 2010.The OPD fee schedule increase factoris an input into the OPPS conversionfactor, which is used to calculate OPPSpayment rates. To implement therequirement to reduce the OPD feeschedule increase factor for hospitalsthat fail to meet reporting requirements,we calculate two conversion factors: afull market basket conversion factor(that is, the full conversion factor), anda reduced market basket conversionfactor (that is, the reduced conversionfactor). We then calculate a reductionratio by dividing the reducedconversion factor by the full conversionfactor. We refer to this reduction ratio asthe ‘‘reporting ratio’’ to indicate that it

74478 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2applies to payment for hospitals that failto meet their reporting requirements.Applying this reporting ratio to theOPPS payment amounts results inreduced national unadjusted paymentrates that are mathematically equivalentto the reduced national unadjustedpayment rates that would result if wemultiplied the scaled OPPS relativeweights by the reduced conversionfactor. To determine the reducednational unadjusted payment rates thatapplied to hospitals that failed to meettheir quality reporting requirements forthe CY 2010 OPPS, we multiply thefinal full national unadjusted paymentrate in Addendum B to the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod by the CY 2010 OPPS finalreporting ratio of 0.980 (74 FR 60642).In the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period (73 FR 68771through 68772), we established a policythat the Medicare beneficiary’sminimum unadjusted copayment andnational unadjusted copayment for aservice to which a reduced nationalunadjusted payment rate applies wouldeach equal the product of the reportingratio and the national unadjustedcopayment or the minimum unadjustedcopayment, as applicable, for theservice. Under this policy, we apply thereporting ratio to both the minimumunadjusted copayment and nationalunadjusted copayment for thosehospitals that receive the paymentreduction for failure to meet theHospital OQR Program reportingrequirements. This application of thereporting ratio to the nationalunadjusted and minimum unadjustedcopayments is calculated according to§ 419.41 of our regulations, prior to anyadjustment for a hospital’s failure tomeet the quality reporting standardsaccording to § 419.43(h). Beneficiariesand secondary payers thereby share inthe reduction of payments to thesehospitals.In the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period (73 FR 68772), weestablished the policy that all otherapplicable adjustments to the OPPSnational unadjusted payment ratesapply in those cases when the OPD feeschedule increase factor is reduced forhospitals that fail to meet therequirements of the Hospital OQRProgram. For example, the followingstandard adjustments apply to thereduced national unadjusted paymentrates: the wage index adjustment; themultiple procedure adjustment; theinterrupted procedure adjustment; therural sole community hospitaladjustment; and the adjustment fordevices furnished <strong>with</strong> full or partialcredit or <strong>with</strong>out cost. We believe thatthese adjustments continue to beequally applicable to payments forhospitals that do not meet the HospitalOQR Program requirements. Similarly,outlier payments will continue to bemade when the criteria are met. Forhospitals that fail to meet the qualitydata reporting requirements, thehospitals’ costs are compared to thereduced payments for purposes ofoutlier eligibility and paymentcalculation. This policy conforms tocurrent practice under the IPPS. Wecontinued this policy in the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod (74 FR 60642), and in the CY2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 72099). For acomplete discussion of the OPPS outliercalculation and eligibility criteria, werefer readers to section II.G. of this finalrule <strong>with</strong> comment period.2. Reporting Ratio Application andAssociated Adjustment Policy for CY2012In the CY 2012 OPPS/ASC proposedrule (76 FR 42327 through 42328), weproposed to continue our establishedpolicy of applying the reduction of theOPD fee schedule increase factorthrough the use of a reporting ratio forthose hospitals that fail to meet theHospital OQR Program requirements forthe full CY 2012 annual payment updatefactor. For the CY 2012 OPPS, theproposed reporting ratio was 0.980,calculated by dividing the proposedreduced conversion factor of $68.052 bythe proposed full conversion factor of$69.420. The final CY 2012 OPPSreporting ratio is 0.980, calculated bydividing the reduced conversion factorof $68.616 by the full conversion factorof $70.016. We proposed to continue toapply the reporting ratio to all servicescalculated using the OPPS conversionfactor. For the CY 2012 OPPS, weproposed to apply the reporting ratio,when applicable, to all HCPCS codes towhich we have assigned statusindicators ‘‘P,’’ ‘‘Q1,’’ ‘‘Q2,’’ ‘‘Q3,’’ ‘‘R,’’‘‘S,’’ ‘‘T,’’ ‘‘U,’’ ‘‘V,’’ and ‘‘X’’ (other thannew technology APCs to which we haveassigned status indicators ‘‘S’’ and ‘‘T’’).We proposed to continue to excludeservices paid under New TechnologyAPCs. We proposed to continue to applythe reporting ratio to the nationalunadjusted payment rates and theminimum unadjusted and nationalunadjusted copayment rates of allapplicable services for those hospitalsthat fail to meet the Hospital OQRProgram reporting requirements. Wealso proposed to continue to apply allother applicable standard adjustmentsto the OPPS national unadjustedpayment rates for hospitals that fail toVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00358 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2meet the requirements of the HospitalOQR Program. Similarly, we proposedto continue to calculate OPPS outliereligibility and outlier payment based onthe reduced payment rates for thosehospitals that fail to meet the reportingrequirements.We invited public comments on theseproposals. We did not receive anypublic comments on our CY 2012proposal to apply the HOP QDRPreduction in the manner described inthe paragraph above and, therefore, arefinalizing our proposal, <strong>with</strong>outmodification.Therefore, for the CY 2012 OPPS, weare applying a reporting ratio of 0.980 tothe national unadjusted payments,minimum unadjusted copayments, andnational unadjusted copayments for allapplicable services for those hospitalsfailing to meet the HOP QDRP reportingrequirements. This reporting ratioapplies to HCPCS codes assigned statusindicators ‘‘P,’’ ‘‘Q1,’’ ‘‘Q2,’’ ‘‘Q3,’’ ‘‘R,’’‘‘S,’’ ‘‘T,’’ ‘‘U,’’ ‘‘V,’’ or ‘‘X,’’ excludingservices paid under New TechnologyAPCs. All other applicable standardadjustments to the OPPS nationalunadjusted payment rates for hospitalsthat fail to meet the requirements of theHOP QDRP will continue to apply. Wecontinue to calculate OPPS outliereligibility and outlier payment based onthe reduced rates for those hospitals thatfail to meet the reporting requirements.F. Extraordinary CircumstancesExtension or Waiver for CY 2012 andSubsequent YearsIn our experience, there have beentimes when hospitals have been unableto submit required quality data due toextraordinary circumstances that are not<strong>with</strong>in their control. It is our goal to notpenalize hospitals for suchcircumstances and we do not want tounduly increase their burden duringthese times. Therefore, in the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod (74 FR 60046 through 600647),we adopted a process for hospitals torequest and for CMS to grant extensionsor waivers <strong>with</strong> respect to the reportingof required quality data when there areextraordinary circumstances beyond thecontrol of the hospital. In the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 72103), we retained theseprocedures <strong>with</strong> some modifications.For CY 2012 and subsequent years, weproposed to retain these procedures<strong>with</strong> one modification. In the CY 2012OPPS/ASC proposed rule (76 FR 42328),we proposed to extend these proceduresto the submission of medical recorddocumentation for purposes ofcomplying <strong>with</strong> our validation

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74479jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2requirement for the Hospital OQRProgram.Under this process, in the event ofextraordinary circumstances, such as anatural disaster, not <strong>with</strong>in the controlof the hospital, for the hospital toreceive consideration for an extensionor waiver of the requirement to submitquality data or medical recorddocumentation for one or more quarters,a hospital would submit to CMS arequest form that would be madeavailable on the QualityNet Web site.The following information should benoted on the form:• Hospital CCN;• Hospital Name;• CEO and any other designatedpersonnel contact information,including name, email address,telephone number, and mailing address(must include a physical address, a postoffice box address is not acceptable);• Hospital’s reason for requesting anextension or waiver;• Evidence of the impact of theextraordinary circumstances, includingbut not limited to photographs,newspaper and other media articles; and• A date when the hospital wouldagain be able to submit Hospital OQRdata and/or medical recorddocumentation, and a justification forthe proposed date.The request form would be signed bythe hospital’s CEO. A request formwould be required to be submitted<strong>with</strong>in 45 days of the date that theextraordinary circumstance occurred.Following receipt of such a request,CMS would—(1) Provide a writtenacknowledgement using the contactinformation provided in the request, tothe CEO and any additional designatedhospital personnel, notifying them thatthe hospital’s request has been received;(2) Provide a formal response to theCEO and any additional designatedhospital personnel using the contactinformation provided in the requestnotifying them of our decision; and(3) Complete our review of any CY2012 request and communicate ourresponse <strong>with</strong>in 90 days following ourreceipt of such a request.We note that we might also decide togrant waivers or extensions to hospitalsthat have not requested them when wedetermine that an extraordinarycircumstance, such as an act of nature(for example, hurricane) affects an entireregion or locale. If we make thedetermination to grant a waiver orextension to hospitals in a region orlocale, we would communicate thisdecision to hospitals and vendorsthrough routine communicationchannels, including but not limited toemails and notices on the QualityNetWeb site.In the proposed rule we invitedpublic comment on this proposal toretain our existing process for grantingextraordinary circumstances extensionsor waivers, and to extend this process tothe submission of medical recorddocumentation, for the Hospital OQRProgram.<strong>Comment</strong>: Several commenterssupported the proposal to continue theexisting process for grantingextraordinary circumstances extensionsor waivers and to extend this process tothe submission of medical recorddocumentation for the Hospital OQRProgram. One commenter noted directexperience <strong>with</strong> medical recorddocumentation destroyed by a recentdisaster.Response: We thank thesecommenters for supporting our proposalto extend our process for grantingextraordinary circumstances extensionsor waivers to the submission of medicalrecord documentation.After consideration of the publiccomments we received, we arefinalizing our proposal <strong>with</strong>outmodification; to continue the existingprocess for granting extraordinarycircumstances extensions or waivers, toextend this process to the submission ofmedical record documentation for theHospital OQR Program, and to use thisprocess for CY 2012 and subsequentyears.G. Requirements for Reporting ofHospital OQR Data for CY 2013 andSubsequent YearsTo participate in the Hospital OQRProgram, hospitals must meetadministrative, data collection andsubmission, and data validationrequirements (if applicable). Hospitalsthat do not meet Hospital OQR Programrequirements, as well as hospitals notparticipating in the Program andhospitals that <strong>with</strong>draw from theProgram, will not receive the full OPPSpayment rate update. Instead, inaccordance <strong>with</strong> section 1833(t)(17)(A)of the Act, those hospitals will receivea reduction of 2.0 percentage points totheir OPD fee schedule increase factorfor the applicable payment year. Weestablished the payment determinationrequirements for the CY 2012 paymentupdate in the CY 2011 OPPS/ASC finalrule <strong>with</strong> comment period (75 FR 72099through 72106).In the CY 2012 OPPS/ASC proposedrule (76 FR 42328 through 42333), <strong>with</strong>respect to the payment determinationsfor CY 2013 and subsequent years, weproposed to implement therequirements listed below. Most of theseVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00359 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2requirements are the same as therequirements we implemented for theCY 2012 payment determination, <strong>with</strong>some proposed modifications.1. Administrative Requirements for CY2013 and Subsequent YearsTo participate in the Hospital OQRProgram, we proposed that severaladministrative steps be completed.These steps are the same as those wefinalized for the CY 2012 paymentdetermination and would require thehospital to:• Identify a QualityNet securityadministrator who follows theregistration process located on theQualityNet Web site (http://www.QualityNet.org) and submits theinformation to the appropriate CMSdesignatedcontractor. All CMSdesignatedcontractors would beidentified on the QualityNet Web site.The same person may be the QualityNetsecurity administrator for both theHospital IQR Program and the HospitalOQR Program. Based on our experience,we believe that the QualityNet securityadministrator typically fulfills a varietyof tasks related to the hospital’s abilityto participate in the Hospital OQRProgram, such as: Creating, approving,editing and/or terminating QualityNetuser accounts <strong>with</strong>in the organization;monitoring QualityNet usage tomaintain proper security andconfidentiality measures; and serving asa point of contact for informationregarding QualityNet and the HospitalOQR Program. However, the mainpurpose of the QualityNetAdministrator is to serve as a contact forsecurity purposes. Because of CMSinformation systems securityrequirements, the hospital would berequired to maintain a currentQualityNet security administrator for aslong as the hospital participates in theProgram. While only a single QualityNetsecurity administrator would berequired for Program purposes, wesuggest to hospitals that it may bebeneficial to have more than oneQualityNet security administrator forback-up purposes.• Register <strong>with</strong> QualityNet, regardlessof the method used for data submission.• Complete and submit an onlineparticipation form if this form (or apaper Notice of Participation form) hasnot been previously completed, if ahospital has previously <strong>with</strong>drawn, or ifthe hospital acquires a new CCN. ForHospital OQR Program purposes,hospitals that share the same CCNwould be required to complete a singleonline participation form. At this time,the participation form for the HospitalOQR Program is separate from the

74480 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2participation form required for theHospital IQR Program and completing aform for each program is required.Agreeing to participate includesacknowledging that the data submittedto the CMS-designated contractor wouldbe submitted to CMS, shared <strong>with</strong> oneor more other CMS contractors thatsupport the implementation of theHospital OQR Program, and be publiclyreported.We proposed to retain the proceduresand update the deadlines for submittingthe participation form which weestablished in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR72100):Hospitals <strong>with</strong> Medicare acceptancedates on or after January 1 of the yearprior to the annual payment updateaffected: For the CY 2013 andsubsequent years payment updates, weproposed that any hospital that has aMedicare acceptance date on or afterJanuary 1 of the year prior to the annualpayment update affected (for example,2012 would be the year prior to theaffected CY 2013 annual paymentupdate), including a new hospital andhospitals that have merged, must submita completed participation form no laterthan 180 days from the date identifiedas its Medicare acceptance date on theCMS Certification and Survey ProviderEnhanced Reporting (CASPER) system.Hospitals typically receive a packagenotifying them of their new CCN afterthey receive their Medicare acceptancedate. The Medicare acceptance date isthe earliest date that a hospital canreceive Medicare payment for theservices that it furnishes. Completingthe participation form would includesupplying the name and address of eachhospital campus that shares the sameCCN.The use of the Medicare acceptancedate as beginning the timeline forHospital OQR Program participationallows us to monitor more effectivelyhospital compliance <strong>with</strong> therequirement to complete a participationform because a hospital’s Medicareacceptance date is readily available toCMS through its data systems. Inaddition, providing an extended timeperiod to register for the program wouldallow newly functioning hospitalssufficient time to get their operationsfully functional before having to collectand submit quality data.We are aware that Medicareacceptance dates may be back-dated; wehad experience <strong>with</strong> reportedoccurrences as such over the past year.In that event, we would consider ahospital’s request to allow additionaltime to elect to participate.Hospitals <strong>with</strong> Medicare acceptancedates before January 1 of the year priorto the affected annual payment update:For the CY 2013 and subsequent yearspayment update, we proposed that anyhospital that has a Medicare acceptancedate before January 1 of the year priorto the affected annual payment update(for example, 2012 would be the yearprior to the affected CY 2013 annualpayment update) that is not currentlyparticipating in Hospital OQR andwishes to participate in the HospitalOQR Program must submit aparticipation form by March 31 of theyear prior to the affected annualpayment update. We proposed adeadline of March 31, because webelieve it would give hospitals sufficienttime to decide whether they wish toparticipate in the Hospital OQRProgram, as well as put into place thenecessary staff and resources to timelyreport data for first quarter of the year’sservices. This requirement would applyto all hospitals whether or not thehospital billed for payment under theOPPS.For the CY 2013 and subsequent yearspayment updates, we proposed that anyHospital OQR-participating hospital thatwants to <strong>with</strong>draw may do so at anytime from January 1 to November 1 ofthe year prior to the affected annualpayment update. A hospital that<strong>with</strong>draws during this time period forany annual payment update would notbe able to later sign up to participate forthat payment update, would receive a2.0 percentage point reduction to itsOPD fee schedule increase factor for thatyear, and would be required to submita new participation form in order toparticipate in any future year of theHospital OQR Program. We note thatonce a hospital has submitted aparticipation form, it is considered to bean active Hospital OQR Programparticipant until such time as thehospital submits a <strong>with</strong>drawal form toCMS or is designated as closed in theCMS CASPER system.In the proposed rule we invitedpublic comment on these proposedHospital OQR Program administrativerequirements for the CY 2013 andsubsequent years’ paymentdeterminations.<strong>Comment</strong>: Some commenterssupported requiring hospital outpatientdepartments to report quality data andthe 2.0 percent reduction for hospitalsthat do not successfully report qualitydata to CMS.Response: We thank thesecommenters for supporting hospitaloutpatient quality data reporting underthe Hospital OQR Program and the useof the 2.0 percentage point reduction forVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00360 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2hospitals that do not successfully reportquality data to CMS.<strong>Comment</strong>: Some commenterssupported the proposed administrativerequirements for the Hospital OQRProgram in general.Response: We thank thesecommenters for supporting ourproposed administrative Hospital OQRProgram requirements.After consideration of the publiccomments we received, we arefinalizing our proposals for HospitalOQR Program administrativerequirements <strong>with</strong>out modification.2. Form, Manner, and Timing of DataSubmission for CY 2013 andSubsequent YearsIn the CY 2012 OPPS/ASC proposedrule (76 FR 42329 through 42332), weproposed that, to be eligible to receivethe full OPD fee schedule increase factorfor any payment determination,hospitals must comply <strong>with</strong> oursubmission requirements for chartabstracteddata, population andsampling data, claims-based measuredata, and structural quality measuredata, including all-patient volume data:a. CY 2013 and CY 2014 DataSubmission Requirements for Chart-Abstracted Measure Data SubmittedDirectly to CMSIn the CY 2012 OPPS/ASC proposedrule (76 FR 42329 through 42330), <strong>with</strong>respect to the proposed chart-abstractedmeasures for which hospitals wouldsubmit data directly to CMS, weproposed for CY 2013 and CY 2014 thatparticipating hospitals submit chartabstracteddata for each applicablequarter by the deadline posted on theQualityNet Web site; there must be nolapse in data submission. For the CY2013 Hospital OQR Program, weproposed that the applicable quarterswould be as follows: 3rd quarter CY2011, 4th quarter CY 2011, 1st quarterCY 2012, and 2nd quarter CY 2012.Hospitals that did not participate in theCY 2012 Hospital OQR Program, butwould like to participate in the CY 2013Hospital OQR Program, and that have aMedicare acceptance date on theCASPER system before January 1, 2012,would begin data submission <strong>with</strong>respect to 1st quarter CY 2012encounters using the CY 2013 measureset that was finalized in this final rule<strong>with</strong> comment period. For thosehospitals <strong>with</strong> Medicare acceptancedates on or after January 1, 2012, datasubmission must begin <strong>with</strong> the first fullquarter following the submission of acompleted online participation form.For the CY 2014 Hospital OQRProgram, we proposed that the

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74481jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2applicable quarters for previouslyfinalized measures would be as follows:3rd quarter CY 2012, 4th quarter CY2012, 1st quarter CY 2013, and 2ndquarter CY 2013. With respect to ourproposed additional measures for CY2014 (5 Diabetes measures and 1Cardiac Rehabilitation measure), theapplicable quarters would be 1st quarterCY 2013 and 2nd quarter CY 2013.Hospitals that did not participate in theCY 2013 Hospital OQR Program, butwould like to participate in the CY 2014Hospital OQR Program, and that have aMedicare acceptance date on theCASPER system before January 1, 2013,would begin data submission <strong>with</strong>respect to 1st quarter CY 2013encounters using the CY 2014 measureset that we are finalizing in this finalrule <strong>with</strong> comment period. For thosehospitals <strong>with</strong> Medicare acceptancedates on or after January 1, 2013, datasubmission must begin <strong>with</strong> the first fullquarter following the submission of acompleted online participation form.We proposed that hospitals mustsubmit all required data according to thedata submission schedule that is madeavailable on the QualityNet Web site(https://www.QualityNet.org). This Website meets or exceeds all current HIPAArequirements. Submission deadlineswould be, in general, approximately 4months after the last day of eachcalendar quarter. Thus, for example, theproposed submission deadline for datafor services furnished during the firstquarter of CY 2012 (January–March,2012) would be on or around August 1,2012. The actual submission deadlineswould be posted on the http://www.QualityNet.org Web site.We proposed that hospitals submitchart-abstracted data to the OPPSClinical Warehouse using either theCMS Abstraction and Reporting Tool forOutpatient Department (CART–OPD)measures or the tool of a third-partyvendor that meets the measurespecification requirements for datatransmission to QualityNet.We proposed that hospitals mustcollect Hospital OQR data fromoutpatient hospital encounters to whichthe required measures apply. Inprevious rulemakings, we have usedvarious terms for describing the unit ofcare for outpatient hospital reporting,including encounter, episode, episodeof care, and discharge. We note that foroutpatient hospital services, the termencounter is explicitly used and definedin the Medicare Benefit Policy Manual(Pub. 100–02), Chapter 6, Section 20.3,which states ‘‘A hospital outpatient‘encounter’ is a direct personal contactbetween a patient and a physician, orother person who is authorized by Statelicensure law and, if applicable, byhospital or CAH staff bylaws, to order orfurnish hospital services for diagnosis ortreatment of the patient.’’ For Medicareoutpatient services, the terms episodeand episode of care also are used. Whendiscussing inpatient services, theMedicare Benefit Policy Manualspecifically refers to discharges; theterm encounter is not used in referenceto inpatient services. Thus, for theHospital OQR Program, we areexamining encounters, episodes, orepisodes of care and will use theseterms in connection <strong>with</strong> the HospitalOQR Program.We will make every effort to ensurethat data elements common to bothinpatient and outpatient settings aredefined consistently for purposes ofquality reporting (such as ‘‘time ofarrival’’).We proposed that hospitals mustsubmit quality data using the CCNunder which the care was furnished.To be accepted into the OPPS ClinicalWarehouse and to meet data submissionrequirements, data submissions, at aminimum, must be timely, complete,and accurate. Data submissions areconsidered to be ‘‘timely’’ when data aresuccessfully accepted into the OPPSClinical Warehouse on or before thereporting deadline. A ‘‘complete’’submission would be determined basedon whether the data satisfy the samplingcriteria that are published andmaintained in the Hospital OQRSpecifications Manual, and mustcorrespond to both the aggregatenumber of encounters submitted by ahospital and the number of Medicareclaims the hospital submits forpayment; requirements for utilizing theoption of sampling are discussed below.We strongly recommend thathospitals review OPPS ClinicalWarehouse feedback reports and theHospital OQR Provider ParticipationReports that are accessible through theirQualityNet accounts. These reportsenable hospitals to verify whether thedata they or their vendors submittedwere accepted into the OPPS ClinicalWarehouse and the date/time that suchacceptance occurred. We also note thatirrespective of whether a hospitalsubmits data to the OPPS ClinicalWarehouse itself or uses a vendor tocomplete the submissions, the hospitalis responsible for ensuring that HospitalOQR requirements are met.<strong>Comment</strong>: One commenter requestedclarification on data submission datesfor the chart-abstracted measures OP–16, OP–18 through OP–21, and OP–23due to statements in the CY 2011 OPPS/ASC final rule <strong>with</strong> comment periodthat data collection for these measuresVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00361 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2would be due in August 2012, whereas,in the CY 2012 OPPS/ASC proposedrule, the proposed timing for datacollection for the CY 2013 paymentdetermination is to begin July 1, 2011.Response: In the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR72090), we finalized 23 qualitymeasures for the CY 2013 paymentdetermination, which included OP–16through OP–23. We stated in that finalrule that data submission of the newchart-abstracted measures for the CY2013 payment determination will bedue in August 2012. We also stated thatcollection for OP–16: Troponin resultsfor Emergency Department acutemyocardial infarction (AMI) patients orchest pain patients (<strong>with</strong> ProbableCardiac Chest Pain) Received Within 60minutes of Arrival would begin <strong>with</strong>January 1, 2012 discharges (75 FR72083).However, in the CY 2012 OPPS/ASCproposed rule, we proposed changes tothe form and manner for data collectionfor the chart-abstracted measure OP–22:Left Without Being Seen (76 FR 42332).We are finalizing this proposal below insection XIV.G.2.g. of this final rule <strong>with</strong>comment period.OP–16, OP–18 through OP–21, andOP–23 are chart-abstracted measures forwhich data are submitted directly toCMS. We proposed the form andmanner for submitting chart-abstracteddata for these measures for the CY 2013payment determination in the CY 2012OPPS/ASC proposed rule (76 FR 42329through 42330).As discussed above, we have in thisfinal rule <strong>with</strong> comment periodfinalized our proposal to modify thecollection mechanism for OP–22: LeftWithout Being Seen. With respect to theCY 2013 payment determination,hospitals must submit data on thismeasure between July 1, 2012 andAugust 15, 2012 <strong>with</strong> respect to theperiod January 1, 2011 throughDecember 31, 2011.<strong>Comment</strong>: One commenterappreciated the discussion related to theharmonization of terminology aroundthe use of the terms encounters,episodes, and episodes of care asconsistent definitions are vital to dataaccuracy.Response: We thank this commenterfor their appreciation of the discussionrelated to harmonization of thisterminology.<strong>Comment</strong>: Some commenterssupported the proposed data submissionrequirements for the Hospital OQRProgram in general.Response: We thank thesecommenters for their support of ourproposed data submission requirements.

74482 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2After consideration of the publiccomments we received, we arefinalizing our proposals, <strong>with</strong>outmodification, regarding CY 2013 and CY2014 data submission requirements forchart-abstracted measure data for OP–16, OP–18 through OP–21, and OP–23submitted directly to CMS. Specifically,for the CY 2013 Hospital OQR Program,the applicable quarters will be asfollows: 3rd quarter CY 2011, 4thquarter CY 2011, 1st quarter CY 2012,and 2nd quarter CY 2012. Submissiondeadlines will be, in general,approximately 4 months after the lastday of each calendar quarter. Thus, forexample, the proposed submissiondeadline for data for services furnishedduring the first quarter of CY 2012(January to March, 2012) will be on oraround August 1, 2012.b. Eligibility To Voluntarily Sample andData Submission Exception for LowPatient Volume for CY 2013 andSubsequent YearsIf a hospital has a sufficiently largenumber of eligible encounters <strong>with</strong>respect to a measure, the hospital hasthe option to sample those encountersand submit data only for these sampledencounters, rather than submitting dataon all of the eligible encounters. Thissampling scheme, which includes theminimum number of encounters that ahospital must have in order to sample,is set out in the Hospital OQRSpecifications Manual at least 3 monthsin advance of each data submissiondeadline. We note that sampling is notrequired and hospitals may submit morecases than the minimum set by oursampling scheme and may submit up toall of their cases if they desire to do so.We changed the notification timeframefor this sampling scheme to at least 3months from at least 4 months to beconsistent <strong>with</strong> the Hospital OQRSpecifications Manual release schedule.If a hospital chooses to sample for aparticular quarter, the hospital mustmeet the sampling requirements for therequired chart-abstracted measures thatquarter.In addition, to reduce the burden onhospitals that treat a low number ofpatients but otherwise meet thesubmission requirements for a particularquality measure, we proposed tocontinue our policy that hospitals thathave five or fewer encounters (bothMedicare and non-Medicare) for anymeasure included in a measure topic ina quarter would not be required tosubmit patient level data for the entiremeasure topic for that quarter. Even ifhospitals would not be required tosubmit patient level data because theyhave five or fewer encounters (bothMedicare and non-Medicare) for anymeasure included in a measure topic ina quarter, we note that they mayvoluntarily do so.We did not receive any publiccomments on our proposal for voluntarysampling and data submissionexception for low patient volume for CY2013 and subsequent years; therefore,we are finalizing our proposal <strong>with</strong>outmodification.c. Population and Sampling DataRequirements Beginning With the CY2013 Payment Determination and forSubsequent YearsDuring the past three years of theHospital OQR Program, the submissionof population and sampling data wasnot required, though hospitals couldsubmit, on a voluntary basis, theaggregate numbers of outpatientencounters which are eligible forsubmission under the Hospital OQRProgram and sample size counts. Theseaggregated numbers of outpatientencounters represent the number ofoutpatient encounters in the universe ofall possible cases eligible for datareporting under the Hospital OQRProgram. For the CY 2012 paymentupdate, we proposed, but did not adopt,a policy to require submission of thispopulation and sample size data.In the CY 2012 OPPS/ASC proposedrule (76 FR 42330 through 42331), weproposed that beginning <strong>with</strong> the CY2013 payment determination, hospitalsmust submit on a quarterly basis,aggregate population and sample sizecounts for Medicare and non-Medicareencounters for the measure populationsfor which chart-abstracted data must besubmitted.Under this proposal, a hospital wouldsubmit on a quarterly basis an aggregatepopulation and sample size count <strong>with</strong>respect to each measure regardless ofwhether any patients met the inclusioncriteria for the measure population. Forexample, if a hospital did not treat anypatients who met the inclusion criteriafor a specific measure, the hospitalwould still be required to submit a zerofor its quarterly aggregate populationand sample count to meet therequirement.Our analysis of third quarter CY 2010outpatient hospital submitted datashows that for hospitals that submittedabstracted data for encounters, at least99 percent of these providersvoluntarily reported both populationand sampling data. Data completenesswas also assessed by comparingreported Medicare cases to submittedclaim counts, minimum encountercount thresholds based on reportedpopulation sizes, and minimum sampleVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00362 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2size thresholds based on reportedpopulation sizes. We found that lessthan 10 percent of hospitals differedsignificantly in their Medicare selfreportedencounters versus Medicareclaim counts in the Clinical Warehouse,and less than 20 percent did not meetcase count or sample size minimumthresholds. Based upon this analysis, webelieve that hospitals have hadsufficient time to become familiar <strong>with</strong>Hospital OQR data reporting and havedeveloped data systems necessary tosupport this proposed requirement; infact, recent data suggest that the vastmajority of hospitals have done so.We proposed that the deadlines forthe reporting of aggregate numbers ofoutpatient hospital encounters andsample size counts would be the sameas those for reporting data for chartabstractedmeasures, and thesedeadlines would be posted on the datasubmission schedule that would beavailable on the QualityNet Web site.Hospitals would be permitted to submitthis information prior to the deadline;this would allow us to advise hospitalsregarding their incomplete submissionstatus as appropriate and give hospitalssufficient time to make appropriaterevisions before the data submissiondeadline.We stated that we plan to use theaggregate population and sample sizedata to assess data submissioncompleteness to the OPPS ClinicalWarehouse and adherence to samplingrequirements for Medicare and non-Medicare patients.<strong>Comment</strong>: One commenter wasconcerned that only 80 percent ofhospitals are able to submit outpatientquality data meeting requirements forcase count and sampling minimumsaggregate population and sample sizedata. This commenter believed that thisshould be of concern to CMS becausethe commenter believed that the 20percent of hospitals not meeting thecase count or sampling minimumrequirements are ones that havesystematic issues such as ‘‘complexoutpatient services,’’ high volume orservices, and/or have some clinics thathave patients who should have datareported to CMS under the HospitalOQR Program, while some other clinicsowned by the hospital do not that makeit difficult for them to accuratelydetermine what minimum number ofcases or cases sampled are to besubmitted to meet programrequirements.Response: The percent of hospitalsthat show evidence of having issues<strong>with</strong> meeting sampling thresholds isless than 20 percent: more precisely,17.3 percent in the Hospital OQR data

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74483examined. Over 99 percent of hospitalsare voluntarily reporting aggregatepopulation and sampling data.However, due to data accuracy concernsthat may exist for this small set ofreporting hospitals, we have decided tonot finalize this requirement for the CY2013 payment determination.After consideration of the publiccomments we received, we havedecided to not finalize our proposal torequire the reporting of population andsample size data and instead willcontinue our policy of accepting thesubmission of this information on avoluntary basis for the CY 2013payment determination.d. Claims-Based Measure DataRequirements for the CY 2013 and CY2014 Payment DeterminationsIn the CY 2012 OPPS/ASC proposedrule (76 FR 42331), for the claims-basedmeasures, we proposed to calculate themeasures using the hospital’s Medicareclaims data as specified in the HospitalOQR Specifications Manual; noadditional data submission is requiredfor hospitals. For the CY 2013 and CY2014 payment updates, we wouldutilize paid Medicare FFS claims forservices furnished from January 1, 2010to December 31, 2010 and January 1,2011 to December 31, 2011,respectively.We did not receive any comments onour proposal regarding the time periodsfor Medicare FFS claims for calculatingclaims-based measures for the CY 2013and CY 2014 payment determinations;therefore, we are finalizing theseproposals <strong>with</strong>out modification.e. Structural Measure DataRequirements for the CY 2013 and CY2014 Payment DeterminationsIn the CY 2012 OPPS/ASC proposedrule (76 FR 42331), for the CY 2013payment determination, we proposedthat hospitals would be required tosubmit data on the structural measures,including OP–17: Tracking ClinicalResults between Visits, between July 1,2012 and August 15, 2012 <strong>with</strong> respectto the time period of January 1, 2011 toDecember 31, 2011.As discussed above, we proposed toadopt two new structural measures forthe CY 2014 payment determination,OP–31: Safe Surgery Checklist Use, andOP–32: Hospital Outpatient DepartmentVolume for Selected Outpatient SurgicalProcedures. We proposed that for theCY 2014 payment determination,hospitals would be required to submitdata on all structural measures betweenJuly 1, 2013 and August 15, 2013 <strong>with</strong>respect to the time period from January1, 2012 to December 31, 2012.<strong>Comment</strong>: One commenter requestedclarification on data submission datesfor the structural measure OP–17:Tracking Clinical Results betweenVisits, due to statements in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod that data collection for thismeasure would start January 1, 2012,whereas, in the CY 2012 OPPS/ASCproposed rule, CMS proposed that thesubmission of data for CY 2013 paymentdeterminations would begin July 1,2011.Response: In the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR72090), we finalized 23 qualitymeasures for the CY 2013 paymentdetermination, which included thestructural measure OP–17: TrackingClinical Results between Visits. Westated that hospitals would be requiredto begin submitting data on OP–17 viaa Web-based tool on the QualityNet Website in July 2012 for the time periodJanuary 1, 2012 through June 2012.In the CY 2012 OPPS/ASC proposedrule, we proposed a modification to thetimeframe for data collection. We statedthat for all of the proposed structuralmeasures, including OP–17: TrackingClinical Results between Visits,hospitals would be required to submitdata between July 1, 2012 and August15, 2012 <strong>with</strong> respect to the time periodof January 1, 2011 to December 31, 2011(76 FR 42331).After consideration of the publiccomment we received on our proposalregarding structural measure datarequirements for the CY 2013 and CY2014 payment determinations; we arefinalizing our proposals, <strong>with</strong>modification. With respect to structuralmeasures for the CY 2013 paymentdetermination, hospitals will berequired to submit data between July 1,2012 and August 15, 2012 <strong>with</strong> respectto the time period from January 1, 2012to June 30, 2012.f. Data Submission Deadlines for theNHSN HAI Surgical Site InfectionMeasure for the CY 2014 PaymentDeterminationAs discussed above, we proposed toadopt a new HAI measure for the CY2014 payment determination: surgicalsite infection. We proposed to use thedata submission and reporting standardprocedures that have been set forth byCDC for NHSN participation in generaland for submission of this measure toNHSN. We refer readers to the CDC’sNHSN Web site (http://www.cdc.gov/nhsn) for detailed data submission andreporting procedures. We believe thatthese procedures are feasible becausethey are already widely used by over4,000 hospitals reporting HAI data tothe NHSN. Our proposal seeks to reducehospital burden by aligning CMS datasubmission and reporting procedures<strong>with</strong> NHSN procedures currently usedby hospitals, including hospitalscomplying <strong>with</strong> 28 State HAI reportingrequirements. The submissiontimeframes for the CY 2014 paymentdetermination that we proposed to usefor the proposed HAI measure areshown below. Hospitals would berequired to submit their quarterly datato the NHSN for Hospital OQR purposesaccording to the schedule shown in thetable below (any updates to thisschedule made by CMS will be postedon the QualityNet Web site).jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00363 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.134

74484 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Hospitals would have until theHospital OQR final submission deadlineto submit their quarterly data to NHSN.After the final Hospital OQR Programsubmission deadline has occurred foreach CY 2013 quarter to be used towardthe CY 2014 payment determination, wewill obtain the hospital-specificcalculations generated by the NHSN forthe Hospital OQR Program.<strong>Comment</strong>: Many commenters statedtheir belief that data collection onNHSN measures by outpatient hospitalsshould be deferred. <strong>Comment</strong>ers citedissues related to NHSN capacity, lack ofexperience <strong>with</strong> NHSN measures, andapplicability to outpatient procedures ofthe NHSN Surgical Site Infectionmeasure.Response: We thank the commentersfor their input. As discussed above, weare not finalizing the collection of anyNHSN measures at this time. Thus, weare not finalizing our proposalsregarding data submission deadlines forthese measures at this time.g. Data Submission Requirements forOP–22, ED-Patient Left Without BeingSeen, for the CY 2013 and CY 2014Payment DeterminationsIn the CY 2012 OPPS/ASC proposedrule (76 FR 42328 through 42333), <strong>with</strong>respect to OP–22: ED-Patient LeftWithout Being Seen, we proposed thathospitals would be required to submitdata once for each of the CY 2013 andCY 2014 payment determinations via aWeb-based tool located on theQualityNet Web site. For the CY 2013payment determination, hospitalswould be required to submit databetween July 1, 2012 and August 15,2012 <strong>with</strong> respect to the time periodfrom January 1, 2011 to December 31,2011. For the CY 2014 paymentdetermination, hospitals would berequired to submit data between July 1,2013 and August 15, 2013 <strong>with</strong> respectto the time period of January 1, 2012 toDecember 31, 2012.We invited public comment on theseproposals for data collection andsubmission requirements and thesecomments are discussed in sectionXIV.B.2.a., above, of this final rule <strong>with</strong>comment period.After consideration of the publiccomments we received, for OP–22: ED-Patient Left Without Being Seen we arefinalizing our proposal on the form andmanner of data collection, <strong>with</strong> amodification. Specifically, as proposedwe are finalizing that for the CY 2013payment determination, numerator anddenominator counts will be collected forthis measure and that these data are tobe submitted to CMS via a Web-basedtool from July 1, 2012 to August 15,2012. However, based on the commentswe received, we are modifying the timeframes so that data collection will beprospective, and will begin for the timeperiod from January 1, 2012 to June 30,2012.3. Hospital OQR Program ValidationRequirements for Chart-AbstractedMeasure Data Submitted Directly toCMS: Data Validation Approach for theCY 2013 Payment Determinationa. Randomly Selected HospitalsIn the CY 2012 OPPS/ASC proposedrule (76 FR 42332), similar to ourapproach for the CY 2012 paymentdetermination (75 FR 72103 through72106), we proposed to validate chartabstracteddata submitted directly toCMS from randomly selected hospitalsfor the CY 2013 payment determination.To reduce hospital burden and tofacilitate our efforts to reallocateresources in the event that we finalizethe targeting proposal discussed below,for the CY 2013 payment determination,we proposed to reduce the number ofrandomly selected hospitals from 800 to450. We have found that hospitals areconsistently reporting high accuracyrates for chart-abstracted measures andthat variation among hospitals isrelatively low. We believe that this lowlevel of variation between hospitals willallow us to reduce the sample size whilenot diminishing our ability to makestatistical inferences from the sample.Thus, we believe that we can safelyreduce sample size and still havesufficient case numbers for purposes ofvalidation. Because these 450 hospitalswill be selected randomly, everyHospital OQR Program participatinghospital will be eligible each year forvalidation selection. To be eligible forrandom selection for validation, ahospital must be coded as open in theCASPER system at the time of selectionand must have submitted at least 10encounters to the OPPS ClinicalWarehouse during the data collectionperiod for the CY 2013 paymentdetermination. In our proposed rule, wemistakenly stated that a hospital mustbe coded as open in the OSCAR system;this system has been replaced byCASPER. We proposed this 10encounter minimum so that we have asufficient sample size for calculating astatistically valid validation score.<strong>Comment</strong>: Several commenterssupported the proposal to reduce thenumber of hospitals randomly selectedfor validation from 800 to 450. One ofthese commenters applauded thisproposal, and encouraged continuedreductions in the number of hospitalsselected for validation as hospitalVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00364 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2accuracy increased. One commenterbelieved that the total number ofhospitals (up to 500) will remainadequate to assess the reportingaccuracy of various types of hospitals.One commenter expressed concern atthe severe reduction in the number ofhospitals sampled for validationseemingly <strong>with</strong>out justification. Onecommenter strongly opposed thisproposal and believed that this reducedCMS’ burden at the expense of validityof data publicly reported on HospitalCompare. One commenter opposed theproposed reduction and believed thatthe number of hospitals selected forvalidation should be increased.Response: We thank all of thesecommenters for their views on thenumber of hospitals that should beselected for validation. Our proposalattempts to balance the burden tohospitals and cost to us <strong>with</strong> ensuringthe validity of data made publiclyavailable on Hospital Compare. As westated, we have observed high levels ofdata accuracy, we believe that we canreduce the number of hospitals selectedfor validation for the CY 2013 paymentdetermination <strong>with</strong>out compromisingthe accuracy of the data. Under thisproposal a sample of approximately21,600 randomly selected records wouldbe selected for validation each year, andrecords submitted by up to 50additional targeted hospitals would alsobe validated (discussed below).<strong>Comment</strong>: One commenter believedthat the minimum number of cases ahospital should have to be subject toselection for validation should be 25cases rather than 10.Response: We considered largerthreshold values for hospitals to beselected for validation. However, weconcluded that because measure datasubmitted by hospitals <strong>with</strong> small casecounts in the denominator currently arepublished on Hospital Compare, wehave sought to select a minimumnumber as a threshold for validation.We have selected an absolute minimumthreshold of 10 cases for validationselection in order for a sufficient samplesize for calculating a statistically validvalidation score.<strong>Comment</strong>: Several commenters notedthat CMS proposed separate andspecific procedures for data validationof another NHSN measure under theHospital IQR Program and requestedthat CMS discuss its plans for validationof data submitted through the NHSN forthe Hospital OQR Program. Some ofthese commenters requested that indiscussing such procedures, CMSprovide more detail on how hospitaloutpatient departments would submit alist of patients and what format should

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74485jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2be used. One commenter noted theimportance of robust and accurate dataand encouraged CMS to explicitlydiscuss its intended plan to validatedata submitted on the NHSN measures.Response: We thank the commentersfor their suggestions and agree thatseparate and specific procedures forvalidation of NHSN measure data arewarranted. We intend to learn from ourexperiences <strong>with</strong> validating NHSNmeasure data under the Hospital IQRProgram and apply these lessons to ourfuture proposals for validating NHSNmeasure data under the Hospital OQRProgram.After consideration of the publiccomments we received, we arefinalizing our proposals for validation<strong>with</strong>out modification.b. Use of Targeting Criteria for DataValidation Selection for CY 2013(1) BackgroundIn the CY 2011 OPPS/ASC proposedrule (75 FR 46381), we stated that wewere considering building upon whatwe proposed as a validation approachfor the Hospital OQR Program. Wenoted that we were considering, inaddition to selecting a random sampleof hospitals for validation purposes,selecting targeted hospitals based oncriteria designed to measure whetherthe data these hospitals have reportedraises a concern regarding dataaccuracy. Because hospitals had gainedlittle experience <strong>with</strong> validation underthe Hospital OQR at that time, we notedthat we were considering this approachfor possible use beginning <strong>with</strong> the CY2013 payment determination. Examplesof targeting criteria suggested forinclusion:• Abnormal data patterns identifiedsuch as consistently high Hospital OQRmeasure denominator exclusion ratesresulting in unexpectedly lowdenominator counts;• Whether a hospital had previouslyfailed validation;• Whether a hospital had not beenpreviously selected for validation for 2or more consecutive years;• Whether a hospital had lowsubmitted case numbers relative topopulation sizes; or• Whether a hospital had any extremeoutlier values for submitted dataelements.We invited comment on whether, inaddition to random sampling forvalidation, we should use targetedvalidation and, if so, what criteria fortargeting we should adopt.In the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period (75 FR 72106) weresponded to the comments we receivedand noted that for the CY 2013 paymentdetermination, Hospital OQR Programdata reporting will have been completedfor four payment determinations: CYs2009, 2010, 2011, and 2012. Further,hospitals will have had the opportunityto learn from the validation process. Wealso stated that we intended to proposeto implement validation targetingcriteria for CY 2013 and subsequentyears in the CY 2012 OPPS/ASCproposed rule.(2) Targeting Criteria for Data ValidationSelection for CY 2013In the CY 2012 OPPS/ASC proposedrule (76 FR 42332), in addition toproposing to randomly selecting 450hospitals for validation, we proposed toselect up to an additional 50 hospitalsbased upon targeting criteria. A hospitalcould be selected for validation basedon targeting criteria if it:• Fails the validation requirementthat applies to the CY 2012 paymentdetermination; or• Has an outlier value for a measurebased on the data it submits. Weproposed to define an ‘‘outlier value’’for purposes of this targeting as ameasure value that appears to deviatemarkedly from the measure values forother hospitals. For a normallydistributed variable, nearly all values ofthe variable lie <strong>with</strong>in 3 standarddeviations of the mean; very few valueslie past the 3 standard deviation mark.One definition of an outlier is a valuethat exceeds this threshold. 36 In order totarget very extreme values, we proposedto target hospitals that greatly exceedthis threshold because such extremevalues strongly suggest that the datasubmitted is inaccurate. Specifically, weproposed to select hospitals forvalidation if their measure value for ameasure is greater than 5 standarddeviations from the mean, placing theexpected occurrence of such a valueoutside of this range at 1 in 1,744,278.If more than 50 hospitals meet either ofthe above targeting criteria, then up to50 would be selected randomly fromthis pool of hospitals.<strong>Comment</strong>: Several commenterssupported the use of extreme outliers asa criterion for selecting hospitals forvalidation. Some commenters supportedusing data quality concerns for targetinghospitals for validation selection.Response: We thank thesecommenters for their support of ourextreme outlier proposal and the use ofdata quality concerns for targeting36 Ruan, Da, Chen, Guoguing, Kerre, Etienne E.,and Wets, Geert, (2010), Intelligent Data Mining:Techniques and Applications, Studies inComputational Intelligence, Vol. 5, Page 318.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00365 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2hospitals for validation selection. Wenote that in our proposal we used astandard normal distribution for theselected outlier threshold. We have alsoexamined data submitted under theHospital OQR Program and found the 5standard deviation threshold suitablefor detecting extreme values fortargeting hospitals based upon dataquality concerns.After consideration of the publiccomments we received, we arefinalizing our proposal <strong>with</strong>outmodification.c. Encounter SelectionIn the CY 2012 OPPS/ASC proposedrule (76 FR 42332 through 42333), foreach selected hospital (random ortargeted), we proposed to validate up to48 randomly selected patient encounters(12 per quarter; 48 per year) from thetotal number of encounters that thehospital successfully submitted to theOPPS Clinical Warehouse. If a selectedhospital has submitted less than 12encounters in one or more quarters, onlythose encounters available would bevalidated. For each selected encounter,a designated CMS contractor wouldrequest that the hospital submit thesupporting medical recorddocumentation that corresponds to theencounter.We continue to believe that validatinga larger number of encounters perhospital for fewer hospitals at themeasure level has several benefits. Webelieve that this approach is suitable forthe Hospital OQR Program because itwill: (1) Produce a more reliableestimate of whether a hospital’ssubmitted data have been abstractedaccurately; (2) provide more statisticallyreliable estimates of the quality of caredelivered in each measured hospital aswell as at a national level; and (3)reduce overall burden, for example, insubmitting validation documentation,because hospitals most likely will not beselected to undergo validation eachyear, and a smaller number hospitalsper year will selected.For all selected hospitals, we wouldnot be selecting cases stratified bymeasure or topic; our interest is whetherthe data submitted by hospitalsaccurately reflects the care deliveredand documented in the medical record,not what the accuracy is by measure orwhether there are differences bymeasure or topic. We proposed tovalidate data for April 1, 2011 to March31, 2012 encounters as this provides afull year of the most recent data possibleto use for purposes of completing thevalidation in time to make the CY 2013payment determinations.

74486 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2<strong>Comment</strong>: One commenter requestedthat CMS re-evaluate the samplingrequirements for the Hospital OQRProgram to better align them <strong>with</strong> theHospital IQR Program and requested areduction in sample size requirementsto reduce burden on hospitals.Response: We interpret thecommenter as referring to the HospitalIQR Program sampling requirements forvalidation which stratify by measureand/or topic. As we have stated, we areinterested in whether the data submittedby hospitals accurately reflects the caredelivered and documented in themedical record, not what the accuracy isby measure or whether there aredifferences by measure or topic. Inaddition, by not stratifying by measureand/or topic, it is possible to samplefewer cases and maintain precision forreliability estimates for validationpurposes.<strong>Comment</strong>: One commenter opposedthe proposal to continue the CY 2012policy of sampling up to 12 records perquarter from hospitals selected forvalidation, stating their belief that thisnumber should be reduced as burden tohospitals should be reduced, not just theburden to CMS. One commenterbelieved that validating a larger numberof cases from a sample of hospitals hasadvantages over sampling a smallernumber of cases from a pool of allhospitals.Response: We thank the commentersfor their views on the number of casesto be sampled from hospitals selectedfor validation. In setting a sample sizewe are attempting to balance burden tohospitals <strong>with</strong> data accuracy; sentimentsmirrored in the comments received. Wediscussed our basis for the selection ofup to 12 records per quarter or 48 peryear in the CY 2011 OPPS/ASC finalrule <strong>with</strong> comment period (75 FR72104), and the CY 2012 OPPS/ASCproposed rule (76 FR 42332 through42333).After consideration of the publiccomments we received, we arefinalizing our proposals <strong>with</strong>outmodification.d. Validation Score CalculationIn the CY 2012 OPPS/ASC proposedrule (76 FR 42333), for the CY 2013payment determination, we proposed touse the validation calculation approachfinalized for the CY 2012 paymentdetermination <strong>with</strong> validation beingdone for each selected hospital.Specifically, we proposed to conduct ameasures level validation by calculatingeach measure <strong>with</strong>in a submitted recordusing the independently abstracted dataand then comparing this to the measurereported by the hospital; a percentagreement would then be calculated. Wewould also compare the measurecategory for quality measures <strong>with</strong>continuous units of measurement, suchas time, so that for these measures, boththe category and the measure wouldneed to match.To receive the full OPPS OPD feeschedule increase factor for CY 2013, weproposed that hospitals must attain atleast a 75 percent reliability score, basedupon the proposed validation process.We proposed to use the upper bound ofa two-tailed 95 percent confidenceinterval to estimate the validation score.If the calculated upper limit is above therequired 75 percent reliabilitythreshold, we would consider ahospital’s data to be ‘‘validated’’ forpayment purposes. Because we are moreinterested in whether the measure hasbeen accurately reported, we wouldcontinue to focus on whether themeasure data reported by the hospitalmatches the data documented in themedical record as determined by ourreabstraction. We proposed to calculatethe validation score using the samemethodology we finalized for the CY2012 payment determination (75 FR72105). We also proposed to use thesame medical record documentationsubmission procedures that we alsofinalized for the CY 2012 paymentdetermination (75 FR 72104) <strong>with</strong> onemodification.We proposed to shorten the timeperiod given to hospitals to submitmedical record documentation to theCMS contractor from 45 calendar daysto 30 calendar days. This proposedchange in submission timeframe willalign the process <strong>with</strong> requirements in42 CFR 476.78(b)(2), which allow 30days for chart submission in the contextof QIO review. We proposed thisdeadline of 30 days also to reduce thetime for data validation completion toincrease timeliness of providinghospitals <strong>with</strong> feedback on theirabstraction accuracy.<strong>Comment</strong>: Many commenters opposedthe proposal to reduce the time forhospitals to submit medical recorddocumentation for validation. Some ofthese commenters cited burden as anissue. Some commenters expressedconcern that the shortened timeframewould not allow adequate time toreview records before submission forvalidation purposes. One commenterstated that hospitals also have recordsthey are required to prepare forRecovery Audit Contractor (RAC)purposes. One commenter believed thatthis proposal would be a burden onmedical and quality staff if a hospitalhad been selected for both outpatientand inpatient hospital quality reporting.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00366 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Response: We thank thesecommenters for expressing theirconcerns regarding this proposal. Basedon these comments, we have decided tonot finalize our proposal to reduce thetime for hospitals to submit medicalrecord documentation and, instead, dueto issues of burden as well asconsistency <strong>with</strong> other CMS programs(for example, the RAC, PERM, andCERT programs), we will retain ourexisting policy. Under this existingpolicy, the CMS contractor must receivethe requested documentation by 45calendar days from the date of therequest as documented in the requestletter. Other details of this policy,including the issuance of a secondrequest letter if the hospital does notrespond to the initial request <strong>with</strong>in 30days are detailed in the CY 2011 OPPS/ASC final rule <strong>with</strong> comment period (75FR 72104).<strong>Comment</strong>: Some commenters agreed<strong>with</strong> reducing the time from 45 days to30 days if the timeliness of feedbackwas improved.Response: We thank thesecommenters for supporting our proposalto reduce the time to submit medicalrecords for validation from 45 days to 30days if timeliness of feedback could beimproved. We agree that improvedtimelines of feedback is important forquality improvement.After consideration of the publiccomments we received, we havedecided to not finalize our proposal toreduce the time for hospitals to submitmedical record documentation. Asstated above, we will retain the medicalrecord return policy that we finalized inthe CY 2011 OPPS/ASC final rule forthe Hospital OQR Program CY 2012payment determination. We did notreceive any comments on our proposalregarding validation score calculation.Therefore, we are finalizing thisproposal <strong>with</strong>out modification.4. Additional Data ValidationConditions Under Consideration for CY2014 and Subsequent YearsWe continue to consider buildingupon our validation approach oftargeting hospitals to address dataquality concerns and to ensure that ourpayment decisions are made usingaccurate data. Thus, in the CY 2012OPPS/ASC proposed rule (76 FR 42333),we requested public comment on thefollowing additional targeting criteria toselect hospitals for validation:• Whether a hospital that was openunder its current CCN and had not beenselected for validation in the previous 3years. This is consistent <strong>with</strong> validationtargeting criteria we recently proposedto implement for the CY 2015 Hospital

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74487jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2IQR Program (76 FR 25920 through25921).• Whether a hospital had submitted alow number of encounters relative topopulation sizes; or• Whether a hospital reportedsignificant numbers of ‘‘Unable toDetermine’’ data elements.In the proposed rule we welcomedpublic comment on these proposals, andnoted that we were specificallyinterested in receiving public commentson definitions of low numbers relativeto population sizes and what wouldconstitute significant numbers of‘‘Unable to Determine’’ data elements.<strong>Comment</strong>: Several commenterssupported the idea of selecting eligiblehospitals for validation if not selected inthe previous 3 years, or, in other words,at least once every 4 years forvalidation. One commenter suggestedthat the time allowance for targeting ahospital for validation due to nonselectionbe increased from 3 years to 4years.Response: We appreciate thecommenters’ support. Regarding thesuggestion that the time allowance fortargeting a hospital for validation due tonon-selection be increased from threeyears to four, if the time was increasedto four years, the maximum number ofyears that a hospital could avoid beingselected for validation would be 5 years.We believe that this timeframe is toolong for a hospital that has submittedquality measure information to go<strong>with</strong>out their data being validated.<strong>Comment</strong>: One commenter expressedconcerns about the criteria for how todefine low numbers relative topopulation size and significant numbersof ‘‘unable to determine’’ data elements.The commenter stated that <strong>with</strong>out aquality strategy for outpatient care, it isdifficult to evaluate a low number ofencounters relative to population orsignificant numbers of ‘‘unable todetermine.’’ Another commentersuggested that statistical testing be usedto determine thresholds for theseproposed criteria.Response: We thank thesecommenters for their thoughts on howto define low numbers relative topopulation size and significant numbersof ‘‘unable to determine’’ data elementsin formulating these factors as targetingcriteria for validation. We will takethese views under consideration as wedevelop future proposals on theseissues. We thank the commenters for alltheir views on these proposed criteriaand will take them into account as weconsider future proposals.H. Hospital OQR Reconsideration andAppeals Procedures for CY 2013 andSubsequent YearsWhen the Hospital IQR Program wasinitially implemented, it did not includea reconsideration process for hospitals.Subsequently, we received manyrequests for reconsideration of thosepayment decisions and, as a result,established a process by whichparticipating hospitals would submitrequests for reconsideration. Weanticipated similar concerns <strong>with</strong> theHospital OQR Program and, therefore, inthe CY 2008 OPPS/ASC final rule <strong>with</strong>comment period (72 FR 66875), westated our intent to implement for theHospital OQR Program areconsideration process modeled afterthe reconsideration process weimplemented for the Hospital IQRProgram. In the CY 2009 OPPS/ASCfinal rule <strong>with</strong> comment period (73 FR68779), we adopted a reconsiderationprocess that applied to the CY 2010payment decisions. In the CY 2010OPPS/ASC final rule <strong>with</strong> commentperiod (74 FR 60654 through 60655), wecontinued this process for the CY 2011payment update. In the CY 2011 OPPS/ASC final rule <strong>with</strong> comment period (75FR 72106 through 72108), we continuedthis process for the CY 2012 paymentupdate <strong>with</strong> some modification.In the CY 2012 OPPS/ASC proposedrule (76 FR 42333 through 42334), weproposed to continue this process forthe CY 2013 payment determination andsubsequent years. Under this proposedprocess, a hospital seekingreconsideration must—• Submit to CMS, via QualityNet, aReconsideration Request form that willbe made available on the QualityNetWeb site; this form must be submittedby February 3 of the affected paymentyear (for example, for the CY 2013payment determination, the requestmust be submitted by February 3, 2013)and must contain the followinginformation:Æ Hospital CCN.Æ Hospital Name.Æ CMS-identified reason for notmeeting the requirements of the affectedpayment year’s Hospital OQR Programas provided in any CMS notification tothe hospital.Æ Hospital basis for requestingreconsideration. This must identify thehospital’s specific reason(s) forbelieving it met the affected year’sHospital OQR Program requirementsand should receive the full OPD feeschedule increase factor.Æ CEO and any additional designatedhospital personnel contact information,including name, email address,VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00367 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2telephone number, and mailing address(must include physical address, not justa post office box).Æ A copy of all materials that thehospital submitted to comply <strong>with</strong> therequirements of the affected year’sHospital OQR Program. Such materialmight include, but does not need to belimited to, the applicable Notice ofParticipation form or completed onlineregistration form, and measure data thatthe hospital submitted via QualityNet.• Paper copies of all the medicalrecord documentation that it submittedfor the initial validation (if applicable).We proposed that hospitals wouldsubmit this documentation to adesignated CMS contractor whichwould have authority to review patientlevel information. We would post theaddress where hospitals are to send thisdocumentation on the QualityNet Website.• To the extent that the hospital isrequesting reconsideration on the basisthat CMS has determined it did notmeet an affected year’s validationrequirement, the hospital must providea written justification for each appealeddata element classified during thevalidation process as a mismatch. Onlydata elements that affect a hospital’svalidation score would be eligible to bereconsidered. We would review the dataelements that were labeled asmismatched as well as the writtenjustifications provided by the hospital,and make a decision on thereconsideration request.We note that, consistent <strong>with</strong> ourpolicy for CY 2012 reconsiderations,reconsideration request forms would notneed to be signed by the hospital’s CEO.Following receipt of a request forreconsideration, CMS would—• Provide an email acknowledgement,using the contact information providedin the reconsideration request, to theCEO and any additional designatedhospital personnel notifying them thatthe hospital’s request has been received.• Provide a formal response to thehospital CEO and any additionaldesignated hospital personnel, using thecontact information provided in thereconsideration request, notifying thehospital of the outcome of thereconsideration process.We intend to complete anyreconsideration reviews andcommunicate the results of thesedeterminations <strong>with</strong>in 90 daysfollowing the deadline for submittingrequests for reconsideration.We also proposed to apply the samepolicies that we finalized for the CY2012 payment determination regardingthe scope of our review when a hospitalrequests reconsideration because it

74488 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2failed our validation requirement. Thesepolicies are as follows:• If a hospital requestsreconsideration on the basis that itdisagrees <strong>with</strong> a determination that oneor more data elements were classified asmismatches, we would only considerthe hospital’s request if the hospitaltimely submitted all requested medicalrecord documentation to the CMScontractor each quarter under thevalidation process.• If a hospital requestsreconsideration on the basis that itdisagrees <strong>with</strong> a determination that oneor more medical records it submittedduring the quarterly validation processwas classified as an invalid recordselection (that is, the CMS contractordetermined that one or more medicalrecords submitted by the hospital didnot match what was requested, thusresulting in a zero validation score forthe encounter(s)), our review wouldinitially be limited to determiningwhether the medical documentationsubmitted in response to the designatedCMS contractor’s request was thecorrect documentation. If we determinethat the hospital did submit the correctmedical documentation, we wouldabstract the data elements and computea new validation score for theencounter. If we conclude that thehospital did not submit the correctmedical record documentation, wewould not further consider thehospital’s request.• If a hospital requestsreconsideration on the basis that itdisagrees <strong>with</strong> a determination that itdid not submit the requested medicalrecord documentation to the CMScontractor <strong>with</strong>in the proposed 30calendar day timeframe, our reviewwould initially be limited todetermining whether the CMScontractor received the requestedmedical record documentation <strong>with</strong>in30 calendar days, and whether thehospital received the initial medicalrecord request and reminder notice. Ifwe determine that the CMS contractortimely received paper copies of therequested medical recorddocumentation, we would abstract dataelements from the medical recorddocumentation submitted by thehospital and compute a validation scorefor the hospital. If we determine that thehospital received two letters requestingmedical documentation but did notsubmit the requested documentation<strong>with</strong>in the 30 calendar day period, wewould not further consider thehospital’s request.If a hospital is dissatisfied <strong>with</strong> theresult of a Hospital OQR reconsiderationdecision, the hospital would be able tofile an appeal under 42 CFR Part 405,Subpart R (PRRB appeal).In the proposed rule we invitedpublic comment on our proposed CY2013 Hospital OQR Programreconsideration and appeals procedures.<strong>Comment</strong>: Some commenterssupported our proposal to continue forCY 2013 and subsequent years’ paymentdeterminations our programreconsideration and appeals procedurescurrently in place.Response: We thank thesecommenters for their support of ourHospital OQR Program reconsiderationand appeals procedures.<strong>Comment</strong>: One commenterencouraged CMS to be more prescriptivethan, as stated in the proposal, theintention of having reconsiderationreviews completed and communicationof the results of these determinations tohospitals <strong>with</strong>in 90 days given thathospitals were not allowed this leewayin submission timeframes.Response: We believe that thecommenter is stating a desire for acommitment that we will completereconsideration reviews andcommunicate decisions results tohospitals in 90 day days or less after thesubmission deadline timeframe. Asreconsideration requests can involveextensive research and informationreview, among other time consumingprocesses, often the full 90 day timeframeis necessary to complete theprocess in a thorough manner. In somemore complex cases, the 90 days maynot be enough. Note that, when thereconsideration process can becompleted in a shorter time-frame, wecan and have communicated the resultsin less than 90 days. We intend wherepossible to complete anyreconsideration requests and tocommunicate the results of our decision<strong>with</strong>in 90 days.After consideration of the publiccomments we received, we arefinalizing our proposals <strong>with</strong>outmodification.I. Electronic Health Records (EHRs)Starting <strong>with</strong> the FY 2006 IPPS finalrule, we have encouraged hospitals totake steps toward the adoption of EHRs(also referred to in previous rulemakingdocuments as electronic medicalrecords) that will allow for reporting ofclinical quality data from EHRs to aCMS data repository (70 FR 47420through 47421). We sought to preparefor future EHR submission of qualitymeasures by sponsoring the creation ofelectronic specifications for qualitymeasures under consideration for theHospital IQR Program. Through the EHRIncentive Programs, we expect that theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00368 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2submission of quality data throughEHRs will provide a foundation forestablishing the capacity of hospitals tosend, and for CMS, in the future, toreceive, quality measures via hospitalEHRs for Hospital IQR and OQRProgram measures. We expect theHospital IQR and Hospital OQRPrograms to transition to the use ofcertified EHR technology, for measuresthat otherwise require information fromthe clinical record. This would allow usto collect data for measures <strong>with</strong>out theneed for manual chart abstraction.In the FY 2012 IPPS/LTCH PPSproposed rule (75 FR 25894), weidentified FY 2015 as a potentialtransition date to move to EHR-basedsubmission and phase out manual chartabstraction. We also anticipate such atransition for hospital outpatientmeasures, although likely somewhatafter the transition for hospital inpatientmeasures. This is a result of the fact thatthe clinical quality measures in the EHRIncentive Program currently areprimarily aligned <strong>with</strong> the Hospital IQRProgram, rather than the Hospital OQRProgram. Our goals are to align thehospital quality reporting programs, toseek to avoid redundant and duplicativereporting of quality measures forhospitals, and to rely largely on EHRsubmission for measures based onclinical record data.<strong>Comment</strong>: A commenterrecommended that prior to CY 2015,CMS offer a voluntary test period of atleast one year and omit public reporting,in order to allow hospitals to submitdata, refine electronic submissionprocess to ensure accuracy and validityof data flows. The commenter was alsoconcerned about the potentialinaccurate calculations generated fromcertified EHRs and urged CMS not topublicly report the Stage 1 clinicalquality measure (CQM) data reportedand not to use them as a baseline forfuture quality reporting programs, suchas a value-based purchasing program.Response: We understand thathospitals need to gain experience inelectronic data submission. The 2012Medicare EHR Incentive ProgramElectronic Reporting Pilot (2012Electronic Reporting Pilot) (discussedbelow) that we proposed is voluntaryand last for one year. This Pilot wouldprovide eligible hospitals and CAHs theopportunity to report clinical qualitymeasures using certified EHRtechnology. We thank the commenterfor the feedback on certified EHRtechnology and we will communicatethat to the ONC for further evaluation.We also note that at present, CQMsreported through attestation under theEHR Incentive Program are not publicly

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74489jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2reported and we do not plan to publishthe CQMs reported through the 2012Electronic Reporting Pilot. The onlyinformation that we expect to makepublicly available are the names ofhospitals that have received anincentive payment under the EHRIncentive Program. We will providefurther education and outreach tostakeholders on the reporting processfor the 2012 Electronic Reporting Pilotin FY 2012. For hospitals that may beconcerned about the accuracy of theresults calculated by their certified EHRtechnology, we would suggest that theycontact their vendors about these issues.<strong>Comment</strong>: A commenter requestedclarification regarding the validation ofquality measures submitted throughcertified EHR technology after manualchart-abstraction is phased out.Response: For reporting clinicalquality measures under the EHRIncentive Program, the eligible hospitalor CAH must attest to the output that isgenerated from its certified EHRtechnology. We are still in the processof developing validation strategy forquality measures submitted throughcertified EHR technology after manualchart-abstraction is phased out.<strong>Comment</strong>: A commenter stated thatCMS must ensure that the electronicmeasure is comparable to the originalmanual chart-abstracted measure. Thecommenter noted that any potentialelectronic retooling of the measuresmust not undermine the scientific basisand data integrity of the measures.Another commenter suggested that foreasy understanding by healthcareprofessionals, the e-specifications forEHR submission of quality measuresshould be written in simple languagewhile maintaining the accuracy of dataelement definitions. The commenterbelieved it is critical for CMS to createmeasure specifications to ensurediscrete data are applicable to measures<strong>with</strong>out contradicting documentation in‘‘free text’’ and ‘‘scanned document’’areas of the medical record.Response: We agree that electronicmeasures should be comparable to theoriginal manual chart-abstractedmeasures and we thank the commenterfor the suggestions on the creation ofuser-friendly e-specifications that align<strong>with</strong> medial record documentations. Weare collaborating <strong>with</strong> the NQF, measurestewards, and the ONC to develop theaccurate, easy to understand, andmedical-record compatible electronicspecifications while maintaining theintegrity of the measures as endorsed.<strong>Comment</strong>: Some commentersdiscussed their CQM reportingexperience for Stage 1 meaningful use.<strong>Comment</strong>ers indicated that extra effortswere required to manipulate thecertified EHR products to generateaccurate quality data. For this reason,some commenters had misgivings aboutthe testing of the e-measurespecifications. In addition, commenterswere concerned whether corrections orupdates, such as new medications totreat patients <strong>with</strong> stroke, werecommunicated and adopted timely byvendors. Some commenters did notbelieve EHR vendors have the capacityto keep up <strong>with</strong> the constant changes inelectronic measures and relatedspecifications. Moving forward, somecommenters requested that CMSestablish a transparent process tomanage specification updates to qualitymeasures, as well as a mechanismthrough which vendors and providerscan provide feedback on problematicmeasures. The commenters noted thatthe existing CQMs require a level ofclinical documentation and the use ofcoded data fields that are far moreextensive than other Stage 1 MeaningfulUse objectives.Response: We thank the commentersfor the feedback. We are continuing towork <strong>with</strong> ONC to resolve the identifiedconcerns. Generally, the e-measurespecifications we adopt undergorigorous development processes and e-specification updates and newspecifications are timely communicatedto vendors. We thank the commentersfor their suggestions on the transparentprocess to manage updates and will takethem into consideration for futureplanning.<strong>Comment</strong>: <strong>Comment</strong>ers recommendedthat CMS conduct a different pilotprogram to field test the measures usedin the HITECH EHR Incentive Programfor the purpose of determining theability of vendors and hospitals toaccurately capture the necessary data inthe required formats to generate, valid,reliable and comparable qualitymeasures directly from the EHRs.Response: CMS agrees that it isimportant to obtain input from thevendors, providers, and measurestewards about the electronicspecifications. We thank thecommenters for the suggestions for apilot program to test measures in thefield. Currently, we are working <strong>with</strong>the various stakeholders to define thisprocess.<strong>Comment</strong>: A commenter requestedclarification whether the informationrelated to the Hospital IQR Programcontained in CMS’ FAQ (AnswerID10589: ‘‘CMS does not require anyadditional information beyond what isgenerated from certified EHR technologyin order to satisfy the requirement forsubmitting CQM information’’) alsoVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00369 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2applies to e-measures in the HospitalOQR Program. If it does, the amount ofdata obtained from e-measures willdiffer in the Hospital IQR and HospitalOQR Programs.Response: The reporting requirementsare separate for each program. At thistime there are different and separatereporting requirements for the EHRIncentive Program, the Hospital IQRProgram, and the Hospital OQRProgram.J. 2012 Medicare EHR Incentive ProgramElectronic Reporting Pilot for EligibleHospitals and CAHs1. BackgroundIn the CY 2012 OPPS/ASC proposedrule (76 FR 42334 through 42336), weproposed changes to the methods bywhich eligible hospitals and CAHswould report clinical quality measuresfor the 2012 payment year andsubsequent years for the Medicare EHRIncentive Program. Specifically, weproposed that for the 2012 payment yearand subsequent years, eligible hospitalsand CAHs may continue to reportclinical quality measure results ascalculated by certified EHR technologyby attestation, as for the 2011 paymentyear. Alternatively, for the 2012payment year, eligible hospitals andCAHs would be able to participate in aproposed 2012 Electronic ReportingPilot. We proposed to revise ourregulations at § 495.8(b)(2)(ii) andproposed to add § 495.8(b)(2)(vi), whichwould reflect these proposals forreporting CQMs through attestation andthe 2012 Electronic Reporting Pilot.2. Electronic Reporting PilotSection 1886(n)(3)(B)(ii) of the Actprovides authority for the Secretary toaccept information on CQMselectronically on a pilot basis. Weproposed that eligible hospitals andCAHs participating in the Medicare EHRIncentive Program may meet the CQMreporting requirement of the EHRIncentive Program for payment year2012 by participating in an ElectronicReporting Pilot. We proposed thatparticipation in this ElectronicReporting Pilot would be voluntary andthat eligible hospitals and CAHs maycontinue to attest to the results of CQMscalculated by certified EHR technologyas they did for the 2011 payment year.We encouraged participation in theproposed Electronic Reporting Pilot inview of our desire to adequately pilotelectronic submission of CQMs and tomove to a system of reporting whereeligible hospitals and CAHs can qualifyfor CQM reporting for both the HospitalIQR and Hospital OQR Programs, and

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274490 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsthe EHR Incentive Program. We stronglyencouraged eligible hospitals and CAHsto participate in the proposed ElectronicReporting Pilot as it providesopportunities to test the interoperabilityand functionality of the certified EHRtechnology that they have implemented.We believe that the participation ofeligible hospitals and CAHs in theproposed Electronic Reporting Pilotwould help advance EHR-basedreporting in the Hospital IQR andHospital OQR Programs.Eligible hospitals and CAHs wouldneed to be registered in order toparticipate in the proposed ElectronicReporting Pilot. Eligible hospitals andCAHs wishing to participate in theproposed Electronic Reporting Pilot forthe CQMs would register by indicatingtheir desire and intent to participate inthe proposed Electronic Reporting Pilotas part of the attestation process for theMedicare EHR Incentive Program. Weproposed that eligible hospitals andCAHs that participate in the proposedElectronic Reporting Pilot and meet itssubmission requirements would satisfythe requirements for reporting clinicalquality measures under the MedicareEHR Incentive Program. Such eligiblehospitals and CAHs would therefore notneed to attest to the results of clinicalquality measures calculated by certifiedEHR technology. As described below,for the purpose of the proposedElectronic Reporting Pilot, CMS wouldcalculate the results of the clinicalquality measures for eligible hospitalsand CAHs based on patient level datasubmitted for Medicare patients. Theproposed Electronic Reporting Pilotwould require eligible hospitals andCAHs to submit information on thesame 15 CQMs that were listed in Table10 of the final rule for the Medicare andMedicaid EHR Incentive Programs (75FR 44418 through 44420) and suchinformation would be obtained from thecertified EHR technology used by theeligible hospital or CAH.We proposed that electronicsubmission of the 15 CQMs through thisproposed Electronic Reporting Pilotwould be sufficient to meet the coreobjective for reporting CQMs for theMedicare EHR Incentive Program for the2012 payment year. Since the reportingof CQMs is only one of the 14 coremeaningful use objectives for eligiblehospitals and CAHs for the MedicareEHR Incentive Program, an eligiblehospital or CAH that chooses toparticipate in the proposed ElectronicReporting Pilot would still be requiredto meet and attest to the other core andmenu set objectives and their associatedmeasures using the attestation modulefor the program on the CMS Web site.We stated that after the eligiblehospital or CAH had attested and CMShad received electronic submission ofthe CQMs from an eligible hospital orCAH participating in the proposedElectronic Reporting Pilot, CMS woulddetermine whether the eligible hospitalor CAH has successfully met all therequirements for the Medicare EHRIncentive Program. We expect thisdetermination would be made <strong>with</strong>in 2months after the end of the paymentyear and not later than November 30,2013. Eligible hospitals and CAHs thatdo not meet the reporting requirementsthrough the Electronic Reporting Pilotmay meet such requirement throughattestation. We proposed that eligiblehospitals and CAHs, alternatively, mayattest, but still participate in theproposed Electronic Reporting Pilot.<strong>Comment</strong>: A commenter requestedmore clarification on the purpose of thisPilot, which appears to duplicate otherquality measurement programs.Response: The specific purpose of the2012 Electronic Reporting Pilot is toprovide a method for eligible hospitalsand CAHs to electronically report theclinical quality measures for the EHRIncentive Program. We recognize thatthere may be some overlap between the2012 Electronic Reporting Pilot andother quality reporting programs but weexpect electronic reporting will bealigned and harmonized acrossMedicare quality reporting programsover time.<strong>Comment</strong>: Some commenters stronglysupported the proposed 2012 ElectronicReporting Pilot, which they perceived asa great opportunity for hospitals to testinteroperability and functionality oftheir certified EHR technology whileallowing CMS to evaluate thecompatibility of electronic measurespecifications and chart-abstracted data.<strong>Comment</strong>ers recommended that CMSshould be flexible <strong>with</strong> theimplementation timelines for the pilotto ensure the viability and successfulfunctionality of this new reportingmethod.Response: We appreciate thecommenters’ support of the proposed2012 Electronic Reporting Pilot. If theproposed timelines for the ElectronicReporting Pilot are not feasible for aneligible hospital or CAH, attestationwould continue to be an acceptablemethod for reporting the clinical qualitymeasures for the 2012 payment year.<strong>Comment</strong>: Some commenters believedthat the 2012 Electronic Reporting Pilotwould be instrumental in shaping andfacilitating the mechanisms forelectronic reporting by eligible hospitalsand CAHs in the near future. Acommenter asked CMS to clarify theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00370 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2options for attestation and participationin the 2012 Electronic Reporting Pilot.Response: We thank the commentersfor their support. As we stated in theproposed rule, the 2012 ElectronicReporting Pilot would be an alternativeto reporting CQMs by attestation for the2012 payment year. Eligible hospitalsand CAHs may choose to report CQMsby attestation and voluntarilyparticipate in the 2012 ElectronicReporting Pilot simultaneously. We willprovide more education and outreach tostakeholders on the reporting processfor the 2012 Electronic Reporting Pilotin 2012.<strong>Comment</strong>: A commenterrecommended making the 2012Electronic Reporting Pilot a viableoption for all hospitals, including safetynet hospitals, so that CMS can gauge theunique challenges to electronicreporting by a diverse group ofhospitals. Another commenter suggestedCMS should allow all hospitals toparticipate in the 2012 ElectronicReporting Pilot regardless of whetherthey participated in the EHR IncentiveProgram. A commenter recommendedproviding an additional incentive for2012 Electronic Reporting Pilotparticipants to increase participation.Response: We plan to engage a varietyof hospitals and vendors in the testingof the submission of patient levelreports for the clinical quality measuresrequired in the pilot. The submitter willnot be required to register in theregistration and attestation modulebefore submitting the test files. Moreinformation about the testing periodwill be available in 2012. Although weappreciate the commenter’srecommendation, the amounts of theincentive payments are limited bystatute and we do not have the authorityto award additional amounts forparticipation in the 2012 ElectronicReporting Pilot.<strong>Comment</strong>: One commenter requesteddelaying the 2012 Electronic ReportingPilot until 2013.Response: Based on the amount ofsupport from public comments and ourdesire to advance the electronicreporting of quality measures, we havedecided to implement the ElectronicReporting Pilot for the 2012 paymentyear as proposed. We recognize that the2012 Electronic Reporting Pilot may notbe suitable for all eligible hospitals andCAHs. To that end, we anticipate onlythose eligible hospitals and CAHs thatare most ready to transmit clinicalquality measure information from theircertified EHR technology wouldparticipate in the 2012 ElectronicReporting Pilot. Participation in thepilot is not required to be a meaningful

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74491jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2user of certified EHR technology.Eligible hospitals and CAHs that are notinterested in participating in the pilotwould report the clinical qualitymeasures by attestation as was requiredfor the 2011 payment year. We referreaders to the discussion of thereporting method for the 2011 paymentyear in the HITECH EHR IncentiveProgram final rule (75 FR 44430 through44431).<strong>Comment</strong>: A commenter requested adetailed analysis of the incapability ofthe PQRI 2009 Registry XMLSpecification content exchange standardin conveying aggregate hospital qualitymeasures data from EHRs. Thecommenter also suggested CMS consult<strong>with</strong> hospitals and vendors on the needto move to electronic reporting from thecurrent attestation model, given relativecosts and benefits.Response: We suggest that thecommenter should contact the Office ofthe National Coordinator for HealthInformation Technology (ONC) <strong>with</strong> anyquestions or concerns about the PQRI2009 Registry XML Specificationcontent exchange standard. ONC’s Website address is http://healthit.hhs.gov.We appreciate the suggestion to consult<strong>with</strong> hospitals and vendors about theneed to move from the currentattestation model to electronic reportingand will take it into consideration forfuture planning.After consideration of the publiccomments we received, we arefinalizing as proposed the voluntary2012 Electronic Reporting Pilot foreligible hospitals and CAHsparticipating in the Medicare EHRIncentive Program for the 2012 paymentyear. Eligible hospitals and CAHs alsomay choose to attest to the results ofCQMs calculated by certified EHRtechnology as for the 2011 paymentyear. We also are revising ourregulations at § 495.8(b)(2) as proposed.Successful electronic submission of the15 CQMs required for eligible hospitalsand CAHs through this 2012 ElectronicReporting Pilot will be sufficient to meetthe core objective of reporting hospitalCQMs to CMS under the Medicare EHRIncentive Program for the 2012 paymentyear.3. CQM Reporting Under the ElectronicReporting PilotIn the CY 2012 OPPS/ASC proposedrule (76 FR 42336), we proposed thateligible hospitals and CAHsparticipating in the proposed 2012Electronic Reporting Pilot must submitCQM data on all 15 CQMs listed inTable 10 of the final rule (75 FR 44418through 44420) to CMS via a secureportal and based on data obtained fromthe eligible hospital or CAH’s certifiedEHR technology.We proposed that eligible hospitalsand CAHs participating in the proposedElectronic Reporting Pilot would: (1)Submit CQM data on Medicare patientsonly; (2) submit Medicare patient-leveldata from which CMS may calculateCQM results using a uniform calculationprocess, rather than aggregate resultscalculated by the eligible hospital orCAH’s certified EHR technology; (3)submit one full Federal fiscal year ofCQM data, regardless of the eligiblehospital or CAH’s year of participationin the Medicare and Medicaid EHRIncentive Programs; and (4) useelectronic specifications fortransmission as specified by CMS,which we expected would be QualityData Reporting Architecture (QRDA)Level I. (We note that we used the term‘‘Level 1’’ in the CY 2012 OPPS/ASCproposed rule (76 FR 42336). ‘‘Level 1’’is used interchangeably <strong>with</strong> the term‘‘Category I’’ to denote patient-leveldata. In order to be consistent <strong>with</strong> theImplementation Guide for ClinicalDocument Architecture Release 2, weare using the term ‘‘Category 1’’ insteadof the term ‘‘Level I’’ in this final rule<strong>with</strong> comment period.)As noted previously, for the proposed2012 Electronic Reporting Pilot, CQMdata on which the eligible hospital orCAH’s submission is based would beobtained from certified EHR technology.However, the functionality of reportingthese CQMs to CMS would not rely onthe certification process. We proposedthat eligible hospitals and CAHsparticipating in the proposed ElectronicReporting Pilot would report CQMsbased on a pilot measurement period ofone full Federal fiscal year (October 1,2011 through September 30, 2012),regardless of whether the eligiblehospital or CAH is in its first year ofparticipation in the Medicare andMedicaid EHR Incentive Programs. Theperiod for submitting information onCQMs under the proposed 2012Electronic Reporting Pilot would beOctober 1, 2012 through November 30,2012, which is the 60 days following theclose of the measurement period. TheCQM reporting format would be asspecified by CMS, which we expectedwould be QRDA Category I. Weproposed to offer a test period beginningJuly 1, 2012, which would allow eligiblehospitals, CAHs, or their designee tosubmit CQM reports to CMS <strong>with</strong> therequirements that would be used in theproposed 2012 Electronic ReportingPilot.<strong>Comment</strong>: Some commenters statedthat if QRDA Category I is going to beimplemented, vendors will need time toVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00371 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2develop, test, and deploy thisfunctionality. <strong>Comment</strong>ers urged CMSto provide a Web site for vendors to testtheir implementation of thetransmission standard and a sample setof test data to ensure that the results areconsistent.Response: We will provide a testperiod before and during the submissionperiod as well as additional educationand outreach to the industry in advanceto assist 2012 Electronic Reporting Pilotparticipants <strong>with</strong> transmitting electronicquality measure data. We thank thecommenters for the suggestions forsample test data and will take that intoconsideration should the Pilot beextended beyond the one-year timeframe.<strong>Comment</strong>: A commenter supportedthe collection of patient-level data.Another commenter was concernedabout the significant resource andsystem burden from the submission ofpatient-level data. Furthermore, thestructure and content of the patientleveldata elements were not clear to thecommenter. The commenter urged CMSto accept the submission of aggregateleveldata which can be compiled fromcertified EHR technology. Additionally,a commenter was concerned that QRDAis not a sufficiently well-tested andmature standard, compared to the PQRIXML format (contained in the certifiedEHR technology), which the commenterbelieved is well-tested for submission ofaggregate quality measure data. Thecommenter strongly urged CMS to striveto modify the PQRI XML format forsuitability for electronic transmission ofpatient-level quality measure data forthe 2012 Electronic Reporting Pilot.Response: We do not believe therewill be additional burdens from thesubmission of patient-level data becauseeligible hospitals are already submittingpatient-level data to CMS under theHospital IQR Program. Also, weanticipate that the certified EHRtechnology vendors will work <strong>with</strong> therequirements necessitated by the Pilot toserve the best interest of hospitals. Wewill strive to ensure that hospitalsparticipating in the Pilot are provided<strong>with</strong> the resources needed tounderstand the structure and content ofthe patient-level data elements. Oneimportant purpose of the 2012Electronic Reporting Pilot is to test theQRDA Category I format for thetransmission of patient-level CQM data.Therefore, we do not intend to modifythe PQRI XML format for suitability totransmit patient-level data.<strong>Comment</strong>: A commenter stated thatthe proposed 2012 Electronic ReportingPilot seems to require a reporting periodof one full year, while the reporting

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274492 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsperiod for eligible hospitals and CAHsnot participating in the pilot is only 90days. The commenter requestedstandardizing the reporting period to 90days for both the 2012 ElectronicReporting Pilot participants and nonparticipantsto level the playing field,based on concerns that requiring onefull year of data would delay the receiptof incentive payments for eligiblehospitals and CAHs that are in their firstpayment year. The commenter stronglybelieved that the proposed one-yearmeasurement period is a disincentivefor provider participation in the pilot, aseligible hospitals and CAHs would haveto complete one whole year of datacollection before receiving their EHRincentive payment.Response: We understand thecommenter’s concerns. However, fortesting purposes, we believe the pilotmeasurement period should be one fullyear for consistency <strong>with</strong> the EHRreporting period that is required foreligible hospitals and CAHs beginningin their second payment year under theMedicare EHR Incentive Program.Eligible hospitals and CAHs should notethat the 2012 Electronic Reporting Pilotis voluntary. Hospitals that begin Stage1 in FY 2012 would have a 90-dayreporting period if they choose to reportCQMs by attestation. We encourageparticipation in the 2012 ElectronicReporting Pilot because we believe it isa valuable learning process as we moveto electronic submission of CQMs.<strong>Comment</strong>: Some commentersrecommended that CMS should onlycollect numerator, denominator, andexclusionary data. <strong>Comment</strong>ers alsorequested CMS to provide explanationwhy aggregate data submission is notpiloted.Response: We still collect numerator,denominator, and exclusion data fromeligible hospitals and CAHs who chooseto report CQMs by attestation. Thereason we collect patient-level data inthe 2012 Electronic Reporting Pilot is toalign <strong>with</strong> the data reported to theHospital IQR Program, as part of ourefforts to reduce burdens on thehospitals that participate in thatprogram.<strong>Comment</strong>: A few commentersassumed that CMS intends to test theuse of the HL7 Standard QRDA CategoryI, which has been developed to supportreporting on quality data from EHRs,and may use it for the future. Based onthis assumption, some commentersrequested CMS to collaborate <strong>with</strong> ONCto remove the PQRI 2009 Registrycontent exchange standards from thecertification requirements, as they willnot be used.Response: Because this is a pilot andis meant to test alternative ways forelectronic reporting to take place, we donot believe it is necessary or appropriateto collaborate <strong>with</strong> ONC to remove thePQRI 2009 XML Registry specificationas the basis of certification.<strong>Comment</strong>: One commenter wasconcerned that the collection of patientleveldata would not comply <strong>with</strong> theHIPAA requirements.Response: The HIPAA Privacy <strong>Rule</strong> at45 CFR 164.512(a) permits disclosuresof protected health information that arerequired by law, including regulation.Eligible hospitals and CAHs that chooseto participate in the 2012 ElectronicReporting Pilot would be required tosubmit patient-level data.<strong>Comment</strong>: A commenterrecommended the collection of all-payerdata, instead of just Medicare data, inorder to advance the utilization of allpayerdatabase.Response: We thank the commenterfor the suggestion. The pilot is designedto collect Medicare patient data. We willanalyze the Medicare patient data wereceive in this 2012 ElectronicReporting Pilot and evaluate thefeasibility of collecting all-payer data inthe future.<strong>Comment</strong>: A commenter wasconcerned about the significant resourceand system burden from the submissionof patient-level data using QRDA. Thecommenter questioned CMS’ ability toreceive and analyze the huge amount ofpatient-level data and was concernedthat the huge QRDA Category I files mayslow down CMS’ data processing. Somecommenters recommended that CMSand other measure vendors work <strong>with</strong>HL7 to create, ballot, and test a genericstandard (perhaps QRDA Category II)conformable to NQF’s Quality DataModel and the Model and the HealthQuality Measure Format (HQMF)standard that would allow for computerto-computerinteroperable exchange ofdiscrete data.Response: We thank the commentersfor their valuable input. QRDA CategoryI will be piloted in the 2012 ElectronicReporting Pilot, but it may not be theeventual transmission format used forall EHR CQM reporting. We will use the2012 Electronic Reporting Pilotexperience to evaluate the level ofcomplexity, effort, and burden createdby this transmission format. Thisanalysis will be considered in futureprogram designs.<strong>Comment</strong>: A commenter wasconcerned about the potential securityrisks of patient data and urged CMS tobuild a security protection mechanismmodeled after the Quality ImprovementOrganization (QIO) warehouse system.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00372 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Some commenters recommended thatCMS should require providers to submittheir patient-level data to a QIO ClinicalData Warehouse, which would thentransmit quality data to CMS.Response: We have security standardsin place to receive patient-level data inthe Hospital IQR and OQR Programs.We will continue to utilize secure datatransmission standards in all reportingprograms at CMS. We also note thatcertified EHR technology is arequirement of participation in the pilot,and that a core objective of meaningfuluse addresses security validation.<strong>Comment</strong>: A commenter suggestedthat the 2012 Electronic Reporting Pilotalso test electronic measures and notjust transmission of quality data to CMS.The commenter also encouraged CMS tosolicit feedback from participants andnon-participants of the 2012 ElectronicReporting Pilot.Response: The 2012 ElectronicReporting Pilot will test file submissionwhile certified EHR technology iscertified for its ability to electronicallycalculate CQM specifications requiredby CMS. We welcome feedback fromparticipants and non-participants in the2012 Electronic Reporting Pilot.After consideration of the publiccomments we received, we arefinalizing our proposals for reportingCQM data under the 2012 ElectronicReporting Pilot. Among otherrequirements, eligible hospitals andCAHs participating in the 2012Electronic Reporting Pilot must: (1)Submit CQM data on Medicare patientsonly; (2) submit Medicare patient-leveldata from which CMS may calculateCQM results using a uniform calculationprocess, rather than aggregate resultscalculated by the eligible hospital orCAH’s certified EHR technology; (3)submit one full Federal fiscal year ofCQM data, regardless of the eligiblehospital or CAH’s year of participationin the Medicare and Medicaid EHRIncentive Programs; and (4) use QRDACategory I format data transmission.K. ASC Quality Reporting Program1. BackgroundSection 109(b) of the MIEA TRHCAamended section 1833(i) of the Act byre-designating clause (iv) as clause (v)and adding new clause (iv) to paragraph(2)(D) and by adding new paragraph (7).Section 1833(i)(2)(D)(iv) of the Actauthorizes, but does not require, theSecretary to implement the revised ASCpayment system ‘‘in a manner so as toprovide for a reduction in any annualupdate for failure to report on qualitymeasures in accordance <strong>with</strong> paragraph(7).’’ Section 1833(i)(7)(A) of the Act

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74493jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2states that the Secretary may providethat any ASC that does not submitquality measures to the Secretary inaccordance <strong>with</strong> paragraph (7) willincur a 2.0 percentage point reductionto any annual increase provided underthe revised ASC payment system forsuch year. It also specifies that areduction for one year cannot be takeninto account in computing any annualincrease factor for a subsequent year.Section 1833(i)(7)(B) of the Actprovides that, ‘‘[e]xcept as the Secretarymay otherwise provide,’’ the hospitaloutpatient quality data provisions ofsubparagraphs (B) through (E) of section1833(t)(17) of the Act shall apply toASCs in a similar manner to the mannerin which they apply under theseparagraphs to hospitals under theHospital OQR Program and anyreference to a hospital, outpatientsetting, or outpatient hospital services isdeemed a reference to an ASC, thesetting of an ASC, or services of an ASC,respectively. Section 1833(t)(17)(B) ofthe Act requires that hospitals submitquality data in a form and manner, andat a time, that the Secretary specifies.Section 1833(t)(17)(C)(i) of the Actrequires the Secretary to developmeasures appropriate for themeasurement of the quality of care(including medication errors) furnishedby hospitals in outpatient settings, thatthese measures reflect consensus amongaffected parties and, to the extentfeasible and practicable, that thesemeasures include measures set forth byone or more national consensusbuilding entities. Section1833(t)(17)(C)(ii) of the Act allows theSecretary to select measures that are thesame as (or a subset of) the measures forwhich data are required to be submittedunder the Hospital IQR Program.Section 1833(t)(17)(D) of the Act givesthe Secretary the authority to replacemeasures or indicators as appropriate,such as where all hospitals areeffectively in compliance or themeasures or indicators have beensubsequently shown not to represent thebest clinical practice. Section1833(t)(17)(E) of the Act requires theSecretary to establish procedures formaking data submitted under theHospital OQR Program available to thepublic. Such procedures includeproviding hospitals <strong>with</strong> theopportunity to review their data beforethese data are released to the public. Fora more detailed discussion of theprovisions in section1833(t)(17) of theAct, please see the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR72064 through 72065) and this final rule<strong>with</strong> comment period.In the CY 2008 OPPS/ASC final rule<strong>with</strong> comment period (72 FR 66875), theCY 2009 OPPS/ASC final rule <strong>with</strong>comment period (73 FR 68780), the CY2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60656), and theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 72109), we didnot implement a quality data reportingprogram for ASCs. We determined thatit would be more appropriate to allowASCs to acquire some experience <strong>with</strong>the revised ASC payment system, whichwas implemented for CY 2008, beforeimplementing new requirements, suchas public reporting of quality measures.However, in these rules, we indicatedthat we intend to implement theprovisions of section 109(b) of theMIEA–TRHCA in the future.In preparation for proposing an ASCQuality Reporting Program, in the CY2011 OPPS/ASC proposed rule, wesolicited public comment on thefollowing measures under considerationfor ASC quality data reporting: (1)Patient Fall in the ASC; (2) Patient Burn;(3) Hospital Transfer/Admission; (4)Wrong Site, Side, Patient, Procedure,Implant; (5) Prophylactic IV AntibioticTiming; (6) Appropriate Surgical SiteHair Removal; (7) Surgical SiteInfection; (8) MedicationAdministration Variance (MAV); (9)Medication Reconciliation; and (10)VTE Measures: Outcome/Assessment/Prophylaxis (75 FR 46383).In addition to preparing to proposeimplementation of an ASC QualityReporting Program, HHS developed aplan to implement a value-basedpurchasing (VBP) program for paymentsunder the Medicare program under titleXVIII of the Act for ASCs as required bysection 3006(f) of the Affordable CareAct, as added by section 10301(a) of theAffordable Care Act. We also submitteda Report to Congress, as required bysection 3006(f)(4) of the Affordable CareAct, entitled ‘‘Medicare AmbulatorySurgical Center Value-Based PurchasingImplementation Plan’’ that contains thisplan. This report is found on our Website at: http://www.cms.gov/ASCPayment/downloads/C_ASC_RTC%202011.pdf. Currently,we do not have express statutoryauthority to implement an ASC VBPprogram. Should there be legislation toauthorize CMS to implement an ASCVBP program, we will develop theprogram and propose it throughrulemaking.In the CY 2012 OPPS/ASC proposedrule (76 FR 42336 through 42349), weproposed to implement the ASC QualityReporting Program beginning <strong>with</strong> theCY 2014 payment determination, <strong>with</strong>data collection beginning in CY 2012 forVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00373 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2most of the measures to be used for theCY 2014 payment determination.<strong>Comment</strong>: One commenter stated thatit was unclear if there are any paymentpenalties for not participating in ASCquality data reporting and that if thereare payment penalties, how would theybe calculated. Several commentersstated their belief that the paymentpenalty for non-reporting or not meetingreporting requirements be lowered for atleast the initial payment penalty year,recommending a 0.4 percentage pointreduction for CY 2014, rather than a 2percentage point reduction. Some ofthese commenters noted that a 0.4percentage point reduction is consistent<strong>with</strong> the Hospital IQR Program.Response: The payment reduction fornot participating in ASC qualityreporting is set by statute. Section1833(i)(7)(A) of the Act states that theSecretary may provide that any ASCthat does not submit quality measures tothe Secretary as specified will incur a2.0 percentage point reduction to anyannual increase provided under therevised ASC payment system for suchyear. We intend to propose in the CY2013 OPPS/ASC proposed rule themethod for how these paymentpenalties will be calculated. We notethat although the payment reductionunder the Hospital IQR Program wasinitially a 0.4 percentage pointreduction to the applicable percentageincrease, the payment reduction has,since FY 2007, been 2.0 percentagepoints. (Beginning <strong>with</strong> FY 2015, thepayment reduction will be one-quarterof the applicable percentage increase(determined <strong>with</strong>out regard to sections1886(b)(3)(B)(ix), (xi), or (xii) of theAct).)<strong>Comment</strong>: Many commentersappreciated CMS’ plan to implement anASC Quality Reporting Program butstrongly urged CMS to delay the start ofrequired data submission from theproposed January 1, 2012 to October 1,2012 at the earliest, in order for ASCsto have sufficient time to prepare andadapt to the new reporting procedures.A few commenters noted that a newquality reporting program warrants atleast 6 months of advance notice toproviders, who would have to makesubstantive changes to data elementsand operation systems. <strong>Comment</strong>erscited the example of ASCs’ inexperiencein reporting data using Quality DataCodes (QDCs) as well as reporting toNHSN as efforts that would requiretremendous time, training and resourcesto initiate.Many commenters believed it wouldbe prudent for CMS to allow ASCs tosubmit quality data initially on a trialbasis for a time period from January 1,

74494 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES22012 through September 30, 2012.<strong>Comment</strong>ers asserted that ASCs needthis trial period to test their systems andresolve any problems that may arise.Response: We thank the commentersfor their support for the ASC QualityReporting Program. We strongly believethis program is an important milestonein the alignment of quality of care acrossHOPDs and ASC settings. Weacknowledge the new challenges facedby ASCs in preparation for this qualityreporting program. Based on publiccomments, we will delay required datasubmission until October 1, 2012 for theCY 2014 payment determination. Moreinformation regarding measuresubmission timeframes and otherprogram requirements can be found inthe ‘‘Form, Manner and Timing’’ sectionof this final rule <strong>with</strong> comment period.After consideration of the publiccomments we received, we arefinalizing the ASC Quality ReportingProgram, <strong>with</strong> data collection to beginon October 1, 2012.2. ASC Quality Reporting ProgramMeasure Selectiona. Timetable for Selecting ASC QualityMeasuresIn the CY 2012 OPPS/ASC proposedrule (76 FR 42337), we proposed toadopt measures for three CY paymentdeterminations for the ASC QualityReporting Program in this rulemaking.We proposed to adopt measures for theCYs 2014, 2015, and 2016 paymentdeterminations. We stated, to the extentthat we finalize some or all of themeasures for future paymentdeterminations, we would not beprecluded from adopting additionalmeasures or changing the list ofmeasures for future paymentdeterminations through annualrulemaking cycles so that we mayaddress changing program needs arisingfrom new legislation or from changes inHHS and CMS priorities. Under thisapproach, in the CY 2013 or CY 2014rulemaking cycle, we could propose anyadditions or revisions to the measureswe adopted in the CY 2012 rulemakingcycle for the CY 2014 paymentdetermination or for future paymentdeterminations. This is consistent <strong>with</strong>our approach to proposing measures formultiple payment determinations forthe Hospital IQR and Hospital OQRPrograms. We believe this proposedprocess will assist ASCs in planning,meeting future reporting requirements,and implementing quality improvementefforts. We also would have more timeto develop, align, and implement theinfrastructure necessary to collect dataon the measures and make paymentdeterminations. This flexibility wouldenable us to adapt the program tosupport changes in HHS and CMSpriorities and any new legislativerequirements. In the proposed rule, weinvited public comments on thisproposal.<strong>Comment</strong>: A few commenterssupported the multi-year approachwhich is perceived as greatopportunities for ASCs to gainunderstanding of measurespecifications, data collection and datasubmission methodologies while CMSdevelops needed infrastructure tocollect quality data on ASCs.Response: We thank the commentersfor the support of the multi-yearproposals for ASC quality measures.After consideration of the publiccomments we received, we arefinalizing our proposal to adopt qualitymeasures for the CY 2014, CY 2015, andCY 2016 payment determinations. Wediscuss the quality measures that we arefinalizing for these CYs below.b. Considerations in the Selection ofMeasures for the ASC Quality ReportingProgramSection 1833(i)(7)(B) of the Act statesthat section 1833(t)(17)(C) of the Actshall apply <strong>with</strong> respect to ASC servicesin a similar manner in which they applyto hospitals for the Hospital OQRProgram, except as the Secretary mayotherwise provide. The requirements atsection 1833(t)(17)(C)(i) of the Act statethat measures developed shall ‘‘beappropriate for the measurement of thequality of care (including medicationerrors) furnished by hospitals inoutpatient settings and that reflectconsensus among affected parties and,to the extent feasible and practicable,shall include measures set forth by oneor more national consensus buildingentities.’’In selecting proposed measures for theASC Quality Reporting Program andother quality reporting programs, wehave focused on measures that have ahigh impact on and support HHS andCMS priorities for improved health careoutcomes, quality, safety, efficiency andsatisfaction for patients. Our goal for thefuture is to expand any measure setadopted for ASC quality reporting toaddress these priorities more fully andto align ASC quality measurerequirements <strong>with</strong> those of otherreporting programs as appropriate,including the Hospital OQR Program,the Hospital IQR Program, the PQRS,and reporting requirementsimplemented under the HITECH Act sothat the burden for reporting will bereduced. In general, we prefer to adoptmeasures that have been endorsed byVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00374 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2the NQF because it is a national multistakeholderorganization <strong>with</strong> a welldocumentedand rigorous approach toconsensus development. However, aswe have noted in previous rulemakingfor the Hospital OQR Program (75 FR72065), the requirement that measuresreflect consensus among affected partiescan be achieved in other ways,including through the measuredevelopment process, through broadacceptance and use of the measure(s),and through public comment.In developing this and other qualityreporting programs, as well as theHospital VBP Program, we applied thefollowing principles for thedevelopment and use of measures. Inthe proposed rule, we invited publiccomment on these principles in the ASCquality reporting context.• Pay-for-reporting, public reporting,and value-based purchasing programsshould rely on a mix of standards,process, outcomes, and patientexperience of care measures, includingmeasures of care transitions andchanges in patient functional status.Across all programs, we seek to move asquickly as possible to the use ofprimarily outcome and patientexperience measures. To the extentpracticable and appropriate, outcomeand patient experience measures shouldbe adjusted for risk or other appropriatepatient population or provider/suppliercharacteristics.• To the extent possible andrecognizing differences in paymentsystem maturity and statutoryauthorities, measures should be alignedacross public reporting and paymentsystems under Medicare and Medicaid.The measure sets should evolve so thatthey include a focused core set ofmeasures appropriate to the specificprovider/supplier category that reflectsthe level of care and the most importantareas of service and measures for thatprovider/supplier.• The collection of informationshould minimize the burden onproviders/suppliers to the extentpossible. To this end, we willcontinuously seek to align our measures<strong>with</strong> the adoption of meaningful usestandards for HIT, so that data can besubmitted and calculated via certifiedEHR technology <strong>with</strong> minimal burden.• To the extent practicable andfeasible, and <strong>with</strong>in the scope of ourstatutory authorities for various qualityreporting and value-based purchasingprograms, measures used by CMSshould be endorsed by a national, multistakeholderorganization. Measuresshould be aligned <strong>with</strong> best practicesamong other payers and the needs of theend users of the measures.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74495jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2We believe that ASC facilities aresimilar, insofar as the delivery ofsurgical and related nonsurgicalservices, to HOPDs. Similar standardsand guidelines can be applied betweenhospital outpatient departments andASCs <strong>with</strong> respect to surgical careimprovement, given that many of thesame surgical procedures are providedin both settings. Measure harmonizationassures that comparable care in differentsettings can be evaluated in similarways, which further assures that qualitymeasurement can focus more on theneeds of a patient <strong>with</strong> a particularcondition rather than on the specificprogram or policy attributes of thesetting in which the care is provided. Ingeneral, our goal is to adopt harmonizedmeasures that assess the quality of caregiven across settings and providers/suppliers and to use the same measurespecifications based on clinicalevidence and guidelines for the carebeing assessed regardless of provider/supplier type or setting. Thisharmonization goal is also supported bya commenter to the CY 2011 OPPS/ASCproposed rule, who recommended CMSalign ASC quality measures <strong>with</strong> Stateand other Federal requirements (75 FR72109).Our CY 2014 measure proposals forASCs align closely <strong>with</strong> those discussedin the Report to Congress entitled‘‘Medicare Ambulatory Surgical CenterValue-Based PurchasingImplementation Plan’’ and <strong>with</strong> thoseproposed for future consideration in theCY 2011 OPPS/ASC proposed rule (75FR 46383). Furthermore, the measuresthat we proposed for ASCs fall into theparameter of our stated framework forthe ASC Quality Reporting Program,discussed above. The initial measure setthat we proposed for the CY 2014payment determination addressesoutcome measures and infection controlprocess measures. Six of the eight initialmeasures that we proposed for the CY2014 payment determination arerecommended by the ASC QualityCollaborative (ASC QC) and are NQFendorsed.The seventh measure that weproposed is appropriate for measuringambulatory surgical care, is NQFendorsed,is currently in use in thePQRS, and is similar to a measure thatis being used in the Hospital OQRProgram, and therefore aligns acrosssettings in which outpatient surgery isperformed. We proposed collectingthese seven measures via ‘‘quality datacodes’’ to be placed on Part B claimssubmitted by ASCs for Medicare fee-forservicepatients beginning January 1,2012. The eighth measure we proposedfor the CY 2014 payment determinationis an outcome measure of surgical siteinfection to be submitted in 2013 via theCDC’s NHSN. Similarly, hospitalinpatient departments will beginreporting this measure to the CDC underthe Hospital IQR Program in 2012, andwe also proposed that hospitaloutpatient departments begin reportingthis measure to the CDC under theHospital OQR Program in 2013. Thus,this measure would be aligned acrossquality reporting programs for facilitiesperforming surgery.<strong>Comment</strong>: Several commenterssupported all the proposed NQFendorsedmeasures for ASCs and alsobelieved that all ASC quality reportingmeasures should be NQF-endorsed,regardless of the measures’ endorsementby other national multi-stakeholderorganizations. Some commenters notedthat ASC measures should focus onfacility-level data and not physicianleveldata.Response: Under section 1833(i)(7)(B)and (t)(17)(C)(i) of the Act, except as theSecretary may otherwise provide, theSecretary must develop measures thatreflect consensus among affected partiesand, to the extent feasible andpracticable, must include measures setforth by a national consensus buildingentity. Whenever possible, we strive toadopt NQF-endorsed measures becausethese measures will meet theserequirements, as discussed above.However, we believe that therequirement that measures reflectconsensus among affected parties can beachieved in other ways, includingthrough the measure developmentprocess, through broad acceptance anduse of the measure, and through publiccomments. Further, it may not befeasible or practicable to adopt an NQFendorsedmeasure, such as when anNQF-endorsed measure does not exist.Section 1833(t)(17)(C)(i) of the Act doesnot require that each measure we adoptfor the ASC Quality Reporting Programbe endorsed by a national consensusbuilding entity, or by the NQFspecifically. Further, section1833(i)(7)(B) of the Act states thatsection 1833(t)(17) of the Act, whichcontains this requirement, applies to theASC Quality Reporting Program, exceptas the Secretary may otherwise provide.Under this provision, the Secretary hasfurther authority to adopt measures thatdo not reflect consensus among affectedparties and are not endorsed by anational consensus building entity. Wewish to clarify that these measureswould be submitted by facilities, notphysicians, and that the data for themeasures will be displayed at thefacility level.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00375 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2<strong>Comment</strong>: A commenter stated thatseveral distinct factors should beconsidered in the selection of measuresfor ASCs: (1) The diversity in the casemix across ASCs (that is, a singlesubspecialty ASC (for example,endoscopy centers) versus a ‘‘multispecialty’’ASC may require exemptionsbased on case mix or low volume); (2)Hospital OQR Program measurespecifications may not be relevant for allASCs; (3) the reporting burden for mostASCs which are classified as smallbusiness; and (4) the use of EHRs inASCs is not widespread.Response: We have considered thesefactors in selecting measures for theASC Quality Reporting Program. Ingeneral, we have sought to selectmeasures that are broadly applicable toASCs, given the diversity in case mixand ASC specialty. The majority of themeasures selected for CY 2014, CY 2015and CY 2016 for this program areapplicable regardless of the types ofprocedures performed at a particularfacility. We will consider the usefulnessof specialty-specific measures as well asexemptions based on case mix or lowvolume for ASCs as we gain experience<strong>with</strong> the measures we are adopting andas we develop future measures. We alsosought to align the ASC measures <strong>with</strong>measures selected for other settings/providers that perform surgeries, suchas HOPDs. However, we acknowledgethat not all procedures that areperformed in HOPDs are performed inASCs, and hence that some HospitalOQR measures may not be as relevantfor ASCs or may need to be tailored tothe types of procedures approved to beperformed in ASCs. We also understandthat most ASCs are small businesses forwhich data collection burden or EHRadoption may pose challenges.Therefore, in order to reduce burden, weproposed and are finalizing only claimsbasedmeasures for the first year of theprogram and adding only structuralmeasures in the second year of theprogram.<strong>Comment</strong>: A few commenters weredisappointed that no patient experienceof care measures were proposed forASCs. The commenters encouragedCMS to facilitate voluntary patientexperience of care measures for ASCs.Response: We are considering apatient experience of care survey for theASC Quality Reporting Program, andwill also consider the operationalfeasibility of allowing voluntaryreporting of such a measure in thefuture.

74496 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES23. ASC Quality Measures for the CY2014 Payment Determinationa. Claims-Based Measures RequiringSubmission of Quality Data Codes(QDCs) Beginning January 1, 2012In the CY 2012 OPPS/ASC proposedrule (76 FR 42338 through 42342), weproposed to adopt seven NQF-endorsedclaims-based measures, six of whichwere developed by the ASC QC. TheASC QC is a cooperative effort oforganizations and companies formed in2006 <strong>with</strong> a common interest inensuring that ASC quality data ismeasured and reported in a meaningfulway. Stakeholders in the ASC QCinclude ASC corporations, ASCassociations, professional societies andaccrediting bodies that focus on ASCquality and safety. The ASC QCinitiated a process of standardizing ASCquality measure development throughevaluation of existing nationallyendorsed quality measures to determinewhich could be directly applied to theoutpatient surgery facility setting. TheASC QC in its ASC Quality MeasureImplementation Guide version 1.4 statesthat ‘‘it focused on outcomes andprocesses that ASC facilities couldinfluence or impact, outcomes that ASCfacilities would be aware of given theirlimited contact <strong>with</strong> the patient, andoutcomes that would be understandableand important to key stakeholders inASC care, including patients, providersand payers.’’The ASC QC developed and pilottestedfive facility-level measures(Patient Burn; Patient Fall in the ASC;Wrong Site, Wrong Side, Wrong Patient,Wrong Procedure, Wrong Implant;Hospital Transfer/Admission, andProphylactic IV Antibiotic Timing) forfeasibility and usability. On November15, 2007, these five measures wereendorsed by the NQF. On September 25,2008, a sixth ASC QC-developedfacility-level measure, ‘‘AppropriateSurgical Site Hair Removal’’ was NQFendorsedas ‘‘Ambulatory SurgeryPatients <strong>with</strong> Appropriate Method ofHair Removal.’’ Of the six ASC QCmeasures, the Prophylactic IV AntibioticTiming and Ambulatory SurgeryPatients <strong>with</strong> Appropriate Method ofHair Removal measures are infectioncontrol process measures, and the restare outcome measures. All six of thesemeasures were listed as underconsideration in the CY 2011 OPPS/ASC proposed rule (75 FR 46383). Weproposed these six measures for use inthe CY 2014 payment determination.The seventh claims-based measure weproposed for the CY 2014 paymentdetermination is Selection ofProphylactic Antibiotic: First ORSecond Generation Cephalosporin. Thismeasure was developed by the AMA’sPhysician Consortium for PerformanceImprovement, a national, diverse,physician-led group that identifies,develops, and promotes implementationof evidence-based clinical performancemeasures that reflect best practices. Thismeasure is NQF-endorsed. It is aninfection control process measure and iscurrently adopted in the Hospital IQRProgram and the PQRS.We proposed to collect all sevenmeasures using the claims-based qualitydata codes (QDCs) data collectionmechanism. We proposed to requireASCs to report on ASC claims a qualitydata code (QDC) to be used for reportingquality data. We proposed that an ASCwould need to add a QDC to any claiminvolving a proposed claims-basedquality measure. We stated that CMS isin the process of developing QDCs foreach proposed claims-based qualitymeasure and the QDC would be a CPTCategory II code or a HCPCS Level II G-code if an appropriate CPT code is notavailable. We stated that moreinformation on the QDCs that would beassociated <strong>with</strong> the proposed qualitymeasures will be provided in this CY2012 OPPS/ASC final rule <strong>with</strong>comment period. Additionally, weproposed to create a new ASC paymentindicator ‘‘M5’’ (Quality measurementcode used for reporting purposes only;no payment made) for assignment to theQDC to clarify that no payment isassociated <strong>with</strong> the QDC for that claim.We stated that, if one or more of thesemeasures are finalized as proposed, anASC would need to begin submittingthese QDCs on any Medicare Part Bclaims pertaining to the measures onJanuary 1, 2012.For the first six measures listed, theASC QC measures specifications can befound at http://www.ascquality.org/documents/ASCQualityCollaborationImplementationGuide.pdf. 37 For theseventh measure, the specifications canbe found on the PQRS Web site at:http://www.cms.gov/pqrs/downloads/2011_PhysQualRptg_MeasuresGroups_SpecificationsManual_033111.pdf?agree=yes&next=Accept.<strong>Comment</strong>: <strong>Comment</strong>ers generallysupported most of the proposedmeasures for CY 2014 and requestedharmonization of the measures <strong>with</strong> theHospital OQR Program as appropriate,so that comparative quality data isavailable to consumers. A commenterrequested that CMS provide measure37 ASC Quality Measures: Implementation GuideVersion 1.4, ASC Quality Collaboration, December2010.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00376 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2benchmarks for ASCs to assess how theystack up against their peers.Response: We thank the commentersfor the support of our intent to align andharmonize measures across HospitalOQR and ASC Quality ReportingPrograms to keep consumers betterinformed when making outpatient caredecisions. When publicly displayingmeasures, we provide State and nationalaverages whenever possible forcomparative purposes. For the HospitalIQR Program, we provide benchmarksusing the Achievable Benchmarks ofCare methodology at: http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228768205297. We also providesuch benchmarks for the Hospital OQRmeasures at: http://www.qualitynet.org/dcs/ContentServer?c=Page&pagename=QnetPublic%2FPage%2FQnetTier2&cid=1228768205213. However, suchinformation is provided forinformational purposes and qualityimprovement purposes and should notbe interpreted as performancestandards.<strong>Comment</strong>: Several commentersbelieved that the number of measuresproposed for ASCs is excessive andrecommended that CMS adopt threepatient safety measures initially to allowASCs more time to gain experience <strong>with</strong>quality reporting.Response: We are mindful of thepotential burden on ASCs when wecontemplated measures for ASCs. Wedetermined that the initial adoption ofclaims-based measures would ease thedata collection burden on ASCs whileproviding sufficient time for ASCs togain experience <strong>with</strong> quality reporting.To that end, instead of proposing chartabstractedmeasures, we proposed sevenclaims-based measures and 1 NHSNbasedreporting measure for the firstyear of ASC Quality Reporting Program.As discussed below, in this final rule<strong>with</strong> comment period, we are finalizingonly five of the seven claims-basedmeasures we proposed for CY 2014payment determination. In addition, weare delaying the data collection untilOctober 1, 2012 for the claims-basedmeasures for the CY 2014 paymentdetermination.<strong>Comment</strong>: Several commenterssupported the submission of QDCs onadministrative claims which theybelieved are less burdensome, given thatASCs already submit a CMS–1500 formfor each Medicare beneficiary served. Afew commenters were concerned aboutthe potential burden caused by the useCPT II codes—QDCs and questionedwhy CMS cannot adopt the same data

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74497jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2collection code process used in HospitalOQR Program claims-based measures.Some commenters were very concernedthat proposed method of collection viaQDCs has not been tested for the ASCsetting. One commenter believed thatthe PQRS experienced problems usingQDCs.Response: We agree <strong>with</strong> thecommenters that stated that QDCs are alow-burden method of collecting qualitydata. The information needed for thecurrent claims-based measures used inthe Hospital OQR Program can becaptured using solely ICD–9 codes andCPT–I codes placed on claims submittedto CMS. This is not the case for the ASCquality measures, because the type ofinformation needed to assess whethernumerator events occurred for thesemeasures (and for some of the measures,events that help define thedenominator) are not captured in thesetwo coding systems. This type ofinformation can be captured using theCPT–II and G-codes that would beplaced on claims in addition to the ICD–9 codes and CPT–I codes used tocapture diagnoses and procedure codes.The other method that could havebeen used to collect information forthese measures is submission ofretrospectively chart-abstracted dataelements to CMS separately fromclaims. However, we determined thatthis method of data collection for thesemeasures may be more burdensome forASCs than submitting CPT–II codes andG-codes on the claims for thesemeasures in addition to the ICD–9 andCPT–I codes that they submit to CMSfor payment purposes. In order tosubmit quality data using CPT–II andHCPCS codes, ASCs would need to addthe appropriate QDCs for measurenumerators and denominators onMedicare Part B claim forms. Based onthe public comments we received, weare deferring the start date of requiredsubmissions of QDCs for the ASCQuality Reporting Program to October 1,2012.The QDCs are a means of datacollection for quality measures that isalready in use in PQRS. PQRS hasreceived quality measure informationvia QDCs reported via claims since theprogram’s inception in 2007. From 2007through 2008, there were instanceswhere QDCs were reported incorrectlyand therefore deemed invalid due to anumber of reasons. These reasonsincluded: diagnosis mismatch; gendermismatch; reporting the QDC on adenominator code not contained <strong>with</strong>inthe measure; and reporting an invalidmodifier (PQRS uses 1P, 2P, 3P and 8Pmodifiers to represent performanceexclusions and performance not metinstances). However, in recent reportingyears, we have seen the QDC errorsdecrease to a very low percentage (lessthan 1 percent errors are QDC-related)attributed to providers’ progressiveexperience <strong>with</strong> QDCs, our educationand outreach efforts, as well as ourstreamlining of diagnosis-specific QDCs.Therefore, we believe that over time,ASCs will have the same success asPQRS <strong>with</strong> QDC-based measures.<strong>Comment</strong>: For future options for datasubmission, a commenter suggestedusing ASC-specific registry which isunder consideration for development byregistry developers.Response: We thank the commenterfor the suggestion. In our search forfuture quality measures for ASCs, wewill consider ASC-specific registrybasedmeasures.The seven proposed claims-basedmeasures are discussed in more detailbelow:(1) Patient Burns (NQF #0263)The ASC Quality Measures:Implementation Guide Version 1.4states that every patient receiving carein an ASC setting has the potential toexperience a burn during an episode ofcare, given the multitude of factors thatcould pose risks for patient burns in thesurgical and procedural settings. TheGuide cited a recent publication fromthe ECRI Institute that relates anincreased risk of burns associated <strong>with</strong>newer electrosurgical devices due totheir application of higher electricalcurrent for longer time intervals. Othercommon sources of burns in a surgicalsetting include chemical and thermalsources, and radiation, scalds, and fires.Clinical practice guidelines for reducingthe risk of burns have been establishedby the American Society ofAnesthesiologists (ASA) andAssociation of Operating Room Nurses(AORN).This NQF-endorsed measure assessesthe percentage of ASC admissionsexperiencing a burn prior to discharge.The specifications for this NQFendorsedmeasure developed by theASC QC can be found at: http://www.ascquality.org/documents/ASCQualityCollaborationImplementationGuide.pdf.The ASC QC in their ASC QualityMeasure Implementation Guide version1.4 defines a ‘‘burn’’ for purposes of thismeasure as ‘‘[u]nintended tissue injurycaused by any of the six recognizedmechanisms: scalds, contact, fire,chemical, electrical or radiation (forexample, warming devices, prepsolutions, and electrosurgical unit orlaser).’’ We believe that this measurewould allow stakeholders to develop abetter understanding of the incidence ofVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00377 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2these events and further refine means toensure prevention.Read together, section 1833(i)(7)(B) ofthe Act and section 1833(t)(17)(C)(i) ofthe Act require the Secretary, except asthe Secretary may otherwise provide, todevelop measures appropriate for themeasurement of the quality of care(including medication errors) furnishedby ASCs, that reflect consensus amongaffected parties and, to the extentfeasible and practicable, that includemeasures set forth by one or morenational consensus building entities. Webelieve that this measure is appropriateto measure quality in ASCs since theyserve surgical patients who may face therisk of burns during ambulatory surgicalprocedures. Furthermore, we believethat this measure meets the consensusrequirement and the requirement that itbe set forth by a national consensusbuilding entity because it wasdeveloped by the ASC QC and isendorsed by the NQF.In the proposed rule, we invitedpublic comment on our proposal toadopt this measure for the CY 2014payment determination using theclaims-based QDC data collectionmechanism for ASC services furnishedfor Medicare patients from January 1,2012 through December 31, 2012 (76 FR42339). While the NQF-endorsedspecification for this measure includesall ASC admissions, our proposal to useinformation submitted on claims tocalculate these measures requires thatwe restrict the measure population tothe population for which CMS receivesclaims. Therefore, for this program, wewould need to calculate the measuresbased on claims submitted for ASCservices furnished to Medicare fee-forservicebeneficiaries. NQF has indicatedto us that our proposal to use MedicarePart B claims submitted by ASCs tocalculate the measure consistently <strong>with</strong>the measure specification is anappropriate application of the NQFendorsedmeasure to a subset of patientswho are part of the broader populationto which the measure applies. As statedin the CY 2012 OPPS/ASC proposedrule, if this measure is finalized, ASCswould need to place QDCs relevant tothis measure on Medicare Part B claimsbeginning January 1, 2012 in order toreport this measure for purposes of theCY 2014 payment determination.<strong>Comment</strong>: Several commenterssupported the proposed measure, butnoted that this measure does not applyto GI ASCs since the risk of burn inconjunction <strong>with</strong> endoscopicprocedures is rare and minor.Response: We thank the commentersfor the support of the measure. Thedenominator for the NQF-endorsed

74498 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2measure is all ASC admissions. NQF hasindicated to us that our proposal to useMedicare Part B claims submitted byASCs to calculate the measureconsistently <strong>with</strong> the measurespecification is an appropriateapplication of the NQF-endorsedmeasure. Therefore, the measure isapplicable to all Medicare Part B ASCadmissions It addresses ‘‘[u]nintendedtissue injury caused by any of the sixrecognized mechanisms: scalds, contact,fire, chemical, electrical or radiation (forexample, warming devices, prepsolutions, and electrosurgical unit orlaser).’’ Although patient burns may berare in GI ASCs, we believe thatinclusion of the measure in the ASCQuality Reporting Program will helpensure that such burns never happen.We refer commenters to thespecifications for this measure for moreinformation.After consideration of the publiccomments we received, we arefinalizing this measure for the CY 2014payment determination <strong>with</strong> datacollection to begin on October 1, 2012(as discussed in section XIV.K.1. of thisfinal rule <strong>with</strong> comment period).(2) Patient Fall (NQF #0266)Falls, particularly in the elderly, cancause injury and loss of functionalstatus, and falls in healthcare settingscan be prevented through assessment ofrisk, care planning, and patientmonitoring. Healthcare settings arebeing called upon to report patient fallsand to take steps to reduce the risk offalls. The ASC QC indicates in theirASC quality measure implementationguide the use of anxiolytics, sedatives,and anesthetic agents may put patientsundergoing outpatient surgery atincreased risk for falls. Guidelines andbest practices for the prevention of falls,and management of patients after fallshave been made available by the Agencyfor Healthcare Research and Quality(http://www.ahrq.gov/qual/transform.htm), and the National Centerfor Patient Safety (http://www.patientsafety.gov).This NQF-endorsed measure assessesthe percentage of ASC admissionsexperiencing a fall in the ASC. Thespecifications for this NQF-endorsedmeasure developed by the ASC QC canbe found at: http://www.ascquality.org/documents/ASCQualityCollaborationImplementationGuide.pdf.The ASC QC in its ASC QualityMeasure Implementation Guide version1.4 defines a ‘‘fall’’ as ‘‘a sudden,uncontrolled, unintentional, downwarddisplacement of the body to the groundor other object, excluding falls resultingfrom violent blows or other purposefulactions’’, which is consistent <strong>with</strong> thedefinition set forth by the NationalCenter for Patient Safety.Read together, section 1833(i)(7)(B) ofthe Act and section 1833(t)(17)(C)(i) ofthe Act require the Secretary, except asthe Secretary may otherwise provide, todevelop measures appropriate for themeasurement of the quality of care(including medication errors) furnishedby ASCs, that reflect consensus amongaffected parties and, to the extentfeasible and practicable, that includemeasures set forth by one or morenational consensus building entities. Webelieve that this measure is appropriateto measure quality in ASCs because itwas specifically developed to measurequality of surgical care furnished byASCs, as measured by patient falls.Furthermore, we believe that thismeasure meets the consensusrequirement and the requirement that itbe set forth by a national consensusbuilding entity because it wasdeveloped by the ASC QC and is NQFendorsed.In the proposed rule, we invitedpublic comment on our proposal toadopt this measure for the CY 2014payment determination using theclaims-based QDC data collectionmechanism for ASC services furnishedfor Medicare fee-for-servicebeneficiaries from January 1, 2012through December 31, 2012 (76 FR42339). While the NQF-endorsedspecification for this measure includesall ASC admissions, our proposal to useinformation submitted on claims tocalculate the measures requires that werestrict the measure population to thepopulation for which CMS receivesclaims. Therefore, for this program, wewould need to calculate the measuresbased on claims submitted for ASCservices furnished to Medicare fee-forservicebeneficiaries. NQF has indicatedto us that our proposal to use MedicarePart B claims submitted by ASCs tocalculate the measure consistently <strong>with</strong>the measure specification is anappropriate application of the NQFendorsedmeasure to a subset of patientswho are part of the broader populationto which the measure applies. As statedin the CY 2012 OPPS/ASC proposedrule, if this measure is finalized, ASCswould need to place QDCs relevant tothis measure on Medicare Part B claimsbeginning January 1, 2012 in order toreport this measure for purposes of theCY 2014 payment determination.<strong>Comment</strong>: All the commenters whocommented on this measure supportedthe proposed measure but wereconcerned about the proposed datacollection starting on January 1, 2012.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00378 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Response: We thank the commentersfor the support of the measure. As statedin XIV.K.1. of this final rule <strong>with</strong>comment period, we are delaying thebeginning of the data collection untilOctober 1, 2012.After consideration of the publiccomments we received, we arefinalizing this measure for the CY 2014payment determination <strong>with</strong> datacollection to begin on October 1, 2012.(3) Wrong Site, Wrong Side, WrongPatient, Wrong Procedure, WrongImplant (NQF #0267)Surgeries and procedures performedon the wrong site/side, and wrongpatient can result in significant impacton patients, including complications,serious disability or death. While theprevalence of such serious errors may berare, such events are considered seriousreportable events, and are included inthe NQF’s Serious Reportable Events inHealthcare 2006 Update. 38 The JointCommission has issued a UniversalProtocol to prevent such serious surgicalerrors. 39 The proposed NQF-endorsedmeasure assesses the percentage of ASCadmissions experiencing a wrong site,wrong side, wrong patient, wrongprocedure, or wrong implant. The ASCQC in its ASC Quality Measures:Implementation Guide Version 1.4defines ‘‘wrong’’ as ‘‘not in accordance<strong>with</strong> intended site, side, patient,procedure or implant.’’ Thespecifications for this NQF-endorsedmeasure developed by the ASC QC canbe found at: http://www.ascquality.org/documents/ASCQualityCollaborationImplementationGuide.pdf.Read together, section 1833(i)(7)(B) ofthe Act and section 1833(t)(17)(C)(i) ofthe Act require the Secretary, except asthe Secretary may otherwise provide, todevelop measures appropriate for themeasurement of the quality of care(including medication errors) furnishedby ASCs, that reflect consensus amongaffected parties and, to the extentfeasible and practicable, that includemeasures set forth by one or morenational consensus building entities. Webelieve that this measure is appropriateto measure quality in ASCs because themeasure assesses the quality of surgicalcare provided in ASCs as measured bythe percentage of surgical errors.Furthermore, we believe that thismeasure meets the consensus38 http://www.qualityforum.org/Publications/2007/03/Serious_Reportable_Events_in_Healthcare%E2%80%932006_Update.aspx39 Joint Commission. Universal Protocol forPreventing Wrong Site, Wrong Procedure, WrongPerson Surgery. Available at http://www.jointcommission.org/standards_information/up.aspx. Last accessed December 14, 2010.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74499jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2requirement and the requirement that itbe set forth by a national consensusbuilding entity because it wasdeveloped by the ASC QC and isendorsed by the NQF.In the proposed rule we invitedpublic comment on our proposal toadopt this measure for the CY 2014payment determination using theclaims-based QDC data collectionmechanism for ASC services furnishedfor Medicare patients from January 1,2012 through December 31, 2012 (76 FR42340). While the NQF-endorsedspecification for this measure includesall ASC admissions, our proposal to useinformation submitted on claims tocalculate these measures requires thatwe restrict the measure population tothe population for which CMS receivesclaims. Therefore, for this program, wewould need to calculate the measuresbased on claims submitted for ASCservices furnished to Medicare fee-forservicebeneficiaries. NQF has indicatedto us that our proposal to use MedicarePart B claims submitted by ASCs tocalculate the measure consistently <strong>with</strong>the measure specification is anappropriate application of the NQFendorsedmeasure to a subset of patientswho are part of the broader populationto which the measure applies. As statedin the CY 2012 OPPS/ASC proposedrule, if this measure is finalized, ASCswould need to place QDCs relevant tothis measure on Medicare Part B claimsbeginning January 1, 2012 in order toreport this measure for purposes of theCY 2014 payment determination.<strong>Comment</strong>: All of the commenters whocommented on this measure supportedthe proposed measure. However, somecommenters indicated that this measuremay not apply to GI ASCs since the riskof performing wrong site, wrong side,wrong patient, wrong procedure, andwrong implant in ASC endoscopicprocedures is rare (for example,confusion over an upper GI endoscopyand colonoscopy, or a single procedurein one encounter versus both an upperendoscopy and colonoscopy in the sameencounter). Also, commenters wereconcerned about the proposed datacollection starting on January 1, 2012.Response: We thank the commentersfor the support of the measure. Asdiscussed above, this measure isapplicable to all Medicare Part B ASCadmissions. Although this type ofmishap may be rare, we believe thatinclusion of the measure in the ASCQuality Reporting Program will helpensure they will never happen. Notethat, as stated in section XIV.K.1. of thisfinal rule <strong>with</strong> comment period, we aredelaying the beginning of the datacollection until October 1, 2012.After consideration of the publiccomments we received, we arefinalizing this measure for the CY 2014payment determination <strong>with</strong> datacollection to being on October 1, 2012.(4) Hospital Transfer/Admission (NQF#0265)The transfer or admission of a surgicalpatient from an outpatient setting to anacute care setting can be an indicationof a complication, serious medical error,or other unplanned negative patientoutcome. While acute intervention maybe necessary in these circumstances, ahigh rate of such incidents may indicatesuboptimal practices or patient selectioncriteria. The proposed NQF-endorsedmeasure assesses the rate of ASCadmissions requiring a hospital transferor hospital admission upon dischargefrom the ASC. The ASC QC defines‘‘hospital transfer/admission’’ as ‘‘anytransfer/admission from an ASC directlyto an acute care hospital, includinghospital emergency room.’’The specifications for this NQFendorsedmeasure developed by theASC QC measure can be found at:http://www.ascquality.org/documents/ASCQualityCollaborationImplementationGuide.pdf. The ASC QCbelieves that this ‘‘measure would allowASCs to assess their guidelines forprocedures performed in the facility andpatient selection if transfers/admissionsare determined to be at a level higherthan expected. If commonalities arefound in patients who are transferred oradmitted, guidelines may requirerevision.’’Read together, section 1833(i)(7)(B) ofthe Act and section 1833(t)(17)(C)(i) ofthe Act require the Secretary, except asthe Secretary may otherwise provide, todevelop measures appropriate for themeasurement of the quality of care(including medication errors) furnishedby ASCs, that reflect consensus amongaffected parties and, to the extentfeasible and practicable, that includemeasures set forth by one or morenational consensus building entities. Webelieve this measure is appropriate tomeasure quality in ASCs because itassesses outpatient surgical care qualityin the form of the rate of surgicaloutpatients needing acute careinterventions. Furthermore, we believethat this measure meets the consensusrequirement and the requirement that itbe set forth by a national consensusbuilding entity because it wasdeveloped by the ASC QC and isendorsed by the NQF.In the proposed rule we invitedpublic comment on our proposal toadopt this measure for the CY 2014payment determination using theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00379 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2claims-based QDC data collectionmechanism for ASC services furnishedfor Medicare patients from January 1,2012 through December 31, 2012 (76 FR42340). While the NQF-endorsedspecification for this measure includesall ASC admissions, our proposal to useinformation submitted on claims tocalculate these measures requires thatwe restrict the measure population tothe population for which CMS receivesclaims. Therefore, for this program, wewould need to calculate the measuresbased on claims submitted for ASCservices furnished to Medicare fee-forservicebeneficiaries. NQF has indicatedto us that our proposal to use MedicarePart B claims submitted by ASCs tocalculate the measure consistently <strong>with</strong>the measure specification is anappropriate application of the NQFendorsedmeasure to a subset of patientswho are part of the broader populationto which the measure applies. As statedin the CY 2012 OPPS/ASC proposedrule, if the measure is finalized, ASCswould need to place QDCs relevant tothis measure on Medicare Part B claimsbeginning January 1, 2012 in order toreport this measure for purposes of theCY 2014 payment determination.<strong>Comment</strong>: All of the commenters whocommented on this measure supportedthe proposed measure. However, onecommenter noted that the measureshould be expanded to include patientswho return home after ASC procedure,but are then admitted to a hospitalshortly after for a procedure-relatedissue. The commenter urged CMS tocreate methods to track the adverseoutcomes of these patients.Response: We thank the commentersfor their support. We also thank thecommenter for the suggestion, and willconsider it in future measuredevelopment and refinement.After consideration of the publiccomments we received, we arefinalizing this measure for the CY 2014payment determination <strong>with</strong> datacollection to begin on October 1, 2012(as discussed in section XIV.K.1. of thisfinal rule <strong>with</strong> comment period).(5) Prophylactic Intravenous (IV)Antibiotic Timing (NQF #0264)Timely preoperative administration ofintravenous antibiotics to surgicalpatients is an effective practice inreducing the risk of developing asurgical site infection, which in turn isassociated <strong>with</strong> reduced health careburden and cost, and better patientoutcomes. 40 41 42 The measurement of40 Classen, D. et al.: The timing of prophylacticadministration of antibiotics and the risk of surgicalwound infection. NEJM. 1992;326(5):281–286.Continued

74500 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2timely antibiotic administration forsurgical patients is occurring in theHospital IQR Program, Hospital OQRProgram and the PQRS. The NQFendorsedASC QC measure assesses therate of ASC patients who received IVantibiotics ordered for surgical siteinfection prophylaxis on time. Thespecifications for this NQF-endorsedmeasure developed by the ASC QCmeasure can be found at: http://www.ascquality.org/documents/ASCQualityCollaborationImplementationGuide.pdf.The ASC QC measure implementationguide defines ‘‘antibiotic administeredon time’’ as ‘‘[a]ntibiotic infusion …initiated <strong>with</strong>in one hour prior to thetime of the initial surgical incision orthe beginning of the procedure (e.g.,introduction of endoscope, insertion ofneedle, inflation of tourniquet) or twohours prior if vancomycin orfluoroquinolones are administered.’’The measure also defines ‘‘prophylacticantibiotic’’ as ‘‘an antibiotic prescribed<strong>with</strong> the intent of reducing theprobability of an infection related to aninvasive procedure. For purposes of thismeasure, the following antibiotics areconsidered prophylaxis for surgical siteinfections: Ampicillin/sulbactam,Aztreonam, Cefazolin, Cefmetazole,Cefotetan, Cefoxitin, Cefuroxime,Ciprofloxacin, Clindamycin, Ertapenem,Erythromycin, Gatifloxacin, Gentamicin,Levofloxacin, Metronidazole,Moxifloxacin, Neomycin andVancomycin.’’ All prophylactic IVantibiotics administered for surgical siteinfection would need to have theirinfusion initiated <strong>with</strong>in the one hourtime frame, except for vancomycin orfluoroquinolones, where infusion mustbe initiated <strong>with</strong>in the two hours timeframe. The ASC QC Guide states that‘‘[i]n cases involving more than oneantibiotic, all antibiotics must be given<strong>with</strong>in the appropriate time frame inorder for the case to meet criteria.’’ Thetiming of the antibiotic starts at the timethe antibiotic is initiated <strong>with</strong> apreoperative order.Read together, section 1833(i)(7)(B) ofthe Act and section 1833(t)(17)(C)(i) ofthe Act require the Secretary, except asthe Secretary may otherwise provide, todevelop measures appropriate for themeasurement of the quality of care41 Silver, A. et al.: Timeliness and use ofantibiotic prophylaxis in selected inpatient surgicalprocedures. The Antibiotic Prophylaxis StudyGroup. Am J Surg. 1996;171(6):548–552.42 Dounis, E., Tsourvakas, S., Kalivas, L., andGiamacellou, H.: Effect of time interval on tissueconcentrations of cephalosporins after tourniquetinflation. Highest levels achieved by administration20 minutes before inflation. Acta Orthop Scand.1995;66(2):158–60.(including medication errors) furnishedby ASCs, that reflect consensus amongaffected parties and, to the extentfeasible and practicable, that includemeasures set forth by one or morenational consensus building entities. Webelieve this measure is appropriate tomeasure quality in ASCs because itassesses the quality of care for surgicalpatients in an outpatient setting asmeasured by timely antibioticadministration. Furthermore, we believethat this measure meets the consensusrequirement and the requirement that itbe set forth by a national consensusbuilding entity because it wasdeveloped by the ASC QC and isendorsed by the NQF.In the proposed rule, we invitedpublic comment on our proposal toadopt this measure for the CY 2014payment determination using theclaims-based QDCs data collectionmechanism for ASC services furnishedfor Medicare patients from January 1,2012 through December 31, 2012 (76 FR42341). While the NQF-endorsedspecification for this measure includesall ASC admissions <strong>with</strong> a preoperativeorder for a prophylactic IV antibiotic forprevention of surgical site infection, ourproposal to use information submittedon claims to calculate these measuresrequires that we restrict the measurepopulation to the population for whichCMS receives claims. Therefore, for thisprogram, we would need to calculatethe measures based on claims submittedfor ASC services furnished to Medicarefee-for-service beneficiaries. NQF hasindicated to us that our proposal to useMedicare Part B claims submitted byASCs to calculate the measureconsistently <strong>with</strong> the measurespecification is an appropriateapplication of the NQF-endorsedmeasure to a subset of patients who arepart of the broader population to whichthe measure applies. As stated in the CY2012 OPPS/ASC proposed rule, if themeasure is finalized, ASCs would needto place QDCs relevant to this measureon Medicare Part B claims beginningJanuary 1, 2012 in order to report thismeasure for purposes of the CY 2014payment determination.<strong>Comment</strong>: A few commentersopposed the measure and believed thatthis measure is not applicable to ASC GIendoscopic centers. A few commentersconsidered the proposed data collectionto begin on January 1, 2012unreasonable.Response: The measure assesseswhether an antibiotic is given on timeprior to a procedure if it was ordered.We note that the specifications for themeasure list endoscopy as one of theexamples of procedures. As stated inVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00380 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2section XIV.K.1. of this final rule <strong>with</strong>comment period, we are delaying thebeginning of data collection untilOctober 1, 2012 for the CY 2014payment determination.<strong>Comment</strong>: A few commenters did notbelieve this measure is burdensomesince it is a claims-based measure, buturged that CMS provide training toASCs regarding when to enter thespecific QDCs appropriately. Acommenter asked for clarificationwhether the proposed QDC-codesshould be reported <strong>with</strong> every claim foran ASC procedure or only if the adverseevent has occurred. One commentersuggested that CMS provide educationto ASCs regarding whether QDCs needto be reported <strong>with</strong> every claim, or onlyfor those where an adverse eventoccurred.Response: We also do not believesubmitting QDCs on claims isburdensome. In order to submit qualitydata using CPT–II and HCPCS codes,ASCs would need to add theappropriate QDCs for measurenumerators and denominators onMedicare Part B claim forms. We intendto provide education and outreach ondata submission for the reportingprogram, and we will publish detailsabout the QDCs and whether they willneed to be submitted for numerators anddenominators in the ASC QualityReporting Program SpecificationsManual. We anticipate releasing thismanual in second quarter 2012.<strong>Comment</strong>: One commenter noted thatCMS incorrectly stated that the NQFendorsedspecification for this measureincludes all ASC admissions. Thecommenter stated that the NQFspecification limits the denominator toall ASC admissions <strong>with</strong> a pre-operativeorder for a prophylactic IV antibiotic forthe prevention of surgical site infection.The commenter recommended givingthe public the opportunity to commenton the QDC descriptors that CMSdevelops in the future. Specifically, thecommenter requested the followingcorrections: (1) The required timing ofantibiotics begins <strong>with</strong> the initiation ofthe IV antibiotic, not the pre-operativeorder; and (2) the specifications limitthe denominator to all ASC admissions<strong>with</strong> a preoperative order for IVantibiotics, not all ASC admissions. Thecommenter believed that three QDCs areneeded to describe: (1) Timelyadministration; (2) untimelyadministration; and (3) circumstanceswhere no prophylactic was ordered.Response: The commenter is correct,the denominator for the NQF-endorsedmeasure is all ASC admissions <strong>with</strong> apre-operative order for a prophylactic IVantibiotic for prevention of surgical site

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74501jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2infections. NQF has indicated to us thatour proposal to use Medicare Part Bclaims submitted by ASCs to calculatethe measure consistently <strong>with</strong> themeasure specification is an appropriateapplication of the NQF-endorsedmeasure. We correctly described themeasure initially but then did not stateit completely when describing theapplication of the measure to a subset ofpatients. As the commenter stated, theassessment of appropriateness of timingbegins <strong>with</strong> the initiation of IVantibiotics relative to the initial surgicalincision or the beginning of theprocedure. We will ensure these aspectsof the measure are clarified in theSpecifications Manual CMS issues forthis program.<strong>Comment</strong>: A commenterrecommended the discontinuation ofthis measure once the proposed surgicalsite infection measure is implementedto include additional ASC procedures.Response: We thank the commenterfor the suggestion. As discussed insection XIV.K.3.b. below, for the ASCQuality Reporting Program, we are notfinalizing the surgical site infectionmeasure in this rulemaking.After consideration of the publiccomments we received, we arefinalizing this measure for the CY 2014payment determination <strong>with</strong> datacollection to begin on October 1, 2012(as discussed in section XIV.K.1 of thisfinal rule <strong>with</strong> comment period).(6) Ambulatory Surgery Patients WithAppropriate Method of Hair Removal(NQF #0515)The ASC QC 43 cited evidence that‘‘[r]azors can cause microscopic cutsand nicks to the skin, not visible to theeye. Use of razors prior to surgeryincreases the incidence of woundinfection when compared to clipping,depilatory use or no hair removal atall.’’ 44 A 1999 guideline issued by theCDC suggests that if hair must beremoved from a surgical site, that itpreferably be done <strong>with</strong> clippers ratherthan razors in order to minimize cutsand nicks to the skin which mayincrease the risk of a surgical siteinfection. 45 In 2002, the Association ofOperating Room Nurses publishedsimilar guidelines for appropriate hairremoval. 46 While a similar measure is43 ASC QC Quality measures: ImplementationGuide version 1.4. ASC Quality Collaboration.December 2010.44 Seropian, R., Reynolds, B.M.: Wound infectionsafter preoperative depilatory versus razorpreparation. Am J Surg.1971 Mar;121(3):251–4.45 http://www.cdc.gov/ncidod/dhqp/pdf/guidelines/SSI.pdf.46 Association of Operating Room Nurses.Recommended practices for skin preparation ofpatients. AORN J. 2002 Jan;75(1):184–7.being considered for retirement from theHospital IQR Program because itdisplays a high degree of performance<strong>with</strong> little variability or room forimprovement, we believe that there issignificant variability in practice andthe level of adherence to this guidelinein outpatient surgical settings such asASCs is not known. Therefore, webelieve that this measure is stillappropriate for use in the ASC setting.In the CY 2012 OPPS/ASC proposedrule (76 FR 42341 through 42342), weproposed to adopt the NQF-endorsedmeasure to capture the percentage ofASC admissions <strong>with</strong> appropriatesurgical site hair removal. Thespecifications for this NQF-endorsedmeasure developed by the ASC QC canbe found at: http://www.ascquality.org/documents/ASCQualityCollaborationImplementationGuide.pdf. Readtogether, sections 1833(i)(7)(B) and1833(t)(17)(C)(i) of the Act require theSecretary, except as the Secretary mayotherwise provide, to develop measuresappropriate for the measurement of thequality of care (including medicationerrors) furnished by ASCs, that reflectconsensus among affected parties and,to the extent feasible and practicable,that include measures set forth by oneor more national consensus buildingentities. We believe this measure isappropriate to measure quality in ASCsbecause it assesses quality of surgicalcare performed in ASCs, as measured byappropriate surgical site hair removal.Furthermore, we believe that thismeasure meets the consensusrequirement and the requirement that itbe set forth by a national consensusbuilding entity because it wasdeveloped by the ASC QC and isendorsed by the NQF.In the proposed rule, we invitedpublic comment on our proposal toadopt this measure for the CY 2014payment determination using theclaims-based QDC data collectionmechanism for ASC services furnishedfor Medicare patients from January 1,2012 through December 31, 2012 (76 FR42341). While the NQF-endorsedspecification for this measure includesall ASC admissions <strong>with</strong> surgical sitehair removal, our proposal to useinformation submitted on claims tocalculate these measures necessitatesthat we restrict the measure populationto the population for which CMSreceives claims. Therefore, for thisprogram, we would need to calculatethe measures based on claims submittedfor ASC services furnished to Medicarefee-for-service beneficiaries. NQFindicated to us that our proposal to useMedicare Part B claims submitted byVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00381 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2ASCs to calculate the measureconsistently <strong>with</strong> the measurespecification is an appropriateapplication of the NQF-endorsedmeasure to a subset of patients who arepart of the broader population to whichthe measure applies. As stated in the CY2012 OPPS/ASC proposed rule, if themeasure is finalized, ASCs would needto place QDCs relevant to this measureon Medicare Part B claims beginningJanuary 1, 2012 in order to report thismeasure for purposes of CY 2014payment determination.<strong>Comment</strong>: A few commenters statedthat the measure does not apply toendoscopy centers. Several commentersopposed this measure because theystated that there is no conclusiveclinical evidence that clipping, ratherthan other hair removal techniques,reduces surgical site infections across abroad spectrum of surgical procedures.Furthermore, the scrotal surgeryexclusion does not appear to be presentin the ASC specifications. Twocommenters found it confusing thatCMS has currently suspended thismeasure from the Hospital IQR Programdue to the measure’s ‘‘topped-out’’status.Response: CMS agrees <strong>with</strong> thesecomments, and is not finalizing thismeasure for the ASC Quality ReportingProgram. A recently publishedsystematic review by Alexander JW etal. (Annals ofSurgery.2001;253(6):1082–1093) alsoindicates that not removing hair isassociated <strong>with</strong> the least probability ofinfection.<strong>Comment</strong>: One commenter indicatedthat CMS incorrectly stated that theNQF-endorsed specification for thismeasure includes all ASC admissions.The commenter clarified that the NQFspecifications limit the denominator toall ASC admissions <strong>with</strong> surgical sitehair removal. A commenter noted thatthe public should have the opportunityto comment on the descriptors CMSdevelops. The commenter believed thata correction that needs to be made in therule: the specifications limit thedenominator to all ASC admissions <strong>with</strong>surgical site hair removal, not all ASCadmissions. Additionally, thecommenter believed that a set of threeQDCs would be needed to describe: (1)Appropriate hair removal; (2)inappropriate hair removal; and (3)circumstances where no hair wasremoved or other exclusions.Response: As discussed above, we arenot finalizing this measure for the ASCQuality Reporting Program.After consideration of the publiccomments we received, we are not

74502 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2finalizing this measure for CY 2014payment determination.(7) Selection of Prophylactic Antibiotic:First OR Second GenerationCephalosporin (NQF #0268)Surgical outcomes are affected by theselection of appropriate antibiotics.Current guidelines indicate that first orsecond generation cephalosporins areeffective for prevention of surgical siteinfections in most cases. The goal of thisproposed measure is to ensure safe,cost-effective, broad spectrumantibiotics are used as a first lineprophylaxis unless otherwise indicated.This measure was developed by theAMA’s Physician Consortium forPerformance Improvement, a national,diverse, physician-led group thatidentifies, develops, and promotesimplementation of evidence-basedclinical performance measures thatreflect best practices. This measurereceived NQF endorsement under a2008 project entitled ‘‘Hospital Care:Specialty Clinician PerformanceMeasures,’’ and it assesses thepercentage of surgical patients aged 18years and older undergoing procedures<strong>with</strong> the indications for a first ORsecond generation cephalosporinprophylactic antibiotic, who had anorder for cefazolin or cefuroxime forantimicrobial prophylaxis. While werecognize that this measure is notspecifically endorsed for the ASCsetting, we believe that this measure ishighly relevant for use in ASCs becauseit assesses adherence to best practicesfor use of prophylactic antibiotics foroutpatient surgical patients.Accordingly, we proposed to adopt anapplication of this NQF-endorsedmeasure for use in the ASC QualityReporting Program. The measurespecifications for this proposed measurecan be found at: http://www.cms.gov/pqrs/downloads/2011_PhysQualRptg_MeasuresGroups_SpecificationsManual_033111.pdf?agree=yes&next=Accept.Read together, section 1833(i)(7)(B) ofthe Act and section 1833(t)(17)(C)(i) ofthe Act require the Secretary, except asthe Secretary may otherwise provide, todevelop measures appropriate for themeasurement of the quality of care(including medication errors) furnishedby ASCs, that reflect consensus amongaffected parties and, to the extentfeasible and practicable, that includemeasures set forth by one or morenational consensus building entities. Webelieve this measure is appropriate formeasurement of quality care in an ASCbecause it specifically assesses qualitycare, as measured by adherence to bestpractices for prophylactic antibioticsprovided for outpatient surgicalpatients. We believe that consensusamong affected parties can be reflectedthrough means other than NQFendorsement, including consensusachieved during the measuredevelopment process; consensus shownthrough broad acceptance and use ofmeasures; and consensus through publiccomment.The measure development processemployed the same process used by theAmerican Medical AssociationPhysician Consortium for PerformanceImprovement (AMA–PCPI). The AMAPCPI is a consortium of physiciansdedicated to improving patient safety bydeveloping evidence based performancemeasures, promoting theimplementation of effective and relevantclinical performance improvementactivities, and advancing the science ofclinical performance measurement andimprovement. The AMA–PCPI developsmany measures for the PQRS program.The AMA–PCPI development processfor this measure is a consensus-basedprocess that involves stakeholder input,including surgeons performingprocedures in outpatient settings suchas ASCs. Because of this, we believe thismeasure meets the requirement ofreflecting consensus among affectedparties.Further, it is not feasible orpracticable to adopt an NQF-endorsedmeasure of prophylactic antibioticselection specifically for ASCs becausethere is no such NQF-endorsed measure.We note that section 1833(t)(17) of theAct does not require that each measurewe adopt for the ASC Quality ReportingProgram be endorsed by a nationalconsensus building entity, or by theNQF specifically. Further, section1833(i)(7)(B) of the Act states thatsection 1833(t)(17) of the Act, whichcontains this requirement, applies to theASC Quality Reporting Program, exceptas the Secretary may otherwise provide.Under this provision, the Secretary hasfurther authority to adopt measures thatare not NQF-endorsed or measures thathave not been endorsed for the ASCsetting.The proposed adoption of thismeasure in the ASC Quality ReportingProgram also is consistent <strong>with</strong> our goalto align measures across settings, as it isalso used in the PQRS, and a similarmeasure (NQF #0528) has beenimplemented in the Hospital OQRProgram and the Hospital IQR Program.In the proposed rule, we invitedpublic comment on our proposal toadopt this measure for the CY 2014payment determination using theclaims-based QDC data collectionmechanism for ASC services furnishedVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00382 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2for Medicare patients from January 1,2012 through December 31, 2012 (76 FR42342). While the NQF-endorsedspecification for this measure includesall surgical patients aged 18 years andolder undergoing procedures <strong>with</strong> theindications for a first OR secondgeneration cephalosporin prophylacticantibiotic, who had an order forcefazolin OR cefuroxime forantimicrobial prophylaxis, our proposalto use information submitted on claimsto calculate these measures requires thatwe restrict the measure population tothe population for which CMS receivesclaims. Therefore, for this program, wewould need to calculate the measuresbased on claims submitted for ASCservices furnished to Medicare fee-forservicebeneficiaries. NQF has indicatedto us that our proposal to use MedicarePart B claims submitted by ASCs tocalculate the measure consistently <strong>with</strong>the measure specification is anappropriate application of the NQFendorsedmeasure to a subset of patientswho are part of the broader populationto which the measure applies. As statedin the CY 2012 OPPS/ASC proposedrule, if the measure is finalized, ASCswould need to place QDCs relevant tothis measure on Medicare Part B claimsbeginning January 1, 2012 in order toreport this measure for purposes of theCY 2014 payment determination.<strong>Comment</strong>: Several commentersexpressed various concerns regardingthis measure: A commenter believedthis is a physician-level measure andnot an ASC-level measure. Therefore,the commenter suggested that CMSreport the antibiotic selection datasubmitted by physicians for thismeasure by place of service (POS) andaggregate physician performance dataacross surgical settings, includinghospital inpatient and outpatientsettings, and ASC setting.A commenter believed that thismeasure does not represent the mostprevalent area of services provided byASCs. A commenter stated that datacollection for this measure is veryburdensome. One commenter requestedclarification on what procedure codeswould allow for the best comparisonsince very few codes in the currentdenominator set are relevant to the ASCsetting (according to the commenter,ASCs only accounted for 0.16 percent oftotal Medicare procedures in 2009). Acommenter asked that CMS clarify andeducate ASCs as to whether theproposed QDC-codes should be reported<strong>with</strong> every claim for an ASC procedureor only if the adverse event hasoccurred. A commenter stated that thismeasure should be phased out after thesurgical site infection measure has been

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74503jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2expanded to include additional ASCprocedures. Given the NQF’sendorsement for this measure is non-ASC-specific, another commenterencouraged CMS to seek NQFendorsement specific to the ASC settingto ensure accuracy in data collectionand implementation.Response: We agree that the measuremay not address the most prevalentprocedures performed by ASCs and wewill need to examine how the measuremay be modified in order to capturethose procedures most commonlyperformed in ASCs. Therefore, we arenot finalizing this measure for the CY2014 payment determination at thistime.After consideration of the publiccomments we received, we are notfinalizing the selection of prophylacticantibiotic: first OR second generationcephalosporin measure for ASCs for theCY 2014 payment determination.b. Surgical Site Infection Rate (NQF#0299)HAIs are among the leading causes ofdeath in the United States. CDCestimates that as many as 2 millioninfections are acquired each year inhospitals and result in approximately90,000 deaths. 47 It is estimated thatmore Americans die each year fromHAIs than from auto accidents andhomicides combined. HAIs not only putthe patient at risk, but also increase thedays of hospitalization required forpatients and add considerable healthcare costs. HAIs are largely preventablefor surgical patients through applicationof perioperative best practices such asthose listed in the CDC’s Surgical SiteInfection prevention guidelines.Therefore, many health care consumersand organizations are calling for publicdisclosure of HAIs, arguing that publicreporting of HAI rates provides theinformation health care consumers needto choose the safest hospitals, and giveshospitals an incentive to improveinfection control efforts. This proposedmeasure is currently collected by theNHSN as part of State-mandatedreporting and surveillance requirementsfor hospitals in some States.Additionally, data submission for thismeasure through EHRs may be possiblein the near future.This measure is NQF-endorsed andwe proposed to adopt it for the CY 2014Hospital OQR Program. It also has beenadopted for the FY 2014 Hospital IQRProgram. Because we proposed the same47 McKibben. L., Horan, T.: Guidance on publicreporting of healthcare-associated infections:recommendations of the Healthcare InfectionControl Practices Advisory Committee. AJIC2005;33:217–26.measure for Hospital OQR Program, werefer readers to the discussion of thismeasure in sections XIV.C.2.a. of theproposed rule and this final rule <strong>with</strong>comment period. The measurespecifications can be found at http://www.cdc.gov/nhsn/psc.html. The NQFdescribes this measure as the‘‘percentage of surgical site infectionevents occurring <strong>with</strong>in thirty days afterthe operative procedure if no implant isleft in place, or [<strong>with</strong>in] one year if animplant is in place in patients who hadan NHSN operative procedureperformed during a specified timeperiod and the infection appears to berelated to the operative procedure.’’Read together, section 1833(i)(7)(B) ofthe Act and section 1833(t)(17)(C)(i) ofthe Act require the Secretary, except asthe Secretary may otherwise provide, todevelop measures appropriate for themeasurement of the quality of care(including medication errors) furnishedby ASCs, that reflect consensus amongaffected parties and, to the extentfeasible and practicable, that includemeasures set forth by one or morenational consensus building entities.Increasingly, surgical procedures arebeing performed in hospital outpatientdepartment settings and ASCs. Webelieve this measure is appropriate formeasuring quality of care in ASCsbecause it applies to outcomes forsurgical patients undergoing proceduresthat are performed in ASCs.Furthermore, we believe that thismeasure meets the consensusrequirement and the requirement that itbe set forth by a national consensusbuilding entity because it is endorsed bythe NQF. The proposed adoption of thismeasure in the ASC Quality ReportingProgram also is consistent <strong>with</strong> our goalto align measures across settingsbecause we have proposed this measurefor the Hospital OQR Program for CY2014 payment determination and havepreviously adopted it for Hospital IQRProgram for the FY 2014 paymentdetermination. Therefore, we proposedto adopt the Surgical Site Infection Ratemeasure that is collected by the CDC viathe NHSN for the ASC QualityReporting Program for the CY 2014payment determination.Data submission for this measure forthe CY 2014 payment determinationwould begin <strong>with</strong> infection eventsoccurring on or after January 1, 2013through June 30, 2013. The proposedreporting mechanism for this proposedHAI measure via the NHSN is discussedin greater detail in sections XIV.C.2.a. ofthe proposed rule and this final rule<strong>with</strong> comment period. In the proposedrule, we invited public comment on thisVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00383 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2proposed measure and the reportingmechanism.<strong>Comment</strong>: Some commentersrequested clarification on howinfections will be identified by ASCs incases where patients go home on thesame day or go to another hospital forthe infection. <strong>Comment</strong>ers believed thatit would be challenging to surveyoutpatients, including ASC patients, todetermine whether an infection hasdeveloped and if it meets the NHSNdefinition for surgical site infection.Some commenters believed that theNHSN module was not relevant forASCs. A commenter cited the measurespecification that ‘‘SSI [surgical siteinfections] are to be identified onoriginal admission or upon readmissionto the facility of the original operativeprocedures’’ and concluded thismeasure is inappropriate for ASCs dueto patients’ short length of stay and theirlikely admission to a hospital when aninfection occurs. Because thecommenter believed that the 10 NHSNdefinedoperative procedure categorieshave little relevance to the predominantprocedures performed in ASCs, thecommenter recommended that CDC respecifythe measure to include commonASC-specific procedures to identifyrelated infections in the numerator.One commenter urged CMS toconsider facility exemptions inimplementing this measure. Thecommenter stated that ASCs seldomperform operative procedures as definedby the CDC: ‘‘an operative procedures asthe one in which a surgeon makes atleast one incision through the skin ormucous membrane, includinglaparoscopic approach, and closes theincision before the patient leaves theoperating room.’’Another commenter stated that ASCsnormally do not have an ongoingrelationship <strong>with</strong> patients andrecommended that CMS require ASCs toconduct follow-up phone calls <strong>with</strong>patients, caregivers or physicians <strong>with</strong>in30 days of procedures to identifypatients who have developed surgicalsite infections. <strong>Comment</strong>ers alsorecommended that CMS require thatASCs include this information inmedical records as part of the datasubmission to NHSN, preferably viaelectronic submission.Several commenters supported thesurgical site infection measure but thedisparate codes used by hospitaloutpatient departments and ASCs andthe ICD codes used in the NHSNmodule would create potentialinaccurate data submission. Thecommenters believed that theuncommon use of NHSN in ASCs would

74504 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsadd challenges to follow-upsurveillance.Response: We thank the commentersfor their views. As discussed below, weare not finalizing this proposedmeasure.<strong>Comment</strong>: One commenterencouraged CMS to accelerate thetimeframe for making the surgical siteinfection measure data for ASCspublicly available. The commenterbelieved that once this outcomemeasure is implemented, two ASCsurgical infection control measures(ASC–5: Prophylactic IV antibiotictiming, and ASC–7: Prophylacticantibiotic selection for surgical patients)can be eliminated from the HospitalOQR Program. The commentersuggested harmonization of thismeasure across different HOPD surgicaland ASC settings.Response: We appreciate thissupportive comment. At this time, weare not finalizing surgical site infectionmeasures for the Hospital OQR Programor the ASC Quality Reporting Program.We will consider proposing a surgicalsite infection measure for the ASCQuality Reporting Program in the future.We agree <strong>with</strong> the commenters that anumber of procedures frequentlyperformed in outpatient surgical settingslike ASCs are not addressed in thecurrent surgical site infection measureadopted for the Hospital IQR Program,and that a follow-up and collectionprotocol that is better suited tooutpatient surgical settings for such ameasure should be developed. We alsoagree <strong>with</strong> the suggestion that weharmonize measures between the ASCQuality Reporting Program and theHospital OQR Program, to the extentfeasible. These comments will be takeninto consideration in future surgical siteinfection measurement proposals for theASC Quality Reporting Program.<strong>Comment</strong>: A commenter believed thatthe measure should facilitatecomparisons across ASCs and hospitaloutpatient surgery setting by making thedata more patient-centered for easycomprehension.Response: We appreciate the inputfrom the commenter. Although we arenot adopting this measure at this time,we will take this view intoconsideration as we consider proposinga surgical site infection measure in thefuture.<strong>Comment</strong>: A commenter was veryconcerned about the burden to report toNHSN and cited that 40 ASCs that arecurrently participating in NHSNreported registration and datasubmission are very time-consuming.The commenter urged CDC tostreamline these processes to make themmore user-friendly.Response: We appreciate the inputfrom the commenter regarding potentialburden and the need for user-friendlyprocesses. As stated above, we are notfinalizing this measure for the CY 2014payment determination.<strong>Comment</strong>: Some commentersrequested that CMS delayimplementation of the surgical siteinfection measure to the CY 2015payment determination <strong>with</strong> datacollection starting on January 1, 2014through June 30, 2014 to allow ASC togain experience <strong>with</strong> the NHSN module.Response: As stated above, we are notfinalizing the surgical site infectionmeasure for the CY 2014 paymentdetermination.After consideration of the publiccomments we received, we are notfinalizing the surgical site infectionmeasure for ASCs for CY 2014 paymentdetermination. We will considerproposing the measure once a suitableset of procedures and a protocol forASCs and HOPDs has been developed.In summary, we are finalizing fiveclaims-based measures total using theQDC data collection mechanism for theCY 2014 payment determination. Basedupon the public comment we received,we are finalizing the data submission forthese five claims-based measures tobegin on October 1, 2012. This issue isdiscussed in more detail in the Form,Manner and Timing section for thisprogram. The quality measures we areadopting for ASCs for the CY 2014payment determination are listed below<strong>with</strong> the ASC prefix:jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES24. ASC Quality Measures for CY 2015Payment Determinationa. Retention of Measures Adopted forthe CY 2014 Payment Determination inthe CY 2015 Payment DeterminationIn general, unless we otherwisespecify in the retirement section of arule, we proposed to retain measuresfrom one CY payment determination toanother. In the CY 2012 OPPS/ASCproposed rule (76 FR 42343), weproposed to retain the measures weproposed to adopt for the CY 2014payment determination, if they arefinalized in the CY 2012 OPPS/ASCfinal rule <strong>with</strong> comment period, for theCY 2015 payment determination. In theproposed rule, we invited publiccomments on this proposal.<strong>Comment</strong>: One commenter supportedthe proposed retention of the measureswe finalized for the CY 2014 paymentdetermination for the CY 2015 paymentdetermination.Response: We thank the commenterfor supporting the retention of thesemeasures.After consideration of the publiccomment we received, we are finalizingour proposal to retain measures fromone CY payment determination to theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00384 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2next. For the CY 2014 paymentdetermination, as discussed above, weare finalizing five claims-basedmeasures. Therefore, we will retainthese five measures for the CY 2015payment determination.b. Structural Measures for the CY 2015Payment DeterminationIn the CY 2012 OPPS/ASC proposedrule (76 FR 42343 through 42346), forthe CY 2015 payment determination, weproposed to adopt two structuralmeasures: Safe Surgery Checklist Use,and ASC Facility Volume Data onER30NO11.135

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74505Selected ASC Surgical Procedures. Wediscuss these proposals below.(1) Safe Surgery Checklist UseA sound surgery safety checklistcould minimize the most common andavoidable risks endangering the livesand well-being of surgical patients. Thepurpose of this proposed structuralmeasure is to assess whether ASCs areusing a safe surgery checklist that coverseffective communication and helpsensure that safe practices are beingperformed at three critical perioperativeperiods: prior to administration ofanesthesia, prior to incision, and priorto the patient leaving the operatingroom. The use of such checklists hasbeen credited <strong>with</strong> dramatic decreasesin preventable harm, complications andpost-surgical mortality. 48 In November2010, the New England Journal ofMedicine published a study concludingthat surgical complications werereduced by one-third, and mortality bynearly half, when a safe surgerychecklist was used. 49We believe that effectivecommunication and the use of safesurgical practices during surgicalprocedures will significantly reducepreventable surgical deaths andcomplications. Some examples of safesurgery practices that can be performedduring each of these three perioperativeperiods are shown in the table below:jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2For example, mistakes in surgery canbe prevented by ensuring that thecorrect surgery is performed on thecorrect patient and at the correct placeon the patient’s body. 50 A safe surgerychecklist would reduce the potential forhuman error, which would increase thesafety of the surgical environment.Another example of a checklist thatemploys safe surgery practices at each ofthese three perioperative periods is theWorld Health Organization SurgicalSafety Checklist, which was adopted byThe World Federation of Societies ofAnesthesiologists as an internationalstandard of practice. This checklist canbe found at: http://www.who.int/patientsafety/safesurgery/ss_checklist/en/index.html.The adoption of a structural measurethat assesses Safe Surgery Checklist Usewould align our patient safety initiatives<strong>with</strong> those of several surgical specialtysocieties including: the AmericanCollege of Surgeons’ Nora Institute forPatient Safety, the American Society of48 Haynes, A.B.; Weiser, T.G.; Berry, W.G. et al.(2009). ‘‘A Surgical Safety Checklist to ReduceMorbidity and Mortality in a Global Population’’.New England Journal of Medicine. 360:491–499.Anesthesiologists, TJC, the NationalAssociation for Healthcare Quality andthe AORN. The measure would assesswhether the ASC uses a safe surgerychecklist in general, and would notrequire an ASC to report whether it usesa checklist in connection <strong>with</strong> anyindividual procedures.Read together, section 1833(i)(7)(B) ofthe Act and section 1833(t)(17)(C)(i) ofthe Act require the Secretary, except asthe Secretary may otherwise provide, todevelop measures appropriate for themeasurement of the quality of care(including medication errors) furnishedby ASCs, that reflect consensus amongaffected parties and, to the extentfeasible and practicable, that includemeasures set forth by one or morenational consensus building entities.This measure is appropriate for themeasurement of quality of carefurnished by ASCs because it pertains tobest practices for surgeries, and ASCsperform ambulatory surgeries. It alsoreflects consensus among affected49 de Vries EN, Prins HA, Crolla RMPH, et al.Effect of a comprehensive surgical safety system onpatient outcomes. N Engl J Med 2010;363: 1928–3750 Hospital National Patient Safety Goals. TheJoint Commission Accreditation Hospital Manual,VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00385 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2parties. As stated in sections XIV.C.2.c.1of the proposed rule and this final rule<strong>with</strong> comment period, we believe thatconsensus among affected parties can bereflected through means other than NQFendorsement, including consensusachieved during the measuredevelopment process; consensus shownthrough broad acceptance and use ofmeasures; and consensus through publiccomment.The proposed safe surgery checklistmeasure assesses the adoption of a bestpractice for surgical care that is broadlyaccepted and in widespread use amongaffected parties. In addition to beingadopted by The World Federation ofSocieties of Anesthesiologists, the use ofa safe surgery checklist is one of the safesurgery principles endorsed by theCouncil on Surgical and PerioperativeSafety, 51 which is comprised of theAmerican Association of NurseAnesthetists, the American College ofSurgeons, the American Association ofSurgical Physician Assistants, the2011. http://www.jointcommission.org/standards_information/npsgs.aspx.51 http://www.cspsteam.org/safesurgerychecklist/safesurgerychecklist.html.ER30NO11.136

74506 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2American Society of Anesthesiologists,the American Society of PeriAnesthesiaNurses, AORN, and the Association ofSurgical Technologists. Two Stateagencies (Oregon, South Carolina), theVeterans Health Administration, 52numerous hospital systems, Statehospital associations (such as Californiaand South Carolina), nationalaccrediting organizations and largeprivate insurers have endorsed the useof a safe surgery checklist as a bestpractice for reducing morbidity,mortality, and medical errors. 53 54Because the use of a safe surgerychecklist is a widely accepted bestpractice for surgical care, we believethat the proposed structural measure ofSafe Surgery Checklist Use reflectsconsensus among affected parties. Wealso note that TJC has included safesurgery checklist practices among thoseto be used to achieve NPSGs adopted for2011 for surgeries performed inambulatory settings and hospitals. 55The Safe Surgery Checklist Usestructural measure is not NQF-endorsed,and there is no NQF-endorsed measureof safe surgery checklist use despite thebroad acceptance and widespreadendorsement of this practice. Therefore,it is not feasible or practicable to adoptan NQF-endorsed measure of safesurgery checklist use because there is nosuch NQF-endorsed measure. We notethat section 1833(t)(17) of the Act doesnot require that each measure we adoptfor the ASC Quality Reporting Programbe endorsed by a national consensusbuilding entity, or by the NQFspecifically. Further, section1833(i)(7)(B) of the Act states thatsection 1833(t)(17) of the Act, whichcontains this requirement, applies to theASC Quality Reporting Program, exceptas the Secretary may otherwise provide.Under this provision, the Secretary hasfurther authority to adopt non-endorsedmeasures. We note that the proposedadoption of this measure in the ASCQuality Reporting Program is consistent<strong>with</strong> our goal to align measures acrosssettings because we also proposed thesame measure for the Hospital OQRProgram for CY 2014 paymentdetermination.52 Neily, J; Mills, PD, Young-Xu, Y. (2010).‘‘Association between implementation of a MedicalTeam Training Program and Surgical Mortality’’.JAMA. 304 (15): 1693–1700.53 Haynes, AB; Weiser, TG; Berry, WR et al (2009)‘‘A Surgical Safety Checklist to Reduce Morbidityand Mortality in a Global Population’’. NEJM.360:491–499.54 Birkmeyer, JD (2010) ‘‘Strategies for ImprovingSurgical Quality—Checklists and Beyond.’’ NEJM.363: 1963–1965.55 http://www.jointcommission.org/standards_information/npsgs.aspx.For the CY 2015 paymentdetermination, we proposed that datacollection for this structural measure forASCs would begin on July 1, 2013 andend on August 15, 2013 for the entiretime period from January 1, 2012through December 31, 2012. In otherwords, an ASC would report whethertheir facility employed a safe surgerychecklist that covered each of the threecritical perioperative periods for theentire calendar year of 2012 during the45-day window from July 1 throughAugust 15, 2013. The information forthis structural measure would becollected via an online Web-based toolthat will be made available to ASCs viathe QualityNet Web site. This collectionmechanism is also used to collectstructural measures and otherinformation for other programs,specifically for the Hospital IQR andHospital OQR Programs.In the proposed rule, we invitedpublic comments on our proposal to addthis new structural measure to the ASCquality measurement set and thesubmission process for the CY 2015payment determination.<strong>Comment</strong>: Several commenters fullysupported the Safe Surgery Checklistmeasure and believed the measure helpsto ensure safe surgical practices prior toadministration of anesthesia, incision,and the patient’s departure from theoperating room. A commenter did notbelieve this measure would imposesubstantial burden on ASCs because thedata is collected via a Web-based tool.Some commenters appreciated theflexibility given to ASCs in the designand use of a specific checklist to meettheir needs. <strong>Comment</strong>ers urged CMS torevise the measure name to include,‘‘safe surgery/procedure checklist’’ andmodify its purpose statement to indicatethe intent of the measure as ‘‘anassessment whether ASCs use a safesurgery/procedure checklist thataddresses effective communication andhelps ensure that safe practices arebeing performed at three criticalperioperative or periprocedural periods:(1) Prior to the administrative ofanesthesia or sedation; (2) prior toincision or the beginning of theprocedure; and (3) prior to the patientleaving the operating or procedureroom.’’ <strong>Comment</strong>ers urgedharmonization <strong>with</strong> the same measureproposed in the Hospital OQR Program.Response: We agree <strong>with</strong> thecommenter that this measure wouldimpose minimal burden because thedata are submitted using a Web-baseddata submission tool. The ASC safesurgery checklist measure is aligned<strong>with</strong> the safe surgery checklist measurethat we are adopting for HOPDs.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00386 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2<strong>Comment</strong>: A few commentersrecommended a 60-day time period fordata submission rather than the 45-daywindow and suggested that CMS changethis measure into a claims-basedmeasure rather than using an onlinetool. <strong>Comment</strong>ers recommendedchanging the proposed collection timeperiod from January 1, 2012 throughDecember 31, 2012 to January 1, 2013through December 31, 2013 and delaythe data submission period until early2014. The commenters did not providea rationale for this suggestion.Response: The goal of this measure isto assess whether a particular ASC isusing a safe surgery checklist fromJanuary 1, 2012 until December 31,2012, requiring one yes/no response forthis measure, not to assess whether asafe surgery checklist is used for eachMedicare Part B patient. Therefore, aclaims-based measure would not beappropriate to measure whether an ASCis using a safe surgery checklist becausewe are not measuring its use on anindividual claims-based level.We note that the Web based reportingtool is a minimally burdensome methodof collecting this facility levelinformation, and is currently in use forsimilar types of measures for both theHospital IQR and Hospital OQRPrograms. We seek to align the reportingperiods for the reporting programs andcurrently, a 45-day window is beingused for data collection for somestructural measures in the Hospital IQRand Hospital OQR Programs. At thistime, we are not changing the timeperiods for the structural measuresbecause there is minimal burden andadvance preparation to collect andreport this information to CMS.<strong>Comment</strong>: A few commenters did notsupport this measure for differentreasons. Some commenters believed thatthe use of a checklist cannot bevalidated by CMS, and therefore, itshould not be considered as a measure.Some commenters noted that it is notNQF-endorsed. Some commentersobjected to the collection of patient- orprocedure-detailed level data.<strong>Comment</strong>ers were also concerned aboutthe implementation of this measuresimultaneously <strong>with</strong> ICD–10 conversionwould further tax facilities’ resources. Acommenter stated this measure isduplicative because all accredited ASCsare already required to use a safesurgery checklist. Another commenternoted that the safe surgery checklist asrequired in the Conditions for Coveragecould also meet the criteria for thismeasure. A few commenters stated thismeasure does not apply to ASCsperforming GI surgical procedures andrequested the adoption of a safe surgery

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74507jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2checklist that is specific to GIprocedures performed in ASCs.Response: We acknowledge that thismeasure cannot be validated because itdoes not use charts or claims.Nonetheless, we believe the measurewould heighten ASCs’ awareness ofpatient safety during surgicalprocedures and safeguard againstpreventable human errors. As discussedabove, we believe this measure meetsthe statutory requirements, even if it isnot NQF-endorsed. There is no NQFendorsedmeasure for safe surgerychecklist use despite the broadacceptance and widespreadendorsement of this practice. Therefore,it is not feasible or practicable to adoptan NQF-endorsed measure of safesurgery checklist use because there is nosuch NQF-endorsed measure. As statedin previous rulemaking, we believe thatconsensus among affected parties can bereflected through means other than NQFendorsement, including consensusachieved during measure developmentprocesses, consensus shown throughbroad acceptance and use of measure;and consensus through public comment.The use of a safe surgery checklist hasbeen adopted by the World Federationof Societies of Anesthesiologists, and isone of the safe surgery principlesendorsed by the Council on Surgicaland Perioperative Safety which iscomprised of multiple medicalprofessional organizations.We disagree <strong>with</strong> the commenterswho suggested that a safe surgerychecklist would not apply to GIprocedures. Some GI procedures areperformed under anesthesia, and wrongsite surgery and wrong procedure ispossible for GI procedures, all of whichare general topics that would be coveredunder a safe surgery checklist.Therefore, we believe that a welldesigned,comprehensive generic safesurgery checklist should cover GIspecificsurgical procedure elements aswell.We do not believe that the reportingof this structural measure to CMS forthis quality reporting program andsubsequent public reporting isduplicative of accreditationrequirements or conditions of coveragefor ASCs, because these otherrequirements do not require thereporting this information to CMSannually by each eligible facility andthe subsequent public reporting of thisinformation on a CMS Web site. Asstated previously, this measure is notcollected on an individual patient orprocedure level and does not involvethe use of ICD–9 codes or ICD–10 codes.After consideration of the publiccomments we received, we arefinalizing this measure for CY 2015payment determination. We arefinalizing our proposal for the CY 2015payment determination that ASCswould report their yes/no responseregarding use of a safe surgery checklistbetween July 1, 2013 and August 15,2013 for the time period from January 1,2012 through December 31, 2012 usingan online measure submission Web pageavailable on http://www.qualitynet.org.Details regarding measure submissiontimelines and collection periods arediscussed in the Form, Manner andTiming section for this program in thisfinal rule <strong>with</strong> comment period.(2) ASC Facility Volume Data onSelected ASC Surgical ProceduresThere is substantial evidence inrecent peer-reviewed clinical literaturethat volume of surgical procedures,particularly of high risk surgicalprocedures, is related to better patientoutcomes, including decreased surgicalerrors and mortality. 56 57 58 This may beattributable to greater experience and/orsurgical skill, greater comfort <strong>with</strong> andhence likelihood of application ofstandardized best practices, andincreased experience in monitoring andmanagement of surgical patients for theparticular procedure. For this reason,the National Quality Forum hasendorsed measures of total all-patientsurgical volume for Isolated CABG andValve Surgeries (NQF #0124),Percutaneous Coronary Intervention(PCI) (NQF #0165), Pediatric HeartSurgery (NQF #0340), Abdominal AorticAneurism Repair (NQF #357),Esophageal Resection (#0361), andPancreatic Resection (NQF #0366).Additionally, many consumer-orientedWeb sites reporting health care qualityinformation sponsored by States(California, New York, Texas,Washington, Florida, Illinois, Michigan,Oregon) and private organizations(Leapfrog Group, U.S. News & WorldReport) are reporting procedure volume,in addition to provider performance onsurgical process (SCIP measures) andoutcome measures (surgical siteinfection, Patient Safety Indicators, andMortality), because it providesbeneficial performance information to56 Livingston, E.H.; Cao, J. ‘‘Procedure Volume asa Predictor of Surgical Outcomes’’. JAMA.2010;304(1):95–97.57 Flum, D.R.; Salem, L.; Elrod, J.B.; Dellinger,E.P.; Cheadle, A.; Chan, L. ‘‘Early Mortality AmongMedicare Beneficiaries Undergoing BariatricSurgical Procedures’’. JAMA. 2005;294(15):1903–1908.58 Schrag, D.; Cramer, L.D.; Bach, P.B.; Cohen,A.M.; Warren, J.L.; Begg, C.B.;’’ Influence ofHospital Procedure Volume on Outcomes FollowingSurgery for Colon Cancer’’. JAMA.2000; 284(23):3028–3035.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00387 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2consumers choosing a health careprovider. The currently NQF-endorsedmeasures of procedure volume (notedabove) relate to surgeries onlyperformed in inpatient settings, andwould not be applicable to the types ofprocedures approved to be performed inHOPDs and ASCs.The recently issued Report toCongress entitled ‘‘MedicareAmbulatory Surgical Center Value-Based Purchasing Implementation Plan’’included an analysis of CY 2009 ASCclaims for Medicare beneficiaries. Whenstratified by specialty category, CMSidentified six procedure categories thathistorically constitute 98.5 percent ofthe total volume of proceduresperformed in ASCs: Gastrointestinal,Eye, Nervous System, Musculoskeletal,Skin, and Genitourinary. In the CY 2012OPPS/ASC proposed rule (76 FR 42345),we proposed that ASCs submit allpatient volume data on these six broadcategories of surgical procedures as astructural measure to be used for theASC Quality Reporting Program CY2015 payment determination. In sectionXIV.C.2.c.(2) of the proposed rule, wealso proposed that HOPDs submitsimilar all patient volume data for eightbroad procedure categories.Structural measures assess whether aprovider/facility possesses conditionsfor the care of patients that areassociated <strong>with</strong> better quality. Readtogether, section 1833(i)(7)(B) of the Actand section 1833(t)(17)(C)(i) of the Actrequire the Secretary, except as theSecretary may otherwise provide, todevelop measures appropriate for themeasurement of the quality of care(including medication errors) furnishedby ASCs, that reflect consensus amongaffected parties and, to the extentfeasible and practicable, that includemeasures set forth by one or morenational consensus building entities.Because surgical volume is associated<strong>with</strong> better quality, and surgicalprocedures are performed in ASCs, webelieve that surgical volume isappropriate for measuring the quality ofthese six categories of surgicalprocedures performed in ASCs. We havepreviously established for otherprograms that we believe consensusamong affected parties can be reflectedthrough various means includingwidespread use among industrystakeholders. We believe that the ASCFacility Volume Data on Selected ASCSurgical Procedures structural measurereflects consensus among affectedparties as being associated <strong>with</strong> qualityof surgical care because of recentevidence published in well-respectedand widely circulated peer-reviewedclinical literature, and because of its

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274508 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationswidespread reporting among States andprivate stakeholders on Web sitesfeaturing quality information. Becausethe current volume measures areendorsed for inpatient procedures,many of which are not performed inoutpatient settings such as ASCs, it isnot feasible or practicable to use NQFendorsedmeasures of volume for ASCs.Further, section 1833(i)(7)(B) of the Actstates that section 1833(t)(17) of the Act,which contains this requirement,applies to the ASC Quality ReportingProgram, except as the Secretary mayotherwise provide. Under thisprovision, the Secretary has furtherauthority to adopt non-endorsedmeasures.For the CY 2015 paymentdetermination, we proposed that ASCswould report these data <strong>with</strong> respect tothese six categories between the datesJuly 1, 2013 and August 15, 2013 <strong>with</strong>respect to the time period January 1,2012 through December 31, 2012. Inother words, under this proposal, anASC would report its CY 2012 allpatientvolume data for these sixcategories of procedures during the 45-day window of July 1 to August 15,2013. In the CY 2012 OPPS/ASCproposed rule (76 FR 42346), weincluded a table which listed theHCPCS codes for which hospitals wouldbe required to report all-patient volumedata. Like the structural measures in theHospital OQR Program, data on thisproposed measure would be collectedvia an online Web-based tool that wouldbe made available to ASCs via theQualityNet Web site. This collectionmechanism is also used to collectstructural measures and otherinformation for other programs(Hospital IQR and Hospital OQR). In theproposed rule, we invited publiccomment on this proposal.<strong>Comment</strong>: A commenter questionedwhy cardiovascular and respiratorycodes are included for the same measureproposed in the Hospital OQR Programand not in the ASC Quality ReportingProgram. The commenter recommendedharmonizing the same categories forboth programs for consistency.Response: The procedures approvedfor HOPDs and for ASCs are not thesame in type or frequency. For HOPDs,an analysis of prior years’ data indicatedthat procedures performed in the eightbroad categories that we proposed (eye,cardiovascular, gastrointestinal,genitourinary, musculoskeletal,nervous, respiratory, and skin systems)accounted for 99 percent of theprocedures performed in HOPDs. Whenwe assessed the frequency of proceduresperformed by ASCs using prior year’sclaims, we found that the six procedurecategories of gastrointestinal, eye,nervous system, musculoskeletal, skinand genitourinary constitute 98.5percent of the total volume ofprocedures performed in ASCs.Therefore, unlike HOPDs,cardiovascular and respiratory systemprocedures were not included in the listof most common procedures performedin ASCs. These two categories combinedwould account for 1.5 percent ofprocedures performed in ASCs. This isthe reason why procedures performed inthese two anatomic areas were notincluded in the ASC procedure volumelist of procedure codes. We willcontinue to examine claims data on anongoing basis, and should we becomeaware of commonly performedprocedures in the Cardiovascular andRespiratory categories for which weshould collect volume in the future, wewill propose to collect ASC proceduresfor those categories in a future rule.<strong>Comment</strong>: A few commenters fullysupported the collection of all-patientvolume data on surgical proceduremeasure and urged harmonization <strong>with</strong>the same measure adopted in theHospital OQR Program. Anothercommenter noted that the provision ofdata on high volume procedures acrosshospital outpatient setting and ASCsetting would facilitate comparisons andsubsequent informed decisions. Acommenter believed that this measurewould create incentives for ASCs toincrease their procedure volumes andimprove their performance.Response: We appreciate thecommenters’ support and their insightsand recommendations. We willcontinue to work towards harmonizingmeasures, when possible, betweendifferent settings and facilities.<strong>Comment</strong>: A few commentersbelieved that the measure is poorlyspecified, and should be refined toprovide meaningful information to theconsumer. <strong>Comment</strong>ers recommendedclarification on the most common ASCspecialty-specific proceduresperformed, prior to creation of a clearlyspecified measure. <strong>Comment</strong>ers alsourged CMS to solicit input from the ASCcommunity to determine how to makepublication of volume data meaningfulprior to implementation. A commenterstated this measure is unwarranted asvolume data is already available onmany State-supported or hospitalspecificWeb sites. <strong>Comment</strong>ersbelieved that reporting volume <strong>with</strong>outproviding pertinent information onoutcomes or patient-reportedassessments of care may misleadpatients about the quality of caredelivered.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00388 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Response: Although this measure isnot NQF-endorsed, we believed itreflects consensus among affectedparties as evidenced by peer reviewedliterature and widespread use on Websites featuring quality information. Webelieve it is important to provide thisinformation to consumers. We agree<strong>with</strong> commenters that information onoutcomes should be provided toconsumers as well, and we haveadopted several surgical outcomemeasures in the ASC Quality ReportingProgram so that this information can beprovided to consumers. As discussed inthe proposed rule, our goal for thismeasure is to provide consumers <strong>with</strong>useful information on surgicalprocedure volume in order to assistpatients in making informed healthcaredecisions. We are aware of Web sitesreporting volume for some proceduresperformed in hospitals. However, we arenot aware of Web sites that are reportingASC volume by facility for commonlyperformed procedures. We want tocreate a standardized platform forconsumers to be able to comparevolume information based on proceduretypes commonly performed in ASCs<strong>with</strong>in the 6 broad categories.However, we agree <strong>with</strong> commentersthat collecting and displayinginformation on the broad categories ascurrently specified may not bemeaningful to consumers. Based on thepublic comments we received that thesix broad categories will not bemeaningful to consumers, we willfurther refine the specification for thecategories by grouping the codes intoprocedure types commonly performedin ASCs <strong>with</strong>in the 6 broad categories sothat they are more meaningful toconsumers. The codes in the 6 broadcategories that ASCs would use tocollect volume remain the same, but theinformation would be reported to CMSin the subcategories that will be definedin the Specifications Manual. We willinclude these refinements in thespecifications for the measure that willbe in an upcoming release of the ASCSpecifications Manual. We agree <strong>with</strong>the commenter that obtainingstakeholder input as well as consumertesting prior to public reporting of thevolume information will be beneficial,and will strive to do so, as we have donepreviously for information madeavailable to the public from otherquality reporting programs.<strong>Comment</strong>: A commenter believed theproposed volume data submission viathe QualityNet Web site is cumbersomeand the implementation should bedelayed to allow ASCs to gainexperience <strong>with</strong> the online tool.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74509Response: The online tool is a lowburden method of collecting facilitylevel structural measures, and iscurrently in use for structural measuresfor both the Hospital IQR and HospitalOQR Programs. While the time periodfor the measure for CY 2015 would becalendar year 2012, the informationwould not be submitted by ASCs untilmid-2013. Therefore, we do not believefurther delay in the collection andsubmission of the measure is necessary.After consideration of the publiccomments we received, we arefinalizing the proposed ASC facilityvolume data on selected ASC surgicalprocedures measure for the CY 2015payment determination, <strong>with</strong> amodification. Based upon publiccomment received, we will furthergroup the codes for commonlyperformed procedure types <strong>with</strong>in the 6broad categories. This information willbe provided in an upcomingSpecifications Manual release. We arefinalizing our proposal for the CY 2015payment determination that ASCswould report data <strong>with</strong> respect to thesesix categories between July 1, 2013 andAugust 15, 2013 for the entire timeperiod from January 1, 2012 throughDecember 31, 2012 using an onlinemeasure submission Web page availableon http://www.qualitynet.org. Moreinformation regarding the collection andsubmission requirements for thismeasure can be found in the Form,Manner and Timing section for thisprogram in this final rule <strong>with</strong> commentperiod.In summary, for the CY 2015 paymentdetermination, we are retaining the fiveclaims-QDC-based measures finalizedfor the CY 2014 payment determination,and adding two structural measures,safe surgery checklist use and ASCfacility volume data on selected ASCsurgical procedures, for a total of 7measures.The measures for ASCs for the CY2015 payment determination are listedbelow:jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES25. ASC Quality Measures for the CY2016 Payment Determinationa. Retention of Measures Adopted forthe CY 2015 Payment Determination inthe CY 2016 Payment DeterminationIn general, unless otherwise specifiedin the retirement section of a rule, weproposed to retain measures from oneCY payment determination to the next.In the CY 2012 OPPS/ASC proposedrule (76 FR 42346), we proposed toretain the measures we proposed toadopt for the CY 2015 paymentdetermination, if they are finalized in anOPPS/ASC final rule <strong>with</strong> commentperiod, for the CY 2016 paymentdetermination. In the proposed rule, weinvited public comment on thisproposal.As discussed previously, we finalizedour proposal to retain measures fromVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00389 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2one CY payment determination toanother. We did not receive anycomments objecting to the retention ofthe measures finalized for the CY 2015payment determination for the CY 2016payment determination. Thus, we arefinalizing the retention of the sevenmeasures finalized in the CY 2015payment determination for the CY 2016payment determination.ER30NO11.137

74510 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsb. HAI Measure: Influenza VaccinationCoverage Among Healthcare Personnel(HCP) (NQF #0431)The Influenza Vaccination amongHealthcare Personnel measure assessesthe percentage of healthcare personnelwho have been immunized for influenzaduring the flu season. The specificationsfor this measure are available at http://www.cdc.gov/nhsn/PDFs/HSPmanual/HPS_Manual.pdf.In the CY 2012 OPPS/ASC proposedrule (76 FR 42346), for the ASC CY 2016payment determination, we proposed toadopt this NQF-endorsed HAI measure.We also proposed to adopt this measurefor the Hospital OQR Program for theCY 2015 payment determination. Werefer readers to the discussion insections XIV.C.3.b. of the proposed ruleand this final rule <strong>with</strong> comment periodfor detailed descriptions of thismeasure.Read together, section 1833(i)(7)(B) ofthe Act and section 1833(t)(17)(C)(i) ofthe Act require the Secretary, except asthe Secretary may otherwise provide, todevelop measures appropriate for themeasurement of the quality of care(including medication errors) furnishedby ASCs, that reflect consensus amongaffected parties and, to the extentfeasible and practicable, that includemeasures set forth by one or morenational consensus building entities. Webelieve this measure is appropriate formeasuring quality of care in ASCs dueto the significant impact of HCPinfluenza vaccination on the spread ofinfluenza among patients. Furthermore,we believe that this measure meets theconsensus requirement and therequirement that it be set forth by anational consensus building entitybecause it is endorsed by the NQF.We proposed that ASCs use the NHSNinfrastructure and protocol to report themeasure for ASC Quality ReportingProgram purposes. Collection of data viathe NHSN for this measure would begin<strong>with</strong> immunizations from October 1,2013 to March 31, 2014 for the CY 2016payment determination. In the proposedrule, we invited public comment on ourproposal to adopt this HAI measure intothe ASC Quality Reporting Program forthe CY 2016 payment determination.<strong>Comment</strong>: A few commenterssupported the measure, but wereconcerned that ASCs will require manyresources to initiate this reportingprocess since they are not accustomedto reporting to NHSN. A commenterrecommended that the measure be respecifiedfor the ASC setting to includeonly those employees for which ASCscan reasonably report vaccinationstatus. The commenter recommendedthat CMS postpone data collection forimmunizations from the proposedOctober 1, 2013 to March 31, 2014 toOctober 1, 2014 through March 31, 2015for the CY 2016 payment determination.Response: CMS and CDC recognizethe potential challenges faced by ASCsin data collection for this measure.Recently, CDC submitted a revisedmeasure proposal to NQF, based onresults of field testing. The revisedmeasure proposal reduces denominatordata collection to employee healthcarepersonnel, defined as staff on facilitypayroll, and two categories of nonemployeehealthcare personnel: (1)Licensed independent practitioners, thatis, physicians, advance practice nurses,and physician assistants; and (2) studenttrainees and adult volunteers.Based on the public comments wereceived, we are changing the proposedinitial reporting period for HCPinfluenza vaccination coverage so that aless burdensome, updated CDC protocolfor the measures as well asinfrastructure upgrades can beincorporated into the collection systemand ASCs will have enough time toobtain training to collect and report theupdated measure to NHSN. Thereporting period will begin October 1,2014 and continue through March 31,2015 for ASCs as recommended bycommenters. Further details on thesubmission requirements for thismeasure will be proposed in the FormManner and Timing section for thisprogram in a future rulemaking.<strong>Comment</strong>: A commenter cautionedpotential duplicative reporting effortssince some States already mandatevaccination of healthcare workers andpublic reporting of healthcarevaccination rates.Response: We appreciate thecommenter’s cautionary note andrecognize that requirements formeasurement and reporting of HCPvaccination rates, as is the case for othermeasureable healthcare processes andoutcomes, may exist at the State andfederal levels. Standardizing reportablehealthcare quality measurements is apriority because that reduces reportingburden while preserving theopportunities to use those data fordifferent purposes at the State andfederal levels.<strong>Comment</strong>: A commenter stated thatthe measure should allow healthcarepersonnel to choose the vaccinationtype or brand most appropriate forthem.Response: The measure does notrequire healthcare personnel to receivea specific type or brand of influenzavaccine in order to be included in themeasure.After consideration of the publiccomments we received, we arefinalizing the proposed InfluenzaVaccination Coverage among HealthcarePersonnel measure for the CY 2016payment determination, <strong>with</strong> amodification. Because NQF’s finalreview and an endorsement decision arepending <strong>with</strong> respect to the CDC’srevised measure proposal and at therequest of commenters, as discussedabove, we are changing the datacollection timeframe from what weproposed. Data collection via NHSNwill begin on October 1, 2014 andcontinue through March 31, 2015.Details for submission of this measurewill be proposed in a future rulemaking.In summary, for the CY 2016 paymentdetermination, we are retaining theseven measures that we adopted for theCY 2015 payment determination and areadding one NHSN HAI measure for atotal of eight measures.The measures for ASCs for the CY2016 payment determination are listedbelow:BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00390 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations745116. ASC Measure Topics for FutureConsiderationBelow is a list of future measurementareas that we are considering for futureASC Quality Reporting Programpayment determinations for which wesought comment in the CY 2012 OPPS/ASC proposed rule (76 FR 42347through 42348).In particular, we sought comment onthe inclusion of Patient Experience ofCare Measures in the ASC QualityReporting Program measure set for afuture payment determination, such asexisting Consumer Assessment ofHealthcare Providers and Systems(CAHPS) surveys for clinicians/groupsand the CAHPS Surgical Care Survey,sponsored and submitted by theAmerican College of Surgeons (ACS)and the Surgical Quality Alliance(SQA). We also, in particular, soughtcomment on the inclusion of procedurespecificmeasures for cataract surgery,colonoscopy and endoscopy, and formeasures of Anesthesia RelatedComplications in the ASC QualityReporting Program measure set.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00391 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.138

74512 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00392 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.139

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74513jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–CIn the proposed rule, we invitedpublic comment on these qualitymeasures and measurement topics sothat we may consider proposing toadopt them for future ASC QualityReporting Program paymentdeterminations beginning <strong>with</strong> the CY2015 payment determination. We alsosought suggestions for additionalmeasures and rationales for the ASCQuality Reporting Program that are notlisted in the table above.• Patient’s Experience of Care Measure<strong>Comment</strong>: One commenter noted thatthe CAHPS surgical care survey was notappropriate for ASCs since it may notaddress the short patient experience<strong>with</strong> staff performance at ASCs.Response: We thank the commenterfor the input and we will take it intoconsideration in future measureselection efforts for this program.• Anesthesia Related ComplicationsMeasures<strong>Comment</strong>: A commenter supportedthe anesthesia related complicationsmeasures listed, including, Use ofReversal Agents, Type of Anesthesiaand Credentials of the ProfessionalAdministering Anesthesia When aComplication is Reported, Presence ofPhysician During Entire Recovery<strong>Period</strong>, and Post Discharge ED Visit<strong>with</strong>in 72 Hours.Response: We thank the commenterfor the input on anesthesia relatedcomplications. We will take this inputinto consideration in future measureselection efforts for this program.• Additional Future MeasurementTopics<strong>Comment</strong>: A commenterrecommended CMS taking a cautiousapproach for the venousthromboembolism measures: outcome/assessment/prophylaxis measurebecause the incidence of deep veinthrombosis (DVT) and pulmonaryembolism (PE) following total knee andhip replacement can be reduced but noteliminated. The commenter noted thetrade off for lower DVT/PE rates is morewound complications, includingsurgical site infections.Response: We thank the commenterfor the input and recommendation. Wewill take them into consideration infuture measure selection efforts for thisprogram.• Other Measure Topics<strong>Comment</strong>: A commenterrecommended the future inclusion ofASC specialty-specific measures,especially ASC-specific GI measures,plan for reprocessing endoscope, moremeasures related to safe injectionpractices, accreditation status,participation in a registry, sedationsafety, and nursing sensitive structuralmeasures.Response: We thank the commenterfor the input and recommendations forfuture measurement topics. We will takethem into consideration in futuremeasure selection efforts for thisprogram.7. Technical Specification Updates andData Publicationa. Maintenance of TechnicalSpecifications for Quality MeasuresIn the CY 2012 OPPS/ASC proposedrule (76 FR 42348), we proposed toprovide technical specifications, and insome cases, links to technicalspecifications hosted on external thirdparty Web sites, for the ASC QualityReporting Program measure in aSpecifications Manual, to be postedafter publication of the CY 2012 OPPS/ASC final rule <strong>with</strong> comment period, onthe CMS QualityNet Web site athttp://www.QualityNet.org. Currently,the specifications for the proposed ASCVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00393 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2measures for the CY 2014, CY 2015 andCY 2016 payment determinations, <strong>with</strong>the exception of the two structuralmeasures, can be found at: http://www.ascquality.org/documents/ASCQualityCollaborationImplementationGuide.pdf; http://www.cms.gov/pqrs/downloads/2011_PhysQualRptg_MeasuresGroups_SpecificationsManual_033111.pdf?agree=yes&next=Accept; http://www.cdc.gov/vnhsn/psc.html; andhttp://www.cdc.gov/nhsn/PDFs/HSPmanual/HPS_Manual.pdf. Thespecifications for the two structuralmeasures are included in thediscussion.We proposed to maintain thetechnical specifications for the measuresadopted for the ASC Quality ReportingProgram by updating this SpecificationsManual, including updating the detailedinstructions and the calculation ofalgorithms as appropriate. In some caseswhere the specifications are availableelsewhere, we may include links to Websites hosting technical specifications.We currently use this same process forHospital OQR Program measures, asdiscussed in sections XIV.A.3.a. of theproposed rule and this final rule <strong>with</strong>comment period. We proposed to followthe same technical specificationmaintenance process for the ASCQuality Reporting Program measures asfor the Hospital OQR Program measuresand we invited public comments on thisproposal.In the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period (73 FR 68766through 68767), we established asubregulatory process for updates to thetechnical specifications that we use tocalculate Hospital OQR Programmeasures. This process is used whenchanges to the measure specificationsare necessary due to changes inscientific evidence or other substantivechanges, thereby giving CMS the optionER30NO11.140

74514 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2to seek re-endorsement of that measure.The legal standard for adopting HospitalOQR measures is the measure must beappropriate to measure quality of care inthe setting, there must be consensusamong affected parties, and to the extentfeasible and practicable, measures mustbe set forth by a consensus buildingentity. We note that NQF endorsementof an OQR measure is not requiredunder sections 1833(i)(2)(D)(iv), (i)(7) or(t)(17) of the Act. The legal standard foradopting ASC measures is this samestandard, except as the Secretary mayotherwise provide. Changes of thisnature to measures adopted for the ASCQuality Reporting Program may notcoincide <strong>with</strong> the timing of ourregulatory actions, but neverthelessrequire inclusion in the measurespecifications so that measures arecalculated based on the most up-to-datescientific standards and, in someinstances, consensus standards.For the Hospital OQR Program, weindicated that notification of changes tothe measure specifications is availableon the QualityNet Web site, http://www.QualityNet.org, and in theHospital OQR Specifications Manualand would occur no less than 3 monthsbefore any changes become effective forpurposes of reporting under theHospital OQR Program. The HospitalOQR Specifications Manual is releasedevery 6 months and addenda arereleased as necessary providing at least3 months of advance notice forsubstantial changes, such as changes toICD–9, CPT, NUBC, and HCPCS codes,and at least 6 months notice forsubstantive changes to data elementsthat would require significant systemschanges. We proposed to follow thesame subregulatory process for the ASCQuality Reporting Program for updatesto the technical specifications. In theproposed rule, we invited publiccomments on this proposal.<strong>Comment</strong>: A few commentersexpressed appreciation of the technicalspecifications maintenance timeline,which proposes that at least 6 monthsof advance notice will be provided toparticipants for substantive changes todata elements that would requiresignificant system changes and at leastthree months for substantial changes. Acommenter noted that theimplementation of a new reportingprogram requires even more advancenotice and no less than a minimum of6 months.Response: We appreciate thecommenters’ support for our proposedtechnical specifications maintenancetimeline. We will strive to provide asmuch advance notice as possible whensubstantive changes to technicalspecifications are made. We areproviding more start up time for theprogram by delaying the start ofrequired data submission for theprogram to October 1, 2012.After consideration of the publiccomment we received, we are finalizingthe policy of providing technicalspecifications and links to technicalspecifications in a SpecificationsManual to be posted after publication ofthis final rule <strong>with</strong> comment period.However, we are finalizing a policy ofposting it not only the CMS QualityNetWeb site as we proposed, but also on aCMS Web site such as http://www.cms.gov because we wish to utilizemultiple Web sites to increase ASCawareness of our technical and measurespecifications in our outreach andeducation. We believe that posting theinformation on the QualityNet Web sitewould increase ASC awareness of ourprogram’s specifications. However, wealso believe that many ASC’s willreview the CMS Web site, since CMSposts claims processing manuals andother documentation that are used byproviders and practitioners to submitclaims to CMS.We also are finalizing our proposal tofollow the same maintenance processused for the Hospital OQR Program,including maintenance of the technicalspecifications for the measures adoptedby updating the Specifications Manual,and updating the detailed instructionsand the calculation of algorithms asappropriate. We also are finalizing ourpolicy to follow the same subregulatoryprocess for the ASC Quality ReportingProgram as used for the Hospital OQRProgram for updates to the technicalspecifications, including issuing regularmanual releases at six month intervals,to provide addenda as necessary, andproviding at least 3 months of advancenotice for substantial changes such aschanges to ICD–9, CPT, NUBC, andHCPCS codes, and at least 6 monthsnotice for substantive changes to dataelements that would require significantsystems changes.b. Publication of ASC Quality ReportingProgram DataSection 1833(t)(17)(E) of the Actrequires that the Secretary establishprocedures to make data collected underthe Hospital OQR Program available tothe public. It also states that suchprocedures must ensure that a hospitalhas the opportunity to review the datathat are to be made public <strong>with</strong> respectto the hospital prior to such data beingmade public. These requirements undersection 1833(t)(17)(E) of the Act alsoapply to the ASC Quality ReportingProgram except as the Secretary mayVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00394 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2otherwise provide. In the CY 2012OPPS/ASC proposed rule (76 FR 42348),we proposed to make data that an ASChas submitted for the ASC QualityReporting Program available on a CMSWeb site after providing an ASC anopportunity to preview the data to bemade public. We proposed that thesedata would be displayed at the CMSCertification Number (CCN) level.Publishing this information encouragesbeneficiaries to work <strong>with</strong> their doctorsand ASCs to discuss the quality of careASCs provide to patients, therebyproviding an additional incentive toASCs to improve the quality of care thatthey furnish. We intend to propose moredetail on the publication of data in alater rulemaking. In the proposed rule,we solicited public comment on theseproposed processes of making ASCquality data available to the public.<strong>Comment</strong>: <strong>Comment</strong>ersoverwhelmingly supported transparencyin ASC quality reporting and costinformation and some recommendedCMS publish the ASC quality data at theearliest opportunity.<strong>Comment</strong>ers believed the ASC qualityinformation should be displayed in amanner that allows easy comparisonsfor quality and cost between HOPDs andASCs. <strong>Comment</strong>ers expressed concernsregarding potential inappropriate datadisplayed on Hospital Compare. Thesecommenters suggested that, in publiclydisplaying ASC data, CMS should: (1)Provide contact information for programcontent area experts; (2) provide aprovider-specific narrative section thatwould allow providers to adviseconsumers on any concerns the providerhas regarding the reliability or accuracyof data posted; (3) provide each ASC’saccreditation status; (4) displayMedicare rates and patients’ out-ofpocketcosts for services provided inboth HOPD and ASC settings; (5)distinguish ASCs where only GIprocedures are done, those where theyare also done, and those where they arenot done; and (6) stratify performancedata when it is publicly posted based onrisk profiles.Response: We thank the commentersfor their support and suggestions. Wewill take the suggestions intoconsideration for future public reportingof the data.<strong>Comment</strong>: Some commenters believedthat ASCs should have one year ofconfidential feedback on measureparticipation, data completeness, QDCsubmission errors, and performancedetails at CCN level, prior to publicationof the data. Some commentersrecommended that an appeals processshould be put in place for dispute ofdata accuracy.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74515jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Response: We will consider thesesuggestions. We are required to makethe data submitted under this programavailable to the public. Prior to makingthe data available to the public, we alsoare required to provide facilities <strong>with</strong>the opportunity to review their data. Weintend to propose a reconsideration andappeals process in future rulemaking.<strong>Comment</strong>: A few commenters urgedCMS to strive for user friendly data onthe CMS Web site for the ASC QualityReporting Program.Response: We thank the commentersfor their suggestion; we intend to makethe display as consumer friendly aspossible.After consideration of the publiccomments we received, we arefinalizing our proposed policy to makedata that an ASC has submitted for theASC Quality Reporting Programavailable on a CMS Web site afterproviding an ASC an opportunity topreview the data to be made public. Aswe proposed, these data will bedisplayed at the CCN level.8. Requirements for Reporting of ASCQuality Data for the CY 2014 PaymentDeterminationIn the CY 2012 OPPS/ASC proposedrule (76 FR 42348 through 42349), toparticipate in the ASC QualityReporting Program for the CY 2014payment determination, we proposedthat ASCs must meet data collection anddata submission requirements. Westated that we intend to proposeadministrative requirements, datavalidation and data completenessrequirements, reconsideration andappeals processes, and CY 2015payment determination reportingrequirements in the CY 2013 OPPS/ASCproposed rule.<strong>Comment</strong>: Several commenters statedtheir concern that administrativerequirements, data validation and datacompleteness requirements, andreconsideration and appeal processeswere not proposed or provided in detail.Several commenters suggested that rulesfor data validation and completeness aswell as the proposed process forreconsideration and appeals bespecified in an interim rule in the firstquarter of 2012. One commenter statedtheir belief that since the use of claimsbasedquality data codes is a newapproach to quality data reporting, datavalidation procedures must be includedin a final ASC Quality ReportingProgram. One commenter wished toconsider the more detailed proposalsintended for publication in laterrulemaking and encouraged CMS toissue these proposals at the earliestopportunity. One commenter believedthat the uncertainty associated <strong>with</strong> notknowing what is necessary to be asuccessful participant in the program isan unwanted deterrent to fullparticipation.Response: We thank thesecommenters for expressing theirconcerns regarding the deferring ofproposals for administrativerequirements, data validation and datacompleteness requirements, andreconsideration and appeals processesrequirements until the CY 2013 OPPS/ASC proposed rule. We fully intend toput forth these proposals as soon aspossible using the public comments wereceived on the CY 2012 OPPS/ASCproposed rule.We agree that it is preferable to issuethese proposals as soon as possible andbased upon the comments receivedintend to do so in the FY 2013 IPPS/LTCH PPS proposed rule rather than theCY 2013 OPPS/ASC proposed rule. Weintend to take this approach because theFY 2013 IPPS/LTCH PPS proposed ruleis scheduled to finalize earlier and priorto data collection beginning <strong>with</strong>October 2012 services. We disagree <strong>with</strong>the comment that the use of claimsbasedquality codes is a new approachto quality data reporting; thismechanism is used to collect suchinformation under the PQRS. However,regarding the necessity to include datavalidation procedures in a final ASCQuality Reporting Program, we willconsider these comments for futurerulemaking. We note that claims-basedand structural measures historicallyhave not been validated throughindependent medical record review inour hospital and physician qualityreporting programs due to the lack ofrelevant information in medical recorddocumentation for specific dataelements, such as use of a safe surgerychecklist.<strong>Comment</strong>: One commenter stated thatQualityNet accounts are automaticallydeactivated after a 120-day period ofinactivity and yet as proposed, ASCswould only use the QualityNet for datasubmission infrequently. Thiscommenter urged CMS to establish aprocess to avert account deactivation.Response: We thank the commenterfor raising this issue. While we did notmake any proposals specificallyaddressing the need for a QualityNetaccount, we made proposals regardingthe entering of structural measure datawhich may necessitate the need for aQualityNet account. In finalizing ourproposals regarding structural measuredata entry, we note that we havedeferred the data entry for structuralmeasure data until 2013; note that aQualityNet account is not necessary toVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00395 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2access information that is posted to theWeb site, such as specifications manualsand educational materials. We intend toaddress any QualityNet accountrequirements for the ASC QualityReporting Program for programrequirements in later rulemaking.a. Data Collection and SubmissionRequirements for the Claims-BasedMeasuresIn the CY 2012 OPPS/ASC proposedrule (76 FR 42348 through 42349), weproposed that, to be eligible for the fullCY 2014 ASC annual payment update,ASCs would be required to submitcomplete data on individual qualitymeasures through a claims-basedreporting mechanism by submitting theappropriate QDCs on the ASC’sMedicare claims. For the CY 2014payment determination, we proposed touse Medicare fee-for-service ASC claimsfor services furnished between January1, 2012 and December 31, 2012.We proposed to consider an ASC asparticipating in the ASC QualityReporting Program for CY 2014 paymentdetermination if the ASC includes QDCsspecified for the program on their CY2012 claims relating to the proposedmeasures if finalized. As nodeterminations will be made affectingpayment until the CY 2014 annualpayment update, we proposed thisapproach in order to reduce ASCburden. We stated that we intend toprovide additional details regardingparticipation notification and otheradministrative requirements in CY 2013rulemaking.We proposed that data completenessfor claims-based measures would bedetermined by comparing the number ofclaims meeting measure specificationsthat contain the appropriate QDCs <strong>with</strong>the number of claims that would meetmeasure specifications, but did not havethe appropriate QDCs on the submittedclaim. We stated that we intend topropose how we will assess datacompleteness for claims-based measuresin the CY 2013 OPPS/ASC proposedrule. In the CY 2012 OPPS/ASCproposed rule, we requested publiccomment on these proposals and werespecifically interested in receivingpublic comment on what constitutescomplete data in regard to our proposedASC claims-based measures utilizingQDCs and methods to assesscompleteness.<strong>Comment</strong>: Some commenterssupported the proposal to consider anASC as participating in the ASC QualityReporting Program if the ASC includesthe QDCs established for finalizedclaims-based measures on its submittedclaim forms during the reporting period

74516 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2for the CY 2014 payment determinationas this approach was seen as reasonableand reduced burden.Response: We thank thesecommenters for their support. We agreethat this method is reasonable and willreduce burden.<strong>Comment</strong>: Many commentersexpressed their belief that the time linefor beginning the reporting of qualitydata was too aggressive, citing issues oftime to adapt billing systems andpersonnel training. Many commenterssuggested that data collection bedelayed, beginning <strong>with</strong> October 1, 2012services, rather than January 1, 2012services as proposed.Response: We thank the commentersfor their views. Based upon the manycomments received regarding the datacollection time period for the CY 2014payment determination, we are delayingthe beginning of the data collectionuntil October 1, 2012. Thus, we will beusing the claims-based QDC datacollection mechanism for ASC servicesfurnished for Medicare patients fromOctober 1, 2012 through December 31,2012 for the CY 2014 paymentdetermination measures, as discussed insection XIV.K.3.a. of this final rule <strong>with</strong>comment period.<strong>Comment</strong>: One commenter believedthat a low threshold for datacompleteness should be established fordata collection during CY 2012 becauseASCs will not know the rules by whichthey are being judged until late in 2012and that reporting thresholds of lessthan 100 percent for initial reportingperiods are consistent <strong>with</strong> other CMSreporting programs. Some commenterssuggested, that due to ASCs not beingfamiliar <strong>with</strong> reporting, successfulreporting on a limited number of claims,for example, 50 percent should bepermitted, a level similar to that in thePQRS.Response: We thank thesecommenters for responding to ourrequest on what constitutes completedata for our proposed ASC claims-basedmeasures. We agree that for the initialyear of the program, a low thresholdshould be used and that a level such asthe 50 percent used in the PQRS wouldbe reasonable. As previously stated, weintend to propose how we will assessdata completeness for claims-basedmeasures in the FY 2013 IPPS/LTCHPPS proposed rule and will consider thecomments when developing ourproposals.<strong>Comment</strong>: Some commenters believedthat, given the variability in ASC casemix, it can reasonably be anticipatedthat some measures will not apply to allASCs, and, therefore, that CMS shouldconsider the need for exemptions basedon case-mix. One commenter believedthat some smaller facilities may nothave any cases for the proposed ASCquality measures and that to maintain aprocess that limits burden, waiving datasubmission requirements when a facilityhas 5 or fewer cases for a measure as isdone under the Hospital IQR andHospital OQR Programs could beimplemented.Response: We thank the commentersfor their views regarding criteria forreporting exemptions under the ASCQuality Reporting Program. We willconsider these comments as we developour proposals in future rulemaking. Asstated above, based upon the commentsreceived, we intend to make furtherproposals on data completeness in theFY 2013 IPPS/LTCH PPS proposed rulerather than the CY 2013 OPPS/ASCproposed rule as the former rule isscheduled to finalize earlier. We agreethat waiving data submissionrequirements for low case loads isreasonable and we will consider thiscomment <strong>with</strong> all others whendeveloping our proposals.<strong>Comment</strong>: One commenter believedthat, since the full complement ofmeasures are not applicable to all ASCs,G-codes that ASCs can submit onceduring a performance period thatindicates the measure is not applicableto the ASC should be developed,thereby exempting the ASC from datasubmission for the measure. Onecommenter believed that it is unclearhow a facility should report <strong>with</strong>respect to a measure that may not beapplicable to the services furnished bythat type of ASC. One commentersought clarification that ASCs wouldnot need to report on all measures, butonly those measures that applied.Response: We thank the commentersfor their views regarding methods toreport when an ASC does not have casesfor a quality measure. We understandthat a measure may not be applicable tothe services furnished by a type of ASC.For the reporting of quality data usingQDCs, as stated in Section XIV.K.1.a.5,ASCs would add the appropriate QDCsfor measure numerators anddenominators on Medicare Part B claimforms to submit quality data. We intendto provide education and outreach ondata submission for the reportingprogram, and we will publish detailsabout the QDCs and whether they willneed to be submitted for numerators anddenominators in the ASC QualityReporting Program SpecificationsManual. We anticipate releasing thismanual in second quarter 2012.<strong>Comment</strong>: Some commenters believedthat what CMS proposed as constitutingVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00396 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2‘‘successful’’ reporting, that is completesubmission, was vague.Response: We are finalizing ourproposals to assess the completeness ofreporting by comparing the number ofclaims meeting measure specificationsthat contain the appropriate QDCs <strong>with</strong>the number of claims that would meetmeasure specifications, but did not havethe appropriate QDCs on the submittedclaims. We will be using publiccomments we received that addressedthis issue in the development of ourfuture proposals. As stated above, weintend to propose a specific definitionof reporting completeness in the FY2013 IPPS/LTCH PPS proposed rule inorder to provide opportunity for noticeand comment prior to October 2012services.After consideration of the publiccomments received, we are finalizingour proposals <strong>with</strong> some modification.As proposed, we are finalizing ourproposal that, to be eligible for the fullCY 2014 ASC annual payment update,an ASC must submit complete data onindividual quality measures through aclaims-based reporting mechanism bysubmitting the appropriate QDCs on theASC’s Medicare claims. Further, asproposed, we are finalizing our proposalthat data completeness for claims-basedmeasures be determined by comparingthe number of claims meeting measurespecifications that contain theappropriate QDCs <strong>with</strong> the number ofclaims that would meet measurespecifications, but did not have theappropriate QDCs on the submittedclaim. <strong>Final</strong>ly, we are deferring the datacollection time period for the CY 2014payment determination to a later date,beginning data collection <strong>with</strong> servicesbeginning October 1, 2012, rather thanJanuary 1, 2012, while maintaining theend date of December 31, 2012.We also are finalizing our proposal toconsider an ASC as participating in theASC Quality Reporting Program for CY2014 payment determination if the ASCincludes QDCs specified for the programon their CY 2012 claims relating tofinalized measures.b. Data Submission Deadlines for theSurgical Site Infection Rate MeasureAs discussed above, we proposed toadopt a HAI measure, Surgical SiteInfection Rate, for the CY 2014 paymentdetermination. We proposed to use thedata submission and reporting standardprocedures that have been set forth bythe CDC for NHSN participation ingeneral and for submission of thismeasure to the NHSN. We referredreaders to the CDC’s NHSN Web site(http://www.cdc.gov/nhsn) for detaileddata submission and reporting

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74517jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2procedures. Our proposal seeks toreduce ASC burden by aligning CMSdata submission and reportingprocedures <strong>with</strong> NHSN procedurescurrently used by healthcare providersand suppliers. The submissiontimeframes for the CY 2014 paymentdetermination that we proposed to usefor the proposed Surgical Site InfectionRate measure were shown in the CY2012 OPPS/ASC proposed rule (76 FR42349). We stated that ASCs mustsubmit their quarterly data to the NHSNfor ASC Quality Data Reportingpurposes <strong>with</strong>in the date intervalsshown in the table set out in theproposed rule (76 FR 43249) (anyupdates to this schedule would beposted on the QualityNet and CMS Websites).In the proposed rule, we requestedpublic comments on these proposals.We did not receive any commentsspecifically on the proposed timeframes.However, as discussed above, we are notfinalizing this measure at this time;therefore, we are not finalizing this timetable for data collection.XV. Changes to Whole Hospital andRural Provider Exceptions to thePhysician Self-Referral Prohibition:Exception for Expansion of FacilityCapacity; and Changes to ProviderAgreement Regulations Relating toPatient Notification RequirementsA. BackgroundSection 1877 of the Act, also knownas the physician self-referral law: (1)Prohibits a physician from makingreferrals for certain ‘‘designated healthservices’’ (DHS) payable by Medicare toan entity <strong>with</strong> which the physician (oran immediate family member) has afinancial relationship (ownership orcompensation), unless an exceptionapplies; and (2) prohibits the entity fromfiling claims <strong>with</strong> Medicare (or billinganother individual, entity, or third partypayer) for those DHS furnished as aresult of a prohibited referral. The Actestablishes a number of specificexceptions and grants the Secretary theauthority to create regulatory exceptionsthat pose no risk of program or patientabuse.Section 1877(d) of the Act sets forthadditional exceptions related toownership or investment interests heldby a physician (or an immediate familymember of a physician) in an entity thatfurnishes DHS. Section 1877(d)(2) of theAct provides an exception forownership or investment interests inrural providers. In order for an entity toqualify for the exception, the DHS mustbe furnished in a rural area (as definedin section 1886(d)(2) of the Act) andsubstantially all of the DHS furnishedby the entity must be furnished toindividuals residing in a rural area.Section 1877(d)(3) of the Act providesan exception, known as the ‘‘wholehospital’’ exception, for ownership orinvestment interests in a hospitallocated outside of Puerto Rico, providedthat the referring physician isauthorized to perform services at thehospital and the ownership orinvestment interest is in the hospitalitself (and not merely in a subdivisionof the hospital).B. Changes Made by the Affordable CareAct1. Provisions Relating to Exceptions toOwnership and Investment Prohibition(Section 6001(a) of the Affordable CareAct)Section 6001(a) of the Affordable CareAct amended the whole hospital andrural provider exceptions to imposeadditional restrictions on physicianownership or investment in hospitals.The statute defines a ‘‘physician owneror investor’’ in a hospital as a physicianor immediate family member of aphysician who has a direct or indirectownership or investment interest in ahospital. We will refer to hospitals <strong>with</strong>such ‘‘physician owners or investors’’ as‘‘physician-owned hospitals.’’We addressed section 6001(a) of theAffordable Care Act in the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 71800). In 42 CFR411.362, we implemented most of therequirements of section 6001(a) of theAffordable Care Act, including patientsafety requirements. In sections XV.B.2.and C. of the CY 2012 OPPS/ASCproposed rule (76 FR 42350) and thisfinal rule <strong>with</strong> comment period, weaddress the process for a hospital torequest an exception to the prohibitionon expansion of facility capacity undersection 6001(a)(3) of the Affordable CareAct. In section XV.D. of the proposedrule and this final rule <strong>with</strong> commentperiod, we address related patientnotification requirements in theprovider agreement regulations.2. Provisions of Section 6001(a)(3) of theAffordable Care ActThe amended whole hospital andrural provider exceptions provide that ahospital may not increase the number ofoperating rooms, procedure rooms, andbeds beyond that for which the hospitalwas licensed on March 23, 2010 (or, inthe case of a hospital that did not havea provider agreement in effect as of thisdate, but did have a provider agreementin effect on December 31, 2010, the dateof effect of such agreement). SectionVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00397 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR26001(a)(3) of the Affordable Care Actadded new section 1877(i)(3)(A)(i) of theAct to set forth that the Secretary shallestablish and implement an exceptionprocess to the prohibition on expansionof facility capacity. Referrals areprohibited if made by physician ownersor investors after facility expansion andprior to the Secretary granting anexception. Exceptions for expandingfacility capacity will protect only thosereferrals made after the exception isgranted. In the CY 2012 OPPS/ASCproposed rule (76 FR 42350), we setforth proposed regulations for thisprocess at § 411.362(c) and relateddefinitions at § 411.362(a).The proposed regulations at new§ 411.362(c) set forth the process for ahospital to request an exception.Proposed new § 411.362(c)(2) outlinedthe requirements for an applicablehospital request and § 411.362(c)(3)outlined the requirements for a highMedicaid facility request. These termsare defined at sections 1877(i)(3)(E) and1877(i)(3)(F) of the Act. The statute isclear that an applicable hospital mayapply for an exception up to once every2 years. Using our rulemaking authorityunder sections 1871 and 1877(i)(3)(A)(i)of the Act, we proposed to interpret thestatute to impose the same 2-yearfrequency limit on high Medicaidfacilities (as discussed in sectionXV.C.2. of this final rule <strong>with</strong> commentperiod).We proposed to set forth the elementsrequired for a complete request for anexception under proposed new§ 411.362(c)(4). The opportunity forcommunity input (required by section1877(i)(3)(A)(ii) of the Act) and timingof a complete request were described inproposed new § 411.362(c)(5). Underproposed new § 411.362(c)(5), weproposed to provide an opportunity forindividuals and entities in thecommunity in which the hospital islocated to provide input <strong>with</strong> respect tothe hospital’s request for an exception.For purposes of the proposed rule andthis final rule <strong>with</strong> comment period,when the statute refers to an‘‘application,’’ we use the term‘‘request.’’Because section 1877(i)(3)(D) of theAct provides that any increase in thenumber of operating rooms, procedurerooms, and beds for which a hospital islicensed pursuant to being granted anexception may occur only in facilitieson the hospital’s main campus, weproposed a definition of the ‘‘maincampus of the hospital’’ at § 411.362(a),as discussed below. In addition, weproposed a definition of the ‘‘baselinenumber of operating rooms, procedure

74518 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2rooms, and beds’’ for purposes ofsection 1877(i)(3)(C)(ii) of the Act.Section 1877(i)(3)(H) of the Actprovides that the Secretary shall publishthe final decision <strong>with</strong> respect to anapplication in the Federal Register nolater than 60 days after receiving acomplete application. Under sectionXV.C.4. of the proposed rule and thisfinal rule <strong>with</strong> comment period, wediscuss our proposal for publishingdecisions in the Federal Register, aswell as on the CMS Web site.Under section 1877(i)(3)(A) of the Act,the Secretary must promulgateregulations by January 1, 2012,concerning the process for a hospital toapply for an exception, and implementthis process on February 1, 2012. In theproposed rule, we proposed an effectivedate of January 1, 2012. Below, we setout our proposals and our final policiesrelated to the exception process ingreater detail.C. Process for Requesting an Exceptionto the Prohibition on Expansion ofFacility CapacityIn order to conform our regulations tothe amendments made to the ruralprovider and whole hospital exceptionsby section 6001(a)(3) of the AffordableCare Act, in the CY 2012 OPPS/ASCproposed rule (76 FR 42350), weproposed to add two definitions in§ 411.362(a) and a new § 411.362(c) toestablish the process by which anapplicable hospital or high Medicaidfacility may request an exception to theprohibition on expansion of facilitycapacity. We proposed to define theterms ‘‘baseline number of operatingrooms, procedure rooms, and beds’’ and‘‘main campus of the hospital.’’ Theprocess we proposed set forth therelevant data sources and the requiredelements of a complete request for anexception. Below we address commentswe received on this proposal.1. General <strong>Comment</strong>s<strong>Comment</strong>: <strong>Comment</strong>ers weregenerally supportive of CMS’ overallapproach to the exception process. Onecommenter contended that the proposedrule honors the purpose and intent ofthe Affordable Care Act’s elimination ofthe whole hospital exception whilepermitting reasonable grandfatheringpolicies to protect self-referrals forexisting physician-owned hospitals.Response: We appreciate thecommenters’ support.<strong>Comment</strong>: In the proposed rule (76 FR42350 and 42351), CMS proposed thatdata from the CMS Healthcare CostReport Information System (HCRIS) beused to determine whether a hospitalsatisfies the inpatient Medicaidadmissions, bed capacity, and bedoccupancy criteria for applicablehospitals or the inpatient Medicaidadmissions criterion for high Medicaidfacilities. CMS currently considersHCRIS to contain a sufficient amount ofdata for a particular fiscal year if HCRIScontains data from at least 6,100hospitals for that fiscal year. Therefore,CMS proposed that HCRIS must containdata from at least 6,100 hospitals for aparticular year in order for that year’sdata to be used under the exceptionprocess. CMS proposed that if HCRISdoes not contain sufficient data for thatyear, data from the most recent year(s)that satisfy the threshold should beused.Some commenters supported the CMSproposal to require hospitals to use datamaintained <strong>with</strong>in HCRIS todemonstrate that they satisfy therelevant eligibility criteria. Thesecommenters asserted that use ofstandardized data sets will minimizeinconsistent application of theeligibility criteria.Response: We appreciate thecommenters’ support.<strong>Comment</strong>: One commenterrecommended that CMS consider usingthe Dartmouth Atlas ‘‘Hospital ServiceAreas’’ and the 24-kilometer radiusaround a hospital in determiningwhether a hospital has a legitimate needto increase its number of operatingrooms, procedure rooms, and bedsunder the exception process for bothapplicable hospitals and high Medicaidfacilities.Response: The commenter did notprovide details regarding how thesuggested geographic areas should beconsidered in the exception process. Ifthe commenter is recommending thatwe use these areas in lieu of the county,State, or national data referred to insections 1877(i)(3)(E) and 1877(i)(3)(F)of the Act, the recommendation iscontrary to these statutory directives,and, therefore, we decline to adopt it.2. Applicable HospitalBelow we separately discuss each ofthe statutory criteria that a hospitalmust satisfy to qualify as an ‘‘applicablehospital.’’ In the CY 2012 OPPS/ASCproposed rule (76 FR 42350), weproposed the processes by which ahospital can determine whether itsatisfies each criterion. The proposeddata requirements for each criterion arefurther discussed in each section below.We stated in the proposed rule thatwe will post the average percent of totalinpatient Medicaid admissions percounty, the average bed capacity perState, the national average bed capacity,and the average bed occupancy per StateVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00398 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2on the CMS Web site at: http://www.cms.gov/physicianselfreferral/85_physician_owned_hospitals.asp. Westated that hospitals could access thesedata to assess whether they satisfy therespective criteria to qualify as anapplicable hospital. We also stated thatwe would make a reasonable effort toensure that the data contained in HCRISare correct and complete at the time ofdisclosure. We invited public commenton proposing and justifying alternativedata sources other than HCRIS thatcould result in more accuratedeterminations as to whether a hospitalsatisfies the relevant criteria. Wereceived the following commentregarding the requirement that hospitalsmust use data maintained <strong>with</strong>in HCRISto demonstrate satisfaction of theeligibility criteria.<strong>Comment</strong>: One commenterrecommended that CMS permitapplicable hospitals to use State agencymaintaineddata to demonstrate thatthey meet the eligibility criteriaconcerning inpatient Medicaidadmissions, bed capacity, and bedoccupancy. The commenter assertedthat State agency-maintained data are asaccurate as data maintained <strong>with</strong>inHCRIS and are often available morequickly.Response: We are not persuaded toadopt the commenter’srecommendation. We will requirehospitals to use data maintained <strong>with</strong>inHCRIS. We believe this will result in theuse of uniform and consistent data,which will minimize inconsistentapplication of the eligibility criteria.a. Percentage Increase in PopulationSection 1877(i)(3)(E)(i) of the Actprovides that an applicable hospitalmust be located in a county in whichthe percentage increase in thepopulation during the most recent 5-year period (as of the application date)is at least 150 percent of the percentageincrease in the population growth of theState in which the hospital is locatedduring that period, as estimated by theBureau of the Census.To determine the percentage increasein population in the county and State inwhich the hospital is located, weproposed at new § 411.362(c)(2)(i) thatthe hospital use population estimatesprovided by the Bureau of the Census.If the hospital is located in an areareferred to by the Bureau of the Censusas a county equivalent area, such as anindependent city, borough, or censusarea, we proposed that the hospitalshould use the Bureau of the Censusestimates for the county equivalent areain which it is located. For the remainderof this subsection, ‘‘county’’ refers to

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74519jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2both a county and a county equivalentarea.We acknowledged that the Bureau ofthe Census may not provide county andState population size estimates that arecurrent as of the date that a hospitalsubmits its request for an exception. Weproposed that a hospital should useonly the most recent estimates availableto perform the necessary calculations.For example, if a hospital submits arequest for an exception in 2012, but themost recent year for which the Bureauof the Census has estimates is 2010, thehospital should perform the necessarycalculations using estimates for the mostrecent 5-year period, which in thisexample, would include years 2006–2010.We also proposed that a hospital usecounty and State population estimatesfor the same years. For example, if ahospital submits a request for anexception in 2012 and the most recentyear for which the Bureau of the Censushas State and county populationestimates is 2011 and 2010,respectively, the hospital shouldperform the necessary calculationsusing estimates for the most recent 5-year period for which the Bureau of theCensus has both State and countypopulation estimates, which in thisexample, would include years 2006–2010. We proposed to review a requestbased on the population estimatesavailable as of the date that a hospitalsubmits its request even if the Bureau ofthe Census updates its estimates afterthe hospital submits its request andprior to our decision. We received thefollowing comment regarding thepopulation growth criterion forapplicable hospitals.<strong>Comment</strong>: Two commenterssupported the proposal to requirehospitals to use estimates from theBureau of the Census for the populationgrowth criterion. The commentersasserted that use of common data setswill minimize inconsistent applicationof the eligibility criteria.Response: We appreciate thecommenters’ support for our proposal.After consideration of the publiccomment we received, we are adoptingas final our proposed new§ 411.362(c)(2)(i), <strong>with</strong>out modification.b. Inpatient AdmissionsSection 1877(i)(3)(E)(ii) of the Actprovides that an applicable hospitalmeans a hospital that has an annualpercent of total inpatient admissionsunder Medicaid that is equal to orgreater than the average percent <strong>with</strong>respect to such admissions for allhospitals located in the county in whichthe hospital is located. We proposed atnew § 411.362(c)(2)(ii) to requirehospitals to calculate inpatientadmissions using filed hospital costreport discharge data. We proposed that,in calculating the hospital’s annualpercent of total Medicaid inpatientadmissions, the hospital should dividethe number of discharges for the yearthat are paid for under Medicaid by thetotal number of discharges for the yearpaid for by any governmental or privatepayor. We invited public comment onother data sources that could be used toprovide an accurate estimate of theannual percent of total inpatientMedicaid admissions for the applicablehospital and for all hospitals in thesame county.We did not receive any publiccomments on our proposal. Therefore,we are finalizing our proposal, <strong>with</strong>outmodification, to require hospitals to usehospital cost report discharge data toestimate the annual percentages of totalinpatient Medicaid admissions.The statute does not specify thenumber of years for which the hospital’sannual percent of total inpatientadmissions under Medicaid must beequal to or greater than the averagepercent <strong>with</strong> respect to such admissionsfor all hospitals located in the county inwhich the hospital is located. Weproposed at new § 411.362(c)(2)(ii) thata hospital must satisfy this criterion foreach of the 3 most recent fiscal years forwhich data are available as of the datethe hospital submits a request. Weinvited public comment on whether 3years of data are sufficient to indicate alegitimate need by the hospital toincrease its number of operating rooms,procedure rooms, and beds and, if not,how many years of data we shouldconsider in evaluating a request for anexception.We proposed at new§ 411.362(c)(2)(ii) that the hospitalwould estimate its annual percentage oftotal inpatient admissions underMedicaid. The hospital would referenceits own filed cost reports for the 3 mostrecent fiscal years for which data areavailable. We proposed that we wouldreview a request based on the dataavailable as of the date the hospitalsubmits its request. We stated that weplan to issue guidance to further addressthe process for a hospital to estimate itsannual percentage of total inpatientadmissions under Medicaid. Theguidance will also explain how we willdetermine and provide the averagepercentages of inpatient admissionsunder Medicaid for each county.<strong>Comment</strong>: One commenter contendedthat CMS exceeded its statutoryauthority in proposing that applicablehospitals must satisfy the eligibilityVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00399 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2criteria concerning inpatient Medicaidadmissions, bed capacity, and bedoccupancy for each of the 3 most recentfiscal years. The commenter assertedthat the proposal was not supported bythe statutory text, which imposes sucha requirement for high Medicaidfacilities, but not for applicablehospitals. The commenter noted that theCongress could have required applicablehospitals to satisfy these criteria foreach of the 3 most recent years, but didnot.Response: We disagree <strong>with</strong> thecommenter that we exceeded ourstatutory authority in proposing the 3-year timeframe. The fact that Congressdid not specify a timeframe for meetingthis criterion does not preclude us fromimposing a timeframe using ourrulemaking authority under sections1871 and 1877(i)(3)(A)(i) of the Act. Webelieve a general timeframe helpsidentify the need for an exception andensure consistent application of theprohibition.<strong>Comment</strong>: One commenter assertedthat it was unreasonable to require 3years of data to demonstrate a legitimateneed by a hospital to expand itscapacity. The commenter contendedthat such a requirement would make itvirtually impossible for a hospital toqualify as an applicable hospital andwould unreasonably delay a hospital’sability to qualify as an ‘‘applicablehospital.’’ The commenterrecommended that CMS allowapplicable hospitals to satisfy theinpatient admission, bed capacity, andbed occupancy criteria using data fromany 1 of the last 3 most recent fiscalyears prior to a facility capacityexpansion request, which would allowhospitals to apply for an exception tothe capacity restriction much sooner.Another commenter expressedconcern that 3 years of data on hospitaladmissions, bed capacity, and bedoccupancy is too long to identify trendsin the demand for health services,especially in high-growth markets <strong>with</strong>rapidly changing populations, and,therefore, would be incapable ofidentifying legitimate expansion needsin some areas of the country. Thecommenter suggested that data beweighted to identify health care demandtrends in States and counties <strong>with</strong>rapidly changing populations.Response: We are not persuaded toadopt the first commenter’s proposal.We believe that allowing hospitals touse data from any 1 of the last 3 mostrecent years may result in inconsistentapplication of the eligibility criteria andthe approval of an expansion requestbased on anomalous data. However, wehave reconsidered our proposal to

74520 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2require hospitals to satisfy eligibilitycriteria for each of the 3 most recentfiscal years for which data are available.We are adopting a modification of thisproposal in this final rule <strong>with</strong> commentperiod. Under this modification, ahospital’s eligibility for an exception tothe prohibition against facilityexpansion can be established using themost recent year of data availableregarding each of the criteria related toinpatient admission data, bed capacity,and bed occupancy rates. We believethat requiring 1 year of data on each ofthese criteria, together <strong>with</strong> therequirement to satisfy a 5-yearpopulation growth criterion, issufficient to identify those hospitals<strong>with</strong> a legitimate need to expandcapacity <strong>with</strong>out risking the approval ofexception requests based on aberrantdata. In addition, we believe thatrequiring applicable hospitals toperform calculations and submitdocumentation for 1 year of data, asopposed to 3 years of data, will decreasethe administrative burden on applicablehospitals.With respect to the commentregarding weighted data, the commenterdid not set forth a specificrecommendation demonstrating how thedata can be weighted. Without furtherdetail, we are unable to adopt thecommenter’s suggestion. Moreover, webelieve that our revised policy mayaddress some of the commenter’sconcerns.We are modifying proposed new§ 411.362(c)(2)(ii), (iv), and (v) toprovide that hospitals establishcompliance <strong>with</strong> the inpatient Medicaidadmission, average bed capacity, andaverage bed occupancy criteria forapplicable hospitals using the mostrecent available fiscal year data. Ahospital may access these data on theCMS Web site at: http://www.cms.gov/physicianselfreferral/85_physician_owned_hospitals.asp. Ifthe hospital filed its own cost report forthe respective year and satisfies thecriteria to qualify as an applicablehospital, the hospital may submit arequest starting on February 1, 2012.<strong>Comment</strong>: In the proposed rule (76 FR42351 and 42352), CMS proposed thatestimates of inpatient Medicaidadmissions would be based on filedhospital cost report discharge data. Incompleting the hospital cost report,hospitals report the number ofdischarges for whom Medicaid is theprimary payer. One commenterrecommended that, to estimate theannual percent of total inpatientMedicaid admissions, Medicaid shouldbe considered as a whole and notbroken down by primary and secondarypayers.Response: We do not agree <strong>with</strong> thecommenter. The statute does not requireMedicaid data to be considered as awhole. In addition, hospitals do notsubmit discharge data in the mannerrecommended by the commenter, andtherefore such data are not readilyavailable for use in the exceptionprocess.After consideration of the publiccomments we received, we arefinalizing at § 411.362(c)(2)(ii) theMedicaid inpatient admission criterionfor applicable hospitals. As noted above,the final regulatory language has beenmodified to permit hospitals to satisfythis criterion using data for the mostrecent fiscal year for which data areavailable.c. NondiscriminationSection 1877(i)(3)(E)(iii) of the Actprovides that an applicable hospitaldoes not discriminate againstbeneficiaries of Federal health careprograms and does not permitphysicians practicing at the hospital todiscriminate against such beneficiaries.We proposed to incorporate thisrequirement at new § 411.362(c)(2)(iii)of the regulations.We did not receive any publiccomments regarding thenondiscrimination criterion. Therefore,we are adopting, as final, theincorporation of the requirement at new§ 411.362(c)(2)(iii) <strong>with</strong>outmodification.d. Bed CapacitySection 1877(i)(3)(E)(iv) of the Actprovides that an applicable hospitalmeans a hospital that is located in aState in which the average bed capacityin the State is less than the nationalaverage bed capacity. The statute doesnot specify a time period over which aState’s average bed capacity must be lessthan the national average bed capacity.We proposed at new § 411.362(c)(2)(iv)that the State average bed capacity mustbe less than the national average bedcapacity for each of the 3 most recentfiscal years for which data are availableas of the date that a hospital submits itsrequest. We invited public comment onwhether 3 years of data are sufficient toindicate a legitimate need by thehospital to increase its number ofoperating rooms, procedure rooms, andbeds and, if not, how many years of datawe should consider in evaluating anyrequest for an exception. We note that,for the reasons stated in sectionXV.C.1.b. of this final rule <strong>with</strong>comment period, we are modifying theproposed regulatory language to requireVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00400 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2applicable hospitals to satisfy the bedcapacity criterion during only the mostrecent fiscal year for which data areavailable.Under our proposed process, wewould use filed hospital cost reportingdata to determine State and nationalaverage bed capacities. We stated thatwe plan to issue guidance explaininghow we will determine and provide theaverage bed capacities. We proposedthat we would review a request basedon the data available as of the date ahospital submits its request. We discussbelow the significant points raised bycommenters to our proposal.<strong>Comment</strong>: One commenterrecommended that existing physicianownedhospitals should be permitted toexpand in counties in which thehospital bed capacity per 1,000population is below the nationalaverage.Response: Section 1877(i)(3)(E)(iv) ofthe Act provides that an applicablehospital must be located in a State thathas an average bed capacity that is lessthan the national average bed capacity.We are obligated to follow the statutorydirective. Therefore, we are notadopting the commenter’srecommendation to consider bedcapacity at the county level.<strong>Comment</strong>: One commenter assertedthat the proposed criteria appearsufficiently flexible to allow hospitalslocated in areas <strong>with</strong> a low bed capacityand high bed occupancy to be grantedan exception from the expansionrequirements.Response: We appreciate thecommenter’s support for the proposedeligibility criteria for applicablehospitals. We believe that our modifiedexception process closely mirrors thestatute and will provide sufficientflexibility to allow hospitals in areas<strong>with</strong> a low bed capacity and high bedoccupancy to be granted an exception.After consideration of the publiccomments we received, we are adoptingas final our proposed new§ 411.362(c)(2)(iv) <strong>with</strong> the modificationthat the State average bed capacity mustbe less than the national averagecapacity for the most recent fiscal yearfor which data are available as of thedate that a hospital submits its request,as discussed above in previousresponses to comments.e. Bed OccupancySection 1877(i)(3)(E)(v) of the Actprovides that an applicable hospitalmeans a hospital that has an average bedoccupancy rate that is greater than theaverage bed occupancy rate in the Statein which the hospital is located. Thestatute does not specify the time period

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74521jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2over which the hospital’s average bedoccupancy rate must be greater than theState average bed occupancy rate. Weproposed at new § 411.362(c)(2)(v) thatthe hospital’s bed occupancy rate mustbe greater than the State average bedoccupancy rate for each of the 3 mostrecent fiscal years for which data areavailable as of the date that a hospitalsubmits its request. We invited publiccomment on whether 3 years of data aresufficient to indicate a legitimate needby the hospital to increase the numberof its operating rooms, procedure rooms,and beds and, if not, how many yearsof data we should consider in evaluatingany request for an exception. We notethat, for the reasons stated in sectionXV.C.1.b. this final rule <strong>with</strong> commentperiod, we have modified this proposaland are requiring applicable hospitals tosatisfy the bed occupancy criterionduring only the most recent fiscal yearfor which data are available.We proposed at new § 411.362(c)(2)(v)that the hospital use filed hospital costreporting data to calculate its ownaverage bed occupancy rate. We statedthat we plan to issue guidanceexplaining how the hospital cancalculate its bed occupancy rate. Theguidance would also explain how wewill determine and provide the Statebed occupancy rates. We proposed thatwe would review a request based on thedata available as of the date that thehospital submits its request.Except for the comments regardingthe need to use 3 years of data toestablish that the bed occupancycriterion is satisfied, we did not receiveany public comments specific to thiscriterion. Therefore, as discussed insection XV.C.1.b. of this final rule <strong>with</strong>comment period, we are finalizing at§ 411.362(c)(2)(v) the requirement thatan applicable hospital must have anaverage bed occupancy rate that isgreater than the average bed occupancyrate in the State in which the hospitalis located for the most recent fiscal yearfor which data are available as of thedate that a hospital submits its request.3. High Medicaid FacilityBelow we separately discuss each ofthe statutory criteria that a hospitalmust satisfy to qualify as a ‘‘highMedicaid facility.’’ In the CY 2012OPPS/ASC proposed rule (76 FR 42351),we proposed the processes by which ahospital can determine whether itsatisfies each criterion. The proposeddata requirements for each criterion arefurther discussed in the sections below.a. Number of Hospitals in CountySection 1877(i)(3)(F)(i) of the Actprovides that a high Medicaid facilitymust be a hospital that is not the solehospital in a county. We proposed toincorporate this requirement into theregulations at new § 411.362(c)(3)(i). Wereceived the following commentregarding our proposal.<strong>Comment</strong>: One commenter stated thatthe proposed rule will not allowexpansion or construction of aphysician-owned hospital that is thesole hospital in a county or where noother hospitals exist and expressedconcern that this will reduce access toquality care.Response: Section 1877(i)(3)(F)(i) ofthe Act provides that a high Medicaidfacility cannot be the sole hospital in acounty. We are obligated to follow thisstatutory directive. Also, we do notbelieve that the requirement reducesaccess to quality care. Therefore, we arenot making any changes in response tothe commenter’s concern.After consideration of the publiccomment we received, we are adoptingas final our proposed policy under new§ 411.362(c)(3)(i) <strong>with</strong>out modification.b. Inpatient AdmissionsSection 1877(i)(3)(F)(ii) of the Actprovides that a high Medicaid facilitymust be a hospital that, <strong>with</strong> respect toeach of the 3 most recent years forwhich data are available, has an annualpercent of total inpatient admissionsunder Medicaid that is estimated to begreater than such percent <strong>with</strong> respectto such admissions for any otherhospital located in the county in whichthe hospital is located. We proposed toincorporate this requirement at new§ 411.362(c)(3)(ii) of the regulations.We proposed at new§ 411.362(c)(3)(ii) that the hospitalestimate its annual percentages of totalinpatient admissions under Medicaidfor each of the 3 most recent fiscal yearsfor which data are available. We alsoproposed that the hospital estimate theannual percentage of such admissionsfor all other hospitals located in thecounty in which the hospital is locatedfor each of the 3 most recent fiscal yearsfor which data are available. Weproposed that we would review arequest based on the data available as ofthe date that the hospital submits itsrequest.We proposed to require the applicanthospital to use filed hospital costreporting discharge data as a proxy forinpatient admissions under Medicaid.We stated that we would post the datanecessary for a hospital to calculate theannual percentage of total inpatientadmissions under Medicaid for all otherhospitals located in the county in whichthe hospital is located on the CMS Website at: http://www.cms.gov/VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00401 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2physicianselfreferral/85_physician_owned_hospitals.asp. Wealso stated that we plan to issueguidance that further describes theprocess for hospitals to estimateinpatient admissions under Medicaid.We address below the specificcomments received in response to ourproposal.<strong>Comment</strong>: In the proposed rule (76 FR42351 and 42352), CMS proposed thatestimates of inpatient Medicaidadmissions would be based on filedhospital cost report discharge data. Incompleting the hospital cost report,hospitals report the number ofdischarges for whom Medicaid is theprimary payer. One commenterrecommended that, to estimate theannual percent of total inpatientMedicaid admissions, Medicaid shouldbe considered as a whole and notbroken down by primary and secondarypayers.Response: We do not agree <strong>with</strong> thecommenter. The statute does not requireMedicaid data to be considered as awhole. In addition, hospitals do notsubmit discharge data in the mannerrecommended by the commenter, andtherefore such data is not readilyavailable for use in the exceptionprocess.<strong>Comment</strong>: One commenter stated thatthe proposed rule did not specifywhether the average is weighted by totaladmissions.Response: We believe thecommenter’s statement refers to theinpatient Medicaid admissions criteriafor high Medicaid facilities. We areunsure of the exact position taken by thecommenter as the commenter did notexplain how the average could beweighted by total admissions. In theproposed rule (76 FR 42351), we statedthat we would issue guidance thatfurther describes the process forhospitals to estimate inpatientadmissions under Medicaid.After consideration of the publiccomment we received, we are finalizingour proposed policy at new§ 411.362(c)(3)(ii) <strong>with</strong>out modification.c. NondiscriminationSection 1877(i)(3)(F)(iii) of the Actprovides that a high Medicaid facilitydoes not discriminate againstbeneficiaries of Federal health careprograms and does not permitphysicians practicing at the hospital todiscriminate against such beneficiaries.We proposed to incorporate thisrequirement at new § 411.362(c)(3)(iii)of the regulations.We did not receive any publiccomments regarding thenondiscrimination criterion. Therefore,

74522 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2we are finalizing our proposal at new§ 411.362(c)(3)(iii) <strong>with</strong>outmodification.4. Procedure for Submitting a RequestIn the proposed rule, we stated thatwe are not creating an application formthat a hospital must complete to applyfor an exception to the prohibition onexpansion of facility capacity. Rather,we proposed that a hospital submit toCMS a request that includes theinformation and documentation setforth in proposed new§ 411.362(c)(4)(ii).We proposed that each request mustinclude: (i) The name and address,National Provider Identificationnumber(s) (NPI), Tax IdentificationNumber(s) (TIN), and CMS CertificationNumber(s) (CCN) of the hospital; (ii) thecounty in which the hospital is located;and (iii) the name, title, address, anddaytime telephone number of a contactperson who will be available to discussthe request <strong>with</strong> CMS on behalf of thehospital. Each request must include aclear statement as to whether thehospital is requesting an exception as anapplicable hospital or a high Medicaidfacility. We proposed that each requestsubmitted by a hospital must include aclear explanation of how it satisfies thecriteria using the information discussedin sections XV.C.1. or 2. of the proposedrule. This includes performing,recording, and submitting allcalculations necessary to submit acomplete request. The hospital’s requestmust state that it does not discriminateagainst beneficiaries of Federal healthcare programs and does not permitphysicians practicing at the hospital todiscriminate against such beneficiaries.<strong>Final</strong>ly, we encouraged hospitals toclearly label all documentationsubmitted <strong>with</strong> a request and indicatethe criteria for which the documentationprovides supporting information.We proposed at new§ 411.362(c)(4)(ii)(E) that each requestmust include documentation supportingthe hospital’s calculation of thehospital’s baseline number of operatingrooms, procedure rooms, and beds asdefined at section 1877(i)(3)(C)(iii) ofthe Act; the hospital’s number ofoperating rooms, procedure rooms, andbeds for which the hospital is licensedas of the date that the hospital submitsits request; and the additional numberof operating rooms, procedure rooms,and beds by which the hospital requeststo expand.We proposed at new§ 411.362(c)(4)(iii) that each requestmust include a certification signed byan authorized representative of thehospital attesting that all of theinformation provided is true and correctto the best of his or her knowledge andbelief.We proposed at new § 411.362(c)(4)(i)that a hospital must either mail anoriginal and one copy of its request toCMS or submit its requestelectronically. If a hospital submits itsrequest electronically, the hospital mustalso submit an original, hard copy of therequired certification.We received the following commentregarding the process for submitting arequest.<strong>Comment</strong>: One commenter urgedCMS to work <strong>with</strong> hospitals that wouldbenefit from expanded capacity and tomodify the application process, asnecessary, in response to difficulties inmeeting its requirements. Thecommenter asserted the proposedexception process requires complexcalculations and substantialdocumentation. Another commenterhad no objections to the proposedexception process, while a thirdcommenter would not support theelimination of any of the steps in theprocess.Response: The requireddocumentation, set forth in proposednew § 411.362(c)(4), includes astatement of whether the hospital isseeking an exception as an applicablehospital or high Medicaid facility, anexplanation of how the hospital satisfiesthe criteria, the submission of thecalculations used to support theapplication, and a certificationstatement that the hospital does notdiscriminate against beneficiaries ofFederal health programs. We believeeach of these requirements is necessaryto verify compliance <strong>with</strong> the statutorycriteria for an exception to the capacityrestrictions. We also note thatperforming these calculations isnecessary to demonstrate compliance<strong>with</strong> the statutory criteria. In addition,we carefully considered the burdenassociated <strong>with</strong> the calculations anddocumentation. As stated above, wehave reduced the burden on hospitalsapplying for an exception by requiringcertain data from only the most recentfiscal year for which data are available.We do not believe any other changes tothe application process are needed atthis time, although we may considerchanges after we have more experience<strong>with</strong> the process.After consideration of the publiccomments we received, we arefinalizing the proposed procedure forsubmitting a request under new§ 411.362(c)(4) <strong>with</strong>out modification.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00402 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR25. Community InputSection 1877(i)(3)(A)(ii) of the Actprovides that individuals and entities inthe community in which the applicablehospital is located shall have anopportunity to provide input on theapplicable hospital’s request for anexception to the prohibition againstfacility expansion. In the proposed rule(76 FR 42352), we proposed toincorporate this provision in proposednew § 411.362(c)(5) of the regulations.We proposed that the community inputmust take the form of written comments.In addition, using our rulemakingauthority under sections 1871 and1877(i)(3)(A)(i) of the Act, we proposedthat individuals and entities in thecommunity in which a high Medicaidfacility is located have the sameopportunity to submit writtencomments.We proposed at new § 411.362(c)(5)that a hospital must disclose on anypublic Web site for the hospital that itis requesting an exception. The noticeshould be accessible to the public andshould remain posted from the time arequest is submitted to CMS until adecision is finalized by CMS. Once CMShas received the statements,certifications, and documentationrequired for a hospital’s request, westated that CMS will report that thehospital is requesting an exception onthe CMS Hospital Listserv and will postthe hospital’s request for an exceptionon the CMS Web site. For specificinformation on how to subscribe to theCMS Hospital Listserv, we refer readersto the CMS Web site at http://www.cms.gov/MLNProducts/downloads/MailingLists_FactSheet.pdf.In addition, we proposed that we willpublish a notice of the hospital’s requestin the Federal Register. We proposed atnew § 411.362(c)(5) to allow individualsand entities in the community 30 daysfrom the date of the notice’s publicationin the Federal Register to submitwritten comments.We gave examples of communityinput, such as documentationdemonstrating that the hospital does notsatisfy one or more of the data criteriaor that the hospital discriminatesagainst beneficiaries of Federal healthprograms. These are examples only; weindicated that we were not restrictingthe type of community input that maybe submitted. We proposed at new§ 411.362(c)(5) that written commentsmust be submitted by mail orelectronically to CMS.We proposed at new § 411.362(c)(5)(i)that we will consider a request completeif we do not receive any writtencomments during the 30-day period

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74523jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2after notice of the hospital’s request ispublished in the Federal Register.In the proposed rule, we stated that ifwe receive written comments, we willnotify the hospital in writing. Weproposed at new § 411.362(c)(5)(ii) toallow the hospital 30 days after CMSnotifies the hospital of the writtencomments to submit information anddocumentation that rebut the writtencomments. We stated that we wouldconsider the request complete at the endof the 30-day period provided for thehospital’s rebuttal, regardless of whetherthe hospital submits additionalinformation or documentation. We alsostated that we reserve the right toperform our own calculations based ona review of the material submitted andof information generally available toCMS.We address below the commentsreceived in response to our proposal.<strong>Comment</strong>: Two commenters assertedthat the proposed exception processclosely follows the statute and balancesefficient processing <strong>with</strong> the statute’srequirements, especially those regardingpublic and community input on CMSdecisions to grant exceptions. Onecommenter suggested that CMS publisha notice of an exception request in theFederal Register <strong>with</strong>in 60 days ofreceiving it. The commenter assertedthat such a deadline would reducedelays in obtaining a decision, whichwould allow hospitals to increasecapacity sooner, ultimately benefitingMedicaid recipients in high growthareas.Response: We are not adopting thecommenter’s suggested deadline. Thereare many factors external to CMS thataffect publication dates in the FederalRegister. However, we will make everyeffort to expedite our process forsending a notice of an exception requestto the Office of the Federal Register forpublication.<strong>Comment</strong>: One commenter expressedconcern that entities wishing to offercomments or contest an expansion mustdo so <strong>with</strong>in 30 days of a notice beingpublished in the Federal Register. Othercommenters asserted that under theproposed rule, too much time willelapse between the date on which ahospital submits a request and the datewhen a final decision is received.Response: In proposing a 30-daycomment period, we carefullyconsidered the entire exception processfrom both the viewpoint of therequesting hospitals and the individualsand entities in the hospital’scommunity. We believe that the 30-daycomment period balances a requestinghospital’s interest in receiving a timelydecision <strong>with</strong> that of the individualsand entities in the hospital’s communityin having a reasonable amount of timeto provide input.<strong>Comment</strong>: One commenter expressedconcern that the proposed methods fornotifying other area hospitals and thepublic of an exception request are notadequate. The commenter stated thathospitals, employers, payors, andmembers of the community should nothave to sign up for the CMS HospitalListserv or search the Federal Registeror CMS Web site to find out if anapplication for an exception has beenmade. In addition to the proposedmethods of notifications set forth in new§ 411.362(c)(5), the commentersuggested that CMS require the hospitalrequesting an exception to supplywritten notification to every otherhospital in the Metropolitan StatisticalArea (MSA) or <strong>with</strong>in 50 miles of thehospital, if the hospital is located in arural area.Response: We disagree <strong>with</strong> thecommenter’s statement that ourproposed methods of notification arenot adequate. Section 1877(i)(3)(A)(ii) ofthe Act requires that individuals andentities in the community of anapplicable hospital or high Medicaidfacility be allowed an opportunity toprovide input on the hospital’s requestfor an exception to the prohibitionagainst facility expansion. In theproposed rule, we proposed to add new§ 411.362(c)(5) to specify that a hospitalis required to disclose on any publicWeb site for the hospital that it isrequesting an exception. We will reportthat the hospital is requesting anexception on the CMS Hospital Listserv.Also, we will post the hospital’s requestfor an exception on the CMS Web siteand will have a notice of the hospital’srequest published in the FederalRegister. We believe the proposedmethods of notification allow sufficientopportunity for individuals and entitiesin the community to provide input.Moreover, we are not persuaded that theadditional notice advocated by thecommenter would be beneficial. Webelieve that written notice would beoverly burdensome for hospitalsrequesting an exception and may noteffectively provide notice to allinterested individuals and entities inthe hospital’s community. For example,if a nonrural hospital is located near theperimeter of its MSA, there may beother interested hospitals in closeproximity to the hospital but stilllocated outside that MSA that wouldnot receive individualized noticepursuant to this proposal. Additionally,we are not convinced that a 50-mileradius in some rural areas wouldinclude any interested hospitals. InVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00403 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2summary, we do not believe that thecommenter’s suggested methods ofproviding written notice to hospitalswill inform all individuals and entitiesin the community in a consistent,beneficial manner.<strong>Comment</strong>: One commenter suggestedthat CMS require the hospital requestingan exception to place a notice of itsrequest in the newspaper <strong>with</strong> thelargest circulation in the MSA, or, ifrural, the county in which the hospitalis located. The commenter proposedthat the notice should provide (1) thelocation where copies of the expansionrequest are available, (2) the timeframefor submitting comments, and (3) thename of the designated representativewho is appointed to receive thecomments.Response: As stated in the precedingresponse, we do not believe additionalnotice is necessary. We also areconcerned that the commenter’sproposal would be costly andburdensome for the hospital requestingan exception.After consideration of the publiccomments we received, we arefinalizing the proposals concerningcommunity input and notification atnew § 411.362(c)(5) <strong>with</strong>outmodification.6. Permitted IncreaseSection 1877(i)(3)(C)(i) of the Actprovides that a hospital granted anexception from the Secretary mayincrease the number of operating rooms,procedure rooms, and beds for whichthe hospital is licensed above itsbaseline number of operating rooms,procedure rooms, and beds. Section1877(i)(3)(C)(iii) of the Act defines the‘‘baseline number of operating rooms,procedure rooms, and beds’’ as thenumber of operating rooms, procedurerooms, and beds for which theapplicable hospital is licensed as of[March 23, 2010] (or, in the case of ahospital that did not have a provideragreement in effect as of such date butdoes have such an agreement in effecton December 31, 2010, the effective dateof such provider agreement). Weproposed to incorporate this definition,<strong>with</strong> the clarification that it also appliesto high Medicaid facilities, at new§ 411.362(a) of the regulations.Section 1877(i)(3)(C)(i) of the Actprovides that if a hospital previouslyhas been granted an exception by theSecretary, the hospital may increase thenumber of its operating rooms,procedure rooms, and licensed bedsabove the number of such rooms andbeds for which the hospital is licensedafter application of the most recentincrease under such an exception.

74524 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2a. Amount of Permitted IncreaseSection 1877(i)(3)(C)(ii) of the Actprovides that the Secretary shall notpermit an increase in the number ofoperating rooms, procedure rooms, andbeds for which an applicable hospital islicensed to the extent such increasewould result in the number of operatingrooms, procedure rooms, and beds forwhich the applicable hospital islicensed exceeding 200 percent of thebaseline number of operating rooms,procedure rooms, and beds of theapplicable hospital. In the proposed rule(76 FR 42353), we proposed toincorporate this provision at new§ 411.362(c)(6)(i) of the regulations.Using our rulemaking authority undersections 1871 and 1877(i)(3)(A)(i) of theAct, we proposed to adopt a parallellimit the increase in the number ofoperating rooms, procedure rooms, andbeds for which a high Medicaid facilitymay request an exception. We invitedpublic comment on whether theproposed limit would be sufficient tobalance the intent of the generalprohibition on expansion <strong>with</strong> thepurpose of the exception process, whichis to provide the opportunity to expandin areas where a sufficient need foraccess to high Medicaid facilities isdemonstrated. We note that, althoughthe statute provides that an applicablehospital may request an exception up toonce every 2 years, we proposed toapply the same provision to highMedicaid facilities. We believe thatproviding a high Medicaid facility theopportunity to request an exceptiononce every 2 years, while also limitingits total growth, as discussed above,balances the Congress’ intent to prohibitexpansion of physician-owned hospitals<strong>with</strong> the purpose of the exceptionprocess.<strong>Comment</strong>: <strong>Comment</strong>ers supported theproposal regarding the amount ofpermitted increase.Response: We appreciate thecommenters’ support. Upon furtherreview, however, we have concludedthat the language of our proposed§ 411.362(c)(6)(i) is inconsistent <strong>with</strong>the limitation set forth in section1877(i)(3)(C)(ii) of the Act. Proposed§ 411.362(c)(6)(i) provides that ‘‘[a]permitted increase under this sectionmay not exceed 200 percent of thehospital’s baseline number of operatingrooms, procedure rooms, and beds.’’ Wehave concluded that proposed§ 411.362(c)(6)(i) does not clearlyexpress that the 200 percent limitationapplies to the total number of operatingrooms, procedure rooms, and beds forwhich the hospital is licensed after apermitted increase, as opposed to thenumber of operating rooms, procedurerooms, and beds by which the hospitalrequests to expand. Therefore, in thisfinal rule <strong>with</strong> comment period, we aremodifying our proposed new§ 411.362(c)(6)(i) to more closely trackthe statute. The modification clarifiesthat a permitted increase may not resultin the number of operating rooms,procedure rooms, and beds for whichthe hospital is licensed exceeding 200percent of the hospital’s baselinenumber of operating rooms, procedurerooms, and beds.<strong>Comment</strong>: One commenter supportedthe proposal to apply the same limit ontotal growth to both applicable hospitalsand high Medicaid facilities. Thecommenter asserted that applyingparallel requirements to both applicablehospitals and high Medicaid facilitieswould result in an efficient andconsistent process.Response: We agree <strong>with</strong> thecommenter regarding our application ofparallel requirements.After consideration of the publiccomments we received, we arefinalizing the proposed new§ 411.362(c)(6)(i), <strong>with</strong> the modificationdiscussed above.b. Location of Permitted IncreaseSection 1877(i)(3)(D) of the Actprovides that any increase in thenumber of operating rooms, procedurerooms, and beds for which an applicablehospital is licensed may occur only infacilities on the main campus of theapplicable hospital. In the proposed rule(76 FR 42353), we proposed toincorporate this provision at new§ 411.362(c)(6)(ii) of the regulations. Weproposed to define the term ‘‘maincampus’’ as the term ‘‘campus’’ isdefined at § 413.65(a)(2). Using ourrulemaking authority under sections1871 and 1877(i)(3)(A)(i) of the Act, weproposed that, <strong>with</strong> respect to highMedicaid facilities, the limitation onexpansion of hospital capacity, as setforth at section 1877(i)(1)(B) of the Act,similarly applies to the number ofoperating rooms, procedure rooms, andlicensed beds on the ‘‘campus’’ of thehigh Medicaid facility. We believe thatapplying the same limitation toapplicable hospitals and high Medicaidfacilities will result in an efficient andconsistent process.We did not receive any publiccomments regarding the location of thepermitted increase. Therefore, we arefinalizing the proposed new§ 411.362(c)(6)(ii) <strong>with</strong>out modification.7. DecisionsSection 1877(i)(3)(H) of the Act statesthat the Secretary shall publish in theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00404 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Federal Register the final decision <strong>with</strong>respect to an application for anexception to the prohibition againstfacility expansion not later than 60 daysafter receiving a complete application.In the proposed rule (76 FR 42353), weproposed to codify this provision at new§ 411.362(c)(7). To facilitate access todecisions, we proposed to post ourdecisions on the CMS Web site as well.We proposed that the postedinformation will include the hospital’sname, address, county, and our finaldecision. We also proposed that if anexception is granted under this section,we would post the number of operatingrooms, procedure rooms, and beds bywhich the hospital may expand underthe granted exception. We stated that webelieve that posting decisions on theCMS Web site will enable us to informthe public and the affected communityof our decisions in a timely manner andin a centralized location.<strong>Comment</strong>: One commenterrecommended that a request for anexception as an applicable hospitalshould be considered approved if theagency fails to publish a final decisionin the Federal Register <strong>with</strong>in 60 daysof when the request is consideredcomplete.Response: We cannot adopt thecommenter’s proposal. Although section1877(i)(3)(H) of the Act provides thatthe Secretary shall publish in theFederal Register the final decision <strong>with</strong>respect to such application not laterthan 60 days after receiving a completeapplication, section 1877(i)(3)(E) of theAct establishes criteria that must be metin order for a hospital to be granted anexception as an applicable hospital. Weare obligated to grant exceptions only tothose hospitals that meet the statutorycriteria.After consideration of the publiccomment we received, we are finalizingthe proposed new § 411.362(c)(7),<strong>with</strong>out modification.8. Limitation on ReviewSection 1877(i)(3)(I) of the Actprovides that there shall be noadministrative or judicial review of theprocess, either under section 1869 orsection 1878 of the Act, or otherwise.We proposed to incorporate thislimitation on review at proposed new§ 411.362(c)(8) of the regulations. Weproposed to interpret this limitation onreview to mean that CMS’ decision <strong>with</strong>respect to whether a hospital qualifiesfor an exception is not reviewable.We did not receive any publiccomments regarding the limitation ofreview. Therefore, we are finalizing theproposed § 411.362(c)(8) <strong>with</strong>outmodification.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74525jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES29. Frequency of RequestSection 1877(i)(3)(B) of the Actprovides that the exception processshall permit an applicable hospital toapply for an exception up to once every2 years. In the proposed rule (76 FR42353), we proposed to incorporate thisprovision at new § 411.362(c)(1). Usingour authority under sections 1871 and1877 of the Act, we similarly proposedto permit a high Medicaid facility tosubmit a request for an exception up toonce every 2 years from the date of aCMS decision on the hospital’s mostrecent request. We proposed to considerthe date of a CMS decision to be thedate of the decision letter sent to therequesting party.We did not receive any publiccomments regarding the frequency ofrequest. Therefore, we are finalizing ourproposed new § 411.362(c)(1) <strong>with</strong>outmodification.D. Changes Related to ProviderAgreement Regulations on PatientNotification RequirementsSection 1866 of the Act states that aprovider of services shall be qualified toparticipate in the Medicare program andshall be eligible for Medicare paymentsif it files a Medicare provider agreementand abides by the requirementsapplicable to Medicare provideragreements. These requirements areincorporated in our existing regulationsat 42 CFR Part 489, Subparts A and B(Provider Agreements and SupplierApproval). Section 5006 of the DeficitReduction Act of 2005 required theSecretary to develop a strategic andimplementing plan to address certainissues <strong>with</strong> respect to physicianownership of specialty hospitals. Aspart of that plan, we used our authorityunder sections 1866, 1820(e)(3), and1861(e)(9) of the Act (as well as ourgeneral rulemaking authority undersections 1102 and 1871 of the Act) toimpose certain additional requirementson physician-owned hospitals as part oftheir provider agreements. These newrequirements were established in the FY2008 IPPS final rule <strong>with</strong> commentperiod (72 FR 47385 through 47391) andthe FY 2009 IPPS final rule (73 FR48686 through 48688).Specifically, we added a newprovision to require that all hospitalsand CAHs: (1) Furnish all patientswritten notice at the beginning of theirinpatient hospital stay or outpatientservice if a doctor of medicine orosteopathy is not present in the hospital24 hours a day, 7 days a week; and (2)describe how the hospital or CAH willmeet the medical needs of any patientwho develops an emergency medicalcondition at a time when no doctor ofmedicine or osteopathy is present in thehospital or CAH. These requirementsare codified at § 489.20(w). Therequirements of §§ 489.20(u) and (w)were made applicable to both inpatienthospital stays and outpatient servicesbecause, as we stated in the FY 2008IPPS final rule <strong>with</strong> comment period,these provisions are in the interest ofthe health and safety of all individualswho receive services in theseinstitutions. The notice requirementsare intended to permit individuals tomake more informed decisionsregarding their treatment.In the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period (75 FR 72251), westated that we saw no reason to treat thesafety of hospital inpatients differentlythan hospital outpatients, and, thus,applied these patient safetyrequirements to hospital inpatients andoutpatients. We continue to believe thatboth hospital inpatients and outpatientsshould receive these disclosures prior toadmission. However, after hospitals ingeneral informed us that it would beunduly burdensome to providedisclosures to all outpatients, andhospitals <strong>with</strong> emergency departmentsreported the individual noticerequirement makes the registrationprocess more cumbersome and timeconsumingthan is desirable in theemergency department setting, werevisited this issue.In the CY 2012 OPPS/ASC proposedrule (76 FR 42354), we stated that wehave reconsidered the patient safetyrequirements related to patientnotification of physician presence, andin the proposed rule, we proposed thathospital outpatients would need toreceive such disclosures only where therisk of an emergency or the length of theoutpatient visit make their situationsmore like that of hospital inpatients.Under this proposal, we proposed torequire disclosures only for thoseoutpatients receiving observationservices, surgery, or any other procedurerequiring anesthesia. We proposed thatsignage would be required for hospitaloutpatients in the emergencydepartment, as we recognize the merit offinding a less cumbersome manner toprovide the required notice in thissetting. Other hospital outpatientencounters are relatively short and, inmany cases, scheduled in advance. Therisk of emergency is relatively low inmost of these scheduled encounters. Asa result, we believe the safety of theseparticular hospital outpatients wouldnot be compromised in any way ifhospitals were not required to providedisclosures in these circumstances.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00405 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2In the proposed rule, we proposed torevise paragraph (w)(1) of § 489.20 toreduce the categories of outpatients whomust be notified if a hospital does nothave a doctor of medicine or osteopathyon site 24 hours a day, 7 days a week.We proposed that only those outpatientswho receive observation services,surgery, or services involvinganesthesia, must receive such writtennotice. We stated that we believe thischange would reduce burden, butensure that notice goes to thosecategories of patients who are morelikely to find themselves in a situationwhere a doctor of medicine orosteopathy is not present when anemergency develops. (We noted that wewere not proposing to make any changesto similar patient safety requirementsfor physician-owned hospitals at§ 411.362(b)(5)(i).) We proposed to adda provision that notice would berequired at the beginning of a plannedor unplanned inpatient stay oroutpatient visit, and we providedexplanation of when a planned orunplanned stay or visit begins. Weproposed to add a provision to state thatan unplanned stay or visit begins at theearliest point at which the patientpresents to the hospital. The currentregulation describes when a stay or visitbegins by referring to the time when apackage of information is providedregarding scheduled preadmissiontesting and registration for a plannedhospital admission or outpatientservice. However, many admissions tothe hospital are unplanned admissionsof patients who present on anunscheduled visit to the emergencydepartment. Therefore, it was necessaryto clarify when we considered suchunplanned stays or visits to begin.We proposed to add a new paragraph(w)(2) to § 489.20 (existing paragraph(w)(2) would be redesignated asdiscussed below) that would require ahospital that is a main provider that hasone or more remote locations of thehospital or satellites, to make thedetermination of whether notice isrequired separately at each locationproviding inpatient services. Weproposed to use the terms ‘‘mainprovider,’’ ‘‘remote location of ahospital,’’ and ‘‘satellite’’ as these termsare defined at § 413.65(a)(2), § 412.22(h),or § 412.25(e), as applicable. Weproposed that notice would be requiredfor all applicable patients, that is, allinpatients and applicable outpatients, ateach location at which inpatientservices are furnished and at which adoctor of medicine or osteopathy is notpresent 24 hours a day, 7 days a week.We proposed to move language that is

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274526 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationscurrently in paragraph (w)(1) to a newparagraph (w)(3), governing the contentof the written notice. We proposed toredesignate existing paragraph (w)(2),which requires the hospital to receive asigned acknowledgment from thepatient who has received a notice thatthe patient understands that a doctor ofmedicine or osteopathy may not bepresent during all hours in whichservices are furnished to the patient, asparagraph (w)(4) and to revise theredesignated paragraph. We proposed toadd a provision to state that, beforeproviding an outpatient service to anoutpatient for whom a notice isrequired, the hospital must receive thesigned acknowledgment. This revisionwould make this requirement consistent<strong>with</strong> our proposed revisions toparagraph (w)(1) limiting the noticerequirement to certain categories ofoutpatients.We proposed to add a new paragraph(w)(5) which would require everyhospital that has a dedicated emergencydepartment in which a doctor ofmedicine or osteopathy is not present 24hours a day, 7 days a week, to post anotice conspicuously in a place orplaces likely to be noticed by allindividuals entering the dedicatedemergency department. We proposedthat ‘‘dedicated emergency department’’would have the meaning found inexisting § 489.24(b) of the regulations.We proposed to require the notice tostate that the hospital does not have adoctor of medicine or osteopathypresent in the hospital 24 hours a day,7 days a week, and to indicate how thehospital will meet the needs of anypatient <strong>with</strong> an emergency medicalcondition, as that term is defined in§ 489.24(b), at a time when no doctor ofmedicine or osteopathy is present<strong>with</strong>in the hospital. In the event thatthere is a decision to admit a patientfrom the emergency department as aninpatient, we proposed that theindividualized written disclosure andacknowledgment would have to bemade at the time the patient is admitted.<strong>Comment</strong>: A majority of commenterssupported the proposal to limit thetypes of outpatient situations in whichnotice of physician availability isrequired. Several of these commentersadded that, from the beginning, theyhad considered the requirement toprovide notice to all outpatients asoverly burdensome and unnecessaryexcept in the limited circumstancesreflected in the proposed revision.Response: We appreciate thecommenters’ support.<strong>Comment</strong>: Two commenters objectedto any notice to patients concerning theonsite availability of a doctor ofmedicine or osteopathy. One commenterindicated the requirement wouldimpose costs and potentially alarmpatients <strong>with</strong>out any evidence that itwill make patients safer or improvequality of care. The other commenterbelieved that the information might notbe accurate about physician availabilitybecause a physician who is not on sitein a rural setting might be more readilyavailable than a physician who is on siteat a larger facility.Response: We believe our proposalwill reduce costs to hospitals andcritical access hospitals because itwould require significantly fewernotices than are required under thecurrent regulation, which requiresnotice to all outpatients in affectedhospitals and CAHs. In the years sincethe current regulation first took effect,we have not received any feedback ofpatients being unduly alarmed as aresult of receiving notice. While theremay be some individual circumstancesin which a doctor of medicine orosteopathy who is off site might be ableto reach a patient experiencing anemergency more quickly than one whois on site, we believe that this scenariois likely the exception rather than therule. The complete elimination of thenotice requirement implicit in thecommenters’ statements would not beappropriate. As we stated when thisprovision was first adopted, we believeconsumers have certain expectationsconcerning availability of care bydoctors of medicine or osteopathy inhospitals and CAHs, and that, aspatients, they have a right to makeinformed decisions concerning theircare. Consumers may have anexpectation that a hospital or CAH, asa health care facility that providesservices 24 hours a day, 7 days a week,always has a doctor of medicine orosteopathy on site. Therefore, it isimportant to ensure that patients receivenotice when a doctor of medicine orosteopathy is not always on site, andhow the hospital or CAH handlespatient emergencies when a doctor ofmedicine or osteopathy is not present.<strong>Comment</strong>: One commenter describedthe proposal as requiring all physicianownedhospitals and CAHs to furnishoutpatients receiving observationservices, surgery or any other procedurerequiring anesthesia a written noticethat a doctor of medicine or osteopathyis not on site 24 hours a day, 7 days aweek.Response: The patient notificationprovision at proposed § 489.20(w)(1)would apply to all hospitals, not justphysician-owned hospitals, and CAHsthat do not have a doctor of medicineor osteopathy on site 24 hours a day, 7VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00406 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2days a week, and would apply to allinpatients and certain categories ofoutpatients.<strong>Comment</strong>: Two commenters notedand objected to differences inrequirements for physician-ownedhospitals compared to other hospitalsand CAHs. One commenter stated thatthe proposed rule at § 489.20(w) wouldnot apply to physician-owned hospitalsand challenged the differentialtreatment. The commenter noted thatCMS stated in the proposal that thesafety of ‘‘these particular outpatients’’[that is, those who would not receivenotice under the proposed rule] wouldnot be compromised if hospitals werenot required to provide disclosures, andquestioned why CMS would not applythat rationale to make the changeapplicable to all hospitals.Response: It is not correct that§ 489.20(w) does not apply to physicianownedhospitals. It applies to allhospitals and CAHs, including thosethat are physician-owned. However, webelieve the commenter is referring to thefact that there is an additionalregulation at § 411.362(b)(5)(i) thatapplies only to physician-ownedhospitals. We did not propose a similarrevision to this regulation, whichrequires physician-owned hospitals thatdo not have a doctor of medicine orosteopathy on site 24 hours a day, 7days a week, to provide notice to allinpatients and all outpatients. Section411.362(b)(5)(i) was adopted in order toimplement provisions of section 6001(a)of the Affordable Care Act. Thatprovision pertains specifically tophysician-owned hospitals and governsthe notice to be provided to patientswhen the physician-owned hospitaldoes not have a doctor of medicine orosteopathy on site at all times.<strong>Comment</strong>: One commenter requestedguidance to ensure that the presence ofa doctor of medicine or osteopathyincludes the presence of residents.Response: Residents who are doctorsof medicine or osteopathy would beincluded when determining whether ahospital or CAH has a doctor ofmedicine or osteopathy on site.<strong>Comment</strong>: One commenter requestedfurther clarification of the timing for thedisclosure to, and acknowledgement by,an outpatient who is not receivingobservation services, surgery, or otherprocedure requiring anesthesia, andwho experiences a change in medicalcondition which requires immediatesurgery or inpatient admission. Thecommenter stated that it might notalways be feasible to make thedisclosure and receive theacknowledgement under thesecircumstances.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74527jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Response: When an outpatientencounter that does not require a noticeinvolves a medical emergency thatrequires immediate surgery or inpatientadmission, the situation is similar tothat of a patient who presents to ahospital or CAH emergency departmentand requires immediate admission forsurgery or other treatment. In ourproposal <strong>with</strong> respect to suchemergency department patients, westated that, in the event that there is adecision to admit a patient from theemergency department as an inpatient,the individualized written disclosureand acknowledgment would have to bemade at the time the patient is admitted.At the same time, we acknowledge thatin some circumstances the emergentnature of the patient’s condition andneed to initiate treatment immediatelymay result in some necessary delay incompletion of the disclosure andacknowledgment requirements.After consideration of the publiccomments we received, we arefinalizing the proposed revisions to§ 489.20(w), <strong>with</strong>out modification,relating to patient notification when adoctor of medicine or osteopathy is noton site 24 hours a day, 7 days a week.Revised paragraph (w)(1) specifies thatonly those outpatients who receiveobservation services, surgery, or servicesinvolving anesthesia must receivewritten notice if the hospital does nothave a doctor of medicine or osteopathyon site 24 hours a day, 7 days a week.New paragraph (w)(2) requires ahospital that is a main provider, that hasone or more remote locations of thehospital or satellites, to make thedetermination of whether notice isrequired separately at each locationproviding inpatient services. Newparagraph (w)(3) includes provisions(moved from existing paragraph (w)(1))governing the content of the writtennotice. Paragraph (w)(4) requires thehospital to receive a signedacknowledgement from the patient whohas received a notice that the patientunderstands that a doctor of medicine orosteopathy may not be present duringall hours in which services arefurnished to the patient (previouslylanguage in existing paragraph (w)(2);and states that, before providing anoutpatient service to an outpatient forwhom a notice is required, the hospitalmust receive the signedacknowledgement. New paragraph(w)(5) requires that every hospital thathas a dedicated emergency departmentin which a doctor of medicine orosteopathy is not present 24 hours aday, 7 days a week, to post a noticeconspicuously in a place or places likelyto be noticed by all individuals enteringthe dedicated emergency room and setsforth the required statements for thenotice.XVI. Additional Hospital Value-BasedPurchasing (Hospital VBP) ProgramPoliciesA. Hospital VBP Program1. Legislative BackgroundSection 3001(a) of the Affordable CareAct added section 1886(o) to the Act.This section requires the Secretary toestablish a hospital inpatient valuebasedpurchasing program under whichvalue-based incentive payments aremade in a fiscal year to hospitalsmeeting performance standardsestablished for a performance period forsuch fiscal year. Both the performancestandards and the performance periodfor a fiscal year are to be established bythe Secretary.Section 1886(o)(1)(B) of the Actdirects the Secretary to begin makingvalue-based incentive payments underthe Hospital Inpatient Value-BasedPurchasing Program (Hospital VBPProgram) to hospitals for dischargesoccurring on or after October 1, 2012.These incentive payments will befunded for FY 2013 through a reductionof 1.0 percent to the FY 2013 baseoperating DRG payment amount foreach discharge, as required by section1886(o)(7)(B)(i) of the Act, and thisamount will rise to 1.25 percent in FY2014.Section 1886(o)(1)(C) of the Actprovides that the Hospital VBP Programapplies to subsection (d) hospitals (asdefined in section 1886(d)(1)(B) of theAct), but excludes from the definition ofthe term ‘‘hospital,’’ <strong>with</strong> respect to afiscal year: (1) A hospital that is subjectto the payment reduction under section1886(b)(3)(B)(viii)(I) of the Act (theHospital IQR Program) for such fiscalyear; (2) a hospital for which, during theperformance period for the fiscal year,the Secretary cited deficiencies thatpose ‘‘immediate jeopardy’’ to thehealth or safety of patients; and (3) ahospital for which there are not aminimum number (as determined by theSecretary) of measures for theperformance period for the fiscal yearinvolved, or for which there are not aminimum number (as determined by theSecretary) of cases for the measures thatapply to the hospital for theperformance period for such fiscal year.2. Overview of the Hospital InpatientVBP Program <strong>Final</strong> <strong>Rule</strong>We previously issued the HospitalInpatient VBP Program <strong>Final</strong> <strong>Rule</strong>,which implemented the Hospital VBPVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00407 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Program under section 1886(o) of theAct (76 FR 26490 through 26547). TheHospital Inpatient VBP Program <strong>Final</strong><strong>Rule</strong> was developed based on extensiveresearch we conducted on hospitalvalue-based purchasing, includingresearch that formed the basis of a 2007report we submitted to Congress,entitled ‘‘Report to Congress: Plan toImplement a Medicare Hospital Value-Based Purchasing Program.’’ This reportis available on our Web site (https://www.cms.gov/AcuteInpatientPPS/downloads/HospitalVBPPlanRTCFINALSUBMITTED2007.pdf) and takes intoaccount input from stakeholders andother interested parties.As described more fully in theHospital Inpatient VBP Program <strong>Final</strong><strong>Rule</strong>, we adopted for the FY 2013Hospital VBP Program 13 measures thatwe have already adopted for theHospital IQR Program, categorized intotwo domains (76 FR 26495 through26511). We grouped 12 clinical processof care measures into a clinical processof care domain, and placed the HCAHPSsurvey measure into a patientexperience of care domain. We adopteda 3-quarter performance period fromJuly 1, 2011 through March 31, 2012 forthese measures (76 FR 26494 through26495). To determine whether a hospitalmeets the performance standards forthese measures, we will compare eachhospital’s performance during thisperformance period to its performanceduring a 3-quarter baseline period fromJuly 1, 2009 through March 31, 2010 (76FR 26493 through 26495).We also finalized a methodology forassessing the total performance of eachhospital based on performancestandards under which we will scoreeach hospital based on achievement andimprovement ranges for each applicablemeasure. We will calculate a TotalPerformance Score for each hospital bycombining the greater of the hospital’sachievement or improvement points foreach measure to determine a score foreach domain, weighting each domainscore (for the FY 2013 Hospital VBPProgram, the weights will be clinicalprocess of care = 70 percent, patientexperience of care = 30 percent), andadding together the weighted domainscores. We will convert each hospital’sTotal Performance Score into a valuebasedincentive payment using a linearexchange function. We refer readers tothe Hospital Inpatient VBP Program<strong>Final</strong> <strong>Rule</strong> for further explanation of thedetails of the FY 2013 Hospital VBPProgram (76 FR 26490 through 26547).For FY 2014, we adopted 13 outcomemeasures comprised of 3 mortalitymeasures, 2 AHRQ composite measures,and 8 hospital-acquired condition

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274528 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations(HAC) measures (76 FR 26511). Thesemeasures are discussed more fully inthe Hospital Inpatient VBP Program<strong>Final</strong> <strong>Rule</strong> (76 FR 26510 through 26511).In the FY 2012 IPPS/LTCH <strong>Final</strong> <strong>Rule</strong>,we also adopted a new MedicareSpending Per Beneficiary Measure forthe FY 2014 Hospital Inpatient VBPProgram and incorporated the measureinto a new Efficiency Domain (76 FR51654).We received a number of generalcomments in response to the proposalswe made <strong>with</strong> respect to the FY 2014Hospital VBP Program in the proposedrule. Our responses to these commentsappear below.<strong>Comment</strong>: Some commenters arguedthat the proposed performance periodsfor the HAC and AHRQ compositemeasures are not statutorily compliantbecause data on the measures will nothave been included on HospitalCompare for one year prior to the March3, 2012 performance period start date.The commenters also stated that theMedicare spending per beneficiarymeasure is not statutorily compliantbecause it has not been properlyspecified and data on the measure hasnot been included on the HospitalCompare Web site for a minimum of oneyear prior to the start of the measure’sperformance period.<strong>Comment</strong>ers argued that in order fora measure to be included in the HospitalVBP Program, the statute requires thatthe measure be specified under theHospital IQR Program, which includespublicly releasing a document thatoutlines the numerator, denominator,exclusions, and any applicable riskadjustment, as well as following theprocess that the measure undergoes inthe Hospital IQR Program. In addition,these commenters stated that themeasure data must be displayed on theHospital Compare Web site for a yearprior to its inclusion in the HospitalVBP Program. Citing their interpretationof the requirements in section 1886(o) ofthe Act, their view of Congress’ intentunder the Affordable Care Act, and theneed for hospitals to understandmeasures that will be used in theHospital VBP Program, commentersurged CMS to choose differentperformance periods for the HAC,AHRQ, and Medicare spending perbeneficiary measures for FY 2014,which could necessitate delaying theirintroduction into the program until afterFY 2014. <strong>Comment</strong>ers also argued thatthe proposed performance periods forthe HAC and AHRQ measures are tooshort to fairly distinguish performanceamong hospitals.Response: One of our most pressingconcerns is to improve patient safetyand efficiency as quickly as the lawallows and, therefore, we interpreted therequirements under section 1886(o) ofthe Act in a way that enabled us tomove swiftly. We also took into accountcomments submitted in response to theHospital Inpatient VBP ProgramProposed <strong>Rule</strong> that encouraged us tomove <strong>with</strong> urgency in adoptingmeasures for the Hospital VBP Program.We posted a brief description of eachHAC and AHRQ measure on HospitalCompare more than 1 year prior toMarch 3, 2012, the beginning of theseven month performance period thatwe proposed to adopt for thesemeasures. Likewise, we posted onHospital Compare a brief description ofthe Medicare spending per beneficiaryMeasure on April 21, 2011, which ismore than 1 year prior to the May 15,2012 performance period start date.However, we acknowledge thesuggestion from commenters thathospitals would benefit from seeingpublicly posted performance data onmeasures before we include thosemeasures in the Hospital VBP Programand make them part of the basis forvalue-based incentive payments, andnote that we posted HAC and AHRQmeasure data on Hospital Compare onOctober 13, 2011.We recognize that some commentersseek additional information related tothe specifications for the Medicarespending per beneficiary measure thatwe previously articulated. In light ofthese comments, we intend to publiclyrelease further details related to thespecifications for this measure and, indoing so, we will ensure that interestedparties have an opportunity to commenton them. We also note that in light ofcomments received, we are workingexpeditiously to appropriately postMedicare spending per beneficiarymeasure data on Hospital Compare.In addition, we appreciate thecommenters’ concern that the proposed7-month performance period for theHAC and AHRQ measures may be tooshort to fairly assess hospitalperformance on these measures.Although we do not believe that a lowincidence of HAC events necessarilyresults in unstable HAC rates, or that aseven month performance periodcompromises the reliability of theAHRQ composite measures, werecognize that a longer performanceperiod would provide more data onwhich to compare hospital performance.Taking all of these factors intoaccount, we have concluded that wewill publicly post hospital performanceon all Hospital VBP Program candidatemeasures on Hospital Compare for atleast one year prior to the time when theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00408 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2performance period for those measureswould start under the Hospital VBPProgram. Hospitals will, thus, have anopportunity to become familiar <strong>with</strong>their performance on a measure beforethe measure is included in the HospitalVBP Program.In order to give full effect to theprocess of posting hospital data for oneyear, and after consideration of thepublic comments we received, we havealso decided to suspend the effectivedates of the HAC, AHRQ, and Medicarespending per beneficiary measures inthe Hospital VBP Program because dataon these measures will not have beenmade publicly available on HospitalCompare for at least one year prior tothese dates. Because there will not beenough time to both publicly post themeasure data for a year, as well ascollect a requisite amount ofperformance period data to calculatereliable measure scores for FY 2014, theresult of this effective date suspensionis that the HAC, AHRQ and Medicarespending per beneficiary measures willnot be included in the FY 2014 HospitalVBP Program. We note that our decisionto suspend the effective dates of theHAC, AHRQ and Medicare spending perbeneficary measures in the FY 2014Hospital VBP Program has no effect onthe status of these measures under theHospital IQR Program.We believe that the decision tosuspend the effective dates of the HAC,AHRQ and Medicare spending perbeneficiary measures is a logicaloutgrowth of the comments we receivedin response to the CY 2012 OPPS/ASCproposed rule, a reasoned response tothe concerns raised by the public inthose comments, and, alternatively, issupported by good cause.The policies we proposed to adopt inthe proposed rule <strong>with</strong> respect to theHAC, AHRQ, and Medicare spendingper beneficiary measures rest squarelyon the foundation that these measureswere properly included in the HospitalVBP Program in the first place. To theextent that this foundation has beencalled into question by commenters, andto the extent that we wish to implementa Hospital VBP Program that bothresponds to this concern and enjoyswide public support, we haveconcluded that it is, at this time,premature to adopt requirements thatwould, in conjunction <strong>with</strong> therequirements we have previouslyadopted, incorporate these questionedmeasures into the FY 2014 program.And, because we do not interpretsection 1886(o) of the Act to authorizethe Secretary to include ‘‘placeholder’’measures in the Hospital VBP Programby adopting them but giving them no

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74529jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2effect, we believe that in order to bothimplement this posting of data processand comply <strong>with</strong> the statutoryrequirements, we must suspend theeffective dates of these measures.Therefore, we conclude that we havegood cause to waive notice and anopportunity to comment under theAdministrative Procedure Act <strong>with</strong>respect to our decision to suspend theeffective dates of the HAC, AHRQ andMedicare spending per beneficiarymeasures. We seek public comment onthis issue.<strong>Final</strong>ly, for all of the reasonsexplained above, we are not finalizingany proposals in the CY 2012 OPPS/ASC proposed rule relating to the HAC,AHRQ and Medicare spending perbeneficiary measures at this time. Weintend to adopt these measures forfuture years of the Hospital VBPProgram and will take the commentsinto account as we develop our futurepolicies.<strong>Comment</strong>: Some commentersrequested that CMS align Hospital VBPrulemaking processes in the future,noting that CMS published details onthe Hospital VBP Program in threeseparate regulations.Response: We have used more thanone regulation to implement theHospital VBP Program in order to meetthe aggressive deadlines set forth insection 1886(o) of the Act. Thisapproach also enabled us to give thepublic additional time to comment onour proposals. We will make every effortto, where possible, reduce the numberof the rulemaking vehicles for futureHospital VBP Program proposals.<strong>Comment</strong>: Some commenters objectedto the Hospital VBP Program’s structure,arguing that hospitals should berewarded for meeting objectiveperformance criteria instead ofcompeting <strong>with</strong> other hospitals.Response: The basic framework of theHospital VBP Program is set forth insection 1886(o) of the Act, which webelieve represents the culmination ofsubstantial research and stakeholderoutreach on the topic of value-basedpurchasing. As detailed in the HospitalInpatient VBP Program <strong>Final</strong> <strong>Rule</strong> (76FR 26493), we developed the 2007Report to Congress as a plan to developa hospital value-based purchasingprogram after implementing qualityreporting in the hospital setting. Thisreport is well-known to the public andformed the basis of the Hospital VBPProgram as structured by the AffordableCare Act. We believe the finalizedscoring methodology for the HospitalVBP Program provides strong incentivesto hospitals to provide high quality careand to improve their performance overtime.<strong>Comment</strong>: Some commenterssuggested technical changes to the HF–1 (Discharge Instructions) qualitymeasure to improve providers’compliance. <strong>Comment</strong>ers argued thatthe measure should capture discharge‘‘orders,’’ and not the discharge‘‘summary,’’ to avoid unintentionallypenalizing hospitals when doctorschange medication orders after thesummary is created. <strong>Comment</strong>ers urgedCMS to not adopt the HF–1 measure forthe Hospital VBP Program until suchtechnical changes are made.Response: While we are aware of thedifficulties hospitals face in developingstreamlined, effective dischargeprocesses, we believe hospitals shouldbe able to align discharge orders andsummaries <strong>with</strong>out furthermodifications to this measure.<strong>Comment</strong>: Some commentersreiterated their opposition to the use ofHAC measures in the Hospital VBPProgram, arguing that hospitals arealready not paid for those conditionsand will be subjected to paymentreductions based on HAC incidentsbeginning in 2015.Response: As noted above, we aresuspending the effective date of thesemeasures for the Hospital VBP Program.We will take these comments intoconsideration as we develop our futurepolicies.<strong>Comment</strong>: Some commenters calledon CMS to thoroughly test and monitormeasures for continued validity.<strong>Comment</strong>ers also suggested that claimsbasedmeasures need adequate riskadjustment to be valid for publicreporting. Some commenters urged CMSto reconsider the policy on ‘‘toppedout’’measures, arguing that we shouldcontinue monitoring topped-outmeasures to ensure that hospitalscontinue to perform at high levels.<strong>Comment</strong>ers also argued that topped-outstatus should not, by itself, be enoughto disqualify measures from the HospitalVBP Program.Response: We agree that measuresshould be tested and monitored forcontinued validity. We believe that ouranalysis of ‘‘topped-out’’ measuresdescribed in the Hospital Inpatient VBPProgram <strong>Final</strong> <strong>Rule</strong> (76 FR 26496through 26497) is one component of thatmonitoring strategy, by continuing tomeasure whether a measure is still‘‘topped-out’’ for each year of theprogram. Although we agree that someclaims-based measures can and shouldbe risk-adjusted, we do not believe thatit is appropriate to risk adjust all claimsbasedmeasures. For example, many ofthe HAC measures are ‘‘never’’ eventsVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00409 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2that we believe should be counted inevery instance. We also note that thethree mortality measures we haveadopted for the FY 2014 Hospital VBPProgram are currently undergoingmaintenance by the NQF. Should theNQF recommend that changes be madeto any of these measures, we will takethat recommendation under advisementas we develop future measure proposalsfor the Hospital VBP Program.With regard to ‘‘topped-out’’measures, we have previously statedthat, as a general matter, we would notadopt topped-out measures for theHospital VBP Program because theypresent a number of scoring challengesand because their use would mask trueperformance differences amonghospitals (76 FR 26497). We proposed toadopt an exception to this generalapproach for the eight HAC measuresfor which we are suspending theeffective date because we believe theHAC measures capture critical patientsafety data that are strong indicators ofthe quality of hospital care. We do notbelieve we should create exceptions forother measures at this time. We alsonote that we are not finalizing ourproposed HAC scoring methodology atthis time for the reasons discussedabove.<strong>Comment</strong>: Some commenters arguedthat the Hospital VBP Programinappropriately captures mortality datatwice in the outcome domain, throughboth the 30-day mortality measures andthe AHRQ composite measures.<strong>Comment</strong>ers argued that such doublecountingwill harm tertiary carehospitals that often receive dyingpatients.Response: As detailed in the HospitalInpatient VBP Program <strong>Final</strong> <strong>Rule</strong> (76FR 26495 through 26511), we believethe AHRQ composite measures and the30-day mortality measures captureimportant patient safety and qualitydata in the outcome domain. We notethat the two sets of mortality measuresdo not measure the same concepts. TheAHRQ mortality measures assess inhospitaldeaths only and do not use apredefined index period. On the otherhand, the 30-day mortality measuresassess deaths that occur 30 days afteradmission, which, depending on thelength of stay, may occur postdischarge.The 30-day mortalitymeasures also do not count patientsreceiving comfort care only or enrolledin hospice care.As noted above, we are suspendingthe effective date of the AHRQ measuresfor the Hospital VBP Program.Therefore, we will take these commentsinto consideration as we develop ourfuture policies.

74530 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2<strong>Comment</strong>: Some commentersexpressed support for the use of theMedicare spending per beneficiarymeasure, arguing that CMS has met thestatutory requirements for publicdisplay and suggesting that hospitalshave experience tracking spendingthrough the Medicare low-cost countypayments created by the Affordable CareAct. These commenters also noted thatattempts to move toward a value-basedpayment system must include measuresfor enhancing the efficiency of healthcare delivery, and suggest that CMS’proposed 20 percent weight for theefficiency domain underestimated itsimportance as a method to improveoutcomes and patient care for Medicare.One commenter expressed the beliefthat CMS’ plan to include the Medicarespending per beneficiary measure in theFY 2014 Hospital VBP Program isconsistent <strong>with</strong> Congress’ intent,because Medicare spending perbeneficiary is the only measure thatCongress specifically included in theAffordable Care Act, mandating itsinclusion in the Hospital VBP Program.Response: We agree that measurementof efficiency is an important goal for theMedicare program, and we thank thecommenters for their support. However,for the reasons explained above, we aresuspending the effective date of theMedicare spending per beneficiarymeasure in the Hospital VBP Program.We will take these comments intoconsideration as we develop futureproposals regarding this measure.<strong>Comment</strong>: Several commentersexpressed their views regarding theMedicare spending per beneficiarymeasure, including the Medicarepayments to be included, adjustments tobe made, length of the episode, periodof performance, and measureendorsement. Some commenters alsoargued that the Medicare spending perbeneficiary measure’s performancestandards do not sufficiently considerthe significant variation in health carecosts per beneficiary throughout thecountry. Other commenters suggestedthat CMS develop condition-specificspending per beneficiary measures inorder to appropriately capture eachhospital’s service mix. Severalcommenters stated that the measureshould be adjusted for socioeconomicstatus and hospital case mix.Response: We appreciate thesecomments and refer commenters to theFY 2012 IPPS/LTCH PPS final rulewhere we finalized the Medicarespending per beneficiary measure forinclusion in the Hospital IQR Program(76 FR 51618 through 51628). However,as noted above, we are suspending theeffective date of this measure in theHospital VBP Program for FY 2014.Therefore, we will take these commentsinto consideration as we develop futureproposals regarding this measure for theHospital VBP Program.3. Additional FY 2014 Hospital VBPProgram MeasuresIn the CY 2012 OPPS/ASC proposedrule (76 FR 42355 through 42356), forthe FY 2014 Hospital VBP Program, weproposed to retain all 13 of the measuresthat we adopted for the FY 2013Hospital VBP Program, which include12 clinical process of care measures andthe patient experience of care survey.We also proposed to add one measureto the clinical process of care domain:SCIP–Inf-9: Postoperative UrinaryCatheter Removal on Postoperative Day1 or 2. This measure was specified forthe Hospital IQR Program beginning<strong>with</strong> FY 2011 and subsequent paymentdetermination years (74 FR 43869through 43870), and information aboutthe measure first appeared on HospitalCompare in December 2010. Thus, webelieve that this measure meets therequirement in section 1886(o)(2)(C)(i)of the Act to be included in the HospitalVBP Program because it has beenspecified for the Hospital IQR Programand will have been displayed onHospital Compare for at least one yearbefore the applicable performanceperiod begins. In addition, SCIP–Inf–9 isNQF-endorsed (#453).The measure is relevant to theHospital VBP Program because itassesses a practice that reduces CatheterAssociated Urinary Tract Infection(CAUTI), and improves patient safety,which is highlighted as one of theInstitute of Medicine’s six quality aimsalong <strong>with</strong> effectiveness, patientcenteredness,timeliness, efficiency, andequity. SCIP–Inf–9 is one of the NQFendorsedSCIP infection preventionmeasures; these measures are referencedas a whole among the metrics listed inthe HHS Action Plan to Prevent HAIs.This Action Plan can be found at thefollowing Web site: http://www.hhs.gov/ash/initiatives/hai/actionplan/.Furthermore, this measure meets othercriteria considered for measure selectionfor the Hospital VBP Program, such asnot being ‘‘topped-out’’ and displayingmeaningful variability among hospitals.Therefore, we believe it would be ameaningful measure to include in theHospital VBP Program.In the CY 2012 OPPS/ASC proposedrule (76 FR 42356), we listed the clinicalprocess of care and patient experienceof care measures we proposed to adoptfor the FY 2014 Hospital VBP Program.We note that these measures arecurrently NQF-endorsed or undergoingNQF review for maintenance. We willcontinue to monitor these measures toensure that they reliably measurehospital quality, for example, ensuringthat, among other things, these measuresare not ‘‘topped-out,’’ and theirmeasurement criteria remain endorsedby NQF and/or are otherwiseappropriate. In the CY 2012 OPPS/ASCproposed rule (76 FR 42356), we notedthat to the extent we determine thatthese measures are topped-out, we maychoose not to finalize them.We invited public comment on theseproposals.<strong>Comment</strong>: Many commentersexpressed support for the proposal toadd the SCIP–Inf–9 measure to the FY2014 Hospital VBP Program.Response: We thank commenters fortheir support.<strong>Comment</strong>: Some commenterssuggested alternative measures asreplacements for the SCIP clinicalprocess measures in the Hospital VBPProgram, such as surgical outcomesmeasures. <strong>Comment</strong>ers argued thealternative measures are risk-adjustedand better capture high quality surgeriesthan the current SCIP measures. Othercommenters suggested that CMSconsider adopting additional HAIprocess and outcome measures in futureyears.Response: We thank commenters fortheir suggestions. We will considerthese categories of additional measuresfor the Hospital VBP Program in thefuture.After consideration of the publiccomments we received, we arefinalizing for the FY 2014 Hospital VBPProgram, the 13 clinical process of caremeasures, including SCIP–Inf–9, andthe patient experience of care measure,composed of 8 dimensions of theHCAHPS survey. Set out in the tablebelow are the finalized clinical processof care measure, the patient experienceof care measure and the mortalitymeasures that will be included in theFY 2014 Hospital VBP Program.BILLING CODE 4120–01–PVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00410 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74531jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–CVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00411 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.141

74532 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES24. Minimum Numbers of Cases andMeasures for the Outcome Domain forthe FY 2014 Hospital VBP Programa. BackgroundSection 1886(o)(1)(C)(ii)(III) of the Actrequires the Secretary to exclude for thefiscal year hospitals that do not reporta minimum number (as determined bythe Secretary) of measures that apply tothe hospital for the performance periodfor the fiscal year. Section1886(o)(1)(C)(ii)(IV) of the Act requiresthe Secretary to exclude for the fiscalyear hospitals that do not report aminimum number (as determined by theSecretary) of cases for the measures thatapply to the hospital for theperformance period for the fiscal year.In the Hospital Inpatient VBP Program<strong>Final</strong> <strong>Rule</strong>, we adopted 13 outcomemeasures for the FY 2014 Hospital VBPProgram (76 FR 26511), but we did notadopt a minimum number of cases forsuch measures to apply to hospitals, nordid we adopt a minimum number ofmeasures necessary for the outcomedomain to be included in the TotalPerformance Score.Under section 1886(o)(1)(C)(iii) of theAct, in determining the minimumnumber of reported measures and casesunder sections 1886(o)(1)(C)(ii)(III) and(IV), the Secretary must conduct anindependent analysis of what minimumnumbers would be appropriate. Asdescribed in the Hospital Inpatient VBP<strong>Final</strong> <strong>Rule</strong> (76 FR 26528 through 26529),to fulfill this requirement, wecommissioned Brandeis University toperform an independent analysis thatexamined technical issues concerningthe minimum number of cases permeasure and the minimum number ofmeasures per hospital for clinicalprocess of care measures needed toderive reliable domain scores. Based onthat analysis, we finalized our policy toexclude any clinical process of caremeasures for which a hospital reportedfewer than 10 cases, and to excludefrom the Hospital VBP Program anyhospital to which fewer than 4 of theclinical process of care measuresapplied. We also finalized our proposalto exclude any hospital reporting fewerthan 100 HCAHPS surveys during theperformance period (76 FR 26529through 26531).To determine the minimum numbersof measures and cases that should berequired for the outcome domain, weagain commissioned BrandeisUniversity to perform an independentanalysis. This analysis examinedhospital performance on the 13 finalizedoutcome measures using data from theproposed baseline periods (discussedbelow) for the FY 2014 Hospital VBPProgram. As we did to analyze thereliability of scores in the clinicalprocess of care domain, differentminimum numbers of cases andmeasures were tested to determine thecombination of minimum numbers ofcases and measures that would lead toreliable scores in the outcome domainwhile allowing the maximum number ofhospitals to be scored for the HospitalVBP Program. Concurrent <strong>with</strong> theBrandeis analysis, we contracted <strong>with</strong>researchers at Mathematica PolicyResearch (Mathematica) to explore theminimum number of cases a hospitalwould need to report for eachindividual outcome measure.b. Minimum Number of Cases forMortality Measures, AHRQ CompositeMeasures, and HAC MeasuresThe analyses by Brandeis andMathematica determined that in order toreceive a score on a mortality measure,the hospital would need to report aminimum of 10 cases, and in order toreceive a score on an AHRQ compositemeasure, a hospital would need toreport a minimum of 3 cases. Consistent<strong>with</strong> these analyses, we proposed thatthese case minimums would apply forthe FY 2014 Hospital VBP Program.Mathematica also examined theminimum number of cases a hospitalwould need to report in order to receivea reliable score on each HAC measure.Along <strong>with</strong> reliability concerns, whenconducting this analysis, Mathematicaalso took into consideration our view,more fully explained in sectionXVI.A.6.d. of the proposed rule, that theincidence of HACs raises significantsafety and quality concerns for patientsand for the Medicare program.Therefore, we believed that a hospitalshould be held accountable when HACsoccur in all instances in order to protectand promote patient safety.Mathematica concluded that aminimum of one Medicare claim wouldbe sufficient to compute an accuratescore on each HAC measure, and inaccordance <strong>with</strong> this conclusion, weproposed that hospitals be evaluatedbased on the presence or absence ofHAC occurrences, regardless of thenumber of Medicare cases a hospitaltreats, as long as the hospital submits atleast one Medicare claim during theperformance period. As we discussfurther below, we anticipated that allparticipating hospitals will submit atleast one Medicare claim during theperformance period, which would besufficient for the hospitals to receive ascore on seven of the eight HACmeasures.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00412 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2c. Minimum Numbers of Measures forOutcome DomainBrandeis researchers also analyzedthe reliability of the outcome domainscores for hospitals depending upon thetotal number of outcome measures onwhich they reported. The analysisshowed that the data provide ameaningful and sufficiently reliableindication of outcomes for hospitals inthe outcome domain as long as thehospitals submit the minimum numberof cases (discussed above) on each of 11outcome measures for FY 2014.Specifically, the analysis found thatusing at least 11 outcome measures perhospital provided sufficientlycomparable reliability of hospitals’scores in the outcome domain(particularly in terms of rank orderingrelative to other hospitals) as compared<strong>with</strong> what hospitals’ scores would havebeen if they had reported on moreoutcome measures. Brandeis concludedthat this 11 measure minimum could becomprised of the 8 HAC measures,together <strong>with</strong> 3 measures comprised ofany combination of the 3 mortalitymeasures and the 2 AHRQ compositemeasures.We note that, in conducting itsanalysis, Brandeis evaluated how theoutcome domain score would beaffected if a hospital reported all eightfinalized HAC measures. However, oneof these HAC measures, Foreign ObjectRetained After Surgery, will not applyto a very small subset of hospitals thatdo not perform surgeries. Taking thisinto account, as well as our own furtheranalysis which showed that thereliability of the outcome domain scorewould not be significantly different as astatistical matter, in the CY 2012 OPPS/ASC proposed rule (76 FR 42357), weproposed that the minimum number ofmeasures a hospital would need toreport in order to receive a score on theoutcome domain is 10, comprised of 7of the 8 HAC measures (all but theForeign Object Retained After Surgerymeasure), along <strong>with</strong> 3 other measurescomprised of any 3 of the other outcomemeasures (for example, 2 AHRQcomposite measures and 1 mortalitymeasure, or 3 mortality measures). Webelieved that this proposal wasconsistent <strong>with</strong> the conclusions reachedby Brandeis. In addition, from aninclusiveness standpoint, we believedthat a 10 measure minimum wouldmaximize hospital participation in theFY 2014 Hospital VBP Program.Furthermore, because we believedthat every domain is an importantcomponent of an accurate TotalPerformance Score, we proposed that, inorder for a hospital to receive a Total

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74533jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Performance Score and be included inthe FY 2014 Hospital VBP Program, thehospital must have enough cases andmeasures to report on all finalizeddomains. This proposed requirementshould not impose any new barrier tohospitals or greatly reduce the numberof hospitals in the FY 2014 HospitalVBP Program as compared to the FY2013 Hospital VBP Program, whenhospitals will only be scored on clinicalprocess of care and patient experienceof care measures. This is because, asstated above, an analysis of the existingdata shows that virtually all hospitalsparticipating in the FY 2014 HospitalVBP Program will report on a sufficientnumber of cases and measures to receiveoutcome domain scores in addition tothe clinical process and patientexperience domain scores for FY 2014.We invited public comment on theproposed minimum numbers of casesand measures required for the outcomedomain in the FY 2014 Hospital VBPProgram. We also invited publiccomment on the proposed requirementthat hospitals must report on all fourdomains (if finalized) to receive a TotalPerformance Score for the FY 2014Hospital VBP Program.<strong>Comment</strong>: Several commenters urgedCMS to make public our independentanalyses of the minimum cases andmeasures required for the variousHospital VBP Program domains, arguingthat they could not provide informedcomments in response to thoseproposals <strong>with</strong>out the analyses.Response: To the extent that theseanalyses are not subject to privilege, wewill make available additionalinformation, including the study resultsand methods, on the Hospital Value-Based Purchasing Web site at http://www.cms.gov/hospital-value-basedpurchasing/<strong>with</strong>in 30 to 45 days of thisfinal rule <strong>with</strong> comment period.<strong>Comment</strong>: Some commenters objectedto the proposals for minimum numbersof cases and measures in the outcomedomain, arguing that the minimumnumbers of cases proposed for HAC andAHRQ measures are too low.<strong>Comment</strong>ers argued that these proposalswill result in inaccurate performancemeasurement, especially for low-volumehospitals. Some commenters suggestedthat CMS apply the AHRQ compositemeasures’ minimum number of cases toeach component indicator.Response: We thank commenters fortheir input on appropriate minimumnumbers of cases for HAC and AHRQmeasures. We will consider thesecomments in future rulemaking.<strong>Comment</strong>: Some commenters soughtmore clarity on the different minimumnumbers of cases and measures requiredin various parts of the Hospital VBPProgram. <strong>Comment</strong>ers argued that CMSshould choose a consistent standard forminimum cases and measures to avoidprovider confusion.Response: As noted in the HospitalInpatient VBP Program <strong>Final</strong> <strong>Rule</strong> (76FR 26528), we believe the mostimportant factor in setting minimumcase and measure thresholds for theHospital VBP Program is to determine acombination of thresholds that allowsthe maximum number of hospitals to bescored reliably. While we agree that asingle minimum cases standard acrossdomains may reduce the potential forconfusion, we have proposed differentstandards where we believe them to benecessary to accommodate differenttypes of measures and to be as inclusiveas possible. We believe that ourproposals appropriately reflect thedifferent types of measure datacaptured, the relative importance of themeasures <strong>with</strong> regard to patient safetyand our belief that as many hospitals aspossible should be allowed toparticipate in the program.<strong>Comment</strong>: Some commenterssuggested that CMS use a 25-caseminimum for the mortality measures,arguing that 25 cases is the standard forreporting on Hospital Compare and isrecommended by the Institute ofMedicine.Response: We have used a 25-caseminimum for public reporting.However, our analysis determined thata hospital only needed to report aminimum of 10 cases in order to receivea reliable score on the mortalitymeasures. We note that this minimumnumber of cases is also consistent <strong>with</strong>the minimum number of cases requiredin the clinical process of care domain.We believe that this minimum numberof cases provides us <strong>with</strong> accuratemortality measure data for use in theoutcome domain and in the calculationof the Total Performance Score, whileenabling hospital inclusion andproviding consistency <strong>with</strong> the caseminimums in the clinical process ofcare domain.<strong>Comment</strong>: Some commenters notedthat if CMS chose to include only thethree mortality measures in the outcomedomain in the FY 2014 program that itwould need to re-evaluate the minimumnumber of measures required for ahospital to be eligible for the domain.Response: We thank the commentersfor this observation, and agree thatbecause we have decided to suspend theeffective date of the HAC and AHRQmeasures, and use only the threemortality measures in the outcomedomain, we need to re-evaluate theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00413 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2minimum number of measuresnecessary for the domain.In conjunction <strong>with</strong> Brandeis, wereexamined the previous analysesregarding the sufficient number ofmeasures needed to produce a reliableoutcome domain score and havedetermined that hospitals must reporton two of the three mortality measuresin order to receive an outcome domainscore. In the analysis, Brandeis notedthat the vast majority of subsection (d)hospitals admit at least 10 congestiveheart failure cases and at least 10pneumonia cases each year. However,many fewer hospitals admit more than10 acute myocardial infarction casesannually. The Brandeis study indicatedthat a large number of these hospitals(2,548) would receive an outcomedomain score if the minimums of 10mortality cases, 3 AHRQ cases, and 1Medicare discharge for HAC measuresare reported. A large number of theremaining hospitals (422) would receivean outcome domain score if the AMImortality measure were excluded fromthis minimum measure threshold. Thisdifference occurs because smallerhospitals typically do not treat asufficient number of AMI cases to reachthe minimum threshold of ten casesneeded to generate useful AMI mortalityvalues. If the AMI mortality measurewere excluded from the minimummeasure threshold, approximately 3,000hospitals would receive outcomedomain scores in the FY 2014 HospitalInpatient VBP Program, which isapproximately the same number ofhospitals able to participate in the FY2013 Hospital Inpatient VBP Program.As we noted above, we aresuspending the effective date of theAHRQ and HAC measures. Therefore,requiring two mortality measures toqualify for participation will allowmany more hospitals to be included inthe Hospital VBP Program, which isconsistent <strong>with</strong> our views on theappropriate balance between reliabilityand inclusiveness that we described inthe Hospital Inpatient VBP Program<strong>Final</strong> <strong>Rule</strong> (76 FR 26529). Mosthospitals will report sufficient data onall three mortality measures, whilealmost all hospitals will reportsufficient data on at least two of themortality measures. This approachallows us to include as many hospitalsas possible in the program whileensuring the reliability of the domainscore. In either case, the outcomedomain is sufficiently reliable toinclude as part of the Total PerformanceScore.<strong>Comment</strong>: Some commenterssupported the proposal to requirehospitals to report on all four proposed

74534 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2domains in order to receive a TotalPerformance Score.Response: We thank commenters fortheir support.As stated above, we are not finalizingour proposal regarding the minimumnumbers of cases and measures in theoutcome domain insofar as thatproposal relates to the HAC and AHRQmeasures. However, after consideringthe comments, we are finalizing ourproposal that a hospital must report aminimum of 10 cases to receive a scoreon a mortality measure, and we notethat this minimum is consistent <strong>with</strong>our previously finalized policyregarding the minimum number of casesthat a hospital must report in order toreceive a score on a clinical process ofcare measure. As we stated in theproposed rule, this policy is consistent<strong>with</strong> the analyses performed byBrandeis and Mathematica (76 FR42357).Accordingly, we are finalizing that theminimum number of measures that ahospital must report in order to receivea score on the outcome domain is twomeasures. As discussed further below,we will normalize outcome domainscores in order to make fair comparisonsin that domain between hospitals <strong>with</strong>scores on two mortality measures andthose hospitals reporting sufficient dataon all three.Concurrently, we are finalizing ourproposal that hospitals must report theminimum number of cases andmeasures on all finalized domains inorder to receive a Total PerformanceScore in FY 2014. Because we aresuspending the effective date of theMedicare spending per beneficiarymeasure, the number of finalizeddomains will be three instead of four.5. Performance <strong>Period</strong>s and Baseline<strong>Period</strong>s for FY 2014 MeasuresSection 1886(o)(4) of the Act requiresthe Secretary to establish a performanceperiod for the Hospital VBP Program fora fiscal year that begins and ends priorto the beginning of such fiscal year.a. Clinical Process of Care Domain andPatient Experience of Care DomainPerformance <strong>Period</strong> and Baseline <strong>Period</strong>In the CY 2012 OPPS/ASC proposedrule (76 FR 42357 through 42358), forthe FY 2014 Hospital VBP Program, weproposed a 9-month (3-quarter)performance period from April 1, 2012to December 31, 2012 for the clinicalprocess of care and patient experienceof care domain measures. As describedin the Hospital Inpatient VBP Program<strong>Final</strong> <strong>Rule</strong> (76 FR 26494 through 26495),due to various statutory deadlines andother challenges we faced inimplementing the FY 2013 HospitalVBP Program in a timely fashion, weadopted a 3-quarter performance periodfor the clinical process of care andpatient experience of care domains forthe FY 2013 Hospital VBP Program. Wehave stated our intent to move to a 12-month performance period whenfeasible. We believe that this proposed3-quarter performance period will allowus to notify hospitals of the amount oftheir value-based incentive payment atleast 60 days before the start of FY 2014.It will also allow us to considerselecting CY 2013, a 12-monthperformance period, as the performanceperiod for the FY 2015 Hospital VBPProgram. In addition, this proposedperformance period for FY 2014 wouldbegin immediately after the end of theFY 2013 performance period, providereliable performance information, andensure that incentive payments can bemade beginning <strong>with</strong> October 1, 2013discharges.As we explained in the HospitalInpatient VBP Program <strong>Final</strong> <strong>Rule</strong> (76FR 26485), we believe that baseline datashould be used from a comparable 9-month (3-quarter) period. Therefore, weproposed April 1, 2010 to December 31,2010 as the baseline period for theseproposed measures for FY 2014. Weinvited public comment on theseproposals.<strong>Comment</strong>: Many commentersexpressed support for the proposedclinical process and patient experienceperformance periods for FY 2014.Response: We thank commenters fortheir support.After consideration of the publiccomments we received, we arefinalizing the performance period andbaseline period for FY 2014 clinicalprocess of care and patient experienceof care measures as proposed.b. Outcome Domain and Performance<strong>Period</strong>s and Baseline <strong>Period</strong>sIn the Hospital Inpatient VBP Programproposed rule, we proposed an 18-month performance period of July 1,2011 to December 31, 2012 and an 18-month baseline period of July 1, 2008 toDecember 31, 2009 for the threemortality outcome measures currentlyspecified under the Hospital IQRProgram (MORT–30–AMI, MORT–30–HF, MORT–30–PN). In response topublic comment and for reasonsdiscussed in the Hospital Inpatient VBPProgram <strong>Final</strong> <strong>Rule</strong> (76 FR 26494), weadopted a 12-month performance periodof July 1, 2011 to June 30, 2012 and a12-month baseline period of July 1, 2009to June 30, 2010 for these measures.In the Hospital Inpatient VBP Program<strong>Final</strong> <strong>Rule</strong>, we stated that we wouldVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00414 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2begin the performance period for theproposed HAC and AHRQ measures 1year after such measures were includedon Hospital Compare. Because all thefinalized HAC and AHRQ measureswere included on Hospital Compare onMarch 3, 2011, we finalized March 3,2012 as the start of the performanceperiod for these measures in theHospital Inpatient VBP Program <strong>Final</strong><strong>Rule</strong> (76 FR 26494 through 26495). Westated in the Hospital Inpatient VBPProgram <strong>Final</strong> <strong>Rule</strong> (76 FR 26495) thatwe would propose the performanceperiod end date for these measures inthe CY 2012 OPPS/ASC proposed rule.We noted that in order for the HACand AHRQ measures to be scored for theFY 2014 Hospital VBP Program, theperformance period for these measureswould need to end by the fourth quarterof FY 2012 to allow us sufficient timeto collect and process the necessaryclaims data. We stated that this timeperiod needs to be longer for HAC andAHRQ measures than for clinicalprocess and patient experiencemeasures, which are based on chartabstracteddata and surveys rather thanclaims. Claims data require at least threemonths following a given calendarquarter to process and necessitate twoadditional months to complete measurecalculation, including risk adjustment,statistical modeling, quality assurance,programming, and generating reports onpatient-level data, which is provided tohospitals.Therefore, in the CY 2012 OPPS/ASCproposed rule (76 FR 42358), weproposed to adopt a nearly 7-monthperformance period for the HAC andAHRQ measures for FY 2014 byselecting September 30, 2012 as the endof the performance period. We statedthat while we would prefer to use a 12-month performance period, analysis ofexisting data indicates that a 7-monthperformance period would providesufficiently robust values on thesecritical measures.We also stated that because webelieve that a comparable period shouldbe selected for the baseline data, weproposed to set March 3, 2010 toSeptember 30, 2010 as the baselineperiod for the proposed HAC and AHRQmeasures for the FY 2014 Hospital VBPProgram. We invited public comment onthese proposals.<strong>Comment</strong>: Some commenters opposedthe performance and baseline periodproposals, arguing that the variousperformance period dates specified forthe measures <strong>with</strong>in each domain isconfusing and impose hardships onhospitals’ quality management staff.<strong>Comment</strong>ers suggested that CMS instead

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74535propose to adopt harmonizedperformance periods.Response: We agree that a singleperformance period that applies to all ofthe Hospital VBP measures for aparticular payment year would bedesirable and we intend to movetowards this goal in future programyears. In the meantime, we proposed toadopt performance periods that takeinto account the time limitationsassociated <strong>with</strong> collecting performancedata and scoring for different measures.We note that for the FY 2014 HospitalVBP Program, the clinical process andpatient experience of care measures willhave the same performance period. Webelieve that all providers will work totrack achievement and improvementacross all measures and we willcontinue to work towards harmonizedperiods in the future.As noted above, we are suspendingthe effective dates of the AHRQ andHAC measures for the Hospital VBPProgram, and the mortality measureswill be the only measures in theoutcome domain in FY 2014. Thefollowing tables include all finalizedbaseline and performance periods forthe FY 2013 and FY 2014 programyears.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES26. Performance Standards for the FY2014 Hospital VBP Programa. BackgroundSection 1886(o)(3)(A) of the Actrequires the Secretary to establishperformance standards for the measuresselected under the Hospital VBPProgram for a performance period forthe applicable fiscal year. Theperformance standards must includelevels of achievement and improvement,as required by section 1886(o)(3)(B) ofthe Act, and must be established andannounced not later than 60 days beforethe beginning of the performance periodfor the fiscal year involved, as requiredby section 1886(o)(3)(C) of the Act.Achievement and improvementstandards are discussed more fully inthe Hospital Inpatient VBP Program<strong>Final</strong> <strong>Rule</strong> (76 FR 26511 through 26513).In addition, when establishing theperformance standards, section1886(o)(3)(D) of the Act requires theSecretary to consider appropriatefactors, such as: (1) Practical experience<strong>with</strong> the measures, including whether asignificant proportion of hospitals failedto meet the performance standardduring previous performance periods;(2) historical performance standards; (3)improvement rates; and (4) theopportunity for continuedimprovement.b. Mortality MeasuresIn the Hospital Inpatient VBP Program<strong>Final</strong> <strong>Rule</strong>, we finalized theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00415 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2achievement performance standard(achievement threshold) for each of theproposed FY 2014 Hospital VBPProgram mortality measures at themedian of hospital performance (50thpercentile) during the applicablebaseline period. We also finalized theimprovement performance standard(improvement threshold) for eachmortality measure at each specifichospital’s performance on each measureduring the baseline period of July 1,2009 to June 30, 2010 (76 FR 26511through 76 FR 26512). In addition, wefinalized the precise achievementthresholds and benchmarks for thesemortality measures (76 FR 26513), asshown below:ER30NO11.142

74536 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2We received a few comments on themortality measure performancestandards.<strong>Comment</strong>: Some commenters arguedthat the performance standards for themortality measures are so compressed or‘‘topped-out’’ as to render themineffective measures of quality forperformance scoring.Response: We disagree <strong>with</strong>commenters’ assertion. As describedabove, we finalized performancestandards for the mortality measuresselected for the FY 2014 Hospital VBPProgram in the Hospital Inpatient VBP<strong>Final</strong> <strong>Rule</strong> and considered comments onthis topic there (76 FR 26511 through26513).As we noted in the Hospital InpatientVBP Program <strong>Final</strong> <strong>Rule</strong> (76 FR 26496through 26497), our analysis of possiblytopped-out measures was not limited tothe breadth of the achievement range.We also analyzed the variation inmeasure scores achieved by hospitals, asa small coefficient of variation wouldindicate that the distribution ofindividual hospital scores is clusteredtightly around the mean value, whichwould suggest that the measure is notuseful to draw distinctions betweenindividual hospital performance scores.We do not believe the mortalitymeasures meet our criteria for toppedoutmeasures.c. Clinical Process of Care and PatientExperience of Care FY 2014Performance StandardsAs discussed in section XVI.A.5.a. ofthe CY 2012 OPPS/ASC proposed rule(76 FR 42359 through 42360), weproposed to adopt a 9-month (3-quarter)performance period of April 1, 2012 toDecember 31, 2012 for the clinicalprocess of care and patient experienceof care measures for the FY 2014Hospital VBP Program. To setachievement and improvementperformance standards for theseproposed measures for the FY 2014Hospital VBP Program, in the CY 2012OPPS/ASC proposed rule (76 FR 42359),we proposed to use the same approachadopted in the Hospital Inpatient VBPProgram <strong>Final</strong> <strong>Rule</strong> for the FY 2013Hospital VBP Program. That approach,as well as our rationale for adopting it,is explained in detail at 76 FR 26511through 76 FR 26513.We proposed to set the achievementperformance standard (achievementthreshold) for each proposed measure atthe median of hospital performance(50th percentile) during the proposedbaseline period of April 1, 2010 throughDecember 31, 2010. We also proposed toset the improvement performancestandard (improvement threshold) foreach of the proposed measures at eachspecific hospital’s performance on theapplicable measure during the proposedbaseline period of April 1, 2010 throughVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00416 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2December 31, 2010. We proposed to seteach benchmark for each measure as themean of the top decile performance ofapplicable hospitals during theproposed baseline period. We invitedpublic comment on these proposals.<strong>Comment</strong>: Some commenters askedCMS to release the HCAHPS floors forthe FY 2014 program year to allowhospitals to plan for qualityimprovement efforts.Response: We published the floors(0th percentile) for the eight HCAHPSdimensions included in the FY 2013Hospital VBP Program baseline periodin the Hospital Inpatient VBP Program<strong>Final</strong> <strong>Rule</strong> (76 FR 26519). The FY 2014Hospital VBP Program baseline periodfloor for each of the HCAHPSdimensions appears below.<strong>Comment</strong>: Some commenters wereconcerned that the risk adjustmentmodels for the HCAHPS survey are notadequate and do not control for theseverity of a patient’s condition,socioeconomic status, and geographicdifferences.Response: HCAHPS dimensions arecurrently patient-mix adjusted. Weadjust HCAHPS data for patientcharacteristics that are not under thecontrol of the hospital that may affectpatient reports of hospital experiences.The goal of adjusting for patient-mix isto estimate how different hospitalswould be rated if they all provided careto comparable groups of patients. Aspart of the endorsement process forER30NO11.143

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74537HCAHPS, NQF endorsed the HCAHPSpatient-mix adjustment currently in use.The HCAHPS patient-mix adjustment(PMA) model incorporates importantand statistically significant predictors ofpatients’ HCAHPS ratings that also varymeaningfully across hospitals (O’Malleyet al., 2005). The PMA model includesseven variables, as follows: Selfreportedhealth status, education,service line (medical, surgical, ormaternity care), age, response orderpercentile (also known as ‘‘relative lagtime,’’ which is based on the timebetween discharge and surveycompletion), service line by linear ageinteractions, and primary language otherthan English.Initially the model also includedadmission through an emergency room,but because admission through anemergency room is no longer availableon the UB–92 Form, this adjustor is nolonger available for the patient-mixmodel. We are exploring other optionsto obtain that information in the future.We have found that evaluations ofcare increase <strong>with</strong> self-rated health andage (at least through age 74), anddecrease <strong>with</strong> educational attainment.Maternity service has generally morepositive evaluations than medical andsurgical services. Response orderpercentile (relative lag time) findingsshow that late responders tend toprovide less positive evaluations thanearlier responders. From researchconducted during the development ofHCAHPS, we found little evidence thatDRG matters beyond the service line,which is included in the patient mixmodel.To further address specific concernsabout the adjustment model, it isimportant to note that self-reportedhealth status is a widely acceptedmeasure of a person’s overall healthstatus. In general, ‘‘how would you rateyour health’’ is the most widely usedsingle self-reported health item and isused in many national health surveys.Education also captures importantaspects of socio-economic status.Income is generally not available toadjust survey data. Patient-mixadjustment is based on variation bypatient-level factors <strong>with</strong>in hospitals sothat true differences between hospitalsare not included in the adjustment.Controlling for geographic region (ahospital-level factor) as part of a patientmixadjustment model could maskimportant differences in quality acrossthe country.<strong>Comment</strong>: A few commenters wereconcerned that the HCAHPS scorespublicly reported on Hospital Comparediffer by bed size, type of hospital andgeography and thought the HCAHPSscores should be adjusted for thesefactors. These commenters thoughtHCAHPS needs to be vetted more tounderstand these differences to ensurethat HCAHPS is a reliable measure.Response: We recognize that HCAHPSresults differ by bed size and otherhospital characteristics. However, we donot interpret these differing results tomean that the survey should be riskadjustedfor these factors. HCAHPSresults also differ among hospitals <strong>with</strong>the same characteristics, which we viewas evidence that the results account fordifferences in the quality of carereceived by patients. In general, riskadjustmentmodels control forexogenous factors that are beyond thecontrol of a hospital, not for hospitalcharacteristics that are endogenous, or<strong>with</strong>in their control.We also believe that the HCAHPSsurvey has been thoroughly vetted,including through reviews in peerreviewed journals and through noticeand comment rulemaking when weadopted it for the Hospital IQR Program.HCAHPS also has been endorsed by theNQF.After consideration of the publiccomments we received, we arefinalizing the FY 2014 clinical processof care and patient experience of careperformance standards as proposed. Weset out final achievement performancestandards for the finalized FY 2014clinical process of care and patientexperience of care measures using theapplicable baseline period data in thetable below.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00417 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74538 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00418 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.144

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74539jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00419 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.145

74540 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–Cd. AHRQ MeasuresFor the reasons we have discussed inthe Hospital Inpatient VBP Program<strong>Final</strong> rule (76 FR 26514), in the CY 2012OPPS/ASC proposed rule (76 FR 42360),we proposed to set the achievementperformance standard (achievementthreshold) for each AHRQ compositemeasure at the median of hospitalperformance (50th percentile) duringthe proposed baseline period of March3, 2010 to September 30, 2010. Weproposed to set the benchmark for eachAHRQ composite measure at the meanof the top decile of hospital performanceduring the proposed baseline period ofMarch 3, 2010 to September 30, 2010.We also proposed to set theimprovement performance standard(improvement threshold) for each of theproposed measures at each specifichospital’s performance on theapplicable measure during the proposedbaseline period of March 3, 2010 toSeptember 30, 2010.We did not receive any comments onthe proposed AHRQ measuresperformance standards. However, asdescribed above, we will not finalizethese performance standards.e. HAC MeasuresWe adopted eight HAC measures inthe Hospital Inpatient VBP Program<strong>Final</strong> <strong>Rule</strong>. For each of these eight HACmeasures, at least one quarter ofhospitals achieved a 100 percent ratingbased on administrative data for all IPPShospitals participating in the HospitalIQR Program for Medicare dischargesfrom October 1, 2008 through June 30,2010 (that is, they did not have anyreportable HAC occurrences). Inaddition, based on the administrativedata from October 1, 2008 through June30, 2010, at least one half of allhospitals achieved a measure rate of 100percent on six of the eight HACmeasures (Foreign Object Retained AfterSurgery; Air Embolism; BloodIncompatibility; Pressure Ulcer StagesIII and IV; Catheter-Associated UTI;Manifestations of Poor GlycemicVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00420 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Control). Accordingly, the achievementthreshold for these measures would bezero if we proposed to set performancestandards for each individual measureusing the same methodology that wefinalized <strong>with</strong> respect to the mortalitymeasures.We believe that the HAC measures areextremely important in promotingpatient safety, improving quality of care,and reducing costs. According to a 2010HHS Office of the Inspector Generalreport, entitled ‘‘Adverse Events inHospitals: National Incidence AmongMedicare Beneficiaries’’ (http://oig.hhs.gov/oei/reports/oei-06-09-00090.pdf), an estimated 13.5 percent ofhospitalized Medicare beneficiariesexperienced adverse events during theirhospital stays. We believe that all thefinalized HAC measures assess thepresence of conditions and outcomesthat are reasonably preventable if highquality care is furnished to the Medicarebeneficiary. We also believe that theincidence of HACs in general raisesmajor patient safety issues for Medicarebeneficiaries. Outcome measures,ER30NO11.146

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74541jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2including HAC outcome measures, arewidely regarded by the providercommunity as strongly indicative of thequality of medical care and as integralto reporting and improving quality andpatient safety. Therefore, we believe it isimportant to include HAC outcomemeasures in the Hospital VBP Program.For these reasons, in the CY 2012OPPS/ASC proposed rule (76 FR 42360through 42361), we proposed that ourtopped-out policy would not apply tothe HAC measures. We also proposed totreat the eight individual HAC measuresas a single aggregate HAC score forpurposes of performance scoring, andbelieve that this approach will enable usto calculate meaningful distinctionamong hospitals and variation inhospital performance on thesemeasures. In addition, this aggregationof the scores for the HAC measuresensures that the HAC measures do notunduly outweigh the remainder of themeasures in the outcome domain.Accordingly, in taking into account ourHAC policy and reliability concerns, weproposed to set achievementperformance standards, benchmarks,and improvement performancestandards based on hospital combinedperformance on seven or eight HACmeasures, as applicable, during theproposed performance or baselineperiod. Because certain hospitals willreport on only seven of the eight HACmeasures, we proposed separateperformance standards depending onwhether the hospitals report on seven oreight HAC measures.We proposed to set the achievementperformance standard (achievementthreshold) for the HAC aggregate scorefor those hospitals that report on alleight of the HAC measures at themedian of hospital performance (50thpercentile) of those hospitals reportingon all eight of the HAC measures duringthe proposed baseline period of March3, 2010 to September 30, 2010. Weproposed to set the achievementperformance standard (achievementthreshold) for the HAC aggregate scorefor those hospitals that report on sevenof the HAC measures at the median ofhospital performance (50th percentile)on only those seven measures for thosehospitals reporting on either seven oreight of the HAC measures during theproposed baseline period of March 3,2010 to September 30, 2010.We proposed to set the benchmark forthe HAC aggregate score for thosehospitals that report on all eight of theHAC measures at the mean of the topdecile of hospital performance for thosehospitals reporting on all eight HACmeasures during the proposed baselineperiod of March 3, 2010 to September30, 2010. We proposed to set thebenchmark for the HAC aggregate scorefor those hospitals that report on sevenof the HAC measures at the mean of thetop decile of hospital performance ononly those seven measures for hospitalsreporting on either seven or eight of theHAC measures during the proposedbaseline period of March 3, 2010 toSeptember 30, 2010.We also proposed to set theimprovement performance standard(improvement threshold) for the HACaggregate score at each specifichospital’s performance during theproposed baseline period of March 3,2010 to September 30, 2010, whetherthe hospitals report on seven or eightHAC measures. Please see below forfurther discussion of the proposedaggregate HAC scoring methodology.We noted that the proposedperformance standards for the HACaggregate score were shown as a scorecomposed of all eight individual HACmeasures. We recognized that allhospitals report on seven of theseindividual measures, and nearly all(about 95 percent) of hospitals report alleight. However, a small number ofhospitals do not report on the ForeignObject Removal after Surgery HACmeasure. We believe that any numericaldifferences between the HACperformance standards for hospitalsreporting on seven of eight HACmeasures compared to the standards forhospitals reporting on all eight HACmeasures will be statisticallyinsignificant. However, in the CY 2012OPPS/ASC proposed rule (76 FR 42361),we noted that we intended to provideupdated performance standards in theCY 2012 OPPS/ASC final rule <strong>with</strong>comment period for those hospitals onlyreporting on seven of the eight HACmeasures.We invited public comment on theproposed methodology for settingperformance standards for the aggregateHAC score for HAC measures finalizedfor the FY 2014 Hospital VBP Program.<strong>Comment</strong>: Some commenters asked ifCMS had considered how to transitionperformance data on claims-basedmeasures from ICD–9 to ICD–10.<strong>Comment</strong>ers asked if CMS wouldconsider delaying claims-basedmeasures given the burden on providersof implementing ICD–10.Response: We are considering how tobest conduct the transition from ICD–9to ICD–10 for purposes of performancescoring and will provide more details infuture rulemaking.<strong>Comment</strong>: Some commentersexpressed concerns about the proposalsto use HAC measures capturinghealthcare-associated infections (HAI)VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00421 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2data, especially vascular catheterassociatedbloodstream infections andcatheter-associated urinary tractinfections. Some commenters arguedthat unintended consequences forpatient care, such as patient falls, mayresult from catheter removal tooquickly. Other commenters argued thatscoring HAC measures in the aggregatewill complicate CMS’ stated intent toretire claims-based HAI measures whenmore appropriate measures becomeavailable. <strong>Comment</strong>ers also argued thataggregating the HAC measures maymislead consumers and suggested thatCMS remove all HACs related to HAIsfrom the aggregated HAC score. Somecommenters suggested that CMS use adifferent methodology to setperformance standards for the HACmeasures, arguing that they are veryhigh standards to be attained asproposed. Other commenters arguedthat HACs represent such rare eventsthat the proposed separate performancestandards for hospitals depending onwhether they report 7 or 8 HACs couldexacerbate scoring reliability problems.Response: As explained above, we arenot finalizing any proposals related tothe HAC measures at this time. Wethank commenters for their input andwill consider these comments in futurerulemaking.After consideration of the publiccomments we received, we are notfinalizing the performance standardsproposed for the HAC measures.7. FY 2014 Hospital VBP ProgramScoring Methodologya. FY 2014 Domain ScoringMethodologyIn the Hospital Inpatient VBP Program<strong>Final</strong> <strong>Rule</strong>, we adopted a methodologyfor scoring all clinical process of care,patient experience of care, and outcomemeasures. As noted in the HospitalInpatient VBP Program <strong>Final</strong> <strong>Rule</strong>, thismethodology outlines an approach thatwe believe is well-understood by patientadvocates, hospitals and otherstakeholders because it was developedduring a lengthy process that involvedextensive stakeholder input, and waspresented by us in a report to Congress.Further, we have conducted extensiveresearch on a number of other scoringmodels for the Hospital VBP Program toensure a high level of confidence in thescoring methodology (76 FR 26514). Inaddition, we believe that, for simplicityand consistency of the Hospital VBPProgram, it is important to scorehospitals under the same generalmethodology for subsequent fiscal years,<strong>with</strong> appropriate modifications toaccommodate new domains and

74542 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2measures. We finalized a similar scoringmethodology for the Medicare spendingper beneficiary measure in the FY 2012IPPS/LTCH PPS final rule (76 FR 51654through 51656).Therefore, in the CY 2012 OPPS/ASCproposed rule (76 FR 42361), weproposed to use the same scoringmethodology for these measures in theFY 2014 Hospital VBP Program, <strong>with</strong>the changes discussed below for HACmeasures. We invited public commenton this proposal.<strong>Comment</strong>: Some commenters soughtclarification on the outcome domaincalculation, specifically asking if CMSintends to weight measures equally<strong>with</strong>in the domain.Response: As described in theHospital Inpatient VBP Program <strong>Final</strong><strong>Rule</strong> (76 FR 26525), hospitals’ measurescores are ‘‘summed (weighted equally)to determine the total earned points forthe domain.’’ As we noted above, sincesome hospitals will not report the 30-day AMI mortality measure, we willconvert the points earned for each of theremaining mortality measures to apercentage of total points. The pointsearned for each measure that applies tothe hospital would be summed(weighted equally) to determine thetotal earned points for the domain.<strong>Comment</strong>: Some commenters askedCMS to clarify the Hospital VBP scoringmethodology, arguing that it is unclearhow Hospital Compare data aretranslated into value-based purchasingscores.Response: We interpret thecommenter to erroneously believe thatthe measure rates currently posted onHospital Compare are directly translatedinto Hospital VBP scores. That is not thecase. Clinical process of care and patientexperience of care measure ratescurrently displayed on HospitalCompare are calculated using fourquarters of Hospital IQR Program dataadded on a rolling basis, while the HAC,AHRQ and mortality measure ratescurrently displayed on HospitalCompare are calculated using data fromacross multiple years. Under theHospital VBP Program, we will use themeasure data submitted <strong>with</strong> respect tothe applicable performance period tocalculate performance scores using thescoring methodology finalized for theprogram.<strong>Comment</strong>: Some commenters arguedthat CMS should align HospitalCompare data <strong>with</strong> Hospital VBPperformance periods to allow hospitalsto more easily track their performancein the Hospital VBP Program.<strong>Comment</strong>: Some commenters opposedthe performance and baseline periodproposals, arguing that the various datesspecified are confusing and imposehardships on hospitals’ qualitymanagement staff. <strong>Comment</strong>erssuggested that CMS instead proposeharmonized performance periods.Response: We intend to work towardsharmonized performance periods in theHospital VBP Program in future programyears, and we will take these commentsinto account as we determine how bestto do so in the future. We intend todisplay Hospital VBP data on a sectionof the Hospital Compare Web site, asrequired by section 1886(o)(10) of theAct, and will provide details on thosepostings in future rulemaking.After consideration of the publiccomments we received, we arefinalizing our general scoringmethodology for the clinical processand patient experience domains asoutlined in the Hospital Inpatient VBPProgram <strong>Final</strong> <strong>Rule</strong>. We are alsofinalizing our scoring methodology forthe outcome domain, insofar as itapplies to the mortality measures.b. HAC Measures Scoring MethodologyIn the CY 2012 OPPS/ASC proposedrule (76 FR 42361 through 42362), weproposed to score the HAC measuresusing an aggregated HAC rate based onthe unweighted average of the rates ofthe individual HAC measures. However,as explained above, we are aware thathospitals may only report on seven ofthe eight finalized HAC measures. Thisis because some hospitals do notperform surgeries, and therefore wouldnot submit eligible claims that would bethe basis for the Foreign Object RetainedAfter Surgery HAC measure. Theremaining seven HAC measures wouldapply to all hospitals, however, becauseall hospitals that participate in theHospital VBP Program will submiteligible claims for these measures. Wealso anticipate that most hospitals willreport on all eight of the individualHAC measures because most hospitalsthat participate in the Hospital VBPProgram perform surgeries and wouldsubmit eligible surgical claims thatwould be the basis for the ForeignObject Retained After Surgery HACmeasure.Accordingly, we proposed that theaggregate HAC score for each hospital becalculated as the equally-weightedaverage of the rates on all HACmeasures for which the hospital reportsMedicare claims, which will most oftenbe an equally-weighted average of therates on all eight measures, but may berates on seven of the HAC measures. Asstated above, the HAC aggregate scorewill be calculated if a hospital submitsat least one Medicare claim during theperformance period. For example, if aVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00422 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2hospital submits one or more Medicareclaims during the performance period,and those claims do not indicate anyHAC occurrences, the hospital willreceive a perfect score on all applicableHAC measures. The aggregate HAC ratewould then be used to assign points inaccordance <strong>with</strong> the proposedperformance standards discussed aboveto calculate an individual hospital’saggregate HAC achievement andimprovement scores. The singleaggregate HAC score would be thegreater of the hospital’s achievement orimprovement score. The hospital’saggregate HAC score would becombined <strong>with</strong> the hospital’s score onother outcome measures to derive anoutcome domain score, <strong>with</strong> theaggregate HAC score weighted equally<strong>with</strong> the other outcome measures in thedomain. We note that in assigningpoints for this aggregate HAC score,lower aggregate HAC scores representbetter performance. We believe ourproposed aggregate scoring methodologyfor HAC measures allows us tomeaningfully score hospitals on thesecritical patient safety measures.We welcomed public comment onthis proposal.<strong>Comment</strong>: While many commentersgenerally objected to the proposals touse HAC measures, most commentersdid not object to the proposedaggregated scoring methodology.<strong>Comment</strong>ers argued that CMS mustfinalize a HAC scoring methodology thatis statistically reliable in order toprovide reliable comparisons betweenhospitals on these measures.Response: We thank commenters fortheir support. However, for the reasonsdiscussed above, we are not finalizingour proposed scoring methodology <strong>with</strong>respect to the HAC measures at thistime. We will consider these commentsin future rulemaking.After consideration of the publiccomments we received, we are notfinalizing our proposed methodology toscore HAC measures as an aggregate.8. Ensuring HAC Reporting AccuracyAs described in the FY 2012 IPPS/LTCH PPS proposed rule, for the FY2013 Hospital VBP Program, thevalidation process we adopted for theHospital IQR Program will ensure thatthe Hospital VBP data are accurate (76FR 26537 through 26538). In addition,Medicare Administrative Contractors(MACs) review claims to ensure thataccurate Medicare payments are made.This claims review ensures that HACdata included on the claims areaccurately reported both for the HospitalIQR Program and the Hospital VBPProgram. In addition, we are

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74543jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2considering proposing to adoptadditional targeting to assess theaccuracy of HAC data reported onclaims. Specifically, we are consideringtargeting a subset of hospitals that reportzero or an aberrantly low percentage ofHACs on Medicare fee-for-service IPPSclaims relative to the overall nationalaverage of HACs.This consideration is supported byour analysis of HAC rates calculatedusing data from Medicare fee-for-serviceclaims from October 1, 2008 throughJune 30, 2010. We publicly releasedthese rates in March 2011, and they canbe found on our Web site at: http://www.cms.gov/HospitalQualityInits/06_HACPost.asp#TopOfPage. Thisanalysis revealed a range in hospitalreportingof the eight HACs from a lowof 0.0001 percent (that is, 1 dischargeout of every 100,000 applicabledischarges) of hospital inpatientdischarges (23 discharges) reporting ablood incompatibility, to a high of0.0564 percent (that is, 56.4 dischargesout of every 100,000 applicabledischarges) reporting Falls and Trauma.According to this analysis, however,these HAC rates appear to beunderreported occurrences whencompared to similar HAI measures.For example, the Catheter AssociatedUrinary Tract Infection (CAUTI)measure rate was 5.4 percent, or 54 outof every 1,000 eligible discharges, asreported in the AHRQ 2008 NationalHealthcare Quality Report. This rate ismore than 125 times greater than thenational HAC reported CAUTI rate of0.317 out of every 1,000 eligibledischarges. While we recognize thatdefinitional differences in the measuresmight contribute to this rate difference,we also believe that underreporting ofHAC claims data contributed to thisdifference. It is important to note thatthe 5.4 percent CAUTI rate wascalculated using medical recorddocumentation as a data source and arandom sample of Medicarebeneficiaries for acute care hospitalstays, as discussed in a separate Federalreport about healthcare quality (AHRQ2008 National Healthcare QualityReport). We note that this analysis isexploratory in nature, and we cannotdefinitively conclude any systematicunderreporting by any particularhospitals. Nonetheless, we believe thatthis analysis provides sufficientinformation for CMS to considerdevelopment of a HAC validationprocess to assess potentialunderreporting by hospitals and ensureaccurate reporting among all hospitalsreporting HACs on Medicare claims.Our goal is to improve quality andpatient safety through accurate reportingof hospital quality data and accuratelylinking quality to payment in theHospital VBP Program. We strive toensure accurate reporting, and webelieve that validating a random subsetof hospitals that report an aberrantlylow number of HACs would strengthenour overall effort to link value toquality. We welcomed public commentsregarding our consideration of a HACvalidation process. We also noted thatwe intend to take appropriate action ifwe discover systematic underreportingof HAC and other adverse eventinformation, including, whereappropriate, reporting such instances tothe HHS Office of the Inspector Generalfor its review.<strong>Comment</strong>: Some commenterssupported the proposals to validateHAC data as long as it does not causeundue burden to hospitals. Othercommenters suggested that CMS targethospitals <strong>with</strong> aberrantly high HACrates instead of those <strong>with</strong> aberrantlylow rates. Some commenters noted thatHAC validation may prove to bedifficult and suggested that CMS couldbetter identify HACs through datasources other than claims.Response: We thank commenters fortheir support. We intend to validateHAC data in such a way as to avoid anyundue burden on hospitals. We willconsider commenters’ suggestion thatwe target hospitals <strong>with</strong> aberrantly highHAC rates in the future. We welcomecommenters’ suggestion that we couldidentify HACs through other datasources and would appreciate input onsuch sources and methodologies. At thistime, however, we believe the claimsbasedHAC measures are the bestavailable source for HAC data.We thank the commenters for theirviews and will take them into accountas we further develop our policies inthis area.9. Domain Weighting for the FY 2014Hospital VBP ProgramFor the FY 2013 Hospital VBPProgram, we adopted a weightingscheme that weights the clinical processof care domain at 70 percent of the TotalPerformance Score, and weights thepatient experience of care domain at 30percent. However, the addition of theoutcome domain and the proposedaddition of an efficiency domainnecessitate the adoption of a differentdomain weighting scheme than weadopted for the FY 2013 Hospital VBPProgram. We discuss below the factorswe considered in determining theappropriate weight to propose for eachdomain in the FY 2014 Hospital VBPProgram.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00423 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2As we have previously stated, webelieve that the patient’s experienceassociated <strong>with</strong> receiving inpatientservices in a hospital is important indetermining the hospital’s overallquality of care for purposes of theHospital VBP Program. Thus, as wefinalized for the FY 2013 Hospital VBPProgram, in the CY 2012 OPPS/ASCproposed rule (76 FR 42362 through42363), we proposed to weight thepatient experience of care domain at 30percent for the FY 2014 Hospital VBPProgram. We believe that this weightingproposal appropriately encourageshospitals to provide patient-centeredcare across the full spectrum of theirservices.As we stated in the Hospital InpatientVBP Program <strong>Final</strong> <strong>Rule</strong> (76 FR 26491),we believe that domains need not begiven equal weight, and that over time,scoring methodologies should beweighted more towards outcomes,patient experience of care andfunctional status measures (measuresassessing physical and mental capacity,capability, well-being andimprovement).Consistent <strong>with</strong> this policy and ouranalysis showing that many of theclinical process of care measures arenearly topped-out, in the CY 2012OPPS/ASC proposed rule (76 FR 42362through 42363), we proposed to reducethe weighting for the clinical process ofcare domain in FY 2014 to 20 percent.We also proposed to weight the outcomedomain at 30 percent of the TotalPerformance Score for the FY 2014Hospital VBP Program. Because webelieve that scoring hospitals onoutcome measures will improvetreatment outcomes and patient safety,we intend to propose increasing theweighting for the outcome domain insubsequent fiscal years as more outcomemeasures become available.As we indicated in the FY 2012 IPPS/LTCH PPS proposed rule (76 FR 25927through 25928), we believe thatefficiency is an important component ofimproving outcomes, the patientexperience of care and the overallquality of care provided to Medicarebeneficiaries in the inpatient hospitalsetting. Accordingly, in the CY 2012OPPS/ASC proposed rule (76 FR 42363),we proposed to weight the efficiencydomain at 20 percent of the TotalPerformance Score for the FY 2014Hospital VBP Program in order toencourage the delivery of high quality,coordinated, and efficient care toMedicare beneficiaries.Therefore, we proposed the followingdomain weights for the FY 2014 TotalPerformance Score: outcome domain =30 percent; clinical process of care

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274544 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsdomain = 20 percent; patient experienceof care domain = 30 percent; andefficiency domain = 20 percent. Underthis proposed weighting scheme, theclinical care-related domains (process ofcare and outcome domains) would,together, constitute 50 percent of thetotal performance score (20 percent forclinical process of care and 30 percentfor outcome), the patient experience ofcare domain would constitute 30percent, and the efficiency domainwould constitute 20 percent. We believethat this proposed weighting schemewill hold hospitals accountable for allaspects of patient care, includingclinical outcomes and efficiency.We invited public comment on theproposed weighting of the fourproposed domains to be used in thecalculation of the Total PerformanceScore for the FY 2014 Hospital VBPProgram.<strong>Comment</strong>: Several commenterssuggested alternative weighting schemesfor the FY 2014 Hospital VBP Program,some arguing that the patient experienceof care domain would be weighted toohigh at 30 percent. Some commenterssuggested we reconsider the distributionof the clinical process of care domainweighting.Response: We disagree <strong>with</strong>commenters’ argument that the patientexperience domain is weighted too highat 30 percent. While hospitals have lessdirect control over the patientexperience domain than, for example,the clinical process domain, we do notbelieve that the Hospital VBP Programshould diminish the importance of thepatient’s experience of care. We believethat hospitals must strive to improve thepatient’s experience concurrently <strong>with</strong>their efforts to improve theirperformance on other domains as part ofa broad quality improvement effort. Indetermining the weighting for clinicalprocess of care measures, we considerthe available measures in each domainwhile balancing the importance ofpatient experience and our emphasis onoutcomes, as discussed below.<strong>Comment</strong>: <strong>Comment</strong>ers disagreed<strong>with</strong> the proposed outcome domainweighting. Some commenters suggestedthat CMS weight it less than proposed,while others suggested that CMS givemore weight to the outcome measures.Some commenters suggested that CMSredistribute the weight of the outcomedomain and apply more weight to theclinical process of care domain.Response: We agree that the outcomedomain should be weighted toencourage hospitals to improvetreatment outcomes. However, becausewe are suspending the effective date ofthe HAC and AHRQ measures in theHospital VBP Program, the outcomedomain will only have three measuresfor the FY 2014 program. Therefore, webelieve that it is necessary to reduce theweight applied to this domain as aresult of our decision to suspend theeffective date of the HAC and AHRQmeasures. However, we still believe thatoutcome measures are critical to patientsafety. We believe that the threemortality measures serve as very goodpredictors of the quality of care patientsreceive and that they will serve as agood basis to encourage hospitals toimprove outcomes. Taking this intoaccount, and the fact that we are notfinalizing an efficiency domain, we arefinalizing a weighting methodology thatincreases the weight of the clinicalprocess of care domain, as had beensupported by some commenters whorequested a reduction to the weight ofthe outcome domain. We are alsoreducing the weight of the outcomedomain to account for the fact that thedomain will only include threemeasures. We believe that this approachreflects our belief regarding theimportance of these measures andmaintains the same weight for thepatient experience of care domain. Forthese reasons, for FY 2014, we arefinalizing a weighting of 25 percent forthe outcome domain, 45 percent for theclinical process of care domain, and 30percent for the patient experience ofcare domain.<strong>Comment</strong>: Some commentersexpressed concern about the proposedweighting for the efficiency domain,arguing that 20 percent is too high forits first year in the program, especiallybecause it is composed of a single, non-NQF endorsed measure. Somecommenters suggested that CMS did notdisplay this measure on HospitalCompare in a timely manner, did notfully specify the measure for theHospital IQR Program, or did notprovide hospitals <strong>with</strong> sufficient data onthe measure, and that the efficiencydomain should therefore be weighted atzero. Other commenters expressedgeneral concern about weighting 50percent of the program (patientexperience and efficiency domains) onmeasures that are somewhat less undera hospital’s control than clinical processand outcome measures.Response: In light of our decision tosuspend the effective date of theMedicare spending per beneficiarymeasure in the Hospital VBP Program,there is no efficiency domain to weight.We will take these comments intoconsideration as we develop policies infuture rulemaking.<strong>Comment</strong>: Some commenters arguedthat domain weighting changes shouldVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00424 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2occur gradually to allow hospitals toadjust to program changes.Response: We reiterate our belief thatstrong incentives for hospitals toredesign care processes for the deliveryof coordinated, efficient health careservices to Medicare beneficiaries are apriority. We intend to revisit the domainweighting in the future. We believe theaddition of the outcome domain in FY2014 necessitates rapid adoption andsignificant weighting, particularlybecause it captures importantinformation for quality improvement.<strong>Comment</strong>: Some commentersexpressed support for the domainweighting proposal, arguing that theemphasis on outcomes and efficiency,as well as reduced emphasis on clinicalprocesses, is consistent <strong>with</strong> theNational Quality Strategy to promotehigher quality health care. Othercommenters expressed support forgiving the proposed outcome domain ahigher weight than the clinical processdomain.Response: We thank commenters fortheir support. After consideration of thepublic comments we received, we arenot finalizing our FY 2014 domainweighting as proposed. Instead, we willfinalize the FY 2014 domain weightingas follows: clinical process of care = 45percent; patient experience of care = 30percent; outcome = 25 percent.B. Review and Correction Process Underthe Hospital VBP Program1. BackgroundSection 1886(o)(10)(A)(i) of the Actrequires the Secretary to makeinformation available to the publicregarding individual hospitalperformance in the Hospital VBPProgram, including: (1) Performance ofthe hospital on each measure thatapplies to the hospital; (2) theperformance of the hospital <strong>with</strong> respectto each condition or procedure; and (3)the hospital’s Total Performance Score.To meet this requirement, we stated ourintent in the Hospital Inpatient VBPProgram <strong>Final</strong> <strong>Rule</strong> to publish hospitalscores <strong>with</strong> respect to each measure,each hospital’s condition-specific score(that is, the performance score <strong>with</strong>respect to each condition or procedure,for example, AMI, HF, PN, and SCIP),each hospital’s domain-specific score,and each hospital’s Total PerformanceScore on Hospital Compare (76 FR26534 through 26536). We intend tomake proposals related to making thisinformation publicly available in futurerulemaking.Section 1886(o)(10)(A)(ii) of the Actrequires the Secretary to ensure thateach hospital has the opportunity to

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74545jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2review, and submit corrections for, theinformation to be made public <strong>with</strong>respect to each hospital under section1886(o)(10)(A)(i) of the Act prior to suchinformation being made public.For the FY 2013 Hospital VBPProgram, the finalized measures consistof chart-abstracted clinical process ofcare measures and a survey-basedpatient experience of care measure. Inthe CY 2012 OPPS/ASC proposed rule(76 FR 42363 through 42365), weproposed that hospitals will have anopportunity to review and correct chartabstracteddata and patient experiencedata through the processes discussedbelow. We intend to make additionalproposals regarding the review andcorrection of outcome measures,efficiency measures, and domain,condition, and Total PerformanceScores in future rulemaking.2. Review and Corrections of DataSubmitted to the QIO ClinicalWarehouse on Chart-Abstracted Processof Care Measures and Measure RatesIn the CY 2012 OPPS/ASC proposedrule (76 FR 42363 through 42364), weproposed that the process utilized togive hospitals an opportunity to reviewand correct data submitted on theHospital IQR Program chart-abstractedmeasures also be used to allow hospitalsto correct data and measure rates onchart-abstracted measures for theHospital VBP Program. Under thisproposed process, hospitals wouldcontinue to have the opportunity toreview and correct data they submit onall Hospital IQR Program chartabstractedmeasures, whether or not themeasure is adopted as a measure for theHospital VBP Program. We proposed touse the Hospital IQR Program’s datasubmission, review, and correctionprocesses, which will allow for reviewand correction of data on a continuousbasis as it is being submitted for theHospital IQR Program, which in turnwould allow hospitals to correct dataand measure rates used to calculate theHospital VBP Program TotalPerformance Score for those hospitalsthat participate in both programs. Webelieve this process would satisfy therequirement in section 1886(o)(10)(A)(ii)of the Act to allow hospitals to reviewand submit corrections for one of thepieces of information that will be madepublic <strong>with</strong> respect to each hospital—the measure rates for chart-abstractedmeasures. For hospitals that do notparticipate in the Hospital IQR Programbut do participate in the Hospital VBPProgram, such as Maryland hospitals,we intend to make proposals regardinghow those hospitals will be able toreview and correct their Hospital VBPdata in future rulemaking.Under the Hospital IQR Program,hospitals currently have an opportunityto submit, review, and correct any of thechart-abstracted information submittedto the QIO Clinical Warehouse for thefull 4 1 ⁄2 months following the lastdischarge date in a calendar quarter.(We note that in the FY 2012 IPPS/LTCH PPS proposed rule (76 FR 25915),we proposed to reduce the submissionperiod from 4 1 ⁄2 months to 104 days.However, we did not adopt thisproposal in the FY 2012 IPPS/LTCHPPS final rule (76 FR 51640 through51641).) Hospitals can begin submittingdata on the first discharge day of anyreporting quarter. Hospitals areencouraged to submit data early in thesubmission schedule so that they canidentify errors and resubmit data beforethe quarterly submission deadline.Users are able to view and makecorrections to the data that they submit<strong>with</strong>in 24 hours of submission. The dataare populated into reports that areupdated nightly <strong>with</strong> all data that havebeen submitted and successfullyprocessed for the previous day.Hospitals are able to view a report eachquarter which shows the numerator,denominator and percentage of total foreach Clinical Measure Set and Strata.That report contains the hospital’sperformance on each measure set/stratasubmitted to the QIO ClinicalWarehouse. The numerator is thenumber of cases that satisfies theconditions of the performance measure,and a denominator is the number ofsuccessfully accepted cases in themeasure population evaluated by theperformance measure. The percentage oftotal is calculated by using thenumerator divided by the denominatormultiplied by 100. The sum of thenumerators and the denominators foreach measure across the performanceperiod is the same as the Hospital VBPmeasure rate for the quarter.We believe that 4 1 ⁄2 months issufficient time for hospitals to be able tosubmit, review data, make corrections tothe data, and view their percentage oftotal, or measure rate, on each ClinicalMeasure Set/Strata for use in both theHospital IQR and Hospital VBPPrograms. Additionally, because thisprocess is familiar to most hospitals, useof this existing framework reduces theburden that could have been placed onhospitals that participate in the HospitalIQR Program if they had to learn a newprocess for submitting data for theHospital VBP Program. Following theperiod in which hospitals can reviewand correct data and measure rates forchart-abstracted measures as specifiedVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00425 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2above, we proposed that hospitals willhave no further opportunity to correctsuch data or measure rates.We proposed that once the hospitalhas an opportunity to review andcorrect quarterly data related to chartabstractedmeasures submitted in theHospital IQR Program, we will considerthat the hospital has been given theopportunity to review and correct thisdata. We proposed to use this data tocalculate the measure scores forpurposes of the Hospital VBP Program,and these measure scores will be usedto calculate domain, condition, andTotal Performance Scores for theHospital VBP Program <strong>with</strong>out furtherreview and correction. We invitedpublic comment on this proposal.<strong>Comment</strong>: Many commentersexpressed support for the proposedreview and corrections process forchart-abstracted measures, noting thatthe Hospital IQR Program’s reviewprocess is working well.Response: We thank commenters fortheir support.<strong>Comment</strong>: Some commenters askedthat CMS provide details on review andcorrections for claims-based measures,particularly because the Affordable CareAct requires that hospitals have anopportunity to appeal the measure datasubmitted.Response: We will provide moredetails on review and corrections forclaims-based measures in futurerulemaking. We also intend to proposean appeals process in future rulemaking.After consideration of the publiccomments we received, we arefinalizing the review and correctionsprocess for chart-abstracted measures asproposed.3. Review and Correction Process forHospital Consumer Assessment ofHealthcare Providers and Systems(HCAHPS) DataIn the CY 2012 OPPS/ASC proposedrule (76 FR 42364 through 42365), weproposed a ‘‘two-phase’’ process for thereview and correction of HCAHPS data.Under this proposed process, hospitalswould have the opportunity to reviewand correct data they submitted on allHCAHPS Hospital IQR Program items inthe first phase, whether or not suchitems or combination of items areadopted as HCAHPS dimensions for theHospital VBP Program. In the secondphase, hospitals would have theopportunity to review the patient-mixand mode adjusted HCAHPS scores(details on the HCAHPS adjustmentprocess may be found at: http://www.hcahpsonline.org/files/<strong>Final</strong>%20Draft%20Description%20of%20HCAHPS%20

74546 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Mode%20and%20PMA%20<strong>with</strong>%20bottom%20box%20modedoc%20April%2030,%202008.pdf) on dimensions that wewill use to score hospitals under theHospital VBP Program to determinewhether they believe CMS calculatedtheir scores on these dimensionscorrectly.We believe that this proposal for atwo-phase review process will expeditehospital review and correction of data.We also believe that this proposal willimprove quality of care becausehospitals will be able to timely reviewtheir HCAHPS scores and respondefficiently in improving patient care toaddress areas of weakness reflected intheir scores. We are not proposing torelease any patient level data to thepublic. This proposed review processwould only grant each hospital theauthority to review and correct thehospital’s patient-level data.a. Phase One: Review and Correction ofHCAHPS Data Submitted to the QIOClinical WarehouseFor the first phase of the HCAHPSreview and correction process, weproposed to reduce the HCAHPSsubmission deadline under the HospitalIQR Program by one week in order tocreate a 1-week period for hospitals toreview and correct their HCAHPS data.We included this proposal to reduce thesubmission deadline in the FY 2012IPPS/LTCH PPS proposed rule (76 FR25916). Currently, hospitals haveapproximately 14 weeks after the end ofa calendar quarter to submit HCAHPSdata for that quarter to the QIO ClinicalWarehouse. Under this proposal,hospitals would have approximately 13weeks after the end of a calendar quarterto submit HCAHPS data for that quarterto the QIO Clinical Warehouse and a 1-week period to review and correct thatdata. During the 13-week submissionperiod, hospitals would be able toresubmit their data to make correctionsto the patient-level records. The 1-weekreview and correction period wouldoccur immediately after the 13-weekdata submission deadline.The proposed 1-week review andcorrection period would allow hospitalsto provide missing data or replaceincorrect data in the data files they havesubmitted to the QIO ClinicalWarehouse. The 1-week review andcorrection period would allow hospitalsto identify any issues <strong>with</strong> the data theyhad submitted in the 13-weeksubmission period. Hospitals will havethe opportunity to review frequencydistributions of all of their submitteddata items, which include hospitalsummary information, patientadministrative data, and patient surveyresponses, and resubmit their HCAHPSdata files to correct identified issuesduring the 1-week review and correctionperiod. We define the term ‘‘review andcorrect’’ to mean that hospitals cancorrect their existing data records, butnot add new data records. Accordingly,hospitals would not be allowed to addnew patient-level records or removeexisting patient-level records during thereview and correction period. Followingthe conclusion of the 1-week review andcorrection period, hospitals would notbe allowed to review, correct, or submitadditional HCAHPS data for theapplicable calendar quarter. Wefinalized this proposal in the FY 2012IPPS/LTCH PPS final rule (76 FR 51641through 51642).b. Phase Two: Review and Correction ofHCAHPS Scores for the Hospital VBPProgramIn the second phase of the proposedHCAHPS review and correction process,hospitals would be given theopportunity to review their scores onthe HCAHPS items that will be used inthe Hospital VBP Program. TheseHCAHPS scores are constructed afterthe data that hospitals had submittedhave been analyzed to identify andremove incomplete surveys and afteradjustments for the effects of patientmixand survey mode have beenapplied. (Details on the HCAHPSadjustment process may be found at:http://www.hcahpsonline.org/files/<strong>Final</strong>%20Draft%20Description%20of%20HCAHPS%20Mode%20and%20PMA%20<strong>with</strong>%20bottom%20box%20modedoc%20April%2030,%202008.pdf.) Hospitals would haveapproximately 1 week to examine theirHCAHPS dimension scores for theapplicable Hospital VBP Programperformance period. A participatinghospital would have the opportunity toquestion CMS if the hospital believes itsscores were miscalculated. We wouldrespond to a hospital’s inquiries bychecking the calculation and, ifnecessary, recalculating the hospital’sHCAHPS scores. In this proposedsecond phase of the HCAHPS reviewand correction process, hospitals wouldnot be allowed to change or submit newHCAHPS data or delete existing data.Their right to correct information duringthis period would be limited toreviewing their HCAHPS dimensionscores and notifying CMS of any errorsin its calculation of those scores.We intend to propose the proceduralaspects of the second phase of theproposed HCAHPS review andcorrection process in future rulemaking.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00426 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2In summary, for the chart-abstractedand patient experience of care measures,we proposed that existing proceduresfor submission, review, and correctionrelated to chart-abstracted measuresunder the Hospital IQR Program,coupled <strong>with</strong> the proposed two phasereview of HCAHPS scores discussedabove, would constitute an opportunityfor review and correction of measuredata and measure rates under theHospital VBP Program. Because theseprocedures give hospitals theopportunity to review and correct thedata and/or measure rates, such dataand measure rates may be used tocalculate domain, condition, and TotalPerformance Scores for the HospitalVBP Program. We intend to makeproposals related to making thisinformation publicly available, and tomake additional proposals regarding thereview and correction of outcomemeasures, efficiency measures, anddomain, condition, and TotalPerformance Scores in futurerulemaking. We invited public commenton these proposals.<strong>Comment</strong>: Some commentersexpressed support for the proposed twophasereview and corrections process,agreeing that it provides an appropriateopportunity to review data to be madepublic.Response: We thank commenters fortheir support.<strong>Comment</strong>: Some commentersrecommended that CMS provide clearguidance for missing and incorrect datacorrection in the first phase andsuggested that CMS reconsider allowingnew records to be submitted in thesecond phase.Response: In order to create stabilityin the data submission process andensure adequate time for data cleaningand processing, score calculation andreport preparation, we have neverallowed HCAHPS data to be submittedinto the data warehouse after the datasubmission deadline. Permitting postdeadlinedata submissions could resultin the strategic submission, alteration or<strong>with</strong>holding of HCAHPS surveys.Maintaining a firm data submissiondeadline is also consistent <strong>with</strong> CMSData Warehouse policy that applies toall measures. Accordingly, we will notallow new records to be submitted oraccepted in the data warehouse after theend of the data submission period foreither Phase One or Two of the newReview and Correction process.As noted in the FY 2012 IPPS/LTCHPPS final rule and CY 2012 OPPS/ASCproposed rule, the data submissiondeadline will occur one week earlierthan previously in order to allow timefor the Phase One Review and

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74547jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Correction period. During the datasubmission period, which will lastapproximately 13 weeks, hospitals andsurvey vendors can submit surveys andwill also have the opportunity toresubmit surveys to correct any issuesregarding the patient records. During thenew one-week Phase One Review andCorrection period, hospitals and surveyvendors will be permitted to correct andresubmit any previously submittedpatient records. Phase Two of theReview and Correction process willoccur months after the relevant datasubmission deadlines and long after theHCAHPS Hospital VBP scores have beencalculated. Therefore, no HCAHPSrecords could be submitted or acceptedat that time; otherwise, HCAHPS datacould not be finalized in a timelymanner.We will provide detailed informationon the HCAHPS Review and Correctionprocess closer to the inaugural PhaseOne and Phase Two of the program.<strong>Comment</strong>: Some commenters opposedthe proposal to allow a one-weekHCAHPS review period, arguing thathospitals need at least two weeks orlonger to review their results.Response: The one-week HCAHPSreview and correction period allows aformal opportunity for hospitals (ortheir HCAHPS survey vendors) toresubmit data for patients in order tocorrect errors in the data submitted forthose patients.Given the amount of time necessaryfor participating hospitals or theirsurvey vendors to fully administer theHCAHPS survey, receive surveyresponses, and create the necessary datafiles, we do not believe it is appropriateto further shorten the data submissionperiod either by beginning the periodsooner, or ending it sooner.During the proposed one-weekReview and Correction period for PhaseOne, hospitals or their survey vendorswill have access to a summary report oftheir data that had been submittedduring the data submission period.HCAHPS scores would not be availableuntil the Phase Two period.After consideration of the publiccomments we received, we arefinalizing as proposed our two-phasereview and corrections process forHCAHPS data.XVII. Files Available to the Public viathe InternetIn the past, a majority of the Addendato which we referred throughout thepreamble of the OPPS/ASC proposedand final rules <strong>with</strong> comment periodsappeared in the printed version of theFederal Register as part of the annualrulemakings. However, beginning <strong>with</strong>the CY 2012 OPPS/ASC proposed rule(76 FR 42365 through 42366), theAddenda of the proposed rules and thefinal rules <strong>with</strong> comment period will bepublished and available only via theInternet on the CMS Web site. Ourexisting regulations at §§ 416.166(b),416.171(b), and 416.173 provide for thepublication of covered surgicalprocedures, covered ancillary services,the payment methodology, and thepayment rates under the ASC paymentsystem in the Federal Register. In theproposed rule (76 FR 42365 and 42391through 42392), we proposed to revisethese three regulations to make theAddenda for the ASC payment systemavailable via the Internet on the CMSWeb site.We did not receive any publiccomments regarding publication of theAddenda only via the Internet on theCMS Web site. Therefore, we arefinalizing, <strong>with</strong>out modification, ourproposal for CY 2012. We also arefinalizing the revisions to §§ 416.166(b),416.171(b), and 416.173 to provide forthe publication of covered surgicalprocedures, covered ancillary services,payment methodologies, and paymentrates under the ASC payment system viathe Internet on the CMS Web site. In theCY 2012 OPPS/ASC proposed rule, weinadvertently omitted the last sentenceof existing § 416.171(b), which we didnot propose to change. In this final rule<strong>with</strong> comment period, we are finalizing§ 416.171(b) <strong>with</strong> the inclusion oflanguage to correct this technical error.To view the Addenda of this final rule<strong>with</strong> comment period pertaining to theCY 2012 payments under the OPPS, goto the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/HORD and select ‘‘1525–FC’’ from thelist of regulations. All Addenda for thisfinal rule <strong>with</strong> comment period arecontained in the zipped folder entitled‘‘2012 OPPS FC Addenda’’ at the bottomof the page.To view the Addenda of this final rule<strong>with</strong> comment period pertaining to theCY 2012 payments under the ASCpayment system, go to the CMS Web siteat: http://www.cms.gov/ASCPayment/ASCRN/ and select ‘‘1525–FC’’ from thelist of regulations. All Addenda for thisfinal rule <strong>with</strong> comment period arecontained in the zipped folder entitled‘‘Addenda AA, BB, DD1, and DD2’’, and‘‘Addendum EE’’ at the bottom of thepage.A. Information in Addenda Related tothe CY 2012 Hospital OPPSAddenda A and B provide variousdata pertaining to the CY 2012 paymentfor items and services under the OPPS.Specifically, Addendum A includes aVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00427 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2list of all APCs that are payable underthe OPPS, including the scaled relativeweights, the national unadjustedpayment rates, the national unadjustedcopayments, and the minimumunadjusted copayments for each APCthat we are adopting for CY 2012.Addendum B includes a list of all activeHCPCS codes, including the APCassignments, the scaled relative weights,the national unadjusted payment rates,the national unadjusted copayments, theminimum unadjusted copayments, andthe payment status indicators andcomment indicators for the CY 2012OPPS.For the convenience of the public, wealso are including on the CMS Web sitea table that displays the HCPCS codedata in Addendum B sorted by APCassignment, identified as Addendum C.Addendum D1 defines the paymentstatus indicators that we used inAddenda A and B. Addendum D2defines the comment indicators that areused in Addendum B.Addendum E lists the HCPCS codesthat are only payable to hospitals asinpatient procedures and that are notpayable under the OPPS for CY 2012.Addendum L contains the outmigrationwage adjustment for CY 2012.Addendum M lists the HCPCS codesthat are members of a composite APCand identifies the composite APC towhich each is assigned. Addendum Malso identifies the status indicator foreach HCPCS code and a commentindicator if there is a change in thecode’s status <strong>with</strong> regard to itsmembership in the composite APC.Each of the HCPCS codes included inAddendum M has a single procedurepayment APC, listed in Addendum B, towhich it is assigned when the criteriafor assignment to the composite APC arenot met. When the criteria for paymentof the code through the composite APCare met, one unit of the composite APCpayment is paid, thereby providingpackaged payment for all services thatare assigned to the composite APCaccording to the specific I/OCE logicthat applies to the APC. We refer readersto the discussion of composite APCs insection II.A.2.e. of this final rule <strong>with</strong>comment period for a completedescription of the composite APCs.Addendum N, ‘‘Bypass Codes forCreating ‘Pseudo’ Single ProcedureClaims for CY 2012 OPPS,’’ contains alist of the HCPCS codes that we used tocreate ‘‘pseudo’’ single claims frommultiple procedure claims so that themost claims data can be used to setmedian costs for the CY 2012 OPPS. Werefer readers to section II.A.1.b. of thisfinal rule <strong>with</strong> comment period for a fulldiscussion of the use of this file in the

74548 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2CY 2012 OPPS ratesetting process.Addendum N contains the followingelements for the CY 2012 bypass codes:(1) HCPCS code; (2) short descriptor; (3)overall bypass indicator; and (4) anindicator if the code was not used as abypass code in ratesetting activitiesprior to this final rule <strong>with</strong> commentperiod. The data in Addendum N werepreviously issued as a table (usuallyTable 1) in the preamble of theapplicable proposed or final rule. Weare issuing it as an addendum to thisfinal rule <strong>with</strong> comment period becauseit is lengthy and users can better analyzethe file if it is furnished in Excel formaton the CMS Web site.B. Information in Addenda Related tothe CY 2012 ASC Payment SystemAddenda AA and BB provide variousdata pertaining to the CY 2012 paymentfor the covered surgical procedures andcovered ancillary services for whichASCs may receive separate payment.Addendum AA lists, for CY 2012, theASC covered surgical procedures,whether the procedure is subject tomultiple procedure discounting, thepayment indicator for each procedure,the comment indicator if applicable,and the payment weight and rate foreach procedure. Addendum BBdisplays, for CY 2012, the ASC coveredancillary services, the paymentindicator for each service, the commentindicator if applicable, and the paymentweight and rate for each service.Addendum DD1 defines the paymentindicators that are used in Addenda AAand BB. Addendum DD2 defines thecomment indicators that are used inAddenda AA and BB.Addendum EE lists the surgicalprocedures to be excluded fromMedicare payment if furnished in ASCs.The excluded procedures listed inAddendum EE are surgical proceduresthat are assigned to the OPPS inpatientlist, are not covered by Medicare, arereported using a CPT unlisted code, orhave been determined to pose asignificant safety risk to a Medicarebeneficiary when performed in an ASCor for which standard medical practicedictates that the beneficiary typicallyrequires active medical monitoring andcare at midnight following theprocedure.The Medicare Physician Fee Schedule(MPFS) data files are located at the CMSWeb site at: http://www.cms.gov/PhysicianFeeSched/.The links to all of the FY 2012 IPPSwage index-related tables (that are usedfor the CY 2012 OPPS) are accessible onthe CMS Web site at: http://www.cms.gov/AcuteInpatientPPS/WIFN.XVIII. Collection of InformationRequirementsA. Legislative Requirements forSolicitation of <strong>Comment</strong>sUnder the Paperwork Reduction Actof 1995, we are required to provide 60-day notice in the Federal Register andto solicit public comment before acollection of information requirement issubmitted to the Office of Managementand Budget (OMB) for review andapproval. In order to fairly evaluatewhether an information collectionshould be approved by OMB, section3506(c)(2)(A) of the PaperworkReduction Act of 1995 requires that wesolicit comment on the following issues:• The need for the informationcollection and its usefulness in carryingout the proper functions of our agency.• The accuracy of our estimate of theinformation collection burden.• The quality, utility, and clarity ofthe information to be collected.• Recommendations to minimize theinformation collection burden on theaffected public, including automatedcollection techniques.In the CY 2012 OPPS/ASC proposedrule, we solicited public comments oneach of the issues outlined above asdiscussed below that containedinformation collection requirements.B. Requirements in Regulation TextThe CY 2012 OPPS/ASC proposedrule contained the following proposedinformation collection requirementsspecified in the regulatory text:1. ICRs Regarding Basic Commitmentsof Providers (§ 489.20)Section 489.20(w) contains aphysician presence disclosurerequirement that requires disclosurewhen a doctor of medicine or a doctorof osteopathy is not onsite 24 hours perday, 7 days per week. The burdenassociated <strong>with</strong> the physician presencedisclosure requirement is the time andeffort necessary for each hospital andCAH to develop a standard notice tofurnish to its patient, obtain therequired patients’ signatures, andmaintain a copy in the patient’s medicalrecord. Although this requirement issubject to the PRA, the associatedburden is approved under OMB controlnumber 0938–1034.Our proposed amendment to§ 489.20(w) would require that, forhospitals and CAHs that are notphysician owned, the existing physicianpresence disclosure requirementregarding outpatient services wouldapply only to outpatients receivingobservation services, surgery, andprocedures requiring anesthesia. TheVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00428 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2burden associated <strong>with</strong> this requirementwould be greatly reduced and includesrevisions to the time and effortnecessary for each hospital and CAH torevise and disseminate the existingstandard notice to its patients. Therequirements in § 489.20(w) apply to allhospitals as defined in § 489.24(b). Weestimated that there are approximately2,597 hospitals and CAHs that may nothave a doctor or medicine or a doctorof osteopathy onsite at all times. Weestimated that it will take each hospitalor CAH 4 hours to develop or amendand review a disclosure form on a onetimebasis, 30 seconds to make eachdisclosure, another 30 seconds to obtainthe patient’s signature, and anadditional 30 seconds to include a copyof the notice in the patient’s medicalrecord. We estimated that on averageeach hospital or CAH that is subject tothe disclosure requirement will make1,966 disclosures per year. Theestimated annual burden associated<strong>with</strong> developing an amended form,obtaining patient signatures, andcopying and recording the form is138,032 hours at a cost of approximately$2,557,733. We note that these numbersreflect correction of a minor arithmeticerror reflected in our proposal,increasing the cost over our originalestimate by $6,585.We did not receive any publiccomments on these informationcollection requirements. Therefore, weare finalizing the burden estimate asproposed, <strong>with</strong> the technical correctionnoted.2. ICRs Regarding Exceptions ProcessRelated to the Prohibition of Expansionof Facility Capacity (§ 411.362)As discussed in section XV. of the CY2012 OPPS/ASC proposed rule (76 FR42349 through 42354) and this final rule<strong>with</strong> comment period, we proposed toadd a new § 411.362(c) to establish andimplement the process by which anapplicable hospital or high Medicaidfacility may apply for an exception tothe prohibition on expansion of facilitycapacity. We proposed that a physicianownedhospital would be allowed torequest an exception under proposed§ 411.362(c) by providing information toCMS regarding the hospital’s baselinenumber of operating rooms, procedurerooms, and beds for which the hospitalis licensed as of March 23, 2010, andspecifying the increase in the number ofoperating rooms, procedure rooms andbeds it is requesting under theexceptions process. We proposed thatan applicable hospital requesting anexception would have to satisfyeligibility criteria for 3 of the mostrecent fiscal years for which data are

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74549available. In addition, the hospitalwould have to provide supportingdocumentation to CMS regarding thecriteria it must satisfy. We estimatedthat 265 physician-owned hospitalswould request an exception.As discussed in section XV. of thisfinal rule <strong>with</strong> comment period, wereceived a comment contending that 3fiscal years worth of data was excessive.After consideration of this publiccomment, in this final rule <strong>with</strong>comment, we are modifying theregulations at § 411.362(c)(2)(ii), (iv),and (v) to require applicable hospitals tosatisfy the respective criteria for themost recent fiscal year for which dataare available. Therefore, we haverevised our proposed estimates. Weestimate that it will take each hospital6 hours and 45 minutes to complete therequest process at the cost ofapproximately $365.65 for eachhospital. Overall, the annual burden forthis process is estimated atapproximately 1,789 hours, at the costof approximately $96,897.25. Theseestimates do not include time or costburden estimates for hospitals to readand provide rebuttal statements inresponse to community inputcomments, which is included in thefinal regulation, and the associated timeand costs for the hospital to send themto CMS. Due to the voluntary nature ofthis criterion, time and cost burdenestimates are difficult to anticipate, asthis is an unknown variable.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2C. Associated Information CollectionsNot Specified in Regulatory TextIn the CY 2012 OPPS/ASC proposedrule, we made reference to proposedassociated information collectionrequirements that were not discussed inthe regulation text contained in theproposed rule. The following is adiscussion of those requirements for theproposals that we are adopting in thisfinal rule <strong>with</strong> comment period.1. Hospital Outpatient QualityReporting (Hospital OQR) ProgramAs previously stated in section XIV. ofthe CY 2012 OPPS/ASC proposed ruleand this final rule <strong>with</strong> commentperiod, the Hospital OQR Program hasbeen generally modeled after the qualitydata reporting program for the HospitalIQR Program. We refer readers to the CY2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 72064 through72110 and 72111 through 72114) for adetailed discussion of Hospital OQRProgram information collectionrequirements we have previouslyfinalized.2. Hospital OQR Program Measures forthe CY 2012, CY 2013, CY 2014, and CY2015 Payment Determinationsa. Previously Adopted Hospital OQRProgram Measures for the CY 2012, CY2013, and CY 2014 PaymentDeterminationsIn the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period (73 FR 68766), weretained the 7 chart-abstracted measureswe used in CY 2009 and adopted 4 newclaims-based imaging measures for theCY 2010 payment determination,bringing the total number of qualitymeasures for which hospitals mustsubmit data to 11 measures. In the CY2010 OPPS/ASC final rule <strong>with</strong>comment period (74 FR 60637), werequired hospitals to continue to submitdata on the same 11 measures for the CY2011 payment determination. Theburden associated <strong>with</strong> theaforementioned data submissionrequirements is currently approvedunder OCN: 0938–1109 and expiresOctober 31, 2013.In the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period (75 FR 72071through 72094), we adopted measuresfor the CY 2012, CY 2013, and CY 2014payment determinations.For the CY 2012 paymentdetermination, we retained the 7 chartabstractedmeasures and the 4 claimsbasedimaging measures we used for theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00429 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2CY 2011 payment determination. Wealso adopted 1 structural HIT measurethat tracks HOPDs’ ability to receive labresults electronically, and 3 claimsbasedimaging efficiency measures.These actions bring the total number ofmeasures for the CY 2012 paymentdetermination for which hospitals mustsubmit data to 15 measures. In the CY2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 72112 through72113), we discussed the burdenassociated <strong>with</strong> these informationcollection requirements.For the CY 2013 paymentdetermination, we required thathospitals continue to submit data for allof the quality measures that we adoptedfor the CY 2012 payment determination.We also adopted 1 structural HITmeasure assessing the ability to trackclinical results between visits, 6 newchart-abstracted measures on the topicsof HOPD care transitions and EDefficiency, as well as 1 chart-abstractedED–AMI measure that we proposed forthe CY 2012 payment determination butwhich we decided to finalize for the CY2013 payment determination. Theseactions bring the total number of qualitymeasures for the CY 2013 paymentdetermination for which hospitals mustsubmit data to 23 measures.In the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period (75 FR 72071through 72094), for the CY 2014ER30NO11.147

74550 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationspayment determination, we retained theCY 2013 payment determinationmeasures, but did not adopt anyadditional measures. In the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod (75 FR 72112 through 72113), wediscussed the burden associated <strong>with</strong>these information collectionrequirements.The 23 measures that we adopted inthe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period to be used for the CY2012 through CY 2014 paymentdeterminations are listed in the tablebelow.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 19:22 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00430 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.148

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74551b. Additional Hospital OQR ProgramMeasures for CY 2014In the CY 2011 OPPS/ASC final rule<strong>with</strong> comment period, we did not adoptany new measures for the CY 2014payment determination. In this finalrule <strong>with</strong> comment period, we areadding, for the CY 2014 paymentdetermination, 1 chart-abstractedmeasure and 2 structural measures(including hospital outpatient volumedata for selected outpatient surgicalprocedures). Thus, for the CY 2014payment determination, there will be atotal of 26 measures. The completemeasure set we are adopting for the CY2014 payment determination, includingmeasures we have previously adopted,is shown below.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00431 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.149

74552 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–CWe will calculate the seven claimsbasedmeasures using Medicare FFSclaims data and do not requireadditional hospital data submissions.With the exception of OP–22, we areusing the same data submissionrequirements related to the chartabstractedquality measures that aresubmitted directly to CMS that we usedfor the CY 2011 and CY 2012 paymentdeterminations. For the four structuralmeasures, including the collection ofall-patient volume for selectedoutpatient procedures, hospitals willenter data into a Web-based collectiontool during a specified collection periodonce annually. Under the Hospital OQRProgram requirements, hospitals mustcomplete and submit a notice ofparticipation form for the Hospital OQRProgram if they have not already doneso or have <strong>with</strong>drawn fromparticipation. By submitting thisdocument, hospitals agree that they willallow CMS to publicly report themeasures for which they have submitteddata under the Hospital OQR Program.For the CY 2014 paymentdetermination, the burden associated<strong>with</strong> these requirements (includingthose previously adopted) is the timeand effort associated <strong>with</strong> completingthe notice of participation form,collecting and submitting the data onthe 26 measures. For the 15 chartabstractedmeasures (including thosemeasures for which data are data issubmitted directly to CMS, as well asthe OP–22 measure for which data willbe submitted via a Web-based toolrather than via an electronic file), weestimate that there will beapproximately 3,200 respondents peryear. For hospitals to collect and submitthe information on the chart-abstractedmeasures we estimate it will take 35minutes per sampled case. Based uponthe data submitted for the CY 2011payment determination and ourestimates for the additional proposedmeasures, we estimate there will be atotal of 1,947,429 cases per year,approximately 609 cases per year perrespondent. The estimated annualburden associated <strong>with</strong> the submissionrequirements for these chart-abstractedmeasures is 1,136,000 hours (1,947,429cases per year × 0.583 hours per case).VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00432 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2For the structural measures, excludingthe proposed all-patient volume forselected surgical procedures measure,we estimate that each participatinghospital will spend 10 minutes per yearto collect and submit the required data,making the estimated annual burdenassociated <strong>with</strong> these measures 1,600hours (3,200 hospitals × 0.167 hours permeasure × 3 structural measures perhospital).For the collection of all-patientvolume for selected outpatient surgicalprocedures, because hospitals mustdetermine their populations for datareporting purposes and most hospitalsare voluntarily reporting population andsampling data for Hospital OQRProgram purposes, we believe the onlyadditional burden associated <strong>with</strong> thisproposed requirement would be thereporting of the data using the Webbasedtool. We estimate that eachparticipating hospital will spend 10minutes per year to collect and submitthe data, making the estimated annualburden associated <strong>with</strong> this measure533 hours (3,200 hospitals × 0.167 hoursER30NO11.150

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74553jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2per measure × 1 all-patient volumemeasure per hospital).<strong>Comment</strong>: One commenter believedthat the estimates <strong>with</strong>in the proposedrule are reasonable for the chartabstractionof cases, but that theyunderestimate the true burden byoverlooking the time burden for startupand biannual maintenance education ofthe measure specifications, educationalresearch for cases that do not fit <strong>with</strong>inthe specifications manual, educationregarding electronic tool usage,coordination of data submission anddata quality checks by managementand/or information technologypersonnel, and recruitment ofabstraction personnel by management.The commenter believed that the effectof these additional, required activitieswill double or triple the burdenestimated <strong>with</strong>in the original proposaldocument and should not beoverlooked.Response: We thank the commenterfor bringing our attention to theseadditional sources of burden and fortheir support of our estimates related tothe abstraction of cases. We willconsider whether future estimates willrequire consideration of the factorslisted.c. Hospital OQR Program Measures forCY 2015In this final rule <strong>with</strong> commentperiod, for the CY 2015 paymentdetermination, we are retaining therequirement that hospitals mustcomplete and submit a notice ofparticipation form for the Hospital OQRProgram. For the CY 2015 paymentdetermination, we also are retaining themeasures used for CY 2014 paymentdetermination (including the measuresadopted in this final rule <strong>with</strong> commentperiod) and not adding any additionalmeasures at this time.For the CY 2015 paymentdetermination, the burden associated<strong>with</strong> these requirements is the time andeffort associated <strong>with</strong> completing thenotice of participation form, collectingand submitting the data on the proposedmeasures, and collecting and submittingall-patient volume data for selectedoutpatient surgical procedures. For thechart-abstracted measures, we estimatethat there will be approximately 3,200respondents per year. For hospitals tocollect and submit the information onthe chart-abstracted measures wheredata is submitted directly to CMS, weestimate it will take 35 minutes persampled case. Based upon the datasubmitted for the CY 2011 paymentdetermination and our estimates for theadditional measures, we estimate therewill be a total of 1,947,429 cases peryear, approximately 609 cases per yearper respondent. The estimated annualburden associated <strong>with</strong> theaforementioned proposed submissionrequirements for the chart-abstracteddata is 1,136,000 hours (1,947,429 casesper year × 0.583 hours per case). For thestructural measures, we estimate thateach participating hospital will spend10 minutes per year to collect andsubmit the data, making the estimatedannual burden associated <strong>with</strong> thesemeasures 1,603 hours (3,200 hospitals ×0.167 hours per hospital × 3 structuralmeasures per hospital).For the collection of all-patientvolume data for selected outpatientsurgical procedures, because hospitalsmust determine their populations fordata reporting purposes and mosthospitals are voluntarily reportingpopulation and sampling data forHospital OQR purposes, we believe theonly additional burden associated <strong>with</strong>this requirement will be the reporting ofthe data using the Web-based tool. Weestimate that each participating hospitalwill spend 10 minutes per year tocollect and submit the data, making theestimated annual burden associated<strong>with</strong> this measure 533 hours (3,200hospitals × 0.167 hours per hospital).We invited public comment on theburden associated <strong>with</strong> the informationcollection requirements but did notreceive any public comment.We did not receive any additionalcomments on these informationcollection requirements.3. Hospital OQR Program ValidationRequirements for CY 2013In this final rule <strong>with</strong> commentperiod, we are retaining most of therequirements related to data validationfor CY 2013 that we adopted in the CY2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR 72103 through72106) for CY 2012, <strong>with</strong> somerevisions. While these requirements aresubject to the PRA, they are currentlyapproved under OCN: 0938–1109 andexpire October 31, 2013.Similar to our approach for the CY2012 Hospital IQR Program paymentdetermination (75 FR 72103 through72106), we are validating data fromrandomly selected hospitals for the CY2013 payment determination, but we arereducing the number of hospitals from800 to 450. We note that, becausehospitals would be selected randomly,every hospital participating in theHospital OQR Program would beeligible each year for validationselection.In the CY 2011 OPPS/ASC proposedrule and final rule <strong>with</strong> comment period(75 FR 46381 and 72106, respectively),VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00433 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2we discussed additional data validationconditions under consideration for CY2013 and subsequent years. In this finalrule <strong>with</strong> comment period, we arefinalizing a policy under which we willselect for validation up to 50 additionalhospitals based upon targeting criteria.For each selected hospital, generallywe will randomly select up to 48 patientepisodes of care per year (12 perquarter) for validation purposes fromthe total number of cases that thehospital successfully submitted to theOPPS Clinical Warehouse during theapplicable time period. However, if aselected hospital submitted less than 12cases in one or more quarters, onlythose cases available would bevalidated.The burden associated <strong>with</strong> the CY2013 requirement is the time and effortnecessary to submit validation data to aCMS contractor. We estimate that itwould take each of the sampledhospitals approximately 12 hours tocomply <strong>with</strong> these data submissionrequirements. To comply <strong>with</strong> therequirements, we estimate each hospitalmust submit up to 48 cases for theaffected year for review. All selectedhospitals must comply <strong>with</strong> theserequirements per year, which wouldresult in a total of up to 24,000 chartsbeing submitted by the sampledhospitals. The estimated annual burdenassociated <strong>with</strong> the data validationprocess for CY 2013 is approximately6,000 hours.We are maintaining the deadline of 45days for hospitals to submit requestedmedical record documentation to a CMScontractor to support our validationprocess.We invited public comment on theburden associated <strong>with</strong> theseinformation collection requirements. Wereceived comments regarding increasedburden related to reducing the deadlinefor hospitals to submit requestedmedical record documentation from 45to 30 days. We discuss these commentsand state in section XIV.G.3.d. of thisfinal rule <strong>with</strong> comment period that wehave decided to not finalize ourproposal to reduce the time for hospitalsto submit medical recorddocumentation, and that we are insteadretaining our policy of 45 days afterrequest.4. Hospital OQR ProgramReconsideration and AppealsProceduresIn the CY 2009 OPPS/ASC final rule<strong>with</strong> comment period (73 FR 68779), weadopted a mandatory reconsiderationprocess that applied to the CY 2010payment decisions. In the CY 2010OPPS/ASC final rule <strong>with</strong> comment

74554 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2period (74 FR 60654 through 60655), wecontinued this process for the CY 2011payment update. In the CY 2011 OPPS/ASC final rule <strong>with</strong> comment period (75FR 72106 through 72108), we continuedthis process for the CY 2012 paymentupdate <strong>with</strong> some modifications. Weeliminated the requirement that thereconsideration request form be signedby the hospital CEO to facilitateelectronic submission of the form andreduce hospital burden. We arecontinuing this process for the CY 2013and future years’ paymentdeterminations. While there is burdenassociated <strong>with</strong> filing a reconsiderationrequest, 5 CFR 1320.4 of the PaperworkReduction Act of 1995 regulationsexcludes collection activities during theconduct of administrative actions suchas redeterminations, reconsiderations,and/or appeals.We did not receive any comments onthese information collectionrequirements.5. ASC Quality Reporting ProgramIn this final rule <strong>with</strong> commentperiod, we are adopting five claimsbasedmeasures for collection beginningon October 1, 2012; these measures willbe used for the CY 2014 paymentdetermination. We will collect qualitymeasure data for the five claims-basedmeasures by using Quality Data Codes(QDCs) placed on submitted claimsbeginning <strong>with</strong> services furnished fromOctober 1, 2012 through December 31,2012. The five measures are:• Patient Burns (NQF #0263)• Patient Falls (NQF #0266)• Wrong Site, Wrong Side, WrongPatient, Wrong Procedure, WrongImplant (NQF #0267)• Hospital Transfer/Admission (NQF#0265)• Prophylactic Intravenous (IV)Antibiotic Timing (NQF #0264)Approximately 71 percent of ASCsparticipate in Medical Event Reporting,which includes reporting on the firstfour proposed claims-based measureslisted above. Between January 1995 andDecember 2007, ASCs reported 126events, an average of 8.4 events per year(Florida Medical Quality Assurance,Inc. and Health Services AdvisoryGroup.: Ambulatory Surgery CenterEnvironmental Scan (July 2008)(Contract No. GS–10F–0096T)). Thus,we estimate the burden to report QDCson this number of claims per year forthe first four claims-based measures tobe nominal due to the small number ofcases (less than 1 case per month perASC).The remaining claims-based measureis prophylatic IV antibiotic timing. Weestimate the burden associated <strong>with</strong>submitting QDCs for this measures to be231,851 hours (2,788,640 claims peryear × 50 percent of claims requiringQDC information × 0.167 hours perclaim). We refer readers to the HHSReport to Congress: MedicareAmbulatory Surgical Center Value-Based Purchasing Implementation Plan,available at the Web site: https://www.cms.gov/ASCPayment/downloads/C_ASC_RTC%202011.pdf as the sourcefor the number of ASCs and number ofclaims per year to calculate ASC burdenestimates.For CY 2015 payment determination,we are retaining the five measures weare adopting for CY 2014 paymentdetermination and we are adding twostructural measures.For the structural measures, ASCswill enter required information using aWeb-based collection tool between July1, 2013 and August 15, 2013. For theSafe Surgery Checklist Use structuralmeasure, we estimate that eachparticipating ASC will spend 10minutes per year to collect and submitthe required data, making the estimatedannual burden associated <strong>with</strong> thismeasure 864 hours (5,175 ASCs × 1measure × 0.167 hours per ASC).For the ASC Facility Volume Data onSelected ASC Surgical Proceduresstructural measure, we estimate thateach participating ASC will spend 10minutes per year to collect and submitthe required data, making the estimatedannual burden associated <strong>with</strong> thismeasure, 864 hours (5,175 ASCs × 1measure 0.167 hours per ASC).<strong>Comment</strong>s received regarding burdenrelated to the collection of these data arediscussed in section XIV.K.3., 4, and 5.of this final rule <strong>with</strong> comment period.6. 2012 Electronic Reporting Pilot forEligible Hospitals and CAHsUnder 42 CFR 495.6(f)(9), we requireeligible hospitals and CAHsparticipating in the Medicare EHRIncentive Program (which wouldinclude those participating in the 2012Electronic Reporting Pilot) tosuccessfully report hospital CQMs toCMS in the manner specified by CMS.Although eligible hospitals and CAHsmay continue to attest CQMs in 2012,they may also choose to participate inthe 2012 Electronic Reporting Pilot forHospitals and CAHs which we arefinalizing in this final rule <strong>with</strong>comment period. Eligible hospitals andCAHs participating in the 2012Electronic Reporting Pilot must submitCQM data on all 15 CQMs (listed inTable 10 of the Medicare and MedicaidEHR Incentive Program final rule (75 FR44418 through 44420)) to CMS, via asecure portal based on data obtainedVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00434 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2from the eligible hospital’s or CAH’scertified EHR technology.Eligible hospitals and CAHs arerequired to report on core and menu setcriteria for Stage 1 meaningful use. Thereporting of clinical quality measures ispart of the core set. We estimate that itwould take an eligible hospital or CAH0.5 hour to submit the required CQMinformation under the 2012 ElectronicReporting Pilot. Therefore, the estimatedtotal burden should all 4,922 Medicareeligible hospitals and CAHs (3,620 acutecare hospitals and 1,302 CAHs)participate in the 2012 ElectronicReporting Pilot is 2,461 hours.We believe that an eligible hospital orCAH might assign a Computer andInformation Systems Manager to submitthe CQM information on their behalf.We estimate the cost burden for aneligible hospital or CAH to submit theCQMs and hospital quality requirementsis $29.64 (0.5 hour × $59.27 (meanhourly rate for computer andinformation systems managers based onthe 2010 Bureau of Labor Statistics) andthe total estimated annual cost burdenfor all eligible hospitals and CAHs tosubmit the required CQMs is $145,863($29.64 × 4,922 hospitals and CAHs).We solicited public comments on theestimated numbers of eligible hospitalsand CAHs that may register for the 2012Electronic Reporting Pilot and thatwould submit the CQM information viathe 2012 Electronic Reporting Pilot. Wealso invited public comments on thetype of personnel or staff that wouldmostly likely submit on behalf ofeligible hospitals and CAHs.We did not receive any comments onthese information collectionrequirements.7. Additional TopicsIn addition to soliciting publiccomments as part of the OMB approvalprocess for the proposed informationcollection requirements associated <strong>with</strong>the Hospital OQR Program, in theproposed rule we sought publiccomment on several issues that mayultimately affect the burden associated<strong>with</strong> the Hospital OQR Program.Specifically, in the proposed rule, weproposed to retain measures for the CY2015 payment determinations, to adoptnew measures for the CY 2014 and CY2015 payment determinations, and wesought comments on other possiblemeasures under consideration foradoption into the Hospital OQRProgram. We also sought publiccomments on collecting chart-abstracteddata for one measure for the CY 2013payment determination via a Web-basedtool, and on the continued use of anextraordinary circumstance extension or

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74555jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2waiver for reporting quality data, andadditional data validation conditionsthat we are considering adoptingbeginning <strong>with</strong> the CY 2014 paymentdetermination.We also sought public comment onour proposals for an ASC QualityReporting Program for the ASC paymentdeterminations for CYs 2014, 2015 and2016.We invited public comments on thesepotential information collectionrequirements.<strong>Comment</strong>s and responses for theproposed policies and burdenassociated <strong>with</strong> these proposedinformation collection requirements arediscussed in section XIV. of this finalrule <strong>with</strong> comment period.XIX. Response to <strong>Comment</strong>sBecause of the large number of publiccomments we normally receive onFederal Register documents, we are notable to acknowledge or respond to themindividually. We will consider allcomments we receive by the date andtime specified in the DATES section ofthis final rule <strong>with</strong> comment period,and, when we proceed <strong>with</strong> asubsequent document(s), we willrespond to those comments in thepreamble to that document.XX. Economic AnalysesA. Regulatory Impact Analysis1. IntroductionWe have examined the impacts of thisfinal rule <strong>with</strong> comment period asrequired by Executive Order 12866 onRegulatory Planning and Review(September 30, 1993), Executive Order13563 on Improving Regulation andRegulatory Review (January 18, 2011),the Regulatory Flexibility Act (RFA)(September 19, 1980, Pub. L. 96–354),section 1102(b) of the Social SecurityAct, section 202 of the UnfundedMandates Reform Act of 1995 (UMRA)(March 22, 1995, Pub. L. 104–4),Executive Order 13132 on Federalism(August 4, 1999), and the Contract <strong>with</strong>America Advancement Act of 1996(Pub. L. 104–121) (5 U.S.C. 804(2)).Executive Orders 12866 and 13563direct agencies to assess all costs andbenefits of available regulatoryalternatives and, if regulation isnecessary, to select regulatoryapproaches that maximize net benefits(including potential economic,environmental, public health and safetyeffects, distributive impacts, andequity). Executive Order 13563emphasizes the importance ofquantifying both costs and benefits, ofreducing costs, of harmonizing rules,and of promoting flexibility. This rulehas been designated as an‘‘economically’’ significant rule undersection 3(f)(1) of Executive Order 12866and a major rule under the Contract<strong>with</strong> America Advancement Act of 1996(Pub. L. 104–121). Accordingly, the rulehas been reviewed by the Office ofManagement and Budget. We haveprepared a regulatory impact analysisthat, to the best of our ability, presentsthe costs and benefits of this final rule<strong>with</strong> comment period. In the proposedrule (76 FR 42371), we solicited publiccomments on the regulatory impactanalysis provided.2. Statement of NeedThis final rule <strong>with</strong> comment periodis necessary to update the Medicarehospital outpatient prospective paymentrates and the ambulatory surgical center(ASC) prospective payment rates for CY2012. The final rule <strong>with</strong> commentperiod is necessary to adopt changes topayment policies and payment rates foroutpatient services furnished byhospitals and CMHCs for CY 2012. Weare required under section1833(t)(3)(C)(ii) of the Act to updateannually the OPPS conversion factorused to determine the APC paymentrates. We also are required undersection 1833(t)(9)(A) of the Act toreview, not less often than annually,and revise the groups, the relativepayment weights, and the wage andother adjustments described in section1833(t)(2) of the Act. In addition, wemust review the clinical integrity ofpayment groups and relative weights atleast annually.This final rule <strong>with</strong> comment periodis also necessary to update the ASCpayment rates for CY 2012. The finalrule <strong>with</strong> comment period is necessaryto enable CMS to adopt changes topayment policies and payment rates forcovered surgical procedures andcovered ancillary services that areperformed in an ASC for CY 2012.Because the ASC payment rates arebased on the OPPS relative weights forthe majority of the proceduresperformed in ASCs, the ASC paymentrates are updated annually to reflectannual changes to the OPPS relativeweights. In addition, because theservices provided in ASCs are identifiedby HCPCS codes which are reviewedand revised either quarterly or annually,depending on the HCPCS codes, it isnecessary to update the ASC paymentrates annually to reflect these changes toHCPCS codes. In addition, we arerequired under section 1833(i)(1) of theAct to review and update the list ofsurgical procedures that can beperformed in an ASC not less frequentlythan every 2 years.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00435 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Section 1833(t)(17) of the Act requiresthat subsection (d) hospitals that fail tomeet quality reporting requirementsunder the Hospital OQR Program toincur a reduction of 2.0 percentagepoints to their OPD fee scheduleincrease factor. In section XIV. of thisfinal rule <strong>with</strong> comment period, we areadopting additional policies affectingthe Hospital OQR Program for CY 2013,CY 2014, and CY 2015 that hospitalswill have to meet in order to receive thefull OPD fee schedule increase factor. Inthe proposed rule, we solicited publiccomments on these proposed additionalpolicies. Any public comments that wereceived are addressed in section XIV.of this final rule <strong>with</strong> comment period.This final rule <strong>with</strong> comment periodis necessary to further implementsection 6001(a)(3) of the Affordable CareAct. In section XV. of this final rule<strong>with</strong> comment period, we are adoptinga process for a hospital to request anexception to the prohibition onexpansion of facility capacity under thewhole hospital and rural providerexceptions to the physician self-referralprohibition. We also adopt amendmentsto the patient safety requirements in theprovider agreement regulations. In theproposed rule, we solicited publiccomments on these proposed changes.Any public comments that we receivedare addressed in section XV. of this finalrule <strong>with</strong> comment period.Section 1886(o)(1)(B) of the Actdirects the Secretary to begin makingvalue-based incentive payments underthe Hospital VBP Program to hospitalsfor discharges occurring on or afterOctober 1, 2012. In section XVI. of thisfinal rule <strong>with</strong> comment period, we areadding one chart-abstracted measure forthe FY 2014 payment determinationunder the Hospital VBP Program. In theproposed rule, we solicited publiccomments on this proposed additionalmeasure. Any public comments that wereceived are addressed in section XVI.of this final rule <strong>with</strong> comment period.Section 109(b) of the MIEA–TRHCAstates that the Secretary may implementa quality reporting system for ASCs ina manner so as to provide for areduction of 2.0 percentage points inany annual update <strong>with</strong> respect to theyear involved, for failure to report onquality measures. In section XIV.K. ofthis final rule <strong>with</strong> comment period, weare establishing an ASC QualityReporting Program <strong>with</strong> the collectionof five quality measures beginning in CY2012. In the proposed rule, we solicitedpublic comments on this program. Anypublic comments that we received areaddressed in section XIV.K. of this finalrule <strong>with</strong> comment period.

74556 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES23. Overall Impacts for OPPS and ASCProvisionsWe estimate that the effects of theOPPS provisions that will beimplemented by this final rule <strong>with</strong>comment period will result inexpenditures exceeding $100 million inany 1 year. We estimate the totalincrease, from changes in this final rule<strong>with</strong> comment period, in expendituresunder the OPPS for CY 2012 comparedto CY 2011 to be approximately $600million. Because this final rule <strong>with</strong>comment period for the OPPS is‘‘economically significant’’ as measuredby the $100 million threshold, we haveprepared a regulatory impact analysisthat, to the best of our ability, presentsthe costs and benefits of thisrulemaking. Table 59 of this final rule<strong>with</strong> comment period displays theredistributional impact of the CY 2012changes on OPPS payment to variousgroups of hospitals and for CMHCs.We estimate that the effects of theASC provisions that will beimplemented by this final rule <strong>with</strong>comment period for the ASC paymentsystem will result in expendituresexceeding $100 million in any 1 year.We estimate the total increase, fromchanges in this final rule <strong>with</strong> commentperiod, in expenditures under the ASCpayment system for CY 2012 comparedto CY 2011 to be approximately $45million. Because this final rule <strong>with</strong>comment period for the ASC paymentsystem is ‘‘economically significant’’ asmeasured by the $100 million threshold,we have prepared a regulatory impactanalysis of changes to the ASC paymentsystem that, to the best of our ability,presents the costs and benefits of thisrulemaking. Table 61 and Table 62 ofthis final rule <strong>with</strong> comment perioddisplay the redistributional impact ofthe CY 2012 changes on ASC payment,grouped by specialty area and thengrouped by procedures <strong>with</strong> the greatestASC expenditures, respectively.4. Detailed Economic Analysesa. Effects of OPPS Changes in This <strong>Final</strong><strong>Rule</strong> With <strong>Comment</strong> <strong>Period</strong>We are updating the OPPS paymentrates and revising several OPPSpayment policies for CY 2012. We arerequired under section 1833(t)(3)(C)(ii)of the Act to update annually theconversion factor used to determine theAPC payment rates. We also arerequired under section 1833(t)(9)(A) ofthe Act to review, not less frequentlythan annually, and revise the groups,the relative payment weights, and thewage and other adjustments describedin section 1833(t)(2) of the Act. Inaddition, we must review the clinicalintegrity of payment groups and weightsat least annually. Consistent <strong>with</strong> ourhistorical practice in this final rule <strong>with</strong>comment period, we are updating theconversion factor and the wage indexadjustment for hospital outpatientservices furnished beginning January 1,2012, as we discuss in sections II.B. andII.C., respectively, of this final rule <strong>with</strong>comment period. We discuss ourimplementation of section 10324 of theAffordable Care Act, as amended byHCERA, authorizing a wage index of1.00 for certain frontier States. We alsoare revising the relative APC paymentweights using claims data for servicesfurnished on and after January 1, 2010,through and including December 31,2010, and updated cost reportinformation. We are continuing thecurrent payment adjustment for ruralSCHs, including EACHs. <strong>Final</strong>ly, we listthe 19 drugs and biologicals in Table 32of this final rule <strong>with</strong> comment periodthat we are removing from pass-throughpayment status for CY 2012.We estimate that the update change tothe conversion factor and otheradjustments (but not including theeffects of outlier payments, the passthroughestimates, and the applicationof the frontier State wage adjustment forCY 2012) will increase total OPPSpayments by 1.9 percent in CY 2012.The changes to the APC weights, thechanges to the wage indices, thecontinuation of a payment adjustmentfor rural SCHs, including EACHs, andthe payment adjustment for cancerhospitals will not increase OPPSpayments because these changes to theOPPS are budget neutral. However,these updates will change thedistribution of payments <strong>with</strong>in thebudget neutral system as shown inTable 59 below and described in moredetail in this section. We also estimatethat the total change in paymentsbetween CY 2011 and CY 2012,considering all payments, includingchanges in estimated total outlierpayments, pass-through payments, andthe application of the frontier Statewage adjustment outside of budgetneutrality, in addition to the applicationof the OPD fee schedule increase factorafter all adjustments required bysections 1833(t)(3)(F) and 1833(t)(3)(G)of the Act, will increase total estimatedOPPS payments by 1.9 percent.(1) Limitations of Our AnalysisThe distributional impacts presentedhere are the projected effects of the CY2012 policy changes on various hospitalgroups. We post on the CMS Web siteour hospital-specific estimatedpayments for CY 2012 <strong>with</strong> the othersupporting documentation for this finalVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00436 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2rule <strong>with</strong> comment period. To view thehospital-specific estimates, we referreaders to the CMS Web site at: http://www.cms.gov/HospitalOutpatientPPS/.At the Web site, select ‘‘regulations andnotices’’ from the left side of the pageand then select ‘‘CMS–1525–FC’’ fromthe list of regulations and notices. Thehospital-specific file layout and thehospital-specific file are listed <strong>with</strong> theother supporting documentation for thisfinal rule <strong>with</strong> comment period. Weshow hospital-specific data only forhospitals whose claims were used formodeling the impacts shown in Table59 below. We do not show hospitalspecificimpacts for hospitals whoseclaims we were unable to use. We referreaders to section II.A.2. of this finalrule <strong>with</strong> comment period for adiscussion of the hospitals whoseclaims we do not use for ratesetting andimpact purposes.We estimate the effects of theindividual policy changes by estimatingpayments per service, while holding allother payment policies constant. We usethe best data available, but do notattempt to predict behavioral responsesto our policy changes. In addition, wedo not make adjustments for futurechanges in variables such as servicevolume, service-mix, or number ofencounters. In the proposed rule, as wehave done in previous proposed rules,we solicited public comment andinformation about the anticipated effectsof our proposed changes on providersand our methodology for estimatingthem. Any public comments that wereceived are addressed in the applicablesections of this final rule <strong>with</strong> commentperiod that discuss the specific policies.(2) Estimated Effects of This <strong>Final</strong> <strong>Rule</strong>With <strong>Comment</strong> <strong>Period</strong> on HospitalsTable 59 below shows the estimatedimpact of this final rule <strong>with</strong> commentperiod on hospitals. Historically, thefirst line of the impact table, whichestimates the proposed change inpayments to all facilities, has alwaysincluded cancer and children’shospitals, which are held harmless totheir pre-BBA amount. We also includeCMHCs in the first line that includes allproviders because we include CMHCs inour weight scalar estimate. As discussedin section II.F. of this final rule <strong>with</strong>comment period, we are finalizing anadjustment for certain cancer hospitalsas required under section 3138 of theAffordable Care Act. Because thesehospitals will continue to be eligible toreceive hold harmless payments (undercurrent law), we now include a secondline for all hospitals, excludingpermanently held harmless hospitalsand CMHCs, and we also include a

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74557jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2column that shows the impact on otherhospitals of the budget neutraladjustment accounting for the paymentadjustment to cancer hospitals.We present separate impacts forCMHCs in Table 59 because CMHCs arepaid only for partial hospitalizationservices and CMHCs are a differentprovider type from hospitals. In CY2011, we are paying CMHCs under APC0172 (Level I Partial Hospitalization (3services) for CMHCs) and APC 0173(Level II Partial Hospitalization (4 ormore services) for CMHCs), and we arepaying hospitals for partialhospitalization services under APC 0175(Level I Partial Hospitalization (3services) for hospital-based PHPs) andAPC 0176 (Level II PartialHospitalization (4 or more services) forhospital-based PHPs). For CY 2012, weare continuing this APC paymentstructure and basing payment fully onthe median costs calculated usingclaims and cost report data for the typeof provider for which rates are being set,that is, hospital or CMHC. We displaythe impact on CMHCs of this policybelow, and we discuss the impact onhospitals as part of our discussion of theimpact of changes on hospitals for CY2012.The estimated increase in the totalpayments made under the OPPS isdetermined largely by the increase tothe conversion factor set under themethodology in the statute. Thedistributional impacts presented do notinclude assumptions about changes involume and service mix. Section1833(t)(3)(C)(iv) of the Act providesthat, for purposes of this subparagraphsubject to paragraph (17) andsubparagraph (F) of this paragraph, theOPD fee schedule increase factor isequal to the market basket percentageincrease applicable under section1886(b)(3)(B)(iii) of the Act. The marketbasket percentage increase applicableunder section 1886(b)(3)(B)(iii) of theAct, which we refer to as the IPPSmarket basket percentage increase inthis discussion, is 3.0 percent. However,section 1833(t)(3)(F)(i) of the Actreduces that 3.0 percent by theproductivity adjustment described insection 1886(b)(3)(B)(xi)(II) of the Act,which is 1.0 percentage point (which isalso the MFP adjustment for FY 2012 asadopted in the FY 2012 IPPS/LTCH PPSfinal rule), and sections 1833(t)(3)(F)(ii)and 1833(t)(3)(G)(ii) of the Act furtherreduce the market basket percentageincrease by 0.1 percentage point,resulting in the OPD fee scheduleincrease factor of 1.9 percent, which weare using in the calculation of the CY2012 OPPS conversion factor. We referreaders to section II.B. of this final rule<strong>with</strong> comment period for a detaileddiscussion of the calculation of theconversion factor and the source of itscomponents. Section 10324 of theAffordable Care Act, as amended byHCERA, further authorized additionalexpenditures outside budget neutralityfor hospitals in certain frontier Statesthat have a wage index of 1.00. Theamounts attributable to this frontierState wage index adjustment areincorporated in the CY 2012 estimatesin Table 59. Additionally, in response topublic comments on the proposed rule,we are providing the payment impact ofthe rural floor and the imputed floor<strong>with</strong> budget neutrality at the State levelin Table 60, as discussed in section II.C.of this final rule <strong>with</strong> comment period.Table 59 shows the estimatedredistribution of hospital and CMHCpayments among providers as a result ofthe following factors: APCreconfiguration and recalibration; wageindices and the rural adjustment; thecombined impact of the APCrecalibration, wage and rural adjustmenteffects, and the OPD fee scheduleincrease factor update to the conversionfactor; the effect of the budget neutraladjustment to payments made to the 11dedicated cancer hospitals that meet theclassification criteria in section1886(d)(1)(B)(v) of the Act; the frontierState wage index adjustment; andestimated redistribution considering allpayments for CY 2012 relative to allpayments for CY 2011, including theimpact of changes in estimated outlierpayments, and changes to the passthroughpayment estimate. We did notmodel an explicit budget neutralityadjustment for the rural adjustment forSCHs because we are not making anychanges to the policy for CY 2012.Because the updates to the conversionfactor (including the update of the OPDfee schedule increase factor, that is, theIPPS market basket percentage increaseless the productivity adjustmentrequired by section 1833(t)(3)(F)(i) ofthe Act and less the adjustment requiredby sections 1833(t)(3)(F)(ii) and1833(t)(3)(G)(ii) of the Act; thesubtraction of the estimated cost of thecancer hospital payment adjustment; thesubtraction of the estimated cost of therural adjustment; and the subtraction ofthe estimated cost of projected passthroughpayment for CY 2012) areapplied uniformly across services,observed redistributions of payments inthe impact table for hospitals largelydepend on the mix of services furnishedby a hospital (for example, how theAPCs for the hospital’s most frequentlyfurnished services would change), andthe impact of the wage index changes onVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00437 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2the hospital. However, total paymentsmade under this system and the extentto which this final rule <strong>with</strong> commentperiod will redistribute money duringimplementation also will depend onchanges in volume, practice patterns,and the mix of services billed betweenCY 2011 and CY 2012 by various groupsof hospitals, which CMS cannotforecast.Overall, we estimate that the OPPSrates for CY 2012 will have a positiveeffect for providers paid under theOPPS, resulting in a 1.9 percentestimated increase in Medicarepayments. Removing payments tocancer and children’s hospitals becausetheir payments are held harmless to thepre-OPPS ratio between payment andcost and removing payments to CMHCssuggest that these changes will result ina 1.9 percent estimated increase inMedicare payments to all otherhospitals.To illustrate the impact of the CY2012 changes, our analysis begins <strong>with</strong>a baseline simulation model that usesthe final CY 2011 relative weights, theFY 2011 final IPPS wage indices thatinclude reclassifications, and the finalCY 2011 conversion factor. Column 2 inTable 59 shows the independent effectof the changes resulting from thereclassification of services among APCgroups and the recalibration of APCrelative weights, based on 12 months ofCY 2010 OPPS hospital claims data andthe most recent cost report data. Wemodeled the effect of the APCrecalibration changes for CY 2012 byvarying only the relative weights (thefinal CY 2011 relative weights versusthe CY 2012 relative weights calculatedusing the service-mix and volume in theCY 2010 claims used for this final rule<strong>with</strong> comment period) and calculatingthe percent difference in the relativeweight. Column 2 also reflects the effectof the changes resulting from the APCreclassification and recalibrationchanges and any changes in multipleprocedure discount patterns orconditional packaging that occur as aresult of the changes in the relativemagnitude of payment weights.Column 3 reflects the independenteffects of the updated wage indices,including the application of budgetneutrality for the rural floor policy on anationwide basis. This column excludesthe effects of the frontier State wageindex adjustment, which is not budgetneutral and is included in Column 6.We did not model a budget neutralityadjustment for the rural adjustment forSCHs because we are not making anychanges to the policy for CY 2012. Wemodeled the independent effect ofupdating the wage indices by varying

74558 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2only the wage indices, holding APCrelative weights, service-mix, and therural adjustment constant and using theCY 2012 scaled weights and a CY 2011conversion factor that included a budgetneutrality adjustment for the effect ofchanging the wage indices between CY2011 and CY 2012.Column 4 demonstrates theindependent effect of the cancerhospital payment adjustment. Thecancer hospital payment adjustmentwill be provided at cost reportsettlement rather than through anadjustment to APC payments on aclaims basis as we proposed. Under thisfinal rule <strong>with</strong> comment period, we willexamine each cancer hospital’s data atcost report settlement, determine thecancer hospital’s PCR (before the cancerhospital payment adjustment) and inturn determine the lump sum necessary(if any) to make the cancer hospital’sPCR equal to the target PCR. To theextent at cost report settlement a cancerhospital’s PCR (before the cancerhospital payment adjustment) is abovethe target PCR, a cancer hospital willreceive an aggregate payment equal tozero. We refer readers to section II.F. ofthis final rule <strong>with</strong> public comment forcomplete discussion of our policy forCY 2012 <strong>with</strong> regard to the paymentadjustment for dedicated cancerhospitals. We refer readers to Table 13in section II.F. for the estimated CY2012 percentage payment adjustmentthat will be provided to each cancerhospital at cost report settlement. Thecancer hospital payment adjustment isestimated to result in an aggregateincrease in OPPS payments to cancerhospitals of 34.5 percent. Afteraccounting for TOPs, the estimatedaggregate increase in OPPS payments forCY 2012 is approximately 11.3 percent,after all CY 2012 payment updates havebeen included.Column 5 demonstrates the combined‘‘budget neutral’’ impact of APCrecalibration (that is, Column 2), thewage index update (that is, Column 3),as well as the impact of updating theconversion factor <strong>with</strong> the OPD feeschedule increase factor, the 3.0 percenthospital market basket percentageincrease less the productivityadjustment required by section1833(t)(3)(F)(i) of the Act, which is 1.0percentage point, and less the 0.1percentage point reduction required bysections 1833(t)(3)(F)(ii) and1833(t)(3)(G)(ii) of the Act, whichresulted in an OPD fee scheduleincrease factor of 1.9 percent. Wemodeled the independent effect of thebudget neutrality adjustments and theOPD fee schedule increase factor byusing the relative weights and wageindices for each year, and using a CY2011 conversion factor that included theOPD fee schedule increase and a budgetneutrality adjustment for differences inwage indices.Column 6 demonstrates thecumulative impact of the budget neutraladjustments from Columns 2 through 4,and the OPD fee schedule increasefactor of 1.9 percent reflected in Column5, combined <strong>with</strong> the non-budgetneutral frontier State wage indexadjustment, discussed in section II.C. ofthis final rule <strong>with</strong> comment period.This differs from Column 5 solely basedon application of the non-budget neutralfrontier State wage index adjustment.Column 7 depicts the full impact ofthe CY 2012 policies on each hospitalgroup by including the effect of all thechanges for CY 2012 (including the APCreconfiguration and recalibration shownin Column 2) and comparing them to allestimated payments in CY 2011.Column 7 shows the combined budgetneutral effects of Columns 2 through 4,plus the impact of the frontier Statewage index adjustment; the change tothe fixed-dollar outlier threshold from$2,100 to $1,900 as discussed in sectionII.G. of this final rule <strong>with</strong> commentperiod; the change in the Hospital OQRProgram payment reduction for thesmall number of hospitals in our impactmodel that failed to meet the reportingrequirements (discussed in sectionXIV.E. of this final rule <strong>with</strong> commentperiod); and the impact of increasing theestimate of the percentage of total OPPSpayments dedicated to transitional passthroughpayments. Of the 107 hospitalsthat failed to meet the Hospital OQRProgram reporting requirements for thefull CY 2011 update (and assumed, formodeling purposes, to be the samenumber for CY 2012), we included 34hospitals in our model because they hadboth CY 2010 claims data and recentcost report data. We estimate that thecumulative effect of all changes for CY2012 will increase payments to allproviders by 1.9 percent for CY 2012.We modeled the independent effect ofall changes in Column 7 using the finalrelative weights for CY 2011 and therelative weights for CY 2012. We usedthe final conversion factor for CY 2011of $68.876 and the CY 2012 conversionfactor of $70.016 discussed in sectionII.B. of this final rule <strong>with</strong> commentperiod in this model.Column 7 also contains simulatedoutlier payments for each year. We usedthe one year charge inflation factor usedin the FY 2012 IPPS/LTCH PPS finalrule of 3.89 percent (1.0389) to increaseindividual costs on the CY 2010 claims,and we used the most recent overallCCR in the July 2011 OutpatientVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00438 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2Provider-Specific File (OPSF) (76 FR51794) to estimate outlier payments forCY 2011. Using the CY 2010 claims anda 3.89 percent charge inflation factor,we currently estimate that outlierpayments for CY 2011, using a multiplethreshold of 1.75 and a fixed-dollarthreshold of $2,100 should beapproximately 0.93 percent of totalpayments. Outlier payments of 0.93percent are incorporated in the CY 2012comparison in Column 7. We used thesame set of claims and a charge inflationfactor of 7.94 percent (1.0794) and theCCRs in the July 2011 OPSF, <strong>with</strong> anadjustment of 0.9903, to reflect relativechanges in cost and charge inflationbetween CY 2010 and CY 2012, tomodel the CY 2012 outliers at 1.0percent of estimated total paymentsusing a multiple threshold of 1.75 anda final fixed-dollar threshold of $1,900.Column 1: Total Number of HospitalsThe first line in Column 1 in Table 59shows the total number of facilities(4,161), including designated cancer andchildren’s hospitals and CMHCs, forwhich we were able to use CY 2010hospital outpatient and CMHC claimsdata to model CY 2011 and CY 2012payments, by classes of hospitals, forCMHCs and for dedicated cancerhospitals. We excluded all hospitals andCMHCs for which we could notaccurately estimate CY 2011 or CY 2012payment and entities that are not paidunder the OPPS. The latter entitiesinclude CAHs, all-inclusive hospitals,and hospitals located in Guam, the U.S.Virgin Islands, Northern MarianaIslands, American Samoa, and the Stateof Maryland. This process is discussedin greater detail in section II.A. of thisfinal rule <strong>with</strong> comment period. At thistime, we are unable to calculate adisproportionate share (DSH) variablefor hospitals not participating in theIPPS. Hospitals for which we do nothave a DSH variable are groupedseparately and generally includefreestanding psychiatric hospitals,rehabilitation hospitals, and long-termcare hospitals. We show the totalnumber (3,895) of OPPS hospitals,excluding the hold-harmless cancer andchildren’s hospitals and CMHCs, on thesecond line of the table. We excludedcancer and children’s hospitals becausesection 1833(t)(7)(D) of the Actpermanently holds harmless cancerhospitals and children’s hospitals totheir ‘‘pre-BBA amount’’ as specifiedunder the terms of the statute, andtherefore, we removed them from ourimpact analyses. We show the isolatedimpact on 204 CMHCs at the bottom ofthe impact table and discuss that impactseparately below.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74559jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Column 2: APC Changes Due toReassignment and RecalibrationThis column shows the combinedeffects of the reconfiguration,recalibration, and other policies (such assetting payment for separately payabledrugs and biologicals at ASP+4 percent<strong>with</strong> an accompanying reduction in theamount of cost associated <strong>with</strong>packaged drugs and biologicals andchanges in payment for PHP services).Overall, we estimate that changes inAPC reassignment and recalibrationacross all services paid under the OPPSwill increase payments to urbanhospitals by 0.2 percent. We estimatethat both large and other urban hospitalswill experience an increase of 0.2percent, all attributable to recalibration.We estimate that urban hospitals billingfewer than 21,000 lines for OPPSservices will experience decreasesranging from 0.6 percent to 5.5 percent.The decrease of 5.5 percent for urbanhospitals billing fewer than 5,000 linesper year is attributable to the decline inthe payment for APC 0034 (MentalHealth Services Composite), for whichthe payment rate is set at the paymentrate for APC 0176 (Level II PartialHospitalization (4 or more services) forhospital-based PHPs). Urban hospitalsbilling 21,000 or more lines for OPPSservices will experience increases of 0.2to 0.5 percent.Overall, we estimate that ruralhospitals will experience an increase of0.1 percent as a result of changes to theAPC structure. We estimate that ruralhospitals of all bed sizes will experienceno change or increases of 0.1 to 0.3percent as a result of the APCrecalibration. We estimate that ruralhospitals that report fewer than 5,000lines for OPPS services will experiencea decrease of 0.7 percent, while ruralhospitals that report 5,000 or more linesfor OPPS services will experience nochange or increases of 0.3 to 0.7 percentin payment as a result of the APCrecalibration.Among teaching hospitals, weestimate that the impact resulting fromAPC recalibration will include adecrease of 0.1 percent for majorteaching hospitals and an increase of 0.3percent for minor teaching hospitals.We estimate that non-teaching hospitalswill experience an increase of 0.2percent.Classifying hospitals by type ofownership suggests that voluntary,proprietary, and governmental hospitalswill experience increases of 0.1 to 0.2percent as a result of the APCrecalibration. <strong>Final</strong>ly, we estimate thathospitals for which DSH payments arenot available will experience a decreaseof 6.0 percent and that urban hospitalsfor which DSH is not available willexperience a decrease of 6.3 percent.Hospitals for which DSH is not availablefurnish a large number of psychiatricservices and we believe that the declinein payment for APC 0176 is the causefor this estimated decline in payment.Column 3: New Wage Indices and theEffect of the Rural AdjustmentThis column estimates the impact ofapplying the FY 2012 IPPS wage indicesfor the CY 2012 OPPS <strong>with</strong>out theinfluence of the frontier State wageindex adjustment, which is not budgetneutral. The frontier State wage indexadjustment is reflected in the combinedimpact shown in Columns 6 and 7. Weare continuing the rural paymentadjustment of 7.1 percent to rural SCHsfor CY 2012, as described in sectionII.E.2. of this final rule <strong>with</strong> commentperiod. We estimate that thecombination of updated wage data andnationwide application of rural floorbudget neutrality will redistributepayment among regions. We alsoupdated the list of counties qualifyingfor the section 505 out-migrationadjustments. Overall, we estimate thaturban hospitals will experience nochange from CY 2011 to CY 2012,although large urban hospitals willexperience an increase of 0.1 percent asa result of the updated wage indices.Rural hospitals will experiencedecreases of 0.2 to 0.4 percent as a resultof the updated wage indices. Weestimate that urban hospitals located inthe West South Central, Pacific andPuerto Rico regions will experienceincreases of 0.1 to 0.4 percent. Urbanregions other than New England willexperience no change or decreases of 0.1to 0.8 percent. Hospitals in urban NewEngland are expected to see an increaseof 4.2 percent as a result of theimplementation of the rural floor. Werefer readers to section II.C. of this finalrule <strong>with</strong> comment period for moreinformation and Table 60 for estimatedimpact of the rural floor and theimputed floor <strong>with</strong> budget neutrality atthe State level. Overall, we estimate thatrural hospitals will experience adecrease of 0.3 percent as a result ofchanges to the wage index for CY 2012.We estimate that hospitals in ruralMiddle Atlantic, West North Central,and Pacific States will experienceincreases of 0.1 to 1.0 percent, whileother rural regions will experiencedecreases from 0.1 to 0.8 percent.Column 4: Cancer Hospital PaymentAdjustmentThis column estimates the budgetneutral impact of applying the hospital-VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00439 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2specific CY 2012 cancer hospitalpayment adjustment authorized bysection 3138 of the Affordable Care Act,which is estimated to result in anaggregate increase in OPPS payments todedicated cancer hospitals of 11.3percent for the CY 2012 OPPS afteraccounting for TOPs. We estimate thatall other hospitals will experience apayment decrease of 0.2 percent in CY2012 as a result of the budget neutralpayment adjustment for the dedicatedcancer hospitals.Column 5: All Budget NeutralityChanges Combined With the OPD FeeSchedule IncreaseWe estimate that, for most classes ofhospitals, the addition of the OPD feeschedule increase factor of 1.9 percentwill mitigate the negative impactscreated by the budget neutralityadjustments made in Columns 2 and 3.While most classes of hospitals willreceive an increase that is more in line<strong>with</strong> the 1.9 percent overall increaseafter the update is applied to the budgetneutrality adjustments, urban hospitalsthat bill fewer than 11,000 lines andhospitals that do not report DSH or forwhich DSH information is not availablewill experience decreases. In particular,urban hospitals that report fewer than5,000 lines will experience a cumulativedecrease, after application of the OPDfee schedule increase factor and thebudget neutrality adjustments, of 3.4percent, largely as a result of thedecrease in payment for APC 0034(Mental Health Services Composite).Similarly, urban hospitals for whichDSH is not available, and for whichDSH is zero will experience decreases of0.1 to 4.0, also largely as a result of thedecrease in payment for APC 0034.OPPS payment for APC 0034 iscontinuing to be set to the payment rateof APC 0176 (Level II PartialHospitalization (4 or more services) forhospital-based PHPs), whichexperienced a decline based on updatedcost report and hospital claims data.Overall, we estimate that thesechanges will increase payments to urbanhospitals by 1.9 percent. We estimatethat large urban hospitals and ‘‘other’’urban hospitals will also experienceincreases of 2.0 and 1.9 percent,respectively. Hospitals in urban NewEngland will experience an increase of5.7 percent, largely as a result of thechange in wage index shown undercolumn 3 and discussed above. Weestimate that rural hospitals willexperience a 1.5 percent increase as aresult of the OPD fee schedule increasefactor and other budget neutralityadjustments.

74560 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Among teaching hospitals, weestimate that the impacts resulting fromthe OPD fee schedule increase factorand other budget neutrality adjustmentswill include an increase of 1.9 percentfor major teaching hospitals, minorteaching hospitals and non-teachinghospitals.Classifying hospitals by type ofownership suggests that proprietaryhospitals will experience an estimatedincrease of 1.7 percent, while voluntaryhospitals will experience an estimatedincrease of 2.0 percent and governmenthospitals will experience an estimatedincrease of 1.5 percent.Column 6: All Adjustments With theFrontier State Wage Index AdjustmentThis column shows the impact of allbudget neutrality adjustments,application of the 1.9 percent OPD feeschedule increase factor, and the nonbudgetneutral impact of applying thefrontier State wage adjustment (that is,the frontier State wage index change inaddition to all changes reflected inColumn 4). In general, we estimate thatall facilities and all hospitals willexperience a combined increase of 2.0.Hospitals in the rural Mountain regionwill experience an increase of 2.8percent, most of which is attributable tothe frontier State wage adjustment.Similarly, hospitals in the rural WestNorth Central region will experience anincrease of 2.7 percent, while hospitalsin the urban West North Central willexperience an increase of 2.5 percent,most of which also is attributable to thefrontier State wage adjustment.Column 7: All Changes for CY 2012Column 7 compares all changes forCY 2012 to estimated final payment forCY 2011, including the changes in theoutlier threshold, payment reductionsfor hospitals that failed to meet theHospital OQR Program reportingrequirements, and the difference inpass-through estimates that are notincluded in the combined percentagesshown in Column 5. This columnincludes estimated payment for a fewhospitals receiving reduced paymentbecause they did not meet their HospitalOQR Program reporting requirements;however, we estimate that theanticipated change in payment betweenCY 2011 and CY 2012 for thesehospitals will be negligible. (We furtherdiscuss the estimated impacts ofhospitals’ failure to meet theserequirements in section XX.A.4.d. ofthis final rule <strong>with</strong> comment period.)Overall, we estimate that facilities willexperience an increase of 1.9 percentunder this final rule <strong>with</strong> commentperiod in CY 2012 relative to totalspending in CY 2011. The projected 1.9percent increase for all facilities inColumn 7 of Table 59 reflects the 1.9percent OPD fee schedule increasefactor, less 0.07 percent for the changein the pass-through estimate betweenCY 2011 and CY 2012, plus 0.07 percentfor the difference in estimated outlierpayments between CY 2011 (0.93percent) and CY 2012 (1.0 percent), less0.09 percent due to the section 508 wageadjustment, plus 0.10 percent due to thefrontier State wage index adjustment.When we exclude cancer and children’shospitals (which are held harmless totheir pre-BBA amount) and CMHCs, theestimated increase is 1.9 percent afterrounding. We estimate that thecombined effect of all changes for CY2012 will increase payments to urbanhospitals by 1.9 percent. We estimatethat large urban hospitals willexperience a 2.0 percent increase, while‘‘other’’ urban hospitals will experiencean increase of 1.9 percent. We estimatethat urban hospitals that bill less than5,000 lines of OPPS services willexperience a decrease of 2.9 percent,largely attributable to the decline inpayment for APC 0034 (Mental HealthServices Composite). We estimate thaturban hospitals that bill 11,000 or morelines of OPPS services will experienceincreases between 1.0 percent and 2.3percent, while urban hospitals thatreport between 5,000 and 10,999 lineswill experience a decrease of 0.3percent.Overall, we estimate that ruralhospitals will experience a 1.5 percentincrease as a result of the combinedeffects of all changes for CY 2012. Weestimate that rural hospitals that billless than 5,000 lines of OPPS serviceswill experience an increase of 0.6percent and that rural hospitals that bill5,000 or more lines of OPPS serviceswill experience increases ranging from1.5 to 2.7 percent.Among teaching hospitals, weestimate that the impacts resulting fromthe combined effects of all changes willinclude an increase of 1.9 percent formajor teaching hospitals and nonteachinghospitals. Minor teachinghospitals will experience an increase of1.8 percent.In our analysis, we also have stratifiedhospitals by type of ownership. Basedon this analysis, we estimate thatvoluntary hospitals will experience anincrease of 2.0 percent, proprietaryhospitals will experience an increase of1.7 percent, and governmental hospitalswill experience an increase of 1.6percent.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00440 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2(3) Estimated Effects of This <strong>Final</strong> <strong>Rule</strong>With <strong>Comment</strong> <strong>Period</strong> on CMHCsThe last line of Table 59 demonstratesthe isolated impact on CMHCs. In CY2011, CMHCs are paid under four APCsfor services under the OPPS: APC 0172(Level I Partial Hospitalization (3services) for CMHCs); APC 0173 (LevelII Partial Hospitalization (4 or moreservices) for CMHCs); APC 0175 (LevelI Partial Hospitalization (3 services) forhospital-based PHPs); and APC 0176(Level II Partial Hospitalization (4 ormore services) for hospital-based PHPs).We implemented these four APCs forCY 2011. We adopted payment rates foreach APC based on the cost data derivedfrom claims and cost reports for theprovider type to which the APC isspecific and provided a transition toCMHC rates based solely on CMHC datafor the two CMHC PHP per diem rates.For CY 2012, we are continuing the fourAPC provider-specific structure weadopted for CY 2011 and are finalizingour proposal to base payment fully onthe cost data for the type of providerfurnishing the service. We modeled theimpact of this APC policy assuming thatCMHCs will continue to provide thesame number of days of PHP care, <strong>with</strong>each day having either 3 services or 4or more services, as seen in the CY 2010claims data used for this CY 2012 OPPS/ASC final rule <strong>with</strong> comment period.We excluded days <strong>with</strong> 1 or 2 servicesbecause our policy only pays a per diemrate for partial hospitalization when 3 ormore qualifying services are provided tothe beneficiary. Because the relativepayment weights for APC 0172 and APC0173 for CMHCs both decline in CY2012 due to CMHC cost data for partialhospitalization services provided byCMHCs, we estimate that there will bea 32.4 percent decrease in payments toCMHCs due to these APC policychanges (shown in Column 2).Column 3 shows that the estimatedimpact of adopting the CY 2012 wageindex values will result in a decrease of0.3 percent to CMHCs. Column 4 showsthat CMHCs will experience a 0.2percent reduction as a result of thecancer hospital payment adjustment.We note that all providers paid underthe OPPS, including CMHCs, willreceive a 1.9 percent OPD fee scheduleincrease factor. Column 5 shows thatcombining this OPD fee scheduleincrease factor, along <strong>with</strong> changes inAPC policy for CY 2012 and the CY2012 wage index updates, results in anestimated decrease of 30.8 percent.Column 6 shows that adding the frontierState wage adjustment results in nochange to the cumulative 30.8 percentdecrease. Column 7 shows that adding

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74561the changes in outlier and pass-thoughpayments will result in no change to the30.8 percent decrease in payment forCMHCs. This reflects all changes toCMHCs for CY 2012.The impact of the changes to hospitalpayment rates for partial hospitalizationservices is reflected in the impact of allchanges on hospitals. The impact of thedecline in payment for APC 0034appears most notably in small urbanhospitals that furnish primarilyoutpatient psychiatric services andhospitals for which DSH is zero or notavailable.All providers paid under the OPPSwill receive a 1.9 percent OPD feeschedule increase factor under thispolicy. Combining this OPD feeschedule increase factor <strong>with</strong> changes inAPC policy for CY 2012, the CY 2012wage index updates, and <strong>with</strong> changesin outlier and pass-through payments,we estimate that the combined impacton hospitals <strong>with</strong>in the OPPS systemwill be a 1.9 percent increase in totalpayment for CY 2012. Table 59 presentsthe estimated impact of the changes tothe OPPS for CY 2012.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00441 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74562 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00442 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.151

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74563jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00443 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.152

74564 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00444 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.153

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74565In response to public comments wereceived on the proposed rule, we areproviding the payment impact of therural floor and imputed floor <strong>with</strong>budget neutrality at the State level inTable 60. Column 1 of the table displaysthe number of hospitals located in eachState. Column 2 displays the number ofhospitals in each State that will bereceiving the rural floor or imputedfloor wage index for CY 2012. Column3 displays the percentage of totalpayments each State receives orcontributes to fund the rural floor andthe imputed floor <strong>with</strong> national budgetneutrality. This column compares thepost-reclassification CY 2012 wageindex of providers before the rural floorand the imputed floor adjustment andthe post-reclassification CY 2012 wageindex of providers <strong>with</strong> the rural floorand the imputed floor adjustment.Column 4 displays an estimatedpayment amount that each State willgain or lose due to the application of therural floor and the imputed floor <strong>with</strong>national budget neutrality.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00445 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.154

74566 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00446 Fmt 4701 Sfmt 4725 E:\FR\FM\30NOR2.SGM 30NOR2ER30NO11.155

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74567jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–C(4) Estimated Effect of This <strong>Final</strong> <strong>Rule</strong><strong>with</strong> <strong>Comment</strong> <strong>Period</strong> on BeneficiariesFor services for which the beneficiarypays a copayment of 20 percent of thepayment rate, the beneficiary share ofpayment will increase for services forwhich the OPPS payments will rise andwill decrease for services for which theOPPS payments will fall. For example,for a service assigned to Level IV NeedleBiopsy/Aspiration Except Bone Marrow(APC 0037) in the CY 2011 OPPS, thenational unadjusted copayment is$228.76, and the minimum unadjustedcopayment is $215.24, 20 percent of thenational unadjusted payment rate of$1,076.14. For CY 2012, the nationalunadjusted copayment for APC 0037 is$227.40, a decline from the copaymentin effect for CY 2011. The minimumunadjusted copayment for APC 0037 is$215.00 or 20 percent of the CY 2012national unadjusted payment rate forAPC 0037 of $1,074.99. The minimumunadjusted copayment will declinebecause the CY 2011 payment rate forAPC 0037 will decline for CY 2012. Forfurther discussion on the calculation ofthe national unadjusted copayments andminimum unadjusted copayments, werefer readers to section II.I. of this finalrule <strong>with</strong> comment period. In all cases,the statute limits beneficiary liability forcopayment for a procedure to thehospital inpatient deductible for theapplicable year. The CY 2011 hospitalinpatient deductible is $1,132 (75 FR68799 through 68800). The amount ofVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00447 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2the CY 2012 hospital inpatientdeductible is $1,156.In order to better understand theimpact of changes in copayment onbeneficiaries, we modeled the percentchange in total copayment liabilityusing CY 2010 claims. We estimate,using the claims of the 4,161 hospitalsand CMHCs on which our modeling isbased, that total beneficiary liability forcopayments will decrease as an overallpercentage of total payments, from 22.0percent in CY 2011 to 21.8 percent inCY 2012 due largely to changes inservice-mix.(5) Effects on Other ProvidersThe relative weights and paymentamounts established under the OPPSaffect the payments made to ASCs asdiscussed in section XIII. of this finalER30NO11.156

74568 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2rule <strong>with</strong> comment period. No types ofproviders other than hospitals, CMHCsand ASCs are affected by the changes inthis final rule <strong>with</strong> comment period.(6) Effects on the Medicare andMedicaid ProgramsThe effect on the Medicare program isexpected to be $600 million inadditional program payments for OPPSservices furnished in CY 2012. Theeffect on the Medicaid program isexpected to be limited to increasedcopayments that Medicaid may make onbehalf of Medicaid recipients who arealso Medicare beneficiaries. We referreaders to our discussion of the impacton beneficiaries under sectionXX.A.4.a.(4). of this final rule <strong>with</strong>comment period.(7) Alternatives ConsideredAlternatives to the changes we aremaking and the reasons for our selectedalternatives are discussed throughoutthis final rule <strong>with</strong> comment period.Some of the major issues discussed inthis final rule <strong>with</strong> comment period andthe alternatives considered arediscussed below.• Alternatives Considered for Paymentof the Acquisition and PharmacyOverhead Costs of Drugs and BiologicalsThat Do Not Have Pass-Through StatusWe are finalizing our proposal, <strong>with</strong>modification, that, for CY 2012, theOPPS will make payment for separatelypayable drugs and biologicals at ASP+4percent, and this payment will continueto represent combined payment for boththe acquisition and pharmacy overheadcosts of separately payable drugs andbiologicals. In addition, because we arecontinuing to make a pharmacyoverhead adjustment for CY 2012, webelieve it is appropriate to account forinflation that has occurred since theoverhead redistribution amount of $200million was applied in CY 2011.Further, in order to enhance the intrarulemakingstability of the ASP+Xamount between the proposed rule andthis final rule <strong>with</strong> comment period, weare modifying the proposedredistribution amount of $215 million inorder to keep the mathematicalrelationship between the redistributionamount and amount of total drug costs(instead of the dollar amount, as wasour policy in CY 2010 and 2011) thesame between the proposed rule and thefinal rule. This approach, describedbriefly below and in greater depth insection V.B.3 of this final rule <strong>with</strong>comment period, results in a total CY2012 redistribution amount of $240.3million, or $169 million (or 35 percent)in pharmacy overhead cost currentlyattributed to coded packaged drugs, and$71.3 million (or 10.7 percent) inpharmacy overhead cost attributed touncoded packaged drugs.Therefore, as discussed in furtherdetail in section V.B.3. of this final rule<strong>with</strong> comment period, we believe thatapproximately $169 million inpharmacy overhead cost for packageddrugs and biologicals <strong>with</strong> a separatelyreportedHCPCS code, and $71.3 millionpharmacy overhead cost attributed topackaged uncoded drugs and biologicalsshould, instead, be attributed toseparately payable drugs and biologicalsto provide an adjustment for thepharmacy overhead costs of theseseparately payable products. As a result,we also are finalizing our proposal toreduce the cost of packaged drugs andbiologicals that is included in thepayment for procedural APCs to offsetthe $240.3 million adjustment topayment for separately payable drugsand biologicals. We are finalizing ourproposal that any redistribution ofpharmacy overhead cost that may arisefrom CY 2012 final rule claims data willoccur only from some drugs andbiologicals to other drugs andbiologicals, thereby maintaining theestimated total cost of drugs andbiologicals under the OPPS.We considered three alternatives forpayment of the acquisition andpharmacy overhead costs of drugs andbiologicals that do not have passthroughstatus for CY 2012. The firstalternative we considered was tocompare the estimated aggregate cost ofseparately payable drugs and biologicalsin our claims data to the estimatedaggregate ASP dollars for separatelypayable drugs and biologicals, using theASP as a proxy for average acquisitioncost, to calculate the estimated percentof ASP that would serve as the bestproxy for the combined acquisition andpharmacy overhead costs of separatelypayable drugs and biologicals (70 FR68642), but <strong>with</strong>out redistribution ofestimated pharmacy overhead costs.Under this methodology <strong>with</strong>outredistribution, using July 2011 ASPinformation and costs derived from CY2010 OPPS claims data, we estimatedthe combined acquisition and overheadcosts of separately payable drugs andbiologicals to be ASP–2 percent. Asdiscussed in section V.B.3. of this finalrule <strong>with</strong> comment period, we alsodetermined that the combinedacquisition and overhead costs ofpackaged drugs are 192 percent of ASP.We did not choose this alternativebecause we believe that this analysisindicates that hospital chargingpractices reflected in our standard drugpayment methodology have theVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00448 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2potential to ‘‘compress’’ the calculatedcosts of separately payable drugs andbiologicals to some degree when there isno redistribution of estimated pharmacyoverhead costs. Further, we recognizethat the attribution of pharmacyoverhead costs to packaged or separatelypayable drugs and biologicals throughour standard drug paymentmethodology of a combined payment foracquisition and pharmacy overheadcosts depends, in part, on the treatmentof all drugs and biologicals each yearunder our annual drug packagingthreshold. Changes to the packagingthreshold may result in changes topayment for the overhead cost of drugsand biologicals that do not reflect actualchanges in hospital pharmacy overheadcost for those products.The second alternative we consideredand the one we proposed for CY 2012is to continue our pharmacy overheadredistribution methodology and to applyan inflation allowance and redistribute$215 million in overhead costs frompackaged coded and uncoded drugs andbiologicals to separately payable drugsand biologicals. Using this approach, weproposed to adjust the CY 2010 and2011 pharmacy overhead and handlingredistribution amount of $200 millionusing the PPI for Pharmaceuticals forHuman Use, resulting in a proposed CY2012 redistribution amount of $215million and payments of ASP+4percent. In the final rule, redistributing$215 million in overhead betweenpackaged drugs and biologicals toseparately payable drugs andpharmaceuticals would have resulted ina combined payment of ASP+3 percentfor the acquisition and pharmacyoverhead costs, a 1-percent decrease inthe ASP+X amount from the proposedASP+4 percent. However, as we discussin section V.B.3.b of this final rule <strong>with</strong>comment period, we determined thatthis decline of the methodologicallyderived ASP+X percent is due toincreasing the interim claims data usedin the proposed rule calculations to awhole year’s data for the final rule whilekeeping the drug overheadredistribution amount constant. Further,after additional analysis, we believe thatthis decline in the ASP+X amount forthe final rule due to the inclusion of awhole year’s data will always occur ifwe were to continue to use a fixedoverhead redistribution amount whileupdating the amount of total costsincluded in the analysis for the finalrule to include a whole year worth oftotal cost data. Therefore, because webelieve another policy may promotemore stability than the ASP+X percentcalculation when based on a fixed

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74569jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2redistribution amount, and because webelieve that our proposals shouldalways reflect the expected value of thefinal to the best of our ability, we didnot finalize our proposal to redistributea fixed $215 million pharmacy overheadamount for this final rule <strong>with</strong> commentperiod.The third option that we considered,and the one that we selected for CY2012, is to continue the overheadredistribution methodology that wefinalized in the CY 2010 OPPS/ASCfinal rule <strong>with</strong> comment period,employed in CY 2011, and proposed inCY 2012, but <strong>with</strong> a modification.Specifically, in this CY 2012 OPPS/ASCfinal rule <strong>with</strong> comment period, in orderto enhance intra-rulemaking stability,we will instead keep the proportions ofoverhead redistribution to total drugand biological costs constant betweenthe proposed rule and the final rule, butchange the dollar amount of the transfer.Consequently, instead of redistributingthe proposed $215 million in costs forcoded and uncoded packaged drugs andbiologicals ($54 million in redistributedcosts for uncoded packaged drugs andbiologicals, or 10.7 percent of total drugand biological costs; and $161 millionfor coded packaged drugs andbiologicals, or 35 percent of total costs)we will update the redistributionamounts to keep the proportion ofredistributed costs constant between theproposed rule and the final rule.Therefore, for CY 2012 we willredistribute $169 million (or 35 percent)of coded packaged drug and biologicaloverhead cost, and $71.3 million (or10.7 percent) of uncoded packaged drugand biological overhead cost, resultingin a total redistribution amount of$240.3 million. This option keeps thepercentage of coded packaged anduncoded packaged overhead cost that isredistributed constant between theproposed rule and the final rule, andresults in a final CY 2012 ASP+Xpercent of ASP+4 percent that isidentical to the ASP+X percent in theproposed rule.We chose this alternative because webelieve that it substantially enhancesthe intra-rulemaking stability for theASP+X amount between the proposedrule and the final rule. We believe thatthis redistribution amount provides anappropriate redistribution of pharmacyoverhead costs associated <strong>with</strong> drugsand biologicals, based on the analysesdiscussed in section V.B.3. of this finalrule <strong>with</strong> comment period.• OPPS Payment Adjustment forCertain Cancer HospitalsSection 3138 of the Affordable CareAct instructs the Secretary to conduct astudy to determine if outpatient costs,including the cost of drugs andbiologicals, incurred by cancer hospitalsdescribed in section 1886(d)(1)(B)(v) ofthe Act <strong>with</strong> respect to ambulatoryclassification groups exceed the costsincurred by other hospitals furnishingservices under this subsection (section1833(t) of the Act). Further, section 3138of the Affordable Care Act provides thatif the cancer hospitals’ costs <strong>with</strong>respect to APC groups are determined tobe greater than the costs of otherhospitals paid under the OPPS, theSecretary shall provide an appropriatebudget neutral payment adjustmentunder section 1833(t)(2)(E) of the Act toreflect these higher costs.As discussed in detail in section II. F.of this final rule <strong>with</strong> comment period,using the claims and cost report datathat we used under the modeledproposed CY 2011 OPPS, weconstructed our traditional providerleveldatabase of costs, modeledpayments, units, service mix, wageindex and other provider informationthat we typically use to establish classadjustments under the OPPS. Weobserved that cancer hospitals weremore costly <strong>with</strong> respect to APC groupsthan other hospitals paid under theOPPS, having a standardized cost perdiscounted unit of $150.12 compared toa standardized cost per discounted unitof $94.14 for all other hospitals.Having reviewed the cost data fromthe standard analytic database anddetermined that cancer hospitals aremore costly <strong>with</strong> respect to APC groupsthan other hospitals <strong>with</strong>in the OPPSsystem, we are finalizing our proposal,<strong>with</strong> modification after consideration ofthe public comments we received, toprovide a payment adjustment forcancer hospitals for CY 2012 based ona comparison of costliness relative topayments using cost report data.Specifically, the cancer hospitalpayment adjustment amounts will beprovided on an aggregate basis at costreport settlement and will be equal tothe amount of additional paymentneeded for a resulting PCR that is equalto the weighted average PCR for otherhospitals furnishing services undersection 1833(t) of the Act, which werefer to as the ‘‘target PCR’’. The targetPCR for CY 2012, which is calculatedusing the most recently submitted orsettled cost report data that is availableat the time of this final rule, is 0.91.Based on this target PCR, OPPSpayments to cancer hospitals areestimated to increase by 34.5 percentand total payments to cancer hospitals,including TOPs, are estimated toincrease by 11.3 percent in CY 2012.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00449 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2We considered three alternatives forthe proposed OPPS payment adjustmentfor certain cancer hospitals. The firstalternative we considered was to useour standard payment regression modelinstead of cost report data to identify anappropriate payment adjustment forcancer hospitals. We used this approachin our CY 2006 OPPS final rule <strong>with</strong>comment period to establish the 7.1percent payment adjustment for ruralSCHs (70 FR 68556 through 68561).However, in constructing our analysis ofcancer hospitals’ costs relative to otherhospitals, we considered whether ourstandard analytical approach wouldlead to valid results. The analysespresented in the CY 2006 OPPSproposed and final rules were designedto establish an adjustment for a largeclass of rural hospitals. In contrast,section 3138 of the Affordable Care Actis specifically limited to identifying anadjustment for 11 cancer hospitals to theextent that their costs <strong>with</strong> respect toAPC groups exceeded the costs incurredby other hospitals furnishing servicesunder section 1833(t) of the Act. Withsuch a small sample size (11 out ofapproximately 4,000 hospitals paidunder the OPPS), we were concernedthat the standard explanatory andpayment regression models used toestablish the rural hospital adjustmentwould lead to imprecise estimates ofpayment adjustments for this smallgroup of hospitals. Further, section 3138of the Affordable Care Act specifiesexplicitly that cost comparisonsbetween classes of hospitals mustinclude the cost of drugs andbiologicals. In our CY 2006 analysis ofrural hospitals, we excluded the cost ofdrugs and biologicals in our modelbecause the extreme units associated<strong>with</strong> proper billing for some drugs andbiologicals can bias the calculation of aservice-mix index, or volume weightedaverage APC relative weight, for eachhospital (70 FR 42698). Therefore, wechose not to pursue our standardcombination of explanatory andpayment regression modeling todetermine a cancer hospital adjustment.The second alternative we consideredwas to provide the same adjustment toall cancer hospitals based on thedifference between the weighted averagePCR for all cancer hospitals (0.674) andthe weighted average PCR for all otherhospitals (0.907). This class adjustment,instead of a hospital-specificadjustment, would provide a 34.6percent payment increase for eachcancer hospital. Because this alternativedid not seem equitable to otherhospitals furnishing services underOPPS as it would result in a PCR for

74570 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2most cancer hospitals that is higher thanthe weighted average PCR of otherhospitals furnishing services underOPPS and a much larger budgetneutrality adjustment, we did not selectthis alternative.The third alternative we considered,and the one we selected for CY 2012, isto provide an aggregate payment amountat cost report settlement that is equal tothe amount of additional paymentneeded for a resulting PCR equal to thetarget PCR for those cancer hospitalsthat have a PCR that is less than thetarget PCR. For a cancer hospital <strong>with</strong>an individual PCR that is above thetarget PCR (before the cancer hospitalpayment adjustment), the aggregatepayment amount provided at cost reportsettlement is equal to zero. For purposesof calculating the aggregate adjustmentamounts to be provided in CY 2012, wechose to rely on this straightforwardassessment of payments and costs fromthe cost report data because of theconcerns outlined above <strong>with</strong> respect tothe small number of hospitals, andbecause of the challenges associated<strong>with</strong> accurately including drug andbiological costs in our standardregression models.• Alternatives Considered for theSupervision of Hospital OutpatientTherapeutic ServicesWe are finalizing our proposal toestablish the APC Panel as theindependent advisory body that willrecommend to CMS the appropriatesupervision level for individual hospitaloutpatient therapeutic services. We willmodify the Panel’s scope andcomposition in order to create a bodythat is prepared to address supervisionstandards and reflects the range ofparties subject to the standards. We willissue final decisions on the requiredsupervision levels, taking the Panel’srecommendations into consideration,through a subregulatory process thatwill include a period of informal publicnotice and comment.We considered several alternatives<strong>with</strong> respect to the number and natureof the representatives that we are addingto the APC Panel. Stakeholdersrequested that we add four positions forrepresentatives of CAHs and anadditional four seats for small ruralhospitals that are paid under the OPPS.We did not choose this alternativebecause we do not believe that it wouldmaintain balanced membership on thePanel in accordance <strong>with</strong> the FACArequirements.The alternative that we consideredand chose was to add four positions thatwill be divided evenly amongrepresentatives of CAHs and small ruralPPS hospitals. We chose this alternativebecause we believe that it will lead tobalanced Panel membership inaccordance <strong>with</strong> the FACArequirements. Because currently there islittle representation of small rural PPShospitals on the Panel, we believe thatadditional representation of theseproviders is appropriate.We also considered an alternative<strong>with</strong> respect to how CMS will issuefinal decisions on required supervisionlevels. We considered subjecting ourdecisions to notice and commentrulemaking because most publiccommenters requested this option. Wedid not choose this alternative becausewe believe that a more flexible processthat allows more frequent evaluationsand reduces administrative burden willbest meet the needs of hospitals andbeneficiaries. Public commenters whoresponded to the proposed rule and tothe CY 2011 OPPS/ASC final rule <strong>with</strong>comment period requested that CMSprovide such flexibility. In addition,there is precedent for setting outpatientsupervision levels using a subregulatoryprocess. Our final policy is similar tothe process that the agency uses to setthe supervision levels for outpatientdiagnostic services under the MPFS,which are then adopted for the OPPS. Incontrast to the process for diagnosticservices, we are providing a period ofpublic notice and comment to increasetransparency and opportunity for publicinput.In summary, the APC Panel has anexemplary history of providing valuableadvice to CMS <strong>with</strong> regard to thepayment and clinical issues associated<strong>with</strong> the APC groupings of hospitaloutpatient therapeutic services underthe OPPS. We believe that extension ofthe function of the Panel to providingadvice on supervision of individualhospital outpatient therapeutic serviceswill result in both full consideration ofthe views of all types of hospitals andthe best advice considering the fullspectrum of hospital stakeholders.b. Effects of ASC Payment SystemChanges in This <strong>Final</strong> <strong>Rule</strong> With<strong>Comment</strong> <strong>Period</strong>On August 2, 2007, we published inthe Federal Register the final rule forthe revised ASC payment system,effective January 1, 2008 (72 FR 42470).In that final rule, we adopted themethodologies to set payment rates forcovered ASC services to implement therevised payment system so that it wouldbe designed to result in budgetneutrality as required by section 626 ofPublic Law 108–173; established thatthe OPPS relative payment weightswould be the basis for payment and thatVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00450 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2we would update the system annuallyas part of the OPPS rulemaking cycle;and provided that the revised ASCpayment rates would be phased in over4 years. During the 4-year transition tofull implementation of the ASCpayment rates, payments for surgicalprocedures performed in ASCs thatwere on the CY 2007 ASC list of coveredsurgical procedures were made using ablend of the CY 2007 ASC payment rateand the ASC payment rate calculatedaccording to the ASC standardratesetting methodology for theapplicable transitional year. In CY 2008,we paid ASCs using a 25/75 blend, inwhich payment was calculated byadding 75 percent of the CY 2007 ASCrate for a surgical procedure on the CY2007 ASC list of covered surgicalprocedures and 25 percent of the CY2008 ASC rate calculated according tothe ASC standard ratesettingmethodology for the same procedure. InCY 2009, we paid ASCs using a 50/50blend, in which payment was calculatedby adding 50 percent of the CY 2007ASC rate for a surgical procedure on theCY 2007 ASC list of covered surgicalprocedures and 50 percent of the CY2009 ASC rate calculated according tothe ASC standard ratesettingmethodology for the same procedure.For CY 2010, we transitioned the blendto a 25/75 blend of the CY 2007 ASCrate and the CY 2010 ASC payment ratecalculated according to the ASCstandard ratesetting methodology. In CY2011, we are paying ASCs for allcovered surgical procedures, includingthose on the CY 2007 ASC list, at theASC payment rates calculated accordingto the ASC standard ratesettingmethodology.ASC payment rates are calculated bymultiplying the ASC conversion factorby the ASC relative payment weight. Asdiscussed fully in section XIII. of thisfinal rule <strong>with</strong> comment period, we setthe CY 2012 ASC relative paymentweights by scaling CY 2012 ASC relativepayment weights by the ASC scaler of0.9466. The estimated effects of theupdated relative payment weights onpayment rates during this second year offull implementation of the ASCpayment rates calculated according tothe ASC standard ratesettingmethodology are varied and arereflected in the estimated paymentsdisplayed in Tables 61 and 62 below.Beginning in CY 2011, section 3401 ofthe Affordable Care Act requires that theannual update to the ASC paymentsystem, which is the consumer priceindex for all urban consumers (CPI–U),be reduced by the productivityadjustment. The Affordable Care Actdefines the productivity adjustment to

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74571be equal to the 10-year moving averageof changes in annual economy-wideprivate nonfarm business multifactorproductivity (MFP) (as projected by theSecretary for the 10-year period ending<strong>with</strong> the applicable fiscal year, year,cost reporting period, or other annualperiod). We calculated the CY 2012 ASCconversion factor by adjusting the CY2011 ASC conversion factor by 1.0004 toaccount for changes in the pre-floor andpre-reclassified hospital wage indicesbetween CY 2011 and CY 2012 and byapplying the CY 2012 MFP-adjustedCPI–U update factor of 1.6 percent (2.7percent CPI–U minus a productivityadjustment of 1.1 percentage points).The CY 2012 ASC conversion factor is$42.627.(1) Limitations of Our AnalysisPresented here are the projectedeffects of the changes for CY 2012 onMedicare payment to ASCs. A keylimitation of our analysis is our inabilityto predict changes in ASC service-mixbetween CY 2010 and CY 2012 <strong>with</strong>precision. We believe that the net effecton Medicare expenditures resultingfrom the CY 2012 changes will be smallin the aggregate for all ASCs. However,such changes may have differentialeffects across surgical specialty groupsas ASCs continue to adjust to thepayment rates based on the policies ofthe revised ASC payment system. Weare unable to accurately project suchchanges at a disaggregated level. Clearly,individual ASCs will experiencechanges in payment that differ from theaggregated estimated impacts presentedbelow.(2) Estimated Effects of This <strong>Final</strong> <strong>Rule</strong>With <strong>Comment</strong> <strong>Period</strong> on Payments toASCsSome ASCs are multispecialtyfacilities that perform the gamut ofsurgical procedures, from excision oflesions to hernia repair to cataractextraction; others focus on a singlespecialty and perform only a limitedrange of surgical procedures, such aseye, digestive system, or orthopedicprocedures. The combined effect on anindividual ASC of the update to the CY2012 payments will depend on anumber of factors, including, but notlimited to, the mix of services the ASCprovides, the volume of specific servicesprovided by the ASC, the percentage ofits patients who are Medicarebeneficiaries, and the extent to which anASC provides different services in thecoming year. The following discussionpresents tables that display estimates ofthe impact of the CY 2012 update to therevised ASC payment system onMedicare payments to ASCs, assumingthe same mix of services as reflected inour CY 2010 claims data. Table 61depicts the estimated aggregate percentchange in payment by surgical specialtyor ancillary items and services group bycomparing estimated CY 2011 paymentsto estimated CY 2012 payments, andTable 62 shows a comparison ofestimated CY 2011 payments toestimated CY 2012 payments forprocedures that we estimate will receivethe most Medicare payment in CY 2012.Table 61 shows the estimated effectson aggregate Medicare payments underthe revised ASC payment system bysurgical specialty or ancillary items andservices group. We have aggregated thesurgical HCPCS codes by specialtygroup, grouped all HCPCS codes forcovered ancillary items and servicesinto a single group, and then estimatedthe effect on aggregated payment forsurgical specialty and ancillary itemsand services groups. The groups aresorted for display in descending orderby estimated Medicare programpayment to ASCs. The following is anexplanation of the informationpresented in Table 61.• Column 1—Surgical Specialty orAncillary Items and Services Groupindicates the surgical specialty intowhich ASC procedures are grouped orthe ancillary items and services groupwhich includes all HCPCS codes forcovered ancillary items and services. Togroup surgical procedures by surgicalspecialty, we used the CPT code rangedefinitions and Level II HCPCS codesand Category III CPT codes asappropriate, to account for all surgicalprocedures to which the Medicareprogram payments are attributed.• Column 2—Estimated CY 2011 ASCPayments were calculated using CY2010 ASC utilization (the most recentfull year of ASC utilization) and CY2011 ASC payment rates. The surgicalspecialty and ancillary items andservices groups are displayed indescending order based on estimated CY2011 ASC payments.• Column 3—Estimated CY 2012Percent Change is the aggregatepercentage increase or decrease inMedicare program payment to ASCs foreach surgical specialty or ancillaryitems and services group that will beattributable to updates to ASC paymentrates for CY 2012 compared to CY 2011.As seen in Table 61, we estimate thatthe update to ASC rates for CY 2012 willresult in a 1 percent change in aggregatepayment amounts for eye and ocularadnexa procedures, a 4 percent increasein aggregate payment amounts fordigestive system procedures, and a 0percent change in aggregate paymentamounts for nervous system procedures.Generally, for the surgical specialtygroups that account for less ASCutilization and spending, we estimatethat the payment effects of the CY 2012update are variable. For instance, weestimate that, in the aggregate, paymentfor genitourinary system procedures andhematologic and lymphatic systemsprocedures will increase by 5 percent,whereas auditory system procedureswill decrease by 2 percent under the CY2012 rates.An estimated increase in aggregatepayment for the specialty group doesnot mean that all procedures in thegroup will experience increasedpayment rates. For example, theestimated increase for CY 2012 forgenitourinary system procedures islikely due to an increase in the ASCpayment weight for some of the highvolume procedures, such as CPT code50590 (Fragmenting of kidney stone)where estimated payment will increaseby 29 percent for CY 2012.Also displayed in Table 61 is aseparate estimate of Medicare ASCpayments for the group of separatelypayable covered ancillary items andservices. The payment estimates for thecovered surgical procedures include thecosts of packaged ancillary items andservices. Payment for New TechnologyIntraocular Lenses (NTIOLs) is capturedunder this category. Because the NTIOLclass for reduced spherical aberrationexpired on February 26, 2011, and anew NTIOL class was not approvedduring CY 2011 or CY 2012 rulemaking,we redistributed the estimated paymentdedicated to separately paid NTIOLs inCY 2011 while the NTIOL class wasactive to other services for CY 2012.Therefore, we estimate that aggregatepayments for these items and serviceswill decrease by 26 percent for CY 2012.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00451 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74572 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2Table 62 below shows the estimatedimpact of the updates to the revisedASC payment system on aggregate ASCpayments for selected surgicalprocedures during CY 2012. The tabledisplays 30 of the procedures receivingthe greatest estimated CY 2011 aggregateMedicare payments to ASCs. TheHCPCS codes are sorted in descendingorder by estimated CY 2011 programpayment.• Column 1—HCPCS code.• Column 2—Short Descriptor of theHCPCS code.• Column 3—Estimated CY 2011 ASCPayments were calculated using CY2010 ASC utilization (the most recentfull year of ASC utilization) and the CY2011 ASC payment rates. The estimatedCY 2011 payments are expressed inmillions of dollars.• Column 4—Estimated CY 2012Percent Change reflects the percentdifferences between the estimated ASCpayment for CY 2011 and the estimatedpayment for CY 2012 based on theupdate.As displayed in Table 62, 21 of the 30procedures <strong>with</strong> the greatest estimatedaggregate CY 2011 Medicare paymentare included in the 3 surgical specialtygroups that are estimated to account forthe most Medicare payment to ASCs inCY 2011, specifically eye and ocularadnexa, digestive system, and nervoussystem surgical groups. Consistent <strong>with</strong>the estimated payment effects on thesurgical specialty groups displayed inTable 61 the estimated effects of the CY2012 update on ASC payment forindividual procedures shown in Table62 are varied.The ASC procedure for which themost Medicare payment is estimated tobe made in CY 2011 is the cataractremoval procedure reported <strong>with</strong> CPTcode 66984 (Cataract surg w/iol 1 stage).We estimate that the update to the ASCrates will result in a 1 percent increasefor this procedure in CY 2012. Theestimated payment effects on two of theother four eye and ocular adnexaprocedures included in Table 62 areslightly more significant. We estimatethat the payment rate for CPT code67904 (Repair eyelid defect) willincrease by 3 percent and payment forCPT code 67042 (Vit for macular hole)will increase by 4 percent.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00452 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2We estimate that the payment rates forall of the digestive system proceduresincluded in Table 62 will change by ¥1to +5 percent in CY 2012. During theprevious 4-year transition to the revisedASC payment system, payment for mostof the high volume digestive systemprocedures decreased each yearbecause, under the previous ASCpayment system, the payment rates formany high volume endoscopyprocedures were almost the same as thepayments for the procedures under theOPPS.The estimated effects of the CY 2012update on the eight nervous systemprocedures for which the most MedicareASC payment is estimated to be madein CY 2011 will be variable. Ourestimates indicate that the CY 2012update will result in payment increasesof 2 to 3 percent for 7 of the 8procedures. The nervous systemprocedure for which we estimate anegative effect on CY 2012 payments isCPT code 63650 (Implantneuroelectrodes) which is expected tohave payment decrease of 3 percent.ER30NO11.157

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74573The estimated payment effects formost of the remaining procedures listedin Table 62 will be neutral or willincrease by 2 to 4 percent except CPTcode 29826 (Shoulder arthroscopy/surgery), which is estimated to decreaseby 37 percent, code 29827 (Arthroscoprotator cuff repr), which is estimated toincrease by 23 percent, and CPT code52000 (Cystoscopy), which is estimatedto decrease by 5 percent.Musculoskeletal procedures in generalare expected to account for a greaterpercentage of CY 2012 Medicare ASCspending as we estimate that paymentfor procedures in that surgical specialtygroup will increase under the revisedpayment system in CY 2012.BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00453 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2

74574 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2BILLING CODE 4120–01–CThe previous ASC payment systemserved as an incentive to ASCs to focusVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00454 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2on providing procedures for which theydetermined Medicare payments wouldER30NO11.158

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74575jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2support their continued operation. Wenote that, historically, the ASC paymentrates for many of the most frequentlyperformed procedures in ASCs weresimilar to the OPPS payment rates forthe same procedures. Conversely,procedures <strong>with</strong> ASC payment rates thatwere substantially lower than the OPPSrates were performed least often inASCs. We believed that the revised ASCpayment system would encouragegreater efficiency in ASCs and wouldpromote significant increases in thebreadth of surgical proceduresperformed in ASCs because itdistributes payments across the entirespectrum of covered surgical proceduresbased on a coherent system of relativeweights that are related to the clinicaland facility resource requirements ofthose procedures.The CY 2010 claims data that we usedto develop the CY 2012 ASC paymentsystem relative payment weights andrates reflect the third year of utilizationunder the revised payment system.Although the changes in the claims dataare not large, the data reflect increasedMedicare ASC spending for proceduresthat were newly added to the ASC listin CY 2008. Our estimates based on CY2010 data indicate that for CY 2012there will be especially noticeableincreases in spending for thehematologic and lymphatic systemscompared to the previous ASC paymentsystem.(3) Estimated Effects of This <strong>Final</strong> <strong>Rule</strong>With <strong>Comment</strong> <strong>Period</strong> on BeneficiariesWe estimate that the CY 2012 updateto the ASC payment system will begenerally positive for beneficiaries <strong>with</strong>respect to the new procedures that weare adding to the ASC list of coveredsurgical procedures and for those thatwe are designating as office-based forCY 2012. First, other than certainpreventive services where coinsuranceand the Part B deductible is waived tocomply <strong>with</strong> sections 1833(a)(1) and (b)of the Act, the ASC coinsurance rate forall procedures is 20 percent. Thiscontrasts <strong>with</strong> procedures performed inHOPDs, where the beneficiary isresponsible for copayments that rangefrom 20 percent to 40 percent of theprocedure payment. Second, in almostall cases, the ASC payment rates underthe revised payment system are lowerthan payment rates for the sameprocedures under the OPPS. Therefore,the beneficiary coinsurance amountunder the ASC payment system almostalways will be less than the OPPScopayment amount for the sameservices. (The only exceptions would beif the ASC coinsurance amount exceedsthe inpatient deductible. The statuterequires that copayment amounts underthe OPPS not exceed the inpatientdeductible.) Furthermore, the additionsto the ASC list of covered surgicalprocedures will provide beneficiariesaccess to more surgical procedures inASCs. Beneficiary coinsurance forservices migrating from physicians’offices to ASCs may decrease or increaseunder the revised ASC payment system,depending on the particular service andthe relative payment amounts for thatservice in the physician’s officecompared to the ASC. However, forthose additional procedures that we aredesignating as office-based in CY 2012,the beneficiary coinsurance amountwould be no greater than the beneficiarycoinsurance in the physician’s officebecause the coinsurance in both settingsis 20 percent.(4) Alternatives ConsideredAlternatives to the changes we aremaking and the reasons that we havechosen specific options are discussedthroughout this final rule <strong>with</strong> commentperiod. Some of the major ASC issuesdiscussed in this final rule <strong>with</strong>comment period and the optionsconsidered are discussed below.• Alternatives Considered for Office-Based ProceduresAccording to our final policy for therevised ASC payment system, wedesignate as office-based thoseprocedures that are added to the ASClist of covered surgical procedures in CY2008 or later years and that wedetermine are predominantly performedin physicians’ offices based onconsideration of the most recentavailable volume and utilization data foreach individual procedure HCPCS codeand, if appropriate, the clinicalcharacteristics, utilization, and volumeof related HCPCS codes. We establishpayment for procedures designated asoffice-based at the lesser of the MPFSnonfacility practice expense paymentamount or the ASC rate developedaccording to the standard methodologyof the revised ASC payment system.In developing this final rule <strong>with</strong>comment period, we reviewed CY 2010utilization data for all surgicalprocedures added to the ASC list ofcovered surgical procedures in CY 2008or later years and for those proceduresfor which the office-based designation istemporary in the CY 2011 OPPS/ASCfinal rule <strong>with</strong> comment period (75 FR72036 through 72038). Based on thatreview and as discussed in sectionXIII.C.1.b. of this final rule <strong>with</strong>comment period, we are finalizing ourproposal to newly designate 10 surgicalprocedures as permanently office-basedVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00455 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2and finalizing our proposal to maketemporary office-based designations for8 procedures in CY 2012 that weredesignated as temporarily office-basedfor CY 2011. We considered twoalternatives in developing this policy.The first alternative we consideredwas to make no change to the procedurepayment designations. This would meanthat we would pay for the 10 procedureswe proposed to designate aspermanently office-based and the 8procedures we proposed to designate astemporarily office-based at an ASCpayment rate calculated according to thestandard ratesetting methodology of therevised ASC payment system. We didnot select this alternative because ouranalysis of the data and our clinicalreview indicated that all 10 procedureswe proposed to designate aspermanently office-based, as well as the8 procedures that we proposed todesignate temporarily as office-based,are considered to be predominantlyperformed in physicians’ offices.Consistent <strong>with</strong> our final policy adoptedin the August 2, 2007 final rule (72 FR42509 through 42513), we wereconcerned that making payments at thestandard ASC payment rate for the 10procedures we proposed to designate aspermanently office-based and the 8procedures we proposed to designate astemporarily office-based could createfinancial incentives for the proceduresto shift from physicians’ offices to ASCsfor reasons unrelated to clinicaldecisions regarding the mostappropriate setting for surgical care.Further, consistent <strong>with</strong> our policy, webelieve that when adequate data becomeavailable to make permanentdeterminations about procedures <strong>with</strong>temporary office-based designations,maintaining the temporary designationis no longer appropriate.The second alternative we consideredand the one we are selecting for CY2012 is to designate 10 additionalprocedures as permanently office-basedfor CY 2012 and to designate 8procedures as temporarily office-basedin CY 2012 that were designated astemporarily office-based for CY 2011.We chose this alternative because ourclaims data and clinical review indicatethat these procedures could beconsidered to be predominantlyperformed in physicians’ offices. Webelieve that designating theseprocedures as office-based, whichresults in the CY 2012 ASC paymentrate for these procedures potentiallybeing capped at the CY 2012 physicians’office rate (that is, the MPFS nonfacilitypractice expense payment amount), ifapplicable, is an appropriate step toensure that Medicare payment policy

74576 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsdoes not create financial incentives forsuch procedures to shift unnecessarilyfrom physicians’ offices to ASCs,consistent <strong>with</strong> our final policy adoptedin the August 2, 2007 final rule.c. Accounting Statements and TablesAs required by OMB Circular A–4(available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), we have prepared twoaccounting statements to illustrate theimpacts of this final rule <strong>with</strong> commentperiod. The first accounting statement,Table 63 below, illustrates theclassification of expenditures for the CY2012 estimated hospital OPPS incurredbenefit impacts associated <strong>with</strong> the CY2012 OPD fee schedule increase shownin this final rule <strong>with</strong> comment period,based on the FY 2012 President’sBudget. The second accountingstatement, Table 64 below, illustratesthe classification of expendituresassociated <strong>with</strong> the 1.6 percent CY 2011update to the revised ASC paymentsystem, based on the provisions of thisfinal rule <strong>with</strong> comment period and thebaseline spending estimates for ASCs inthe FY 2012 President’s Budget. Lastly,both tables classify all estimatedimpacts as transfers.jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2d. Effects of Requirements for theHospital Outpatient Quality Reporting(OQR) ProgramIn section XVI. of the CY 2009 OPPS/ASC final rule <strong>with</strong> comment period (73FR 68758 through 68781), section XVI.of the CY 2010 OPPS/ASC final rule<strong>with</strong> comment period (74 FR 60629through 60655), and section XVI. of theCY 2011 OPPS/ASC final rule <strong>with</strong>comment period (75 FR72064 through72110), we discussed our requirementsfor subsection (d) hospitals to reportquality data under the Hospital OQRProgram in order to receive the full OPDfee schedule increase factor for CY 2010,CY 2011, and CY 2012–2014,respectively. In section XIV. of this finalrule <strong>with</strong> comment period, we arefinalizing our proposal to adoptadditional policies affecting theHospital OQR Program for CY 2013, CY2014, and CY 2015.We determined that 107 hospitals didnot meet the requirements to receive thefull OPD fee schedule increase factor forCY 2011. Most of these hospitals (over90 of the 107) received little or no OPPSpayment on an annual basis and did notparticipate in the Hospital OQRProgram. We estimate that 120 hospitalsmay not receive the full OPD feeschedule increase factor in CY 2012. Weare unable at this time to estimate thenumber of hospitals that may notreceive the full OPD fee scheduleincrease factor in CY 2013, CY 2014 andCY 2015.In section XVI.E.3.a. of the CY 2010OPPS/ASC final rule <strong>with</strong> commentVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00456 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2period (74 FR 60647 through 60650), forthe CY 2011 payment update, as part ofthe validation process, we requiredhospitals to submit paper copies ofrequested medical records to adesignated contractor <strong>with</strong>in therequired timeframe. Failure to submitrequested documentation could result ina 2.0 percentage point reduction to ahospital’s CY 2011 OPD fee scheduleincrease factor, but the failure to attaina validation score threshold would not.In section XVI.D.3.b of the CY 2011OPPS/ASC final rule <strong>with</strong> commentperiod, we finalized our proposal tovalidate data submitted by 800 hospitalsof the approximately 3,200 participatinghospitals for purposes of the CY 2012Hospital OQR Program paymentdetermination. We stated our belief thatER30NO11.159

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74577jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2this approach was suitable for the CY2012 Hospital OQR Program because itwould: Produce a more reliable estimateof whether a hospital’s submitted datahave been abstracted accurately; providemore statistically reliable estimates ofthe quality of care delivered in eachselected hospital as well as at thenational level; and reduce overallhospital burden because most hospitalswould not be selected to undergovalidation each year. We adopted athreshold of 75 percent as the thresholdfor the validation score because webelieved this level was reasonable forhospitals to achieve while still ensuringaccuracy of the data. Additionally, thislevel is consistent <strong>with</strong> what weadopted in the Hospital InpatientQuality Reporting (IQR) Program(formerly referred to as the ReportingHospital Quality Data for AnnualPayment Update (RHQDAPU) program))(75 FR 50225 through 50229). As aresult, we believed that the effect of ourvalidation process for CY 2012 would beminimal in terms of the number ofhospitals that would not meet allprogram requirements.In this final rule <strong>with</strong> commentperiod, we are finalizing our proposal tovalidate data submitted by up to 500 ofthe approximately 3,200 participatinghospitals for purposes of the CY 2013Hospital OQR Program paymentdetermination. Under our policy for theCY 2011 and CY 2012 paymentdeterminations, and under our proposalfor CY 2013, we stated that we wouldconduct a measure level validation byassessing whether the measure datasubmitted by the hospital matches theindependently reabstracted measuredata.As stated above, we are unable toestimate the number of hospitals thatmay not receive the full OPD feeschedule increase factor in CY 2013. Wealso are unable to estimate the numberof hospitals that would fail thevalidation documentation submissionrequirement for the proposed CY 2013payment update.The validation requirements for CY2011, CY 2012, and the validationrequirement proposed for CY 2013 willresult in medical record documentationfor approximately 7,300 cases for CY2011, 9,600 cases per quarter for CY2012, and approximately 6,000 cases perquarter for CY 2013, respectively, beingsubmitted to a designated CMScontractor. We will pay for the cost ofsending this medical recorddocumentation to the designated CMScontractor at the rate of 12 cents perpage for copying and approximately$1.00 per case for postage. We havefound that an outpatient medical chartis generally up to 10 pages. Thus, as aresult of validation requirementseffective for the CY 2011 and CY 2012payment determinations, and finalizedfor the CY 2013 payment determination,respectively, we will have expendituresof approximately $16,060 for CY 2011,$21,120 per quarter for CY 2012, andapproximately $13,200 per quarter forCY 2013. Again, because we will pay forthe data collection effort, we believethat a requirement for medical recorddocumentation for 7,300 total cases forCY 2011, a maximum of 12 cases perquarter for 800 hospitals for CY 2012,and a maximum of 12 cases per quarterfor up to 500 hospitals for CY 2013represents a minimal burden to HospitalOQR Program participating hospitals.In previous years, medical recorddocumentation was requested by a CMScontractor and hospitals were given 45days from the date of the request tosubmit the requested documentation. Insection XIV.G.3.d. of this final rule <strong>with</strong>comment period, for the CY 2013payment determination, we are notfinalizing our proposal to reduce thetime from 45 days to 30 days forhospitals to submit requested medicalrecord documentation to meet ourvalidation requirement. Instead, we aremaintaining the 45-day timeframe. Thetotal burden would be a maximum of 12charts for each of the four quarters thatmust be copied and mailed <strong>with</strong>in a 45-day period after the end of each quarter.e. Effects of Changes to Physician Self-Referral RegulationsSection 6001(a) of the Affordable CareAct amended the whole hospital andrural provider exceptions (sections1877(d)(2) and (d)(3) of the Act,respectively) to impose additionalrestrictions on physician ownership orinvestment in hospitals. The amendedwhole hospital and rural providerexceptions provide that a hospital maynot increase the number of operatingrooms, procedure rooms, and bedsbeyond that for which the hospital waslicensed on March 23, 2010 (or, in thecase of a hospital that did not have aprovider agreement in effect as of thisdate, but did have a provider agreementin effect on December 31, 2010, the dateof effect of such agreement). Section6001(a)(3) of the Affordable Care Actadded new section 1877(i)(3)(A)(i) of theAct to set forth that the Secretary shallestablish and implement an exceptionprocess to the prohibition on expansionof facility capacity.Most physician-owned hospitals areunable to qualify for the ownership andinvestment exception at section1877(d)(1) of the Act. Section 1877(d)(1)of the Act provides an exception forVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00457 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2ownership or investment in publiclytraded securities in a corporation wherethere is stockholder equity exceeding$75 million at the end of thecorporation’s most recent fiscal year oron average during the previous 3 fiscalyears; or the ownership involves mutualfunds in a company that has assetsgreater than $75 million. Studies by theOIG and GAO have concluded thatphysician-owned hospitals tend to besmaller and are unable to meet the $75million threshold.The regulations we are finalizing at§ 411.362(c) set forth the process for ahospital to request an exception to theprohibition on expansion of facilitycapacity. New § 411.362(c)(2) outlinesthe requirements for an applicablehospital request and § 411.362(c)(3)outlines the requirements for a highMedicaid facility request. Our newregulations require each hospitaldesiring an exception to access certaindata and make estimates based on thatdata to determine if the hospital meetsthe relevant criteria. For example, ahospital is required to access datafurnished by the CMS Healthcare CostReport Information System (HCRIS) andby the Bureau of the Census, in additionto referencing data from the hospital’sindividual cost reports and makingcertain estimates on the basis of its costreport data. We believe the impact ofthese requirements on affected hospitalswill be minimal.Our new regulations require eachhospital requesting an exception toprovide documentation supporting itscalculations to demonstrate that itsatisfies the relevant criteria. Our newregulations further require each hospitalto provide documentation to supportinformation related to its number ofoperating rooms, procedure rooms, andbeds. This information includes, forexample, the number of operatingrooms, procedure rooms, and beds forwhich the hospital is licensed as of thedate that the hospital submits a requestfor an exception. Each hospital also isrequired to provide a detailedexplanation regarding whether and howit satisfies each of the relevant criteria.We believe physician-owned hospitalswill be minimally affected by theserequirements.Our regulations require each hospitalrequesting an exception to disclose on apublic Web site for the hospital that itis requesting an exception. Our newregulations require each hospital tocertify that it does not discriminate anddoes not permit physicians todiscriminate against beneficiaries ofFederal health care programs. Inaddition, under our new regulations, ifCMS were to receive input from the

74578 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2community related to a particularhospital’s request for an exception, thehospital may submit a rebuttalstatement in response to input from thecommunity. We believe the impact ofthese requirements on physician-ownedhospitals is minimal.We believe the proposals that we arefinalizing will affect a relatively smallnumber of physician-owned hospitals.We estimate that 265 physician-ownedhospitals are eligible to apply for anexception. We believe accuratelyestimating the number of hospitalschoosing to request an exception wouldbe impracticable. Further, we are notaware of any existing data or projectionsthat may produce an estimate <strong>with</strong>reasonable certainty. As a result, we arechoosing to estimate that each of the 265eligible hospitals will request anexception in order to avoidunderestimating the potential impact.We are not aware of any data that mayindicate the potential increase inoperation rooms, procedure rooms, orbeds pursuant to exceptions potentiallyapproved. We also have no data orprojections that may help estimate thenumber of physicians that would beaffected by this final rule <strong>with</strong> commentperiod as a result of their ownershipinterests in hospitals.The requirements concerning thecriteria and process for hospitalsseeking an exception to the prohibitionon expansion of facility capacity areconsistent <strong>with</strong> the physician selfreferralstatute and regulations and thecurrent practices of most hospitals.Thus, our requirements will present anegligible impact on physician-ownedhospitals. Physician-owned hospitalswill bear costs associated <strong>with</strong>requesting an exception to theprohibition on facility expansion. Inpart, because hospitals are currentlyundertaking the costs of producing acost report, we believe that the cost ofreferencing the required data andmaking the required estimates will benegligible. In addition, we believe thecosts of providing supportingdocumentation, certifyingnondiscrimination against beneficiariesof Federal health care programs, andsubmitting other required informationnecessary to request an exception toCMS will be minimal.We believe that beneficiaries may bepositively impacted by these provisions.Specifically, an increase in operatingrooms, procedure rooms, and beds mayaugment the volume or nature ofservices offered by physician-ownedhospitals. An expansion in the numberof hospital beds may also permitadditional inpatient admissions andovernight stays. Increased operatingrooms, procedure rooms, and beds mayresult in improved access to health carefacilities and services. We believe thatour regulatory changes are necessary toconform our regulations to theamendments to section 1877 of the Act.We also believe the new regulations willhelp minimize anticompetitive behaviorthat can affect the decision as to wherea beneficiary receives health careservices and would possibly enhancethe services furnished.In the proposed rule, we solicitedpublic comments on each of the issuesoutlined above that contain estimates ofthe costs and benefits of the proposedrule. We did not receive any publiccomments on our estimates.f. Effects of Changes to ProviderAgreement Regulations on PatientNotification RequirementsIn section XV.D. of this final rule <strong>with</strong>comment period, we discuss ourproposal concerning the requirementthat all hospitals and critical accesshospitals must furnish written notice totheir patients at the beginning of theirhospital stay or outpatient visit if adoctor of medicine or a doctor ofosteopathy is not present in the hospital24 hours a day, 7 days a week, and thatthe notice must indicate how thehospital will meet the medical needs ofany patient who develops an emergencymedical condition at a time when thereis no physician present in the hospital.In this final rule <strong>with</strong> comment period,we are finalizing our proposal to modifythe provider agreement regulations toreduce the categories of outpatients whomust be notified if hospital does nothave a doctor of medicine or doctor ofosteopathy on site 24 hours a day/7 daysa week. We are finalizing our proposalthat only those outpatients who receiveobservation services, surgery, or servicesinvolving anesthesia must receivewritten notice. We are not making anychanges to our patient safetyrequirements for physician-ownedhospitals at § 411.362(b)(5)(i). Wecontinue to believe that patients shouldbe made aware of whether or not adoctor of medicine or a doctor ofosteopathy is present in the hospital atall times, and the hospital’s plans toaddress patient’s emergency medicalconditions when a doctor of medicine ora doctor of osteopathy is not present.We believe our changes to theprovider agreement regulations willresult in only a minor change in thenumber of hospitals that are subject tothe disclosure requirements, specificallythose multicampus hospitals thatcurrently have 24 hours a day, 7 daysa week presence of a doctor of medicineor a doctor of osteopathy on one, but notVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00458 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2all, of their campuses <strong>with</strong> inpatientservices. We anticipate that very fewmulticampus hospitals will fall into thiscategory. Rather, the primary impact ofthe regulations is a change in thenumber of annual written disclosuresgiven by hospitals to patients. Webelieve the cost of implementing theseprovisions borne by hospitals will belimited to a one-time cost associated<strong>with</strong> completing minor revisions toportions of the hospitals policies andprocedures related to patient admissionand registration, as well as providingwritten notification to patients andaffected staff. Therefore, we do notbelieve that these changes will have anysignificant economic impact onhospitals.We do not anticipate that theproposals we are finalizing will have asignificant economic impact on asubstantial number of physicians, otherhealth care providers and suppliers, orthe Medicare or Medicaid programs andtheir beneficiaries. Specifically, webelieve that this final rule <strong>with</strong>comment period will affect mostlyhospitals, physicians, and beneficiaries.The changes we are finalizingconcerning the disclosure of thepresence of a doctor of medicine or adoctor of osteopathy in hospitals areconsistent <strong>with</strong> the current practices ofmost hospitals. Thus, our physicianpresence disclosure proposal willpresent a negligible economic impact onthe hospital.Overall, we believe that beneficiarieswill be positively impacted by theseprovisions. Specifically, disclosure ofphysician presence equips patients tomake informed decisions about wherethey elect to receive care. Our newpolicies make no significant change thathas the potential to impede patientaccess to health care facilities andservices. In fact, we believe that ourpolicies will help minimize anticompetitivebehavior that can affect thedecision as to where a beneficiaryreceives health care services andpossibly the quality of the servicesfurnished.g. Effects of Additional Hospital VBPProgram RequirementsSection 1886(o)(1)(B) of the Actdirects the Secretary to begin makingvalue-based incentive payments underthe Hospital VBP Program to hospitalsfor discharges occurring on or afterOctober 1, 2012. These incentivepayments will be funded for FY 2013through a reduction to the FY 2013 baseoperating MS–DRG payment amount foreach discharge of 1 percent, as requiredby section 1886(o)(7)(B)(i) of the Act.The applicable percentage for FY 2014

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74579jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2is 1.25 percent, for FY 2015 is 1.5percent, for FY 2016 is 1.75 percent, andfor FY 2017 and subsequent years is 2.0percent.In section XVI.A.3. of this final rule<strong>with</strong> comment period, we are finalizingadditional requirements for the FY 2014Hospital VBP Program. Specifically, weare finalizing our proposal to add onechart-abstracted measure to the HospitalVBP measure set for the FY 2014payment determination. Although thisadditional measure is chart-abstracted,it is required for the Hospital IQRProgram. Therefore, its inclusion in theHospital VBP Program does not result inany additional burden because theHospital VBP Program uses data that arerequired for the Hospital IQR Program.h. Effects of the 2012 ElectronicReporting PilotUnder section XIV.J. of this final rule<strong>with</strong> comment period, we are finalizingour proposal to allow eligible hospitalsand CAHs that are participating in theMedicare EHR Incentive Program tomeet the CQM reporting requirement ofthe program for payment year 2012 byparticipating in the 2012 ElectronicReporting Pilot. This alternative willfacilitate the use of an electronicinfrastructure that supports the use ofEHRs by hospitals and CAHs to meet therequirements in various CMS programsand reduce reporting burdensimultaneously. Through this pilot, weare encouraging eligible hospitals andCAHs to take steps toward the adoptionof EHRs that will allow for reporting ofclinical quality data from EHRs to aCMS data repository. We expect that thesubmission of quality data throughEHRs will provide a foundation forestablishing the capacity of hospitalsand CAHs to send, and for CMS, in thefuture, to receive, quality measures viahospital EHRs for the Hospital IQRProgram’s measures. Eligible hospitalsand CAHs that choose to participate inthis 2012 Electronic Reporting Pilot forthe purpose of meeting the CQMreporting requirement of the MedicareEHR Incentive Program will be takingthose first steps toward reportingclinical quality data in such a way.i. Effect of Requirements for theAmbulatory Surgical Center (ASC)Quality Reporting ProgramIn section XIV.K. of this final rule<strong>with</strong> comment period, we are finalizingour proposal to adopt requirements forASCs to report quality data under theASC Quality Reporting Program in orderto receive the full ASC annual paymentupdate factor for CY 2014–2016.We are unable at this time to estimatethe number of ASCs that may notreceive the full ASC annual paymentupdate factor in CY 2014, CY 2015, andCY 2016.B. Regulatory Flexibility Act (RFA)AnalysisThe RFA requires agencies to analyzeoptions for regulatory relief of smallentities, if a rule has a significant impacton a substantial number of smallentities. For purposes of the RFA, weestimate that most hospitals, ASCs andCMHCs are small entities as that term isused in the RFA. For purposes of theRFA, most hospitals are consideredsmall businesses according to the SmallBusiness Administration’s sizestandards <strong>with</strong> total revenues of $34.5million or less in any single year. MostASCs and most CMHCs are consideredsmall businesses <strong>with</strong> total revenues of$10 million or less in any single year.For details, see the Small BusinessAdministration’s ‘‘Table of SmallBusiness Size Standards’’ at http://www.sba.gov/content/table-small-businesssize-standards.In addition, section 1102(b) of theSocial Security Act requires us toprepare a regulatory impact analysis ifa rule may have a significant impact onthe operations of a substantial numberof small rural hospitals. This analysismust conform to the provisions ofsection 603 of the RFA. For purposes ofsection 1102(b) of the Act, we define asmall rural hospital as a hospital that islocated outside of a metropolitanstatistical area and has fewer than 100beds. We estimate that this final rule<strong>with</strong> comment period may have asignificant impact on approximately 704small rural hospitals.The analysis above, together <strong>with</strong> theremainder of this preamble, provides aregulatory flexibility analysis and aregulatory impact analysis.C. Unfunded Mandates Reform ActAnalysisSection 202 of the UnfundedMandates Reform Act of 1995 (UMRA)also requires that agencies assessanticipated costs and benefits beforeissuing any rule whose mandatesrequire spending in any 1 year of $100million in 1995 dollars, updatedannually for inflation. That thresholdlevel is currently approximately $135million. This final rule <strong>with</strong> commentperiod does not mandate anyrequirements for State, local, or tribalgovernments, nor will it affect privatesector costs.D. ConclusionThe changes we are finalizing willaffect all classes of hospitals paid underthe OPPS and will affect both CMHCsVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00459 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2and ASCs. We estimate that most classesof hospitals paid under the OPPS willexperience a modest increase or aminimal decrease in payment forservices furnished under the OPPS inCY 2012. Table 59 demonstrates theestimated distributional impact of theOPPS budget neutrality requirementsthat will result in a 1.9 percent increasein payments for all services paid underthe OPPS in CY 2012, after consideringall changes to APC reconfiguration andrecalibration, as well as the OPD feeschedule increase factor, wage indexchanges, including the frontier Statewage index adjustment, the addition ofan adjustment for dedicated cancerhospitals, estimated payment foroutliers, and changes to the passthroughpayment estimate. However,some classes of providers that are paidunder the OPPS will experiencesignificant gains and others willexperience modest losses in OPPSpayments in CY 2012. Specifically, weestimate that the 11 dedicated cancerhospitals that met the classificationcriteria in section 1883(d)(1)(B)(v) of theAct, as a class, will receive an increasein payments under the OPPS of 13.7percent for CY 2012. In contrast, weestimate that CMHCs will see an overalldecrease in payment of 30.8 percent asa result of the full transition in CY 2012to payment rates for partialhospitalization services at CMHCs basedon cost report and claims datasubmitted by CMHCs.The updates to the ASC paymentsystem for CY 2012 will affect each ofthe approximately 5,000 ASCs currentlyapproved for participation in theMedicare program. The effect on anindividual ASC will depend on its mixof patients, the proportion of the ASC’spatients that are Medicare beneficiaries,the degree to which the payments forthe procedures offered by the ASC arechanged under the revised paymentsystem, and the extent to which the ASCprovides a different set of procedures inthe coming year. Table 61 demonstratesthe estimated distributional impactamong ASC surgical specialties of theMFP-adjusted CPI–U update of 1.6percent for CY 2012.XXI. Federalism AnalysisExecutive Order 13132 establishescertain requirements that an agencymust meet when it promulgates aproposed rule (and subsequent finalrule) that imposes substantial directcosts on State and local governments,preempts State law, or otherwise hasFederalism implications.We have examined the OPPS and ASCprovisions included in this final rule<strong>with</strong> comment period in accordance

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274580 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations<strong>with</strong> Executive Order 13132,Federalism, and have determined thatthey will not have a substantial directeffect on State, local or tribalgovernments, preempt State law, orotherwise have a Federalismimplication. As reflected in Table 59 ofthis final rule <strong>with</strong> comment period, weestimate that OPPS payments togovernmental hospitals (including Stateand local governmental hospitals) willincrease by 1.6 percent under this finalrule <strong>with</strong> comment period. While we donot know the number of ASCs orCMHCs <strong>with</strong> government ownership, weanticipate that it is small. We believethat the provisions related to paymentsto ASCs or CMHCs in CY 2012 will notaffect payments to any ASCs or CMHCsowned by government entities.The analyses we have provided insection XX.A. of this final rule <strong>with</strong>comment period, in conjunction <strong>with</strong>the remainder of this document,demonstrates that this final rule <strong>with</strong>comment period is consistent <strong>with</strong> theregulatory philosophy and principlesidentified in Executive Order 12866, theRFA, and section 1102(b) of the Act.This final rule <strong>with</strong> comment periodwill affect payments to a substantialnumber of small rural hospitals and asmall number of rural ASCs, as well asother classes of hospitals, CMHCs, andASCs, and some effects may besignificant.List of Subjects42 CFR Part 410Health facilities, Health professions,Laboratories, Medicare, Rural areas, X-rays.42 CFR Part 411Kidney diseases, Medicare, Physicianreferral, Reporting and recordkeepingrequirements.42 CFR Part 416Health facilities, Health professions,Medicare, Reporting and recordkeepingrequirements.42 CFR Part 419Hospitals, Medicare, Reporting andrecordkeeping requirements.42 CFR Part 489Health facilities, Medicare, Reportingand recordkeeping requirements.42 CFR Part 495Computer technology, Electronichealth records, Electronic transactions,Health, Health care. Health informationtechnology, Health insurance, Healthrecords, Hospitals, Laboratories,Medicaid, Medicare, Privacy, Reportingand recordkeeping requirements, Publichealth, Security.For reasons stated in the preamble ofthis document, the Centers for Medicare& Medicaid Services is amending 42CFR Chapter IV as set forth below:PART 410—SUPPLEMENTARYMEDICAL INSURANCE (SMI)BENEFITS■ 1. The authority citation for Part 410continues to read as follows:Authority: Secs. 1102 and 1871 of theSocial Security Act (42 U.S.C. 1302 and1395hh).■ 2. Section 410.27 is revised to read asfollows:§ 410.27 Therapeutic outpatient hospital orCAH services and supplies incident to aphysician’s or nonphysician practitioner’sservice: Conditions.(a) Medicare Part B pays fortherapeutic hospital or CAH servicesand supplies furnished incident to aphysician’s or nonphysicianpractitioner’s service, which are definedas all services and supplies furnished tohospital or CAH outpatients that are notdiagnostic services and that aid thephysician or nonphysician practitionerin the treatment of the patient,including drugs and biologicals thatcannot be self-administered, if—(1) They are furnished—(i) By or under arrangements made bythe participating hospital or CAH,except in the case of a SNF resident asprovided in § 411.15(p) of thissubchapter;(ii) As an integral although incidentalpart of a physician’s or nonphysicianpractitioner’s services;(iii) In the hospital or CAH or in adepartment of the hospital or CAH, asdefined in § 413.65 of this subchapter;and(iv) Under the direct supervision (orother level of supervision as specifiedby CMS for the particular service) of aphysician or a nonphysicianpractitioner as specified in paragraph (g)of this section, subject to the followingrequirements:(A) For services furnished in thehospital or CAH, or in an outpatientdepartment of the hospital or CAH, bothon and off-campus, as defined in§ 413.65 of this subchapter, ‘‘directsupervision’’ means that the physicianor nonphysician practitioner must beimmediately available to furnishassistance and direction throughout theperformance of the procedure. It doesnot mean that the physician ornonphysician practitioner must bepresent in the room when the procedureis performed;VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00460 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2(B) Certain therapeutic services andsupplies may be assigned either generalsupervision or personal supervision.When such assignment is made, generalsupervision means the definitionspecified at § 410.32(b)(3)(i), andpersonal supervision means thedefinition specified at § 410.32(b)(3)(iii);(C) Nonphysician practitioners mayprovide the required supervision ofservices that they may personallyfurnish in accordance <strong>with</strong> State lawand all additional requirements,including those specified in §§ 410.71,410.73, 410.74, 410.75, 410.76, and410.77;(D) For pulmonary rehabilitation,cardiac rehabilitation, and intensivecardiac rehabilitation services, directsupervision must be furnished by adoctor of medicine or a doctor ofosteopathy, as specified in §§ 410.47and 410.49, respectively; and(E) For nonsurgical extended durationtherapeutic services (extended durationservices), which are hospital or CAHoutpatient therapeutic services that canlast a significant period of time, have asubstantial monitoring component thatis typically performed by auxiliarypersonnel, have a low risk of requiringthe physician’s or appropriatenonphysician practitioner’s immediateavailability after the initiation of theservice, and are not primarily surgical innature, Medicare requires a minimum ofdirect supervision during the initiationof the service which may be followed bygeneral supervision at the discretion ofthe supervising physician or theappropriate nonphysician practitioner.Initiation means the beginning portionof the nonsurgical extended durationtherapeutic service which ends whenthe patient is stable and the supervisingphysician or the appropriatenonphysician practitioner determinesthat the remainder of the service can bedelivered safely under generalsupervision.(2) In the case of partialhospitalization services, also meet theconditions of paragraph (e) of thissection.(b) Drugs and biologicals are alsosubject to the limitations specified in§ 410.129.(c) <strong>Rule</strong>s on emergency servicesfurnished to outpatients bynonparticipating hospitals are specifiedin subpart G of Part 424 of this chapter.(d) <strong>Rule</strong>s on emergency servicesfurnished to outpatients in a foreigncountry are specified in subpart H ofPart 424 of this chapter.(e) Medicare Part B pays for partialhospitalization services if they are—(1) Prescribed by a physician whocertifies and recertifies the need for the

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74581jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2services in accordance <strong>with</strong> subpart B ofpart 424 of this chapter; and(2) Furnished under a plan oftreatment as required under subpart B ofpart 424 of this chapter.(f) Services furnished by an entityother than the hospital are subject to thelimitations specified in § 410.42(a).(g) For purposes of this section,‘‘nonphysician practitioner’’’ means aclinical psychologist, licensed clinicalsocial worker, physician assistant, nursepractitioner, clinical nurse specialist, orcertified nurse-midwife.PART 411—EXCLUSIONS FROMMEDICARE AND LIMITATIONS ONMEDICARE PAYMENT■ 3. The authority citation for Part 411continues to read as follows:Authority: Secs. 1102, 1860D–1 through1860D–42, 1871, and 1877 of the SocialSecurity Act (42 U.S.C. 1302, 1395w–101through 1395w–152, 1395hh and 1395nn).■ 4. Section 411.362 is amended by—■ a. Under paragraph (a), adding thedefinitions of ‘‘Baseline number ofoperating rooms, procedure rooms, andbeds’’ and ‘‘main campus of thehospital’’ in alphabetical order.■ b. Revising paragraph (b)(2).■ c. Adding a new paragraph (c).The revision and additions read asfollows:§ 411.362 Additional requirementsconcerning physician ownership andinvestment in hospitals.(a) * * *Baseline number of operating rooms,procedure rooms, and beds means thenumber of operating rooms, procedurerooms, and beds for which theapplicable hospital or high Medicaidfacility is licensed as of March 23, 2010(or, in the case of a hospital that did nothave a provider agreement in effect asof such date, but does have a provideragreement in effect on December 31,2010, the date of effect of suchagreement).Main campus of the hospital means‘‘campus’’ as defined at § 413.65(a)(2).* * * * *(b) * * *(2) Prohibition on facility expansion.The hospital may not increase thenumber of operating rooms, procedurerooms, and beds beyond that for whichthe hospital is licensed on March 23,2010 (or, in the case of a hospital thatdid not have a provider agreement ineffect as of this date, but does have aprovider agreement in effect onDecember 31, 2010, the effective date ofsuch agreement), unless an exception isgranted pursuant to paragraph (c) of thissection.* * * * *(c) Criteria for an individual hospitalseeking an exception to the prohibitionon facility expansion.(1) General. An applicable hospital orhigh Medicaid facility may request anexception from the prohibition onfacility expansion up to once every 2years from the date of a CMS decisionon the hospital’s most recent request.(2) Criteria for applicable hospital. Anapplicable hospital is a hospital thatsatisfies all of the following criteria:(i) Population increase. Is located ina county that has a percentage increasein population that is at least 150 percentof the percentage increase in populationof the State in which the hospital islocated during the most recent 5-yearperiod for which data are available as ofthe date that the hospital submits itsrequest. To calculate State and countypopulation growth, a hospital must useBureau of the Census estimates.(ii) Medicaid inpatient admissions.Has an annual percent of total inpatientadmissions under Medicaid that is equalto or greater than the average percent<strong>with</strong> respect to such admissions for allhospitals located in the county in whichthe hospital is located during the mostrecent fiscal year for which data areavailable as of the date that the hospitalsubmits its request. A hospital must usefiled hospital cost report discharge datato estimate its annual percent of totalinpatient admissions under Medicaid.(iii) Nondiscrimination. Does notdiscriminate against beneficiaries ofFederal health care programs and doesnot permit physicians practicing at thehospital to discriminate against suchbeneficiaries.(iv) Average bed capacity. Is locatedin a State in which the average bedcapacity in the State is less than thenational average bed capacity during themost recent fiscal year for which dataare available as of the date that thehospital submits its request.(v) Average bed occupancy. Has anaverage bed occupancy rate that isgreater than the average bed occupancyrate in the State in which the hospitalis located during the most recent fiscalyear for which data are available as ofthe date that the hospital submits itsrequest. A hospital must use filedhospital cost report data to determine itsaverage bed occupancy rate.(3) Criteria for high Medicaid facility.A high Medicaid facility is a hospitalthat satisfies all of the following criteria:(i) Sole hospital. Is not the solehospital in the county in which thehospital is located.VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00461 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2(ii) Medicaid inpatient admissions.With respect to each of the 3 mostrecent fiscal years for which data areavailable as of the date the hospitalsubmits its request, has an annualpercent of total inpatient admissionsunder Medicaid that is estimated to begreater than such percent <strong>with</strong> respectto such admissions for any otherhospital located in the county in whichthe hospital is located. A hospital mustuse filed hospital cost report dischargedata to estimate its annual percentage oftotal inpatient admissions underMedicaid and the annual percentages oftotal inpatient admissions underMedicaid for every other hospitallocated in the county in which thehospital is located.(iii) Nondiscrimination. Does notdiscriminate against beneficiaries ofFederal health care programs and doesnot permit physicians practicing at thehospital to discriminate against suchbeneficiaries.(4) Procedure for submitting a request.(i) A hospital must either mail anoriginal and one copy of the writtenrequest to CMS or submit the requestelectronically to CMS. If a hospitalsubmits the request electronically, thehospital must mail an original hardcopy of the signed certification set forthin paragraph (c)(4)(iii) of this section toCMS.(ii) A request must include thefollowing information:(A) The name, address, NationalProvider Identification number(s) (NPI),Tax Identification Number(s) (TIN), andCMS Certification Number(s) (CCN) ofthe hospital requesting an exception.(B) The county in which the hospitalrequesting an exception is located.(C) The name, title, address, anddaytime telephone number of a contactperson who will be available to discussthe request <strong>with</strong> CMS on behalf of thehospital.(D) A statement identifying thehospital as an applicable hospital orhigh Medicaid facility and a detailedexplanation <strong>with</strong> supportingdocumentation regarding whether andhow the hospital satisfies each of thecriteria for an applicable hospital orhigh Medicaid facility. The request muststate that the hospital does notdiscriminate against beneficiaries ofFederal health care programs and doesnot permit physicians practicing at thehospital to discriminate against suchbeneficiaries.(E) Documentation supporting thehospital’s calculations of its baselinenumber of operating rooms, procedurerooms, and beds; the hospital’s numberof operating rooms, procedure rooms,and beds for which the hospital is

jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES274582 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationslicensed as of the date that the hospitalsubmits a request for an exception; andthe additional number of operatingrooms, procedure rooms, and beds bywhich the hospital requests to expand.(iii) A request must include thefollowing certification signed by anauthorized representative of thehospital: ‘‘With knowledge of thepenalties for false statements providedby 18 U.S.C. 1001, I certify that all of theinformation provided in the request andall of the documentation provided <strong>with</strong>the request is true and correct to the bestof my knowledge and belief.’’ Anauthorized representative is the chiefexecutive officer, chief financial officer,or other comparable officer of thehospital.(5) Community input and timing ofcomplete request. Upon submitting arequest for an exception and until thehospital receives a CMS decision, thehospital must disclose on any publicWeb site for the hospital that it isrequesting an exception. Individualsand entities in the hospital’s communitymay provide input <strong>with</strong> respect to thehospital’s request no later than 30 daysafter CMS publishes notice of thehospital’s request in the FederalRegister. Such input must take the formof written comments. The writtencomments must be either mailed orsubmitted electronically to CMS.(i) If CMS does not receive writtencomments from the community, arequest will be deemed complete at theend of the 30-day period.(ii) If CMS receives written commentsfrom the community, the hospital has 30days after CMS notifies the hospital ofthe written comments to submit arebuttal statement. A request will bedeemed complete at the end of this 30-day period regardless of whether thehospital submits a rebuttal statement.(6) A permitted increase under thissection—(i) May not result in the number ofoperating rooms, procedure rooms, andbeds for which the hospital is licensedexceeding 200 percent of the hospital’sbaseline number of operating rooms,procedure rooms, and beds; and(ii) May occur only in facilities on thehospital’s main campus.(7) Publication of final decisions. Notlater than 60 days after receiving acomplete request, CMS will publish thefinal decision in the Federal Register.(8) Limitation on review. There shallbe no administrative or judicial reviewunder section 1869, section 1878, orotherwise of the process under thissection (including the establishment ofsuch process).PART 416—AMBULATORY SURGICALSERVICES■ 5. The authority citation for Part 416continues to read as follows:Authority: Secs. 1102 and 1871 of theSocial Security Act (42 U.S.C. 1302and1395hh).■ 6. Section 416.166 is amended byrevising paragraph (b) to read as follows:§ 416.166 Covered surgical procedures.* * * * *(b) General standards. Subject to theexclusions in paragraph (c) of thissection, covered surgical procedures aresurgical procedures specified by theSecretary and published in the FederalRegister and/or via the Internet on theCMS Web site that are separately paidunder the OPPS, that would not beexpected to pose a significant safety riskto a Medicare beneficiary whenperformed in an ASC, and for whichstandard medical practice dictates thatthe beneficiary would not typically beexpected to require active medicalmonitoring and care at midnightfollowing the procedure.* * * * *■ 7. Section 416.171 is amended by—■ a. Revising paragraph (b).■ b. Revising paragraph (d).The revisions read as follows:§ 416.171 Determination of payment ratesfor ASC services.* * * * *(b) Exception. The national ASCpayment rates for the following itemsand services are not determined inaccordance <strong>with</strong> paragraph (a) of thissection but are paid an amount derivedfrom the payment rate for the equivalentitem or service set under the paymentsystem established in part 419 of thissubchapter as updated annually in theFederal Register and/or via the Interneton the CMS Web site. If a payment rateis not available, the following items andservices are designated as contractorpriced:* * * * *(d) Limitation on payment rates foroffice-based surgical procedures andcovered ancillary radiology services.Not<strong>with</strong>standing the provisions ofparagraph (a) of this section, for anycovered surgical procedure under§ 416.166 that CMS determines iscommonly performed in physicians’offices or for any covered ancillaryradiology service, excluding those listedin paragraphs (d)(1) and (d)(2) of thissection, the national unadjusted ASCpayment rates for these procedures andservices will be the lesser of the amountdetermined under paragraph (a) of thisVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00462 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2section or the amount calculated at thenonfacility practice expense relativevalue units under § 414.22(b)(5)(i)(B) ofthis subchapter multiplied by theconversion factor described in§ 414.20(a)(3) of this subchapter.(1) The national unadjusted ASCpayment rate for covered ancillaryradiology services that involve certainnuclear medicine procedures will be theamount determined under paragraph (a)of this section.(2) The national unadjusted ASCpayment rate for covered ancillaryradiology services that use contrastagents will be the amount determinedunder paragraph (a) of this section.* * * * *■ 8. Section 416.173 is revised to readas follows:§ 416.173 Publication of revised paymentmethodologies and payment rates.CMS publishes annually, throughnotice and comment rulemaking in theFederal Register and/or via the Interneton the CMS Web site, the paymentmethodologies and payment rates forASC services and designates the coveredsurgical procedures and coveredancillary services for which CMS willmake an ASC payment and otherrevisions as appropriate.PART 419—PROSPECTIVE PAYMENTSYSTEM FOR HOSPITAL OUTPATIENTDEPARTMENT SERVICES■ 9. The authority citation for Part 419continues to read as follows:Authority: Secs. 1102, 1833(t), and 1871of the Social Security Act (42 U.S.C. 1302,1395(t), and 1395hh).■ 10. Section 419.32 is amended by:■ a. Revising paragraph (b)(1)(iv)(A).■ b. Removing the word ‘‘and’’ thatappears at the end of paragraph(b)(1)(iv)(B)(1).■ c. Removing the period and adding ‘‘;and’’ in its place at the end of paragraph(b)(1)(iv)(B)(2).■ d. Adding a new paragraph(b)(1)(iv)(B)(3).The revision and addition read asfollows:§ 419.32 Calculation of prospectivepayment rates for hospital outpatientservices.* * * * *(b) * * *(1) * * *(iv)(A) For calendar year 2003 andsubsequent years, by the hospitalinpatient market basket percentageincrease applicable under section1886(b)(3)(B)(iii) of the Act, reduced bythe factor(s) specified in paragraph(b)(1)(iv)(B) of this section.

Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulations74583jlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2(B) * * *(3) For calendar year 2012, amultifactor productivity adjustment (asdetermined by CMS) and 0.1 percentagepoint.* * * * *■ 11. Section 419.43 is amended byadding a new paragraph (i) to read asfollows:§ 419.43 Adjustments to national programpayment and beneficiary copaymentamounts.* * * * *(i) Payment adjustment for certaincancer hospitals.—(1) General rule. CMSprovides for a payment adjustment forcovered hospital outpatient departmentservices furnished on or after January 1,2012, by a hospital described in section1886(d)(1)(B)(v) of the Act.(2) Amount of payment adjustment.The amount of the payment adjustmentunder paragraph (i)(1) of this section isdetermined by the Secretary as follows:(i) If a hospital described in section1886(d)(1)(B)(v) of the Act has apayment-to-cost ratio (PCR) before thecancer hospital payment adjustment (asdetermined by the Secretary at costreport settlement) that is less than theweighted average PCR of other hospitalsfurnishing services under section1833(t) of the Act (as determined by theSecretary at the time of the applicableCY Hospital Outpatient ProspectivePayment System/Ambulatory SurgicalCenter final rule <strong>with</strong> comment period)(referred to as the Target PCR), forcovered hospital outpatient departmentservices, the aggregate payment amountprovided at cost report settlement tosuch hospital is equal to the amountneeded to make the hospital’s PCR atcost report settlement (as determined bythe Secretary) equal to the target PCR (asdetermined by the Secretary).(ii) If a hospital described in section1886(d)(1)(B)(v) of the Act has apayment-to-cost ratio (PCR) before thecancer hospital payment adjustment (asdetermined by the Secretary at costreport settlement) that is greater thanthe weighted average PCR of otherhospitals furnishing services undersection 1833(t) of the Act (as determinedby the Secretary at the time of theapplicable CY Hospital OutpatientProspective Payment System/Ambulatory Surgical Center final rule<strong>with</strong> comment period) (referred to as theTarget PCR), for covered hospitaloutpatient department services, theaggregate payment amount provided atcost report settlement to such hospital isequal to zero.(3) Budget neutrality. CMS establishesthe payment adjustment underparagraph (i)(1) of this section in abudget neutral manner.■ 12. Section 419.70 is amended by—■ a. Revising the introductory text ofparagraph (d)(2).■ b. Revising paragraph (d)(6).The revisions read as follows:§ 419.70 Transitional adjustments to limitdecline in payments.* * * * *(d) * * *(2) Temporary treatment for smallrural hospitals on or after January 1,2006. For covered hospital outpatientservices furnished in a calendar yearfrom January 1, 2006, through December31, 2011, for which the prospectivepayment system amount is less than thepre-BBA amount, the amount ofpayment under this part is increased by95 percent of that difference for servicesfurnished during CY 2006, 90 percent ofthat difference for services furnishedduring CY 2007, and 85 percent of thatdifference for services furnished duringCYs 2008, 2009, 2010, and 2011 if thehospital—* * * * *(6) Temporary treatment for solecommunity hospitals on or after January1, 2010, and through December 31,2011. For covered hospital outpatientservices furnished on or after January 1,2010, through December 31, 2011, forwhich the prospective payment systemamount is less than the pre-BBAamount, the amount of payment underthis part is increased by 85 percent ofthat difference if the hospital is a solecommunity hospital as defined in§ 412.92 of this chapter or is an essentialaccess community hospital as describedunder § 412.109 of this chapter.* * * * *PART 489—PROVIDER AGREEMENTSAND SUPPLIER APPROVAL■ 13. The authority citation for Part 489continues to read as follows:Authority: Secs. 1102, 1819, 1820(e), 1861,1864(m), 1866, 1869, and 1871 of the SocialSecurity Act (42 U.S.C. 1302, 1395i–3, 1395x,1395aa(m), 1395cc, 1395ff, and 1395hh).■ 14. Section 489.20 is amended byrevising paragraph (w) to read asfollows:§ 489.20 Basic commitments.* * * * *(w)(1) In the case of a hospital asdefined in § 489.24(b), to furnish writtennotice to all patients at the beginning oftheir planned or unplanned inpatienthospital stay or at the beginning of anyplanned or unplanned outpatient visitfor observation, surgery or any otherVerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00463 Fmt 4701 Sfmt 4700 E:\FR\FM\30NOR2.SGM 30NOR2procedure requiring anesthesia, if adoctor of medicine or a doctor ofosteopathy is not present in the hospital24 hours per day, 7 days per week, inorder to assist the patients in makinginformed decisions regarding their care,in accordance <strong>with</strong> § 482.13(b)(2) of thissubchapter. For purposes of thisparagraph, a planned hospital stay oroutpatient visit begins <strong>with</strong> theprovision of a package of informationregarding scheduled preadmissiontesting and registration for a plannedhospital admission for inpatient care oroutpatient service. An unplannedhospital stay or outpatient visit begins atthe earliest point at which the patientpresents to the hospital.(2) In the case of a hospital that is amain provider and has one or moreremote locations of a hospital or one ormore satellites, as these terms aredefined in § 413.65(a)(2), § 412.22(h), or§ 412.25(e) of this chapter, as applicable,the determination is made separately forthe main provider and each remotelocation or satellite whether notice topatients is required. Notice is requiredat each location at which inpatientservices are furnished at which a doctorof medicine or doctor of osteopathy isnot present 24 hours per day, 7 days perweek.(3) The written notice must state thatthe hospital does not have a doctor ofmedicine or a doctor of osteopathypresent in the hospital 24 hours per day,7 days per week, and must indicate howthe hospital will meet the medical needsof any patient who develops anemergency medical condition, asdefined in § 489.24(b), at a time whenthere is no doctor of medicine or doctorof osteopathy present in the hospital.(4) Before admitting a patient orproviding an outpatient service tooutpatients for whom a notice isrequired, the hospital must receive asigned acknowledgment from thepatient stating that the patientunderstands that a doctor of medicine ordoctor of osteopathy may not be presentduring all hours services are furnishedto the patient.(5) Each dedicated emergencydepartment, as that term is defined in§ 489.24(b), in a hospital in which adoctor of medicine or doctor ofosteopathy is not present 24 hours perday, 7 days per week must post a noticeconspicuously in a place or places likelyto be noticed by all individuals enteringthe dedicated emergency department.The posted notice must state that thehospital does not have a doctor ofmedicine or a doctor of osteopathypresent in the hospital 24 hours per day,7 days per week, and must indicate howthe hospital will meet the medical needs

74584 Federal Register / Vol. 76, No. 230 / Wednesday, November 30, 2011 / <strong>Rule</strong>s and Regulationsof any patient <strong>with</strong> an emergencymedical condition, as defined in§ 489.24(b), at a time when there is nodoctor of medicine or doctor ofosteopathy present in the hospital.PART 495—STANDARDS FOR THEELECTRONIC HEALTH RECORDTECHNOLOGY INCENTIVE PROGRAM■ 15. The authority citation for Part 495continues to read as follows:Authority: Secs. 1102 and 1871 of theSocial Security Act (42 U.S.C. 1302 and1395hh).■ 16. Section 495.8 is amended by—■ a. Revising paragraph (b)(2)(ii).■ b. Adding a new paragraph (b)(2)(vi).The revision and addition read asfollows:§ 495.8 Demonstration of meaningful usecriteria.* * * * *(b) * * *(2) * * *(ii) Reporting clinical qualityinformation. For § 495.6(f)(9) ‘‘Reportinghospital clinical quality measures toCMS or, in the case of Medicaid eligiblehospitals, the States,’’ report thehospital quality measures selected byCMS to CMS (or in the case of Medicaideligible hospitals, the States) in the formand manner specified by CMS (or in thecase of Medicaid eligible hospitals, theStates).* * * * *(vi) Exception for Medicare eligiblehospitals and CAHs for FY 2012—Participation in the Medicare EHRIncentive Program Electronic ReportingPilot. In order to satisfy the clinicalquality measure reporting objective in§ 495.6(f)(9), aside from attestation, aMedicare eligible hospital or CAH mayparticipate in the Medicare EHRIncentive Program Electronic ReportingPilot.* * * * *(Catalog of Federal Domestic AssistanceProgram No. 93.773, Medicare—HospitalInsurance; Program No. 93.774, Medicare—Supplementary Medical Insurance Program;and Program No. 93.778 (Medical Assistance)Dated: October 26, 2011.Donald M. Berwick,Administrator, Centers for Medicare &MedicaidServices.Dated: October 28, 2011Kathleen Sebelius,Secretary.[FR Doc. 2011–28612 Filed 11–1–11; 4:15 pm]BILLING CODE 4120–01–Pjlentini on DSK4TPTVN1PROD <strong>with</strong> RULES2VerDate Mar2010 17:08 Nov 29, 2011 Jkt 226001 PO 00000 Frm 00464 Fmt 4701 Sfmt 9990 E:\FR\FM\30NOR2.SGM 30NOR2