Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals (IPPS) and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year (FY) 2026 Rates; Changes to the FY 2025 IPPS Rates Due to Court Decision; Requirements for Quality Programs; and Other Policy Changes; Health Data, Technology, and Interoperability: Electronic Prescribing, Real-Time Prescription Benefit and Electronic Prior Authorization o m m a h k 36750 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations approving new technology add-on payments for RYSTIGGO® for FY 2026. k. SYMVESSTM (Acellular Tissue Engineered Vessel-Tyod) Humacyte, Inc. submitted an application for new technology add-on payments for SYMVESSTM for FY 2026. According to the applicant, SYMVESSTM is a bioengineered, implantable blood vessel indicated for use in adults as a vascular conduit for extremity arterial injury when urgent revascularization is needed to avoid imminent limb loss and when autologous vein grafting is not feasible. The applicant stated that SYMVESSTM is composed of organized extracellular matrix proteins in the tubular form of a blood vessel and is used to repair, bypass, or replace arteries that have sustained traumatic injuries. Please refer to the online application posting for SYMVESSTM, available at https://mearis.cms.gov/public/ publications/ntap/NTP24100639G2M, for additional detail describing the technology and the disease treated by the technology. With respect to the newness criterion, according to the applicant, SYMVESSTM was granted BLA approval from FDA on December 19, 2024, for u ing the technology and the disease treated by the technology. With respect to the newness criterion, according to the applicant, SYMVESSTM was granted BLA approval from FDA on December 19, 2024, for use in adults as a vascular conduit for extremity arterial repair when urgent revascularization is needed to avoid imminent limb loss, and when autologous vein grafting is not feasible. The applicant stated that FDA required a lot release that shows results of all applicable tests prior to distribution of SYMVESSTM and that it submitted the required paperwork to FDA on December 26, 2024. The applicant stated that on February 26, 2025, FDA notified the applicant that the required review of commercial batch information was completed and authorized the applicant to commence commercial shipment; therefore, per the applicant, SYMVESSTM became commercially available as of February 26, 2025. Per the applicant, the average number of units of SYMVESSTM anticipated to be used per inpatient stay is 1 unit. The applicant stated that, effective October 1, 2024, the following ICD–10– PCS codes may be used to uniquely describe procedures involving the use of SYMVESSTM: X2R50WA (Replacement of right up unit. The applicant stated that, effective October 1, 2024, the following ICD–10– PCS codes may be used to uniquely describe procedures involving the use of SYMVESSTM: X2R50WA (Replacement of right upper extremity artery using bioengineered human acellular vessel, open approach, new technology group 10), X2R60WA (Replacement of left upper extremity artery using bioengineered human acellular vessel, open approach, new technology group 10), X2R70WA (Replacement of right lower extremity artery using bioengineered human acellular vessel, open approach, new technology group 10), and X2R80WA (Replacement of left lower extremity artery using bioengineered human acellular vessel, open approach, new technology group 10). As previously discussed, if a technology meets all three of the substantial similarity criteria under the newness criterion, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for the purpose of new technology add-on payments. With respect to the substantial similarity criteria, the applicant asserted that SYMVESSTM is not substantially similar to other currently available technologies because it does not use the same nts. With respect to the substantial similarity criteria, the applicant asserted that SYMVESSTM is not substantially similar to other currently available technologies because it does not use the same or a similar mechanism of action compared to existing technologies, and that therefore, the technology meets the newness criterion. The following table summarizes the applicant’s assertions regarding the substantial similarity criteria. Please see the online application posting for SYMVESSTM for the applicant’s complete statements in support of its assertion that SYMVESSTM is not substantially similar to other currently available technologies. BILLING CODE 4120–01–P 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00216 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36751 BILLING CODE 4120–01–C In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18144), we stated we had the following concerns with regard to the newness criterion. The applicant stated that SYMVESSTM has a novel mechanism of action based on its manufacturing, com ed rule (90 FR 18144), we stated we had the following concerns with regard to the newness criterion. The applicant stated that SYMVESSTM has a novel mechanism of action based on its manufacturing, composition, and post- operative regenerative properties. However, we stated we were interested in more information about how the composition of SYMVESSTM is associated with its post-operative regenerative properties, and specifically how these regenerative properties are associated with its mechanism of action to achieve a therapeutic outcome, as well as how the association between SYMVESSTM’s regenerative properties and mechanism of therapeutic action differs from that of autologous vein grafts. In addition, we questioned whether physiological changes, such as arterialization, cellular repopulation, and fibrosis, that occur after a conduit is implanted, should be considered part of the mechanism of action. We also noted that the applicant stated that the mechanism of action of synthetic grafts is immediate revascularization, and we questioned whether that is not also the mechanism of action of SYMVESSTM and/or autologous vein grafts. We invited public comments on whether SYMVESSTM is su fts is immediate revascularization, and we questioned whether that is not also the mechanism of action of SYMVESSTM and/or autologous vein grafts. We invited public comments on whether SYMVESSTM is substantially similar to existing technologies, including whether post-implantation physiological changes should be considered as part of a technology’s mechanism of action, and whether SYMVESSTM meets the newness criterion. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00217 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00218 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36753 Several commenters also voiced support for SYMVESSTM and asserted that SYMVESSTM has a different mechanism of action than synthetic grafts. A commenter asserted that SYMVESSTM operates through a targeted mechanism of action designed to improve blood flow, vessel wall stabilization, capacity for remodeling, and long-term viabil tic grafts. A commenter asserted that SYMVESSTM operates through a targeted mechanism of action designed to improve blood flow, vessel wall stabilization, capacity for remodeling, and long-term viability. Other commenters described its immediate availability similar to that of synthetic grafts but stated it has a unique mechanism of action which enables integration into native vasculature. Another commenter provided its personal experience that imaging of patients post-SYMVESSTM repair often reveals no visible graft. Per the commenter, this suggests natural tissue integration and effective healing, which the commenter has not seen with other conduits. Other commenters stated that due to its acellular nature, SYMVESSTM’ unique composition avoids cellular damage post-implantation, enabling better interaction with human cells, and maintaining patency, which drives its distinct regenerative properties compared to other vascular conduits. Response: We appreciate the additional information from the applicant and commenters with respect to whether SYMVESSTM is substantially similar to existing technologies. However, we disagree with the applicant and commenters that SYMVESSTM has a unique rom the applicant and commenters with respect to whether SYMVESSTM is substantially similar to existing technologies. However, we disagree with the applicant and commenters that SYMVESSTM has a unique mechanism of action compared to currently available synthetic grafts. While the applicant asserted that SYMVESSTM has a novel composition, we note that, as stated in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58847), the composition of a technology does not represent the mechanism of action. Further, we note the applicant’s assertions that SYMVESSTM’s mechanism of action is the restoration and maintenance of durable blood flow through the conduit post-implantation, achieved through a combination of immediate revascularization and long- term cellular repopulation and remodeling, and that SYMVESSTM’s regenerative properties, including cellular repopulation, matrix remodeling and tissue integration are central to SYMVESSTM’s mechanism of action and therapeutic effectiveness. However, we note that, per FDA, definitive studies that characterize the behavior of SYMVESSTM and how long it would take for cells to migrate and repopulate the graft have not been conducted, and that the exact mec e that, per FDA, definitive studies that characterize the behavior of SYMVESSTM and how long it would take for cells to migrate and repopulate the graft have not been conducted, and that the exact mechanism of action has not been established.111 112 We remain unclear that these potential downstream effects are critical to the way SYMVESSTM provides for urgent arterial repair following extremity vascular trauma to avoid limb loss. Furthermore, we disagree with the applicant that SYMVESSTM’s avoidance of cellular damage and inflammatory responses represents a novel mechanism of action. While these attributes may reduce complications such as fibrosis and neointimal hyperplasia, they do not change the fact that SYMVESSTM functions as a vascular conduit by facilitating blood flow, similar to other vascular grafts. Similarly, the long-term clinical results described by the applicant to demonstrate mechanical durability, patency, and low rates of complications relate to SYMVESSTM’s clinical outcome and not mechanism of action. Similarly, with respect to the comments by several commenters that the absence of visible grafts in imaging studies post-SYMVESSTM implantation suggest natural tiss utcome and not mechanism of action. Similarly, with respect to the comments by several commenters that the absence of visible grafts in imaging studies post-SYMVESSTM implantation suggest natural tissue integration and effective healing, we note that this observation may reflect SYMVESSTM’s biocompatibility and regenerative properties, but it does not, on its own, establish a novel mechanism of action. Tissue integration and remodeling are expected outcomes for many vascular conduits, as stated previously, and are influenced by the material and design of the graft rather than representing a new therapeutic mechanism. After review of the information provided in the comments, including the applicant’s assertions regarding SYMVESSTM’s composition, post- implantation healing characteristics, and mechanism of action, we disagree with the applicant that the evidence provided demonstrates that SYMVESSTM has a unique mechanism of action compared to previously available technologies. Because we agree with applicant that SYMVESSTM will be assigned to the same MS–DRGs and used to treat the same type of disease in a similar patient population as existing technologies for treating significantly agree with applicant that SYMVESSTM will be assigned to the same MS–DRGs and used to treat the same type of disease in a similar patient population as existing technologies for treating significantly damaged arteries due to traumatic injuries, SYMVESSTM meets all three of the substantial similarity criteria. Therefore, we believe SYMVESSTM is substantially similar to currently approved or cleared synthetic grafts, and we consider the beginning of the newness period for SYMVESSTM to begin on the date on which those existing synthetic grafts received FDA 111 SYMVESS. USPI Section 12: Clinical Pharmacology, p. 10. 112 December 18, 2024 Clinical Review Memo— SYMVESS, https://www.fda.gov/media/185229. marketing authorization. Since those technologies have been on the U.S. market for longer than 3 years, SYMVESSTM does not meet the newness criterion and is not eligible for new technology add-on payments for FY 2026. We note that we received public comments with regard to the cost and substantial clinical improvement criteria for this technology, but because we have determined that the technology does not meet the newness criterion and, therefore is not eligible for approval for new tech ntial clinical improvement criteria for this technology, but because we have determined that the technology does not meet the newness criterion and, therefore is not eligible for approval for new technology add-on payments for FY 2026, we are not summarizing comments received or making a determination on those criteria in this final rule. l. TECELRA® Autoleucel) (Afamitresgene Adaptimmune, LLC submitted an application for new technology add-on payments for TECELRA® for FY 2026. According to the applicant, TECELRA® is a melanoma-associated antigen A4 (MAGE–A4)-directed genetically modified autologous T-cell immunotherapy (also referred to as an autologous T-cell receptor (TCR) therapy) indicated for the treatment of adults with unresectable or metastatic synovial sarcoma who have received prior chemotherapy, are HLA–A*02 subtype positive, and whose tumor expresses the MAGE–A4 antigen. Per the applicant, TECELRA® of T cells genetically modified to express affinity-enhanced TCRs specific to the MAGE–A4 protein, which is expressed by synovial sarcoma tumor cells at varying frequencies. is composed Please refer to the online application , available at posting for TECELRA® https://mearis to the MAGE–A4 protein, which is expressed by synovial sarcoma tumor cells at varying frequencies. is composed Please refer to the online application , available at posting for TECELRA® https://mearis.cms.gov/public/ publications/ntap/NTP241004LTDY2, for additional detail describing the technology and the disease treated by the technology. With respect to the newness criterion, according to the applicant, TECELRA® was granted BLA accelerated approval from FDA on August 1, 2024 for treatment of adults with unresectable or metastatic synovial sarcoma who have received prior chemotherapy; are HLA– A*02:01P, HLA–A*02:02P, HLA– A*02:03P, or HLA–A*02:06P positive; and whose tumor expresses the MAGE– A4 antigen as determined by FDA- approved or cleared companion diagnostic devices. Per the applicant, TECELRA® was commercially available immediately after receiving FDA marketing authorization. The applicant stated that TECELRA® is a single, one- time, patient-specific treatment delivered as an intravenous infusion containing 2.68 x 109 to 10 x 109 VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00219 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 intravenous infusion containing 2.68 x 109 to 10 x 109 VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00219 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36754 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations MAGE–A4 TCR positive T-cells, in one or more infusion bag(s). : XW03368 (Introduction of The applicant stated that, effective October 1, 2022, the following ICD–10– PCS codes may be used to uniquely describe procedures involving the use of TECELRA® afamitresgene autoleucel immunotherapy into peripheral vein, percutaneous approach, new technology group 8) or XW04368 (Introduction of afamitresgene autoleucel immunotherapy into central vein, percutaneous approach, new technology group 8). As previously discussed, if a technology meets all three of the substantial similarity criteria under the newness criterion, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for the purpose of new technology add-on payments. With respect to the substantial similarity criteria, the applicant asserted that TECELRA® is not sub g technology and would not be considered ‘‘new’’ for the purpose of new technology add-on payments. With respect to the substantial similarity criteria, the applicant asserted that TECELRA® is not substantially similar to other currently available technologies because TECELRA® is the first FDA-approved engineered TCR T- cell therapy with a unique mechanism of action that is distinct from that of other marketed therapeutic products, the only therapy approved for synovial sarcoma assigned to MS–DRG 018 (Chimeric Antigen Receptor (CAR) T- Cell and Other Immunotherapies), and the only therapy studied specifically in the synovial sarcoma patient population and FDA-approved specifically for the treatment of synovial sarcoma. Therefore, according to the applicant, the technology meets the newness criterion. The following table summarizes the applicant’s assertions regarding the substantial similarity criteria. Please see the online application posting for TECELRA® for the applicant’s complete statements in support of its assertion that TECELRA® is not substantially similar to other currently available technologies. BILLING CODE 4120–01–P 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o statements in support of its assertion that TECELRA® is not substantially similar to other currently available technologies. BILLING CODE 4120–01–P 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00220 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36755 BILLING CODE 4120–01–C In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18150), we noted that the applicant stated that TECELRA® is the only FDA-approved therapy specifically studied and approved for patients with synovial sarcoma, therefore, it does not involve the treatment of a similar type of disease or patient population as existing technologies. While the applicant stated that other therapies in the National Comprehensive Cancer Network Clinical Practice Guidelines (NCCN Guidelines® ), such as pazopanib, are indicated for use in the broader STS population rather than specifically for synovial sarcoma, we noted that synovial sarcoma is a type of STS. Consequently, we questioned whether existing treatments indicated for STS, which can be used for the treatment of s specifically for synovial sarcoma, we noted that synovial sarcoma is a type of STS. Consequently, we questioned whether existing treatments indicated for STS, which can be used for the treatment of specific subtypes of STS, such as synovial sarcoma, would treat the same or similar patient population as TECELRA® . We invited public comments on whether TECELRA® is substantially similar to existing technologies and whether TECELRA® meets the newness criterion. Comment: The applicant submitted a public comment reiterating that VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00221 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00222 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36757 BILLING CODE 4120–01–C Because the final inflated average case-weighted standardized charge per case exceeded the average case- weighted threshold amount in all four scenarios, the applicant asserted that TECELRA® meets the cost criterion. We invited public comments on whether TECELRA® me ge per case exceeded the average case- weighted threshold amount in all four scenarios, the applicant asserted that TECELRA® meets the cost criterion. We invited public comments on whether TECELRA® meets the cost criterion. Comment: The applicant reiterated that the four cost criterion analyses submitted with its application demonstrated that the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, and therefore, TECELRA® meets the cost criterion. Response: We thank the applicant for its comment. We agree that the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount under all scenarios. Therefore, TECELRA® meets the cost criterion. With regard to the substantial clinical improvement criterion, the applicant asserted that TECELRA® represents a substantial clinical improvement over existing technologies because TECELRA® is the first and only FDA- approved therapy for eligible patients with unresectable or metastatic synovial sarcoma; is a new treatment option for eligible patients with unresectable or metastatic synovial sarcoma, who are unresponsive to e rapy for eligible patients with unresectable or metastatic synovial sarcoma; is a new treatment option for eligible patients with unresectable or metastatic synovial sarcoma, who are unresponsive to existing systemic therapies after first-line (1L) progression; offers significant clinical improvement in overall response rate (ORR) and overall survival (OS) compared to existing therapies; and is well-tolerated with a manageable safety profile. The applicant provided 1 published study, TECELRA® ’s prescribing information, and an FDA press release to support these claims, as well as 15 background articles about TCR T-cell therapies, expression of MAGE–A4 in tumors, the prevalence of HLA–A subtypes, other 2L synovial sarcoma treatments, and the burden of illness for patients with synovial sarcoma and myxoid/round cell liposarcoma (MRCLS).114 The following table summarizes the applicant’s assertions regarding the substantial clinical improvement criterion. Please see the online posting for TECELRA® the applicant’s complete statements regarding the substantial clinical improvement criterion and the supporting evidence provided. BILLING CODE 4120–01–P for 114 Background articles are not i TECELRA® the applicant’s complete statements regarding the substantial clinical improvement criterion and the supporting evidence provided. BILLING CODE 4120–01–P for 114 Background articles are not included in the following table but can be accessed via the online posting for the technology. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00223 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00224 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00225 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36760 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations of synovial sarcoma. The applicant asserted that other current treatment options have a minimal impact on ORR and OS in this patient population. The applicant further explained that due to the broad and heterogenous subtypes of STS, clinical studies face challenges in enrolling patients for only one subtype due to limited numbers. The applicant e applicant further explained that due to the broad and heterogenous subtypes of STS, clinical studies face challenges in enrolling patients for only one subtype due to limited numbers. The applicant stated that studies like PALETTE (44 out of 369 patients had SyS) and REGOSARC (27 out of 182 patients had SyS) provide limited data for synovial sarcoma, leaving clinicians reliant on limited results applicable to synovial sarcoma for treatment decisions. The applicant reiterated that the SPEARHEAD–1 clinical trial studied TECELRA® patients, many of whom had failed multiple prior therapies. The applicant asserted that, given that the SPEARHEAD–1 participants failed multiple prior lines of treatment and were no longer eligible for other treatment options due to toxicity, it is reasonable to conclude that this patient population is unresponsive to or ineligible for other currently available treatment options. in heavily pretreated In response to CMS’s concern that it was unclear whether patients with unresectable or metastatic synovial sarcoma who are unresponsive to existing systemic therapies after previous 1L treatments are unresponsive to or ineligible for other existing treatments, ients with unresectable or metastatic synovial sarcoma who are unresponsive to existing systemic therapies after previous 1L treatments are unresponsive to or ineligible for other existing treatments, such as trabectedin, in which higher response rates have been reported, the applicant stated that higher response rates for other existing treatment options have not been reported. The applicant asserted that TECELRA® demonstrated a significant clinical improvement for synovial sarcoma patients by achieving a 43.2 percent ORR compared to historical controls, such as trabectedin (up to 12.3 percent) and pazopanib (up to 18.9 percent). The applicant further stated that the higher ORR rates (27 to 51 percent) referenced by CMS were not specific to synovial sarcoma, but rather pooled analyses of other sarcoma subtypes, with synovial sarcoma showing much lower response rates (5.9 percent for trabectedin). The applicant stated that a meta-analysis of trabectedin and pazopanib reported similar results in patients with metastatic synovial sarcoma, with trabectedin and pazopanib producing an ORR of 7 and 13.2 percent in clinical trials and 12.3 and 18.9 percent in real- world studies, respecti esults in patients with metastatic synovial sarcoma, with trabectedin and pazopanib producing an ORR of 7 and 13.2 percent in clinical trials and 12.3 and 18.9 percent in real- world studies, respectively. The applicant reiterated that the SPEARHEAD–1 trial for TECELRA® used a benchmark ORR of 18 percent based on historical second-line therapies and agreed upon by FDA, and TECELRA® exceeded this benchmark, underscoring its efficacy in treating heavily pretreated synovial sarcoma patients. ’s ORR significantly In response to CMS’s concern that the SPEARHEAD–1 study allowed bridging therapy including pazopanib, trabectedin, ifosfamide, or doxorubicin, between leukapheresis and lymphodepletion at the investigators’ discretion putting into question whether the results can solely be attributable to TECELRA® , the applicant reiterated that TECELRA® provides a treatment option for synovial sarcoma patients who are unresponsive to or ineligible for existing therapies, which have limited efficacy and are not specifically approved for synovial sarcoma. The applicant further explained that patients in the SPEARHEAD–1 study were heavily pretreated with a median of three prior lines of therapy, cy and are not specifically approved for synovial sarcoma. The applicant further explained that patients in the SPEARHEAD–1 study were heavily pretreated with a median of three prior lines of therapy, including standard agents like ifosfamide, doxorubicin, and pazopanib. The applicant stated that some patients received bridging therapy to control disease progression temporarily, but these strategies required a washout period before TECELRA® treatment. The applicant also stated that patients who received bridging therapy notably had a lower ORR of 25 percent compared to 46 percent for those who did not, indicating that bridging therapies did not contribute to improved outcomes. In response to CMS’s concern that patients with unresectable or metastatic synovial sarcoma treated with TECELRA® demonstrated a similar mOS to historical benchmark results of gemcitabine/docetaxel and regorafenib, the applicant reiterated that TECELRA® offers a significant clinical improvement in OS compared to existing therapies. The applicant stated that patients with advanced synovial sarcoma who were treated with TECELRA® demonstrated a mOS of 16.9 months (95 percent CI 10.9- not estimable) in the SPEARH existing therapies. The applicant stated that patients with advanced synovial sarcoma who were treated with TECELRA® demonstrated a mOS of 16.9 months (95 percent CI 10.9- not estimable) in the SPEARHEAD–1 phase II clinical trial conducted at 23 sites in Canada, the U.S., and Europe. The applicant stated that the data referenced in its application for other therapies comes from studies of various designs and scientific rigor, conducted at limited treatment sites, and showed limited efficacy and no statistical benefit over placebo in trials. In contrast, the applicant stated that the SPEARHEAD–1 trial for TECELRA® was an open-label, single arm, phase II trial specifically designed to evaluate efficacy and safety outcomes in populations of advanced synovial sarcoma and MRCLS patients, with a primary endpoint of ORR, a secondary endpoint of OS, and a prespecified statistical analysis plan. The applicant highlighted that Carroll et al. (2022) conducted a meta-analysis that evaluated clinical trials and real-world studies of pazopanib and trabectedin in previously treated metastatic synovial sarcoma patients and found: an mOS of 10.3 months (95 percent CI 8.4–12.6) for 4 pazopanib studi al trials and real-world studies of pazopanib and trabectedin in previously treated metastatic synovial sarcoma patients and found: an mOS of 10.3 months (95 percent CI 8.4–12.6) for 4 pazopanib studies that included 4 to 38 patients; an mOS of 10.5 months (95 percent CI 8.2–13.4) when restricted to pazopanib studies with greater than or equal to ten participants; a mOS of 10.4 months (95 percent CI 7.3–14.8) when using 4 trabectedin studies with 3 to 101 patients; and 10.8 months (95 percent CI 8.4–13.9) when restricted to 3 trabectedin studies with 10 or more participants. As for the data supporting (mOS not gemcitabine and docetaxel in synovial sarcoma, the applicant stated the data are limited and come from analyses of various designs and two studies that show partial response in only one patient. In contrast, the applicant reiterated that the SPEARHEAD–1 study demonstrated an ORR of 39 percent in patients with synovial sarcoma and a mOS of 16.9 months (95 percent CI 10.9–NE). The applicant further stated that the OS among patients who responded to TECELRA® reached; 95 percent CI 15.4–NE) was significantly improved versus non- responders (10.9 months; 95 percent CI 5.2–20.9; p applicant further stated that the OS among patients who responded to TECELRA® reached; 95 percent CI 15.4–NE) was significantly improved versus non- responders (10.9 months; 95 percent CI 5.2–20.9; p 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00226 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36761 a novel antigen with a unique mechanism of action and biomarkers of resistance have not been observed. The applicant stated that the patient population in Carroll et al. (2022) had similar baseline characteristics to the patient population in the SPEARHEAD– 1 study. The applicant explained that, although cancer-testis antigen expression in solid tumors, such as MAGE–A4 in synovial sarcoma, was not used to select patients in past studies, current evidence by immunohistochemistry shows that 70 to 82 percent of synovial sarcoma tumors express MAGE–A4. The applicant stated that, therefore, it expects to see the same prevalence of antigen expression as in prior studies. The applicant further stated that a retrospective study of adult pa ress MAGE–A4. The applicant stated that, therefore, it expects to see the same prevalence of antigen expression as in prior studies. The applicant further stated that a retrospective study of adult patients with metastatic synovial sarcoma from the French Sarcoma Group NetSARC database found that expression of MAGE–A4 and HLA–A genotype did not affect prognosis in synovial sarcoma. The applicant asserted that patients with metastatic synovial sarcoma who are MAGE–A4 positive/HLA–A*02 eligible exhibited similar prognosis as the rest of the population, strengthening the absence of selection bias in TECELRA® trials. Similarly, a commenter stated that there are no biomarkers for synovial sarcoma prognosis and that MAGE–A4 positive synovial sarcoma is not a different disease than MAGE–A4 negative synovial sarcoma. According to this commenter, there is no evidence that MAGE–A4 tumor expression is associated with synovial sarcoma prognosis, and there is no biological reason to suspect that it could be the case. In response to CMS’s question whether the applicant had compared clinical outcomes from the SPEARHEAD–1 study to historical controls without appropriate statistical adjustment to a could be the case. In response to CMS’s question whether the applicant had compared clinical outcomes from the SPEARHEAD–1 study to historical controls without appropriate statistical adjustment to account for differences in the study designs, the applicant submitted two analyses containing indirect treatment comparisons to assess the relative efficacy of TECELRA® versus relevant comparators (pazopanib, trabectedin, gemcitabine/docetaxel, and regorafenib) in patients with advanced or metastatic synovial sarcoma. The applicant stated that, since most trials that included patients with synovial sarcoma were single-arm trials, it conducted unanchored matching- adjusted indicated comparisons (MAICs) to assess ORR and OS and a simulated treatment comparison analysis for these endpoints to serve as a sensitivity analysis to the MAICs. The applicant asserted that the point estimates from these analyses were either statistically significant or trended in favor of TECELRA® for both ORR and OS. The applicant further stated that, in those instances where point estimate results were not statistically significant, interpretation of the 95 percent CI demonstrated clinical meaningfulness in favo The applicant further stated that, in those instances where point estimate results were not statistically significant, interpretation of the 95 percent CI demonstrated clinical meaningfulness in favor of TECELRA® (lower limits of CI for ORR and upper limits of CI on the HRs for OS). to CAR T-cell In response to CMS’s question as to why the applicant compared the safety profile of TECELRA® therapies (which are not approved for use in STS) rather than other available therapies that treat unresectable or metastatic synovial sarcoma, the applicant stated that it made the comparison to CAR T-cell therapies because of the unique hematological aspects of cellular therapy for any indication. The applicant also provided a side-by-side adverse event list comparing TECELRA® to other treatments for STS (pazopanib, trabectedin, and regorafenib). is a single In response to CMS’s question about the support for the applicant’s statement that, because TECELRA® administration, recipients are less likely to experience repeated adverse events from the infusion, compared to treatments requiring multiple or regular continuous or cyclical administrations, the applicant stated that the most common advers y to experience repeated adverse events from the infusion, compared to treatments requiring multiple or regular continuous or cyclical administrations, the applicant stated that the most common adverse events for TECELRA® were expected, reversible, and manageable with supportive care. The applicant further stated that, unlike TECELRA® ’s one-time administration, other therapies currently used for STS involve continuous or cyclical dosing with repeated or long-term AEs. The applicant noted that for trabectedin, repeated dosing may lead to rhabdomyolysis, hepatotoxicity, and cardiomyopathy; for pazopanib, continuous dosing is associated with hepatotoxicity and hypertension within 18 weeks; and for regorafenib, cyclical administration can lead to liver dysfunction due to hepatocellular injury within 2 months. The applicant asserted that TECELRA® offers a favorable benefit-risk profile with a single-dose regimen and manageable adverse events, making it a viable option for patients with contraindications to or risks associated with toxicities from other current treatments used for STS. Similarly, a few commenters stated that TECELRA® provides a safe and more tolerable treatment option f traindications to or risks associated with toxicities from other current treatments used for STS. Similarly, a few commenters stated that TECELRA® provides a safe and more tolerable treatment option for patients with synovial sarcoma. Lastly, a commenter stated that, compared to traditional therapies that require multiple cycles and prolonged exposure to toxic side effects, synovial sarcoma patients treated with TECELRA® have reported improved quality of life due to the convenience of a single treatment administration and the reduced exposure to ongoing toxicities associated with traditional therapies, representing a significant step forward in the treatment of synovial sarcoma. Response: We thank the applicant and other commenters for their comments regarding the substantial clinical improvement criterion. Based on the additional information received, we agree with the applicant and other commenters that TECELRA® represents a substantial clinical improvement over existing technologies because it offers an improvement in ORR of 43.2 percent compared to up to 18.9 percent for existing treatments with a single treatment for adults with unresectable or metastatic synovial sarcoma who because it offers an improvement in ORR of 43.2 percent compared to up to 18.9 percent for existing treatments with a single treatment for adults with unresectable or metastatic synovial sarcoma who have received prior chemotherapy, are HLA–A*02 subtype positive, and whose tumor expresses the MAGE–A4 antigen. After consideration of the public comments we received and the information included in the applicant’s new technology add-on payment application, we have determined that TECELRA® meets the criteria for approval for new technology add-on payment. Therefore, we are approving new technology add-on payments for this technology for FY 2026. Cases involving the use of TECELRA® eligible for new technology add-on payments will be identified by ICD–10– PCS code XW03368 (Introduction of afamitresgene autoleucel immunotherapy into peripheral vein, percutaneous approach, new technology group 8) or XW04368 (Introduction of afamitresgene autoleucel immunotherapy into central vein, percutaneous approach, new technology group 8). that are In its application, the applicant estimated that the cost of the one-time TECELRA® infusion is $727,000 per patient based on a single, one-time, patient-sp approach, new technology group 8). that are In its application, the applicant estimated that the cost of the one-time TECELRA® infusion is $727,000 per patient based on a single, one-time, patient-specific treatment delivered as a cell suspension for intravenous infusion containing 2.68 x 109 to 10 x 109 MAGE–A4 TCR positive T-cells. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS–DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving the use of TECELRA® $472,550 for FY 2026. m. ZIIHERA® (Zanidatamab-hrii) is Jazz Pharmaceuticals, Inc. submitted an application for new technology add- on payments for ZIIHERA® for FY 2026. According to the applicant, ZIIHERA® is VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00227 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36762 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations a bispecific human epidermal growth factor receptor 2 (HER2)-directed antibody for t S D n o d n o m m a h k 36762 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations a bispecific human epidermal growth factor receptor 2 (HER2)-directed antibody for the treatment of adults with previously treated, unresectable or metastatic HER2-positive (IHC 3+) biliary tract cancer (BTC). Please refer to the online application , available at posting for ZIIHERA® https://mearis.cms.gov/public/ publications/ntap/NTP240925MW5YD, for additional detail describing the technology and the disease treated by the technology. With respect to the newness criterion, ’s market according to the applicant, ZIIHERA® was granted BLA approval from FDA on November 20, 2024, for the treatment of adults with previously treated, unresectable or metastatic HER2- positive (IHC 3+) BTC as detected by an FDA-approved test. According to the applicant, ZIIHERA® availability was delayed to allow for final packaging with FDA approved labels and package inserts as well as to allow time for shipment to channel distribution points, therefore, ZIIHERA® became commercially available as of December 2, 2024. We stated we were interested in additional information regarding the cause o time for shipment to channel distribution points, therefore, ZIIHERA® became commercially available as of December 2, 2024. We stated we were interested in additional information regarding the cause of any delay in the technology’s commercial availability, such as related to packaging and shipment to channel distribution points. According to the applicant, ZIIHERA® is administered intravenously in doses of 20 mg/kg once every 2 weeks until disease progression or unacceptable toxicity; therefore, the dose per inpatient stay is 1,400 mg. : XW033CA (Introduction of The applicant stated that effective October 1, 2024, the following ICD–10– PCS codes may be used to uniquely describe procedures involving the use of ZIIHERA® zanidatamab antineoplastic into peripheral vein, percutaneous approach, new technology group 10) or XW043CA (Introduction of zanidatamab antineoplastic into central vein, percutaneous approach, new technology group 10). The applicant stated that C22.1 (Intrahepatic bile duct carcinoma), C23 (Malignant neoplasm of gallbladder), C24.0 (Malignant neoplasm of extrahepatic bile duct), C24.8 (Malignant neoplasm of overlapping sites of biliary tract), C24.9 (Malignant neopla uct carcinoma), C23 (Malignant neoplasm of gallbladder), C24.0 (Malignant neoplasm of extrahepatic bile duct), C24.8 (Malignant neoplasm of overlapping sites of biliary tract), C24.9 (Malignant neoplasm of biliary tract, unspecified); or Z51.11 (Encounter for antineoplastic chemotherapy) may be used to currently identify the indication for ZIIHERA® under the ICD–10–CM coding system. As previously discussed, if a technology meets all three of the substantial similarity criteria under the newness criterion, it would be considered substantially similar to an existing technology and would not be considered ‘‘new’’ for the purpose of new technology add-on payments. With respect to the substantial ’s novel similarity criteria, the applicant asserted that ZIIHERA® is not substantially similar to other currently available technologies because ZIIHERA® and distinct mechanisms of action are not the same or substantially similar to those of other currently available therapies used for the treatment of adults with previously treated, unresectable/metastatic HER2+ (IHC 3+) BTC. In addition, the applicant asserted that ZIIHERA® is the first and only bispecific HER2-directed antibody indicated fo nt of adults with previously treated, unresectable/metastatic HER2+ (IHC 3+) BTC. In addition, the applicant asserted that ZIIHERA® is the first and only bispecific HER2-directed antibody indicated for this population, and that therefore, the technology meets the newness criterion. The following table summarizes the applicant’s assertions regarding the substantial similarity criteria. Please see the online application posting for ZIIHERA® the applicant’s complete statements in support of its assertion that ZIIHERA® is not substantially similar to other currently available technologies. BILLING CODE 4120–01–P for 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00228 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36763 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k BILLING CODE 4120–01–C In the FY 2026 IPPS/LTCH PPS proposed rule (90 FR 18154), after review of the information provided by the applicant, we noted that while the applicant stated that ZIIHERA® is the first and only bispecific HER2-directed S/LTCH PPS proposed rule (90 FR 18154), after review of the information provided by the applicant, we noted that while the applicant stated that ZIIHERA® is the first and only bispecific HER2-directed, biparatopic antibody approved by FDA for the treatment of adults with previously treated, unresectable/ metastatic HER2+ (IHC 3+) BTC, there are several existing treatment options for patients with unresectable/ metastatic HER2+ (IHC 3+) BTC such as FOLFOX, FOLFIRI, STIVARGA® , or VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00229 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00230 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36765 beginning of the newness period to commence on December 2, 2024, the date on which ZIIHERA® became commercially available. With respect to the cost criterion, the applicant provided multiple analyses to demonstrate that ZIIHERA® meets the cost criterion. Each analysis followed the order of operations summarized in the following table to the cost criterion, the applicant provided multiple analyses to demonstrate that ZIIHERA® meets the cost criterion. Each analysis followed the order of operations summarized in the following table. Because the final inflated average case-weighted standardized charge per case exceeded the average case- weighted threshold amount in both scenarios, the applicant asserted that ZIIHERA® meets the cost criterion. We invited public comments on whether ZIIHERA® meets the cost criterion. Comment: The applicant stated that the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount for both the primary cohort and the sensitivity cohort, and thus ZIIHERA® meets the cost criterion. Response: We thank the applicant for its comments. We agree that the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount under all scenarios. Therefore, ZIIHERA® meets the cost criterion. With regard to the substantial clinical improvement criterion, the applicant asserted that ZIIHERA® represents a substantial clinical improvement over existing technologies because it is a bispecific H ith regard to the substantial clinical improvement criterion, the applicant asserted that ZIIHERA® represents a substantial clinical improvement over existing technologies because it is a bispecific HER2-directed antibody with multiple, distinct mechanisms of action and a differentiated clinical profile, and it is the first and only FDA-approved treatment for HER2+ (IHC 3+) BTC. In addition, the applicant asserted that ZIIHERA® fulfills an unmet need for this patient population by providing an optimal chemotherapy-free treatment option, where patients also have the potential to achieve meaningfully improved clinical benefits. The applicant provided 1 study and 2 poster presentations of the same study to support these claims, as well as 3 background articles on other treatments for advanced BTC.121 The following table summarizes the applicant’s assertions regarding the substantial clinical improvement criterion. Please see the online posting for ZIIHERA® the applicant’s complete statements regarding the substantial clinical improvement criterion and the supporting evidence provided. BILLING CODE 4120–01–P for 121 Background articles and supplemental material are not included in the nts regarding the substantial clinical improvement criterion and the supporting evidence provided. BILLING CODE 4120–01–P for 121 Background articles and supplemental material are not included in the following table but can be accessed via the online posting for the technology. / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00231 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00232 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00233 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36768 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations antineoplastic therapies have not been given in the inpatient setting due to them being unsafe for people that are acutely ill because they have cytotoxic mechanisms of action that can cause infection, cytopenias, bleeding and other complications and that having inpatient access to ZIIHERA® would allow patients to start it sooner or to continue treatment on sche s of action that can cause infection, cytopenias, bleeding and other complications and that having inpatient access to ZIIHERA® would allow patients to start it sooner or to continue treatment on schedule, rather than missing doses. Response: We thank the commenters for their input and have taken it into consideration in determining whether ZIIHERA® meets the substantial clinical improvement criterion as discussed later in this section. Comment: The applicant submitted a public comment regarding the substantial clinical improvement criterion and provided responses to CMS’s concerns from the proposed rule. In response to CMS’s questions regarding the applicant’s assertion that ZIIHERA® offers a treatment option for a patient population unresponsive to, or ineligible for, other existing therapies, the applicant stated that prior to FDA approval of ZIIHERA® and its addition as a Category 2A treatment option for BTC, the preferred subsequent-line therapy option for patients with advanced BTC was FOLFOX chemotherapy, although survival rates remain poor (6.2 months OS and 4.0 months mPFS) and response rates are low (5 percent). The applicant asserted that among patients receiving FOLFOX, TC was FOLFOX chemotherapy, although survival rates remain poor (6.2 months OS and 4.0 months mPFS) and response rates are low (5 percent). The applicant asserted that among patients receiving FOLFOX, Grade 3 to 5 adverse events occurred in 69 percent of patients, and 3 chemotherapy-related deaths were reported. The applicant explained that additional treatment options recommended for 2L therapy in BTC were FOLFIRI, STIVARGA® liposomal irinotecan plus 5-fluorouracil plus leucovorin, and provided two tables displaying the efficacy, and safety and tolerability of select 2L therapies in BTC. The applicant commented that historically, there were no HER2- targeted therapies that were specifically studied in a trial dedicated to patients with BTC as most of these trials were basket trials. Per the applicant, with the addition of ZIIHERA® targeted therapies are now recommended in the NCCN guidelines. The applicant stated that ZIIHERA® was studied in the largest phase 2b clinical trial dedicated to BTC with 80 patients with HER2+ disease, 62 of which were IHC3+ and that aside from ZIIHERA® , only ENHERTU® has reported efficacy data in centrally confirmed HER2+ (IHC3+) BTC (n=16). The appli ed to BTC with 80 patients with HER2+ disease, 62 of which were IHC3+ and that aside from ZIIHERA® , only ENHERTU® has reported efficacy data in centrally confirmed HER2+ (IHC3+) BTC (n=16). The applicant further stated that two of the guideline- recommended HER2-targeted agents, trastuzumab + pertuzumab, which was , four HER2- , and investigated in a phase 2 basket trial (SGNTUC–019) in patients with HER2+ solid tumors, including 30 patients with HER2+ advanced BTC, and trastuzumab + tucatinib, which was investigated for the treatment of patients with previously treated, locally advance/ metastatic HER2+ BTC in phase 2 multiple-basket study (MyPathway), are not FDA-approved for use in patients with HER2+ BTC. The applicant provided two figures that describe the efficacy outcomes in previously treated HER2+ BTC for fam-trastuzumab- deruxtecan, tucatinib + trastuzumab, and trastuzumab + pertuzumab, as well as the TEAEs with HER2-targeted subsequent-line therapies for treatment of BTC. The applicant reiterated that a significant and urgent unmet medical need exists for optimal and tolerable treatment options for patients with unresectable/metastatic HER2+ (IHC3+) BTC who have progres he applicant reiterated that a significant and urgent unmet medical need exists for optimal and tolerable treatment options for patients with unresectable/metastatic HER2+ (IHC3+) BTC who have progressed on prior systemic therapy or for those who are ineligible for chemotherapy, and that the outcomes demonstrated by ZIIHERA® support the potential for a new standard of care for patients who progress on 1L options. The applicant further stated that ZIIHERA® offers the only FDA-approved chemotherapy-free treatment option and noted that ENHERTU® has a chemotherapeutic payload and is approved for use when no satisfactory alternative treatment option remains. With respect to the assertion that ZIIHERA® significantly improves clinical outcomes relative to service or technologies previously available, the applicant reiterated findings from the HERIZON–BTC–01 trial and stated that the data continue to demonstrate rapid, sustained, and durable responses in comparison to FOLFOX and FOLFIRI while highlighting the clinical benefit of continued treatment with chemotherapy-free, single-agent ZIIHERA® . The applicant further commented that given the aggressive and rare nature of advanced HER2+ BTC highlighting the clinical benefit of continued treatment with chemotherapy-free, single-agent ZIIHERA® . The applicant further commented that given the aggressive and rare nature of advanced HER2+ BTC (affecting about 4.4 per 100,000 in the U.S.), the conduct of randomized studies can be challenging in this biomarker-selected population and that HERIZON–BTC–01 is a single-arm study without comparator arm as there is no approved standard of care in this setting. The applicant stated that, acknowledging the hazards of cross-trial indirect comparison, the anti-tumor activity observed for ZIIHERA® patients with HER2+ BTC compares favorably to historic controls from clinical studies in similar and relevant populations. The applicant provided several figures that describe the efficacy in outcomes (ORR, mDOR in months, mPFS in months, and mOS in months) in previously treated HER2+ BTC for fam-trastuzumab-deruxtecan, tucatinib + trastuzumab, and trastuzumab + pertuzumab, noting that the table is for illustrative purposes only and is not intended as a direct comparison across trials. The applicant further stated that with the rarity of BTC and a further reduced subset of patients with HER2- is for illustrative purposes only and is not intended as a direct comparison across trials. The applicant further stated that with the rarity of BTC and a further reduced subset of patients with HER2- expressing tumors, the sample size of HERIZON–BTC–01 (n=80, Cohort 1; median age 64 years [IQR 58–70]) is representative of the small BTC population, and that a sample size of approximately 75 patients in Cohort 1 was informed by Clopper-Pearson exact binomial 95 percent CIs using a historical response rate of 10 percent. The applicant reiterated that the HERIZON–BTC–01 study population represented the largest study in the 2L setting conducted in this rare disease. The applicant also stated that a conscious effort was made to target a broad range of clinical sites in wide geographic locations for the HERIZON– BTC–01 study, with study participants enrolled at sites in the U.S., Canada, Spain, France, U.K., Italy, Chile, China, and Korea. The applicant reiterated that the largest components of participants in Cohort 1 (IHC3+) were Asian (61.3 percent) and White (30.6 percent) but asserted that these demographic characteristics are representative of the target indication population of pa of participants in Cohort 1 (IHC3+) were Asian (61.3 percent) and White (30.6 percent) but asserted that these demographic characteristics are representative of the target indication population of patients with BTC, which has a higher prevalence in Asian populations. The applicant stated that Harding et al. (2023) concluded that the ORRs were similar in patients enrolled in Asia compared with those enrolled in the rest of the world, indicating that geographical variation is unlikely to affect the therapeutic use of ZIIHERA® The applicant stated these data demonstrate that HERIZON–BTC–01 results are generalizable to the U.S. BTC population, including the Medicare-age patient population. Furthermore, the applicant stated that prespecified subgroup analysis of cORR based on age ( 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00234 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36769 ZIIHERA® provided treatment benefit regardless of the anatomic subtype, geographical region, and lines of previous treatment and that the ORR results we y, August 4, 2025 / Rules and Regulations 36769 ZIIHERA® provided treatment benefit regardless of the anatomic subtype, geographical region, and lines of previous treatment and that the ORR results were similar across age groups ( 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00235 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36770 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations and final rules regarding the applicant’s assertions as to how the medical service or technology meets the applicable new technology add-on payment criteria. We refer readers to https://mearis.cms.gov/ public/publications/ntap for the publicly posted FY 2026 new technology add-on payment applications and supporting information (with the exception of certain cost and volume information, and information or materials identified by the applicant as confidential or copyrighted), including tables listing the ICD–10–CM codes, ICD–10–PCS codes, and/or MS–DRGs related to the analyses of the cost criterion for certain technologies for the FY 2026 new technology add-on payment applications. In addition, for cert D–10–CM codes, ICD–10–PCS codes, and/or MS–DRGs related to the analyses of the cost criterion for certain technologies for the FY 2026 new technology add-on payment applications. In addition, for certain FY 2026 new technology add-on payment applications, in the FY 2026 IPPS/LTCH PPS proposed rule, we noted we made available separate tables listing the ICD–10–CM codes and/or ICD–10–PCS codes that we believed would be used to identify cases relevant to the Breakthrough Device-designated indications, or would be appropriate to exclude for cases related to FDA market authorized indications that are not covered by the Breakthrough Device designation indications, for purposes of the new technology add-on payment, if approved, in Table 10 associated with the proposed rule, available via the internet on the CMS website at https:// www.cms.gov/medicare/medicare-fee- for-service-payment/acuteinpatientpps. Click on the link on the left side of the screen titled ‘‘FY 2026 IPPS Proposed Rule Home Page’’ or ‘‘Acute Inpatient— Files for Download’’. Please see section VI of the Addendum of the proposed rule for additional information regarding tables associated with the proposed rule. Table 10 as Page’’ or ‘‘Acute Inpatient— Files for Download’’. Please see section VI of the Addendum of the proposed rule for additional information regarding tables associated with the proposed rule. Table 10 associated with this final rule reflects the finalized lists of ICD– 10–CM codes or ICD–10–PCS codes that would be used to identify cases relevant to the Breakthrough Device-designated indication for the RECELL® Autologous Cell Harvesting Device for purposes of the new technology add-on payment for FY 2026, and is available on the CMS website at: https://www.cms.gov/ medicare/medicare-fee-for-service- payment/acuteinpatientpps. We received 34 applications for new technology add-on payments for FY 2026 under the new technology add-on payment alternative pathway. As discussed in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58948 through 58958) and the FY 2025 IPPS/LTCH PPS final rule (89 FR 69242 through 69245), we finalized that beginning with the new technology add-on payment applications for FY 2025, for technologies that are not already FDA market authorized for the indication that is the subject of the new technology add-on payment application, applicants must have a complete and activ FY 2025, for technologies that are not already FDA market authorized for the indication that is the subject of the new technology add-on payment application, applicants must have a complete and active FDA market authorization request at the time of new technology add-on payment application submission and must provide documentation of FDA acceptance or filing to CMS at the time of application submission, consistent with the type of FDA marketing authorization application the applicant has submitted to FDA. See § 412.87(e) and further discussion in the FY 2024 and the FY 2025 IPPS/LTCH PPS final rules (88 FR 58948 through 58958; 89 FR 69242 through 69245). Of the 34 applications received under the alternative pathway, 1 application was not eligible for consideration for new technology add-on payment because it did not meet these requirements; and 4 applicants withdrew their applications prior to the issuance of the proposed rule. Subsequently, prior to the issuance of this final rule, 7 additional applicants (for the Dexcom G7 Hospital Continuous Glucose Monitoring System, DrugSorb- ATR Device, Nelli Seizure Monitoring System, PearlMatrix P–15 Peptide Enhanced Bone Graft, Provizio® additional applicants (for the Dexcom G7 Hospital Continuous Glucose Monitoring System, DrugSorb- ATR Device, Nelli Seizure Monitoring System, PearlMatrix P–15 Peptide Enhanced Bone Graft, Provizio® SEM Scanner, Spur Peripheral Retrievable Stent System, and the Ventura® Interatrial Shunt System) withdrew their applications, or did not meet the May 1 deadline for FDA approval or clearance of the technology and therefore are not eligible for consideration for new technology add- on payments for FY 2026. We are not including in this final rule the description and discussion of applications that were withdrawn or that are ineligible for consideration for FY 2026. We are addressing the remaining 22 applications. Of the remaining 22 applications, 20 of the technologies received a Breakthrough Device designation from FDA. The remaining two applications were designated as a QIDP by FDA. We did not receive any applications for technologies approved through the LPAD pathway. In accordance with the regulations under § 412.87(f)(2), applicants for new technology add-on payments for FY 2026 for Breakthrough Devices must have FDA marketing authorization by May 1 of the year prior to the beginni the regulations under § 412.87(f)(2), applicants for new technology add-on payments for FY 2026 for Breakthrough Devices must have FDA marketing authorization by May 1 of the year prior to the beginning of the fiscal year for which the application is being considered. Under § 412.87(f)(3), applicants for new technology add-on payments for FY 2026 for QIDPs and technologies approved under the LPAD pathway must have FDA marketing authorization by July 1 of the year prior to the beginning of the fiscal year for which the application is being considered. The policy finalized in the FY 2021 IPPS/ LTCH PPS final rule (85 FR 58742) provides for conditional approval for a technology for which an application is submitted under the alternative pathway for certain antimicrobial products (QIDPs and LPADs) at § 412.87(d) that does not receive FDA marketing authorization by July 1 prior to the particular fiscal year for which the applicant applied for new technology add-on payments, provided that the technology receives FDA marketing authorization before July 1 of the fiscal year for which the applicant applied for new technology add-on payments. We refer the reader to the FY 2021 IPPS/LTCH fina e technology receives FDA marketing authorization before July 1 of the fiscal year for which the applicant applied for new technology add-on payments. We refer the reader to the FY 2021 IPPS/LTCH final rule for a complete discussion of this policy (85 FR 58737 through 58742). As we did in the FY 2025 IPPS/LTCH PPS proposed rule, for applications under the alternative new technology add-on payment pathway, in the FY 2026 IPPS/LTCH PPS proposed rule we made a proposal to approve or disapprove each of these 22 applications for FY 2026 new technology add-on payments. Therefore, in this section of the preamble of this final rule, we provide a table summarizing background information and the cost analysis for each of the remaining alternative pathway applications and our determination on whether or not each technology is eligible for the new technology add-on payment for FY 2026. We refer readers to section II.H.8. of the preamble of the FY 2020 IPPS/ LTCH PPS final rule (84 FR 42292 through 42297) and FY 2021 IPPS/LTCH PPS final rule (85 FR 58715 through 58733) for further discussion of the alternative new technology add-on payment pathways for these technologies. a. Alternative Pathway 42297) and FY 2021 IPPS/LTCH PPS final rule (85 FR 58715 through 58733) for further discussion of the alternative new technology add-on payment pathways for these technologies. a. Alternative Pathway for Breakthrough Devices (1) 4WEB Medical Ankle Truss System The following table summarizes the information provided in the new technology add-on payment application for the 4WEB Medical Ankle Truss System. We note that 4WEB Medical, Inc. submitted an application for new technology add-on payments for the 4WEB Medical Ankle Truss System for FY 2024, as summarized in the FY 2024 IPPS/LTCH PPS proposed rule (88 FR 26924 through 26926), which the applicant withdrew prior to the issuance of the FY 2024 IPPS/LTCH PPS final rule (88 FR 58919). BILLING CODE 4120–01–P VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00236 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36771 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00237 Fmt 4701 Sfmt 4725 E:\FR\FM 4, 2025 / Rules and Regulations 36771 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00237 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00238 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00239 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 36774 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k BILLING CODE 4120–01–C In the proposed rule, we noted that after review of the information provided by the applicant, since the indication for which the applicant received PMA VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00240 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00241 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36776 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / O 00000 Frm 00241 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36776 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 2026. Therefore, cases involving the use of AeroPace® System that are eligible for new technology add-on payments will be identified by ICD–10–PCS procedure code X2H13XB (Insertion of temporary phrenic nerve/diaphragm stimulation electrodes into superior vena cava, percutaneous approach, new technology group 11). (3) AGENTTM Paclitaxel-Coated Balloon Catheter The following table summarizes the information provided in the new technology add-on payment application for the AGENTTM Paclitaxel-Coated Balloon Catheter. BILLING CODE 4120–01–P 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00242 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36777 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k BILLING CODE 4120–01–C In the proposed rule, we noted that after review of the information provi 2025 / Rules and Regulations 36777 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k BILLING CODE 4120–01–C In the proposed rule, we noted that after review of the information provided by the applicant, since the indication for which the applicant received PMA VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00243 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00244 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36779 (4) alfapump® system The following table summarizes the information provided in the new technology add-on payment application for the alfapump® system. 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00245 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00246 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00247 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 F mt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00247 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00248 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00249 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00250 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00251 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00252 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36787 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k BILLING CODE 4120–01–C In the proposed rule, after review of the information provided by the applicant, we noted that under the eligibility criteria for approval under the alternative pathway for certain transformative devices, only the use of the technology for the indication rovided by the applicant, we noted that under the eligibility criteria for approval under the alternative pathway for certain transformative devices, only the use of the technology for the indication that corresponds to the technology’s Breakthrough Device designation would be eligible for the new technology add- on payment for FY 2026. Therefore, we noted that only the use of the Emily’s Care Nourish Test System (Model 1) for VLBW neonates and infants in the NICU, and the FDA Breakthrough VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00253 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00254 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36789 We invited public comments on the In addition, because section use of these ICD–10–CM diagnosis codes to identify the Breakthrough Device-designated indication for purposes of the new technology add-on payment, if approved. Based on preliminary information from the applicant at the time of the proposed rule, the applicant anticipated the total cost to the hospital for the Emily’s Care Nour gy add-on payment, if approved. Based on preliminary information from the applicant at the time of the proposed rule, the applicant anticipated the total cost to the hospital for the Emily’s Care Nourish Test System (Model 1) to be $3,000 per patient before discounts and $1,800 after discounts, based on the contents of the kit, which provides enough supplies for testing over a typical NICU stay (36 tests). The applicant stated the contents of the kit include: 36 test strips, pipettes, reference cards, 2 control solutions, and a reusable lightbox (iPhone not included). The applicant also provided additional information on the costs for the annual use of the technology to the hospital of $25,000, consisting of $10,000 for the kit including the lease of the lightbox and iPhone, and $15,000 for the device’s operation (labor, testing milk, analysis interpretation, adjustment of feeding protocols). However, we noted that the costs to the hospital, per patient, per inpatient stay remains unclear, and that the provided costs also include additional costs related to use of the device as well as capital costs for the lease of the lightbox and iPhone. We stated that, as we had discussed in pr ear, and that the provided costs also include additional costs related to use of the device as well as capital costs for the lease of the lightbox and iPhone. We stated that, as we had discussed in prior rulemaking, when determining a new technology add-on payment, we provide payment based on the cost of the actual technology (such as the drug or device itself) and not for additional costs related to the use of the device (86 FR 45146). Therefore, we would not include costs of staff labor for the device’s operation in the relevant costs for purposes of determining the new technology add-on payment amount. 1886(d)(5)(K)(i) of the Act requires that the Secretary establish a mechanism to recognize the costs of new medical services or technologies under the payment system established under that subsection, which establishes the system for payment of the operating costs of inpatient hospital services, we stated that we do not include capital costs in the add-on payments for a new medical service or technology or make new technology add-on payments under the IPPS for capital-related costs (86 FR 45145). We stated that the costs to lease the lightbox and iPhone are capital costs. As such, rvice or technology or make new technology add-on payments under the IPPS for capital-related costs (86 FR 45145). We stated that the costs to lease the lightbox and iPhone are capital costs. As such, we noted that these components would not be eligible for new technology add-on payment because, as discussed in prior rulemaking and as noted, we only make new technology add-on payments for operating costs (72 FR 47307 through 47308). Without a breakdown of the costs of this technology to the hospital, per patient, per inpatient stay, for the operating components of the kit, we stated we were unable to identify the relevant costs for purposes of determining the new technology add-on payment amount. In addition, the applicant had indicated that the cost of the device would be discounted to hospitals, and the Medicare program expects providers to take advantage of available discounts.127 We stated it was unclear how potential discounts would affect the relevant estimated operating costs of the device. We also stated we would be interested in additional information regarding the current or 127 Medicare Department of Health & Human Services (DHHS) Provider Reimbursement Manual Part 1—Cha the device. We also stated we would be interested in additional information regarding the current or 127 Medicare Department of Health & Human Services (DHHS) Provider Reimbursement Manual Part 1—Chapter 8, Purchase Discounts; Allowances; Refunds of Expenses (Date: March 8, 2013) https:// www.cms.gov/regulations-and-guidance/guidance/ transmittals/downloads/r456pr1.pdf. anticipated average cost of the technology to the hospital per inpatient stay. We invited public comments on whether the Emily’s Care Nourish Test System (Model 1) meets the cost criterion and our proposal to disapprove new technology add-on payments for the Emily’s Care Nourish Test System (Model 1) for FY 2026. We also invited public comments on the operating costs for the device, in the event we received updated information to establish that the Emily’s Care Nourish Test System (Model 1) meets the cost criterion. Comment: We received a comment from Prolacta Biosciences stating that subsequent to submission of the new technology add-on payment application for Emily’s Care Nourish Test System (Model 1), Prolacta Bioscience acquired Lactation Lab Inc. and that Prolacta Bioscience should now officially be considered w technology add-on payment application for Emily’s Care Nourish Test System (Model 1), Prolacta Bioscience acquired Lactation Lab Inc. and that Prolacta Bioscience should now officially be considered the applicant, and asked that all correspondence regarding the new technology add-on payments for FY 2026 application and any questions be directed to Prolacta Biosciences. Response: We thank the commenter for its comment and note that for this final rule Prolacta Biosciences is identified as the applicant in the following section. Comment: Multiple commenters, including the applicant, expressed support for approving new technology add-on payment for the Emily’s Care Nourish Test System (Model 1). Some commenters shared their personal experiences as practicing clinicians or as mothers who had infants in the NICU. A few commenters submitted citations and studies that emphasized the importance of human milk and targeted fortification for VLBW infants in the NICU. Other commenters stated that Medicare-eligible mothers may have disabilities which raise the risk of VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00255 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t Medicare-eligible mothers may have disabilities which raise the risk of VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00255 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00256 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36791 purposes of the new technology add-on payment application. Therefore, we continue to believe that the birthweight- related ICD–10–CM diagnosis codes are most appropriate to identify the use of the technology for VLBW neonates and infants that is relevant to the Breakthrough Device designation for the purposes of new technology add-on payment. However, we note that the analyses using these additional gestational age- related diagnosis codes were provided as additional analyses. We agree that the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in the most restrictive scenario. Therefore, the Emily’s Ca ses. We agree that the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount in the most restrictive scenario. Therefore, the Emily’s Care Nourish Test System (Model 1) meets the cost criterion. Comment: In response to CMS’s requests for information about discounts to hospitals, length of stay, and cost breakdown, the applicant stated it does not anticipate providing routine discounts off the cost of the device and any discounts would be a volume discount and should not impact the calculation of new technology add-on payment. The applicant stated that the reference to expected reductions in length of stay was included in error, as it was not included in the labeled claims and resulted from the applicant’s misunderstanding of the factors that are relevant to the device cost calculations. The applicant stated the length of stay for maternal cases is not expected to be materially impacted by testing via the Emily’s Care Nourish Test System (Model 1). The applicant provided a revised cost of $5,150 per patient, per inpatient stay. The applicant stated that the costs for consumables and single-use disposables is due to an i sh Test System (Model 1). The applicant provided a revised cost of $5,150 per patient, per inpatient stay. The applicant stated that the costs for consumables and single-use disposables is due to an increase in the cost of raw materials and increased cost of control solutions. In response to CMS’s request for additional information regarding the delay in the technology’s market availability the applicant stated that as a startup in the maternal and child health sector, Lactation Lab encountered typical early-stage funding obstacles. The applicant stated there was a delay due to restricted access to capital and establishment of the essential infrastructure for achieving scalable manufacturing. Per the applicant, it consequently acquired Lactation Lab and will be manufacturing the device. The applicant expected to be fully commercial by Q4 of 2025. Response: We thank the applicant for its comment. As we have discussed in prior rulemaking (86 FR 45132 and 77 FR 53348), generally, our policy is to begin the newness period on the date of FDA approval or clearance or, if later, the date of availability of the product on the U.S. market. The applicant states that it anticipates that the d cy is to begin the newness period on the date of FDA approval or clearance or, if later, the date of availability of the product on the U.S. market. The applicant states that it anticipates that the device will be fully commercial by Q4 of 2025, but it is unclear whether the technology would be available for sale earlier, in limited quantities. At this time, there is not sufficient information to determine a newness date based on a documented delay in the technology’s availability on the U.S. market. Absent additional information, we therefore consider the newness date for this technology to be May 3, 2024. Based on the information provided in the application for new technology add- on payments, and after consideration of the public comments we received, we believe the Emily’s Care Nourish Test System (Model 1) meets the cost criterion. The technology received FDA clearance on May 3, 2024, with an indication for use to aid in the nutritional management of newborns, including preterm, and infants. As noted earlier in this section, Emily’s Care Nourish Test System (Model 1) has received FDA clearance for multiple indications, and only the use of the Emily’s Care Nourish System (Model nd infants. As noted earlier in this section, Emily’s Care Nourish Test System (Model 1) has received FDA clearance for multiple indications, and only the use of the Emily’s Care Nourish System (Model 1) for VLBW neonates and infants in the NICU, and the FDA Breakthrough Device designation it received for that use, are relevant for purposes of the new technology add-on payment application for FY 2026. Therefore, we are finalizing to approve new technology add-on payments for the Emily’s Care Nourish Test System (Model 1) for FY 2026. Absent additional information from the applicant, we consider the beginning of the newness period to commence on May 3, 2024, the date of FDA marketing authorization for the indication covered by its Breakthrough Device designation. Based on the information available at the time of this final rule, the cost per case of Emily’s Care Nourish Test System (Model 1) is $5,150 per patient, per inpatient stay. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS– DRG payment for the case. As a result, we are finalizing that the maximum ne payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS– DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of Emily’s Care Nourish Test System (Model 1) is $3,347.50 for FY 2026 (that is, 65 percent of the average cost of the technology). The applicant submitted a request and was granted approval for a unique ICD– 10–PCS procedure code for the Emily’s Care Nourish Test System (Model 1) beginning in FY 2026. Therefore, cases involving the use of Emily’s Care Nourish Test System (Model 1) that are eligible for new technology add-on payments will be identified by ICD–10– PCS procedure code XXEZXAB (Measurement of macronutrient content, computer-aided assessment for nutrition management, new technology group 11) in combination with one of the following ICD–10–CM diagnosis codes: 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00257 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 36792 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regul h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00257 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 36792 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations (8) EspritTM BTK Everolimus Eluting Resorbable Scaffold System The following table summarizes the information provided in the new technology add-on payment application for the EspritTM BTK Everolimus Eluting Resorbable Scaffold System BILLING CODE 4120–01–P 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00258 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00259 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 20 cm (200 mm) in length, among patients treated solely for infrapoliteal lesions. Therefore, the applicant requested that CMS revise the maximum new technology add-on payment to $6,933 to reflect a conservative average of 3.55 scaffolds needed to cover the real-world average lesion length of 135.1 mm (65 percent of 3.55 scaffolds, priced at $3,000 each). Response: We thank the commenters for their comments and for the additional c ds needed to cover the real-world average lesion length of 135.1 mm (65 percent of 3.55 scaffolds, priced at $3,000 each). Response: We thank the commenters for their comments and for the additional cost and trial information. 131 DeRubertis, Brian (2024, November 3–6) Two- Year Outcomes of the LIFE–BTK Randomized Controlled Trial Evaluating the Esprit BTK Drug- eluting Resorbable Scaffold for Treatment of Infrapopliteal Lesions. VIVA 2024 Conference, Las Vegas, NV, United States. We note that, based on the information provided by the applicant about the estimated average cost of the technology, the maximum new technology add-on payment for a case would be $6,922.50. Specifically, the applicant stated that an average of 3.55 scaffolds would be used, priced at $3,000 each. Therefore, the estimated average cost per case would be $10,650 and 65 percent of the average cost of the technology ($10,650) is $6,922.50. Based on the information provided in the application for new technology add- on payments, and after consideration of the public comments we received, we believe EspritTM BTK Everolimus Eluting Resorbable Scaffold meets the cost criterion. The technology received FDA marketing on payments, and after consideration of the public comments we received, we believe EspritTM BTK Everolimus Eluting Resorbable Scaffold meets the cost criterion. The technology received FDA marketing authorization on April 26, 2024, with an indication of improving luminal diameter in infrapopliteal lesions in patients with CLTI and total scaffolding length up to 170 mm with a reference vessel diameter of 2.5 mm and 4 mm, which is covered by its Breakthrough Device designation. Therefore, we are finalizing our proposal to approve new technology add-on payments for EspritTM BTK Everolimus Eluting Resorbable Scaffold for FY 2026. We consider the beginning of the newness period to commence on April 26, 2024, the date on which the technology received its FDA marketing authorization for the indication covered by its Breakthrough Device designation. Based on the information available at the time of this final rule, the cost per case of EspritTM BTK Everolimus Eluting Resorbable Scaffold is $10,650.00. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS–DRG payment f 10,650.00. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS–DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of EspritTM BTK Everolimus Eluting Resorbable Scaffold is $6,922.50 for FY 2026 (that is, 65 percent of the average cost of the technology). Cases involving the use of EspritTM BTK Everolimus Eluting Resorbable Scaffold that are eligible for new technology add-on payments will be identified by one of the following ICD–10–PCS procedure codes: VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00260 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36795 (9) EUROPATM Posterior Cervical Fusion System The following table summarizes the information provided in the new technology add-on payment application for the EUROPATM Posterior Cervical Fusion System. BILLING CODE 4120–01–P 2 S E L U R h t i w D O R P 4 4 1 S 7 W summarizes the information provided in the new technology add-on payment application for the EUROPATM Posterior Cervical Fusion System. BILLING CODE 4120–01–P 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00261 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00262 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00263 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36798 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations of the technology, or 65 percent of the costs in excess of the MS–DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of the EUROPATM Posterior Cervical Fusion System is $80,548 for FY 2026 (that is, 65 percent of the average cost of the technology). The applicant submitted a request and was granted approval for unique ICD– 10–PCS procedure codes for the EUROPATM Posterior Cervical Fusion System b 65 percent of the average cost of the technology). The applicant submitted a request and was granted approval for unique ICD– 10–PCS procedure codes for the EUROPATM Posterior Cervical Fusion System beginning in FY 2026. Therefore, cases involving the use of the EUROPATM Posterior Cervical Fusion System that are eligible for new technology add-on payments will be identified by one of the following ICD– 10–PCS procedure codes: (10) iFuse TORQ TNTTM Implant System The following table summarizes the information provided in the new technology add-on payment application for the iFuse TORQ TNTTM Implant System. BILLING CODE 4120–01–P 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00264 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00265 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00266 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00267 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d fmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00267 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36802 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations simply because the patient is receiving two levels of fusion in the same surgical encounter. The applicant encouraged CMS not to finalize its proposal to exclude ICD–10–PCS procedure codes noted in Table 10.2 in the proposed rule. Response: We thank the applicant and other commenters for their comments. We agree with the commenters that there may be cases in which a lumbar or thoracolumbar fusion procedure may occur in the same encounter as sacroiliac joint fusion using the iFuse TORQ TNTTM Implant System. We agree that the use of the device for sacroiliac joint fusion is covered by its Breakthrough Device designation, whether it is used to treat sacroiliac joint dysfunction as a standalone procedure or when it is used for sacroiliac joint fusion that also occurs in the setting of other simultaneous procedures (such as lumbar or thoracolumbar fusions). Therefore, we are not finalizi lone procedure or when it is used for sacroiliac joint fusion that also occurs in the setting of other simultaneous procedures (such as lumbar or thoracolumbar fusions). Therefore, we are not finalizing to exclude cases reporting the ICD–10–PCS procedure codes listed in Table 10.2.-iFuse TORQ TNTTM Implant System associated with the proposed rule in combination with use of the iFuse TORQ TNTTM Implant System. Comment: In response to CMS’s proposed maximum new technology add-on payment, the applicant requested that CMS increase the per- case maximum amount. Per the applicant, while some of the instruments within the iFuse TORQ TNTTM Implant System may not be unique or part of the Breakthrough Device (that is, Blunt Pin and Drill Bit), the TNT Guide Pins are single-use instruments that were noted in the Breakthrough Device designation application with FDA as new and unique, as they were developed specifically for the iFuse TORQ TNTTM Implant System to support navigation compatibility. The applicant stated that the TNT Guide Pins used in both Pelvic Fixation cases (2.5 units) and SI Joint Fusion cases (3.5 units) are a part of the Breakthrough Device technology, as they are navigation e applicant stated that the TNT Guide Pins used in both Pelvic Fixation cases (2.5 units) and SI Joint Fusion cases (3.5 units) are a part of the Breakthrough Device technology, as they are navigational aids, enabling surgeons to accurately position implants, drills, or other tools while minimizing risks to surrounding tissues. Per the applicant, taking into consideration the costs of the new and unique TNT Implant, Washers, and Guide Pins, the weighted average cost per pelvic fixation case (80 percent of mix) and cost per sacroiliac joint fusion case (20 percent of mix), the new technology cost increases to $6,363. The applicant proposed an updated maximum new technology add-on payment for a case of $4,135.95 for FY 2026 (65 percent of the average cost of the technology). Response: We thank the applicant for its comment and cost information. We agree that the TNT Guide Pins are also a new and unique component of the iFuse TORQ TNTTM Implant System and should be included in the maximum new technology add-on payment. Based on the information provided in the application for new technology add- on payments, and after consideration of the public comment we received, we believe the iFus new technology add-on payment. Based on the information provided in the application for new technology add- on payments, and after consideration of the public comment we received, we believe the iFuse TORQ TNTTM Implant System meets the cost criterion. The technology received FDA clearance on August 12, 2024, with an indication for fracture fixation of the pelvis, including acute, non-acute and nontraumatic fractures and sacroiliac joint fusion for sacroiliac joint dysfunction including sacroiliac joint disruption and degenerative sacroiliitis. Therefore, we are finalizing our proposal to approve new technology add-on payments for the iFuse TORQ TNTTM Implant System for FY 2026. We consider the beginning of the newness period to commence on August 19, 2024, the date on which technology received its FDA clearance for the indication covered by its Breakthrough Device designation. Based on the information available at the time of this final rule, the average cost per case of the iFuse TORQ TNTTM Implant System is $6,363, based on the weighted average cost per pelvic fixation case and cost per sacroiliac joint fusion case of the TNT Implant, Washers, and Guide Pins. Under § 412.88(a)( RQ TNTTM Implant System is $6,363, based on the weighted average cost per pelvic fixation case and cost per sacroiliac joint fusion case of the TNT Implant, Washers, and Guide Pins. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS–DRG payment for the case. As a result, we are finalizing that the maximum new technology add-on payment for a case involving the use of the iFuse TORQ TNTTM Implant System is $4,135.95 for FY 2026 (that is, 65 percent of the average cost of the technology). The applicant submitted a request and was granted approval for unique ICD– 10–PCS procedure codes for the iFuse TORQ TNTTM Implant System beginning in FY 2026. Therefore, cases involving the use of the iFuse TORQ TNTTM Implant System that are eligible for new technology add-on payments will be identified by one of the following ICD–10–PCS procedure codes: 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00268 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 Federal Register / Vol. 90, No. 147 / Monday, P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00268 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36803 (11) Merit Wrapsody® Cell Impermeable Endoprosthesis (CIE) The following table summarizes the information provided in the new technology add-on payment application for the Merit Wrapsody® Cell Impermeable Endoprosthesis (CIE). BILLING CODE 4120–01–P 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00269 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00270 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00271 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 36806 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 12. Minima Stent System The following table summarizes the information provided in the new technology add-on payment application for the Minima Stent System. 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n nt System The following table summarizes the information provided in the new technology add-on payment application for the Minima Stent System. 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00272 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00273 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00274 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36809 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k BILLING CODE 4120–01–C In the proposed rule, we noted that after review of the information provided by the applicant, since the indication for which the applicant has received FDA VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00275 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00276 Fmt 4 t has received FDA VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00275 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00276 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36811 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00277 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00278 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00279 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36814 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00280 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00281 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w 65001 PO 00000 Frm 00280 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00281 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00282 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36817 Harvesting Device is $4,875 for FY 2026 (that is, 65 percent of the average cost of the technology). As noted earlier in this section, the RECELL® Autologous Cell Harvesting Device is also indicated for acute partial-thickness thermal burn wounds and acute full-thickness thermal burn wounds. However, we note that under the eligibility criteria for approval under the alternative pathway for certain transformative devices, only the use of the technology for the indication that corresponds to the technology’s Breakthrough Device designation would be eligible for the new technology add-on payment for FY 2026. Therefore, only the use of the RECELL® Autologous Cell Harvesting Dev rresponds to the technology’s Breakthrough Device designation would be eligible for the new technology add-on payment for FY 2026. Therefore, only the use of the RECELL® Autologous Cell Harvesting Device for acute nonthermal full thickness skin wounds after traumatic avulsion, surgical excision (for example, necrotizing soft tissue infection), or resection (for example, skin cancer), and the FDA Breakthrough Device designation it received for those uses, are relevant for purposes of the new technology add-on payment for FY 2026. Therefore, cases involving the use of the RECELL® Autologous Cell Harvesting Device that are eligible for new technology add-on payments will be identified by one of the following ICD–10–PCS procedure codes, in combination with any of the ICD–10– CM diagnosis codes listed in Table 10.A.-RECELL® Autologous Cell Harvesting Device or ICD–10–PCS procedure codes listed in Table 10.B.- RECELL® Autologous Cell Harvesting Device associated with this final rule. (15) restor3d TIDALTM Fusion Cage The following table summarizes the information provided in the new technology add-on payment application for the restor3d TIDALTM Fusion Cage. We note that restor3d submitte stor3d TIDALTM Fusion Cage The following table summarizes the information provided in the new technology add-on payment application for the restor3d TIDALTM Fusion Cage. We note that restor3d submitted an application for new technology add-on payments for the restor3d TIDALTM Fusion Cage for FY 2025, as summarized in the FY 2025 IPPS/LTCH PPS proposed rule (89 FR 36124 through 36125), that it withdrew prior to the issuance of the FY 2025 IPPS/ LTCH PPS final rule (89 FR 69204). BILLING CODE 4120–01–P 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00283 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00284 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00285 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 36820 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations After review of the information provided by the applicant, we agreed with the applicant that the ShortCutTM meets the cost criterion and therefore proposed to approve the ShortCutTM for new technology ad er review of the information provided by the applicant, we agreed with the applicant that the ShortCutTM meets the cost criterion and therefore proposed to approve the ShortCutTM for new technology add-on payments for FY 2026 for use as a splitting device of bioprosthetic aortic valve leaflets to facilitate valve-in-valve procedures for patients at risk for coronary obstruction. Based on preliminary information from the applicant at the time of the proposed rule, the applicant anticipated the total cost of the ShortCutTM to the hospital to be $15,000 per patient. We noted that the cost information for this technology may be updated in the final rule based on revised or additional information CMS receives prior to the final rule. Under § 412.88(a)(2), we limit new technology add-on payments to the lesser of 65 percent of the average cost of the technology, or 65 percent of the costs in excess of the MS–DRG payment for the case. As a result, we proposed that the maximum new technology add- on payment for a case involving the use of the ShortCutTM would be $9,750 for FY 2026 (that is, 65 percent of the average cost of the technology). We invited public comments on whether the ShortCut d- on payment for a case involving the use of the ShortCutTM would be $9,750 for FY 2026 (that is, 65 percent of the average cost of the technology). We invited public comments on whether the ShortCutTM meets the cost criterion and our proposal to approve new technology add-on payments for the ShortCutTM for FY 2026. Comment: Multiple commenters, including the applicant, expressed support for our proposal to approve new technology add-on payment for the ShortCutTM device for FY 2026. Some commenters provided their perspectives regarding the clinical need for the device. Several commenters, including the applicant, noted that the device enabled splitting of pre-existing valve leaflets after insertion of the transcatheter heart valve to allow blood flow into the adjacent or ‘‘at risk’’ coronary artery. Per commenters, approving new technology add-on payments for ShortCutTM would make it economically feasible for hospitals to offer this breakthrough technology to Medicare patients without incurring steep losses The applicant further reiterated that the ShortCutTM device received FDA VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00286 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SG incurring steep losses The applicant further reiterated that the ShortCutTM device received FDA VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00286 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00287 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 36822 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k In the proposed rule, we noted that after review of the information provided by the applicant, we agreed with the applicant that the WiSE CRT System meets the cost criterion and therefore proposed to approve the WiSE CRT System for new technology add-on payments for FY 2026, subject to the technology receiving FDA marketing authorization for the indication corresponding to the Breakthrough Device designation by May 1, 2025. Based on preliminary information from the applicant at the time of the proposed rule, the applicant anticipated the total cost of the WiSE CRT System to the hospital to be $63,300 per patient. The components included the elect mation from the applicant at the time of the proposed rule, the applicant anticipated the total cost of the WiSE CRT System to the hospital to be $63,300 per patient. The components included the electrode VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00288 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00289 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 36824 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00290 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00291 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00292 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36827 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 er / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36827 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00293 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00294 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00295 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 36830 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations In the proposed rule, we noted that after review of the information provided by the applicant, since the indication for which the applicant received NDA approval is included within the scope of the QIDP designation indication, it appears that the FDA-approved indication is appropriate for consideration for new technology add- on payment under the alternative pathway criteria. We noted that the applicant stated that the technology is expected to be commercially available by Q3 of CY 2025 due to product availability. We stated we were interested in additional hway criteria. We noted that the applicant stated that the technology is expected to be commercially available by Q3 of CY 2025 due to product availability. We stated we were interested in additional information regarding the cause for any delay in the technology’s market availability as the technology received FDA approval on February 7, 2025. We agreed with the applicant that EMBLAVEOTM meets the cost criterion and therefore proposed to approve EMBLAVEOTM for new technology add- on payments for FY 2026 for use in patients 18 years and older who have limited or no alternative options for the treatment of cIAI. The applicant had not provided an estimate for the cost of EMBLAVEOTM at the time of the proposed rule. We stated that we expected the applicant to submit cost information prior to the final rule, and that we would provide an update regarding the new technology add-on payment amount for the technology, if approved, in the final rule. We stated that any new technology add-on payment for EMBLAVEOTM would be subject to our policy under § 412.88(a)(2)(ii)(B) where we limit new technology add-on payment for QIDPs to the lesser of 75 percent of the average cost of the technology, ent for EMBLAVEOTM would be subject to our policy under § 412.88(a)(2)(ii)(B) where we limit new technology add-on payment for QIDPs to the lesser of 75 percent of the average cost of the technology, or 75 percent of the costs in excess of the MS–DRG payment for the case. We invited public comments on whether EMBLAVEOTM meets the cost criterion and our proposal to approve new technology add-on payments for EMBLAVEOTM for FY 2026. VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00296 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00297 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 36832 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00298 Fmt 4701 Sfmt 4725 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00299 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00299 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00300 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36835 wage indexes. These updates have been used to calculate the wage indexes in a manner generally consistent with the CBSA-based methodologies finalized in the FY 2005 IPPS final rule and the FY 2015 IPPS/LTCH PPS final rule. We refer the reader to the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38129 through 38130) for a complete discussion of our adoption of FIPS county codes. For FY 2026, we are continuing to use only the FIPS county codes for purposes of crosswalking counties to CBSAs. For FY 2026, Tables 2 and 3 associated with this final rule and the County to CBSA Crosswalk File and Urban CBSAs and Constituent Counties for Acute Care Hospitals File posted on the CMS website reflect the latest FIPS county code updates. B. Worksheet S–3 Wage D the County to CBSA Crosswalk File and Urban CBSAs and Constituent Counties for Acute Care Hospitals File posted on the CMS website reflect the latest FIPS county code updates. B. Worksheet S–3 Wage Data for the FY 2026 Wage Index 1. Cost Reporting Periods Beginning in FY 2022 for FY 2026 Wage Index The FY 2026 wage index values are based on the data collected from the Medicare cost reports submitted by hospitals for cost reporting periods beginning in FY 2022 (the FY 2025 wage indexes were based on data from cost reporting periods beginning during FY 2021). The FY 2026 wage index includes all of the following categories of data associated with costs paid under the IPPS (as well as outpatient costs): • Salaries and hours from short-term, acute care hospitals (including paid lunch hours and hours associated with military leave and jury duty). • Home office costs and hours. • Certain contract labor costs and hours including direct patient care (which includes nursing), certain top management, pharmacy, laboratory, and nonteaching physician Part A services, and certain contract indirect patient care services (as discussed in the FY 2008 final rule with comment period (72 FR 47315 thro ment, pharmacy, laboratory, and nonteaching physician Part A services, and certain contract indirect patient care services (as discussed in the FY 2008 final rule with comment period (72 FR 47315 through 47317)). • Wage-related costs, including pension costs (based on policies adopted in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51586 through 51590) and modified in the FY 2016 IPPS/ LTCH PPS final rule (80 FR 49505 through 49508)) and other deferred compensation costs. Consistent with the wage index methodology for FY 2025, the wage index for FY 2026 excludes the direct and overhead salaries and hours for services not subject to IPPS payment, such as skilled nursing facility (SNF) services, home health services, costs related to Graduate Medical Education (GME) (teaching physicians and residents) and certified registered nurse anesthetists (CRNAs), and other subprovider components that are not paid under the IPPS. The FY 2026 wage index also excludes the salaries, hours, and wage-related costs of hospital-based rural health clinics (RHCs), and federally qualified health centers (FQHCs), because Medicare pays for these costs outside of the IPPS (68 FR 45395). In addition, as expla ated costs of hospital-based rural health clinics (RHCs), and federally qualified health centers (FQHCs), because Medicare pays for these costs outside of the IPPS (68 FR 45395). In addition, as explained in the FY 2004 IPPS final rule (68 FR 45397 through 45398), salaries, hours, and wage-related costs of critical access hospitals (CAHs) are excluded from the wage index as we believe that removing CAHs from the wage index is prudent policy, given the substantial negative impact these hospitals have on the wage indexes in the areas where they are located and the minimal impact they have on the wage indexes of other areas. We refer the reader to the FY 2004 IPPS final rule (68 FR 45397 through 45398) for a complete discussion regarding the exclusion of CAHs from the wage index. Similar to our treatment of CAHs, as discussed later in this section, we exclude rural emergency hospitals (REHs) from the wage index. For FY 2020 and subsequent years, other wage-related costs are also excluded from the calculation of the wage index. As discussed in the FY 2019 IPPS/LTCH final rule (83 FR 41365 through 41369), other wage-related costs reported on Worksheet S–3, Part II, Line 18 and Worksheet from the calculation of the wage index. As discussed in the FY 2019 IPPS/LTCH final rule (83 FR 41365 through 41369), other wage-related costs reported on Worksheet S–3, Part II, Line 18 and Worksheet S–3, Part IV, Line 25 and subscripts, as well as all other wage-related costs, such as contract labor costs, are excluded from the calculation of the wage index. 2. Use of Wage Index Data by Suppliers and Providers Other Than Acute Care Hospitals Under the IPPS Data collected for the IPPS wage index also are currently used to calculate wage indexes applicable to suppliers and other providers, such as SNFs, home health agencies (HHAs), ambulatory surgical centers (ASCs), and hospices. In addition, they are used for prospective payments to IRFs, IPFs, and LTCHs, and for hospital outpatient services. We note, in the calendar year (CY) 2025 ESRD PPS final rule (89 FR 89097 through 89116), CMS finalized a new ESRD PPS-specific wage index that will be used to adjust ESRD PPS payments for geographic differences in area wages. We refer the reader to the CY 2025 ESRD PPS final rule for complete details regarding ESRD wage index. We further note that, in the IPPS rules, we do not address commen phic differences in area wages. We refer the reader to the CY 2025 ESRD PPS final rule for complete details regarding ESRD wage index. We further note that, in the IPPS rules, we do not address comments pertaining to the wage indexes of any supplier or provider except IPPS providers and LTCHs. Such comments should be made in response to separate proposed rules for those suppliers and providers. 3. Verification of Worksheet S–3 Wage Data The wage data for the FY 2026 wage index were obtained from Worksheet S– 3, Parts II, III, and IV of the Medicare cost report, CMS Form 2552–10 (OMB Control Number 0938–0050 with an expiration date September 30, 2025) for cost reporting periods beginning on or after October 1, 2021, and before October 1, 2022. For wage index purposes, we refer to cost reports beginning on or after October 1, 2021, and before October 1, 2022, as the ‘‘FY 2022 cost report,’’ the ‘‘FY 2022 wage data,’’ or the ‘‘FY 2022 data.’’ Instructions for completing the wage index sections of Worksheet S–3 are included in the Provider Reimbursement Manual (PRM), Part 2 (Pub. 15–2), Chapter 40, Sections 4005.2 through 4005.4. The data file used to construct the FY 2026 wage index i tions of Worksheet S–3 are included in the Provider Reimbursement Manual (PRM), Part 2 (Pub. 15–2), Chapter 40, Sections 4005.2 through 4005.4. The data file used to construct the FY 2026 wage index includes FY 2022 data submitted to us as of January 31, 2025. As in past years, we performed an extensive review of the wage data, mostly through the use of edits designed to identify aberrant data. We note, in previous fiscal years, we reviewed and evaluated the audited wage data, and the impacts of the COVID–19 PHE on such data. For FY 2026, we have not identified any significant issues with the FY 2022 wage data itself in terms of our audits of this data. As usual, the data was audited by the Medicare Administrative Contractors (MACs), and there were no significant issues reported across the data for all hospitals. We requested that our MACs revise or verify data elements that resulted in specific edit failures. For the proposed FY 2026 wage index, we identified and excluded 79 providers with aberrant data that should not be included in the wage index. However, we stated that if data elements for some of these providers are corrected, we intend to include data from those providers in with aberrant data that should not be included in the wage index. However, we stated that if data elements for some of these providers are corrected, we intend to include data from those providers in the final FY 2026 wage index. We also adjusted certain aberrant data and included these data in the wage index. For example, in situations where a hospital did not have documentable salaries, wages, and hours for housekeeping and dietary services, we imputed estimates, in accordance with policies established in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49965 through 49967). We instructed MACs to complete their verification of questionable data elements and to transmit any changes to the wage data no later than March 21, 2025. After we VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00301 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36836 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations issued the proposed rule, for the final FY 2026 wage index, we restored the data of 15 hospitals to the wage index, because their data was either verified or improved and removed the da nd Regulations issued the proposed rule, for the final FY 2026 wage index, we restored the data of 15 hospitals to the wage index, because their data was either verified or improved and removed the data of 2 hospitals with aberrant data. Thus, 66 hospitals with aberrant data remain excluded from the FY 2026 wage index (79¥15 + 2 = 66). In constructing the proposed FY 2026 wage index, we included the wage data for facilities that were IPPS hospitals in FY 2022, inclusive of those facilities that have since terminated their participation in the program as hospitals, as long as those data did not fail any of our edits for reasonableness. We stated in the proposed rule (90 FR 18219) that we believe that including the wage data for these hospitals is, in general, appropriate to reflect the economic conditions in the various labor market areas during the relevant past period and to ensure that the current wage index represents the labor market area’s current wages as compared to the national average of wages. As discussed in the FY 2004 IPPS final rule (68 FR 45397 through 45398) and FY 2025 IPPS/LTCH final rule (89 FR 69268), any hospital that is designated as a CAH or REH by 7 days pri average of wages. As discussed in the FY 2004 IPPS final rule (68 FR 45397 through 45398) and FY 2025 IPPS/LTCH final rule (89 FR 69268), any hospital that is designated as a CAH or REH by 7 days prior to the publication of the preliminary wage index public use file (PUF) is excluded from the calculation of the wage index. For the proposed FY 2026 wage index, we removed 7 hospitals that converted to CAH status and 5 hospitals that converted to REH status on or after January 24, 2024, the cut-off date for CAH and REH exclusion from the FY 2025 wage index, and through and including January 24, 2025, the cut-off date for CAH and REH exclusion from the FY 2026 wage index. We did not receive any comments with regard to this proposal, and we are finalizing as proposed to exclude hospitals that have subsequently converted to CAH and/or REH from the wage index calculation. Since we issued the proposed rule, we learned of 6 more hospitals that converted to CAH and/or REH status on or after January 24, 2024, and through and including January 24, 2025. We removed these additional hospitals from the FY 2026 wage index due to their conversion to CAH and/or REH status. In summary, we calculated uary 24, 2024, and through and including January 24, 2025. We removed these additional hospitals from the FY 2026 wage index due to their conversion to CAH and/or REH status. In summary, we calculated the FY 2026 wage index using the Worksheet S–3, Parts II and III wage data of 3,036 hospitals. For the FY 2026 wage index, we allotted the wages and hours data for a multicampus hospital among the different labor market areas where its campuses are located using campus full- time equivalent (FTE) percentages as originally finalized in the FY 2012 IPPS/ LTCH PPS final rule (76 FR 51591). Table 2, which contains the FY 2026 wage index associated with this final rule (available via the internet on the CMS website), includes separate wage data for the campuses of 29 multicampus hospitals. The following chart lists the multicampus hospitals by CMS certification number (CCN) and the FTE percentages on which the wages and hours of each campus were allotted to their respective labor market areas: 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00302 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 Federal Register / 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00302 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36837 We note that, in past years, in Table 2, we have placed a ‘‘B’’ to designate the subordinate campus in the fourth position of the hospital CCN. However, for the FY 2019 IPPS/LTCH PPS proposed and final rules and subsequent rules, we have moved the ‘‘B’’ to the third position of the CCN. Because all IPPS hospitals have a ‘‘0’’ in the third position of the CCN, we believe that placement of the ‘‘B’’ in this third position, instead of the ‘‘0’’ for the subordinate campus, is the most efficient method of identification and interferes the least with the other variable digits in the CCN. We also note that provider 340115 has an additional second sub campus located in a different CBSA then the main campus and its other sub campus. Therefore, in order to uniquely identify this second sub campus, we have placed a ‘‘C’’ in the third position of the CCN. 4. Process for Requests for Wage Index Data Corrections preliminary Work mpus. Therefore, in order to uniquely identify this second sub campus, we have placed a ‘‘C’’ in the third position of the CCN. 4. Process for Requests for Wage Index Data Corrections preliminary Worksheet S–3 wage data file. a. Process for Hospitals To Request Wage Index Data Corrections The preliminary, unaudited Worksheet S–3 wage data files for the proposed FY 2026 wage index were made available on May 23, 2024, through the internet on the CMS website at https://www.cms.gov/medicare/ payment/prospective-payment-systems/ acute-inpatient-pps/wage-index-files/fy- 2026-wage-index-home-page. The FY 2026 preliminary Worksheet S–3 wage data file inadvertently contained cost report data with a begin date before 10/ 01/2021 and cost report data with a begin date after 10/01/2022. We removed these cost reports and added cost reports that were inadvertently omitted from the file originally posted on May 23. Therefore, on June 20, 2024, we posted an updated FY 2026 On January 31, 2025, we posted a public use file (PUF) at https:// www.cms.gov/medicare/payment/ prospective-payment-systems/acute- inpatient-pps/wage-index-files/fy-2026- wage-index-home-page containing FY 2026 wage index data ed a public use file (PUF) at https:// www.cms.gov/medicare/payment/ prospective-payment-systems/acute- inpatient-pps/wage-index-files/fy-2026- wage-index-home-page containing FY 2026 wage index data available as of January 31, 2025. This PUF contains a tab with the Worksheet S–3 wage data (which includes Worksheet S–3, Parts II and III wage data from cost reporting periods beginning on or after October 1, 2021, through September 30, 2022; that is, FY 2022 wage data), a tab with the occupational mix data (which includes data from the CY 2022 occupational mix survey, Form CMS–10079), a tab containing the Worksheet S–3 wage data of hospitals deleted from the January 31, 2025 wage data PUF, and a tab containing the CY 2022 occupational mix data of the hospitals deleted from VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00303 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00304 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 265001 PO 00000 Frm 00304 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36839 through an online submission process or through email. We refer readers to the FY 2026 Hospital Wage Index Development Time Table for complete details. Verified corrections to the wage index data received timely (that is, by May 30, 2025) by CMS and the MACs were incorporated into the final FY 2026 wage index, which will be effective October 1, 2025. We created the processes previously described to resolve all substantive wage index data correction disputes before we finalize the wage and occupational mix data for the FY 2026 payment rates. Accordingly, hospitals that do not meet the procedural deadlines set forth earlier will not be afforded a later opportunity to submit wage index data corrections or to dispute the MAC’s decision with respect to requested changes. Specifically, our policy is that hospitals that do not meet the procedural deadlines as previously set forth (requiring requests to MACs by the specified date in February and, where such reque hanges. Specifically, our policy is that hospitals that do not meet the procedural deadlines as previously set forth (requiring requests to MACs by the specified date in February and, where such requests are unsuccessful, requests for intervention by CMS by the specified date in April) will not be permitted to challenge later, before the PRRB, the failure of CMS to make a requested data revision. We refer readers also to the FY 2000 IPPS final rule (64 FR 41513) for a discussion of the parameters for appeals to the PRRB for wage index data corrections. As finalized in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156), this policy also applies to a hospital disputing corrections made by CMS that do not arise from a hospital’s request for a wage index data revision. That is, a hospital disputing an adjustment made by CMS that did not arise from a hospital’s request for a wage index data revision is required to request a correction by the first applicable deadline. Hospitals that do not meet the procedural deadlines set forth earlier will not be afforded a later opportunity to submit wage index data corrections or to dispute CMS’ decision with respect to changes. Again, s that do not meet the procedural deadlines set forth earlier will not be afforded a later opportunity to submit wage index data corrections or to dispute CMS’ decision with respect to changes. Again, we believe the wage index data correction process described earlier provides hospitals with sufficient opportunity to bring errors in their wage and occupational mix data to the MAC’s attention. Moreover, because hospitals had access to the final wage index data PUFs by late April 2025, they have an opportunity to detect any data entry or tabulation errors made by the MAC or CMS before the development and publication of the final FY 2026 wage index by August 2025, and the implementation of the FY 2026 wage index on October 1, 2025. Given these processes, the wage index implemented on October 1 should be accurate. Nevertheless, in the event that errors are identified by hospitals and brought to our attention after May 30, 2025, we retain the right to make midyear changes to the wage index under very limited circumstances. Specifically, in accordance with § 412.64(k)(1) of our regulations, we make midyear corrections to the wage index for an area only if a hospital can show that: (1) Th under very limited circumstances. Specifically, in accordance with § 412.64(k)(1) of our regulations, we make midyear corrections to the wage index for an area only if a hospital can show that: (1) The MAC or CMS made an error in tabulating its data; and (2) the requesting hospital could not have known about the error or did not have an opportunity to correct the error, before the beginning of the fiscal year. For purposes of this provision, ‘‘before the beginning of the fiscal year’’ means by the May deadline for making corrections to the wage data for the following fiscal year’s wage index (for example, May 30, 2025, for the FY 2026 wage index). This provision is not available to a hospital seeking to revise another hospital’s data that may be affecting the requesting hospital’s wage index for the labor market area. As indicated earlier, because CMS makes the wage index data available to hospitals on the CMS website prior to publishing both the proposed and final IPPS rules, and the MACs notify hospitals directly of any wage index data changes after completing their desk reviews, we do not expect that midyear corrections will be necessary. However, under our current policy, if th MACs notify hospitals directly of any wage index data changes after completing their desk reviews, we do not expect that midyear corrections will be necessary. However, under our current policy, if the correction of a data error changes the wage index value for an area, the revised wage index value will be effective prospectively from the date the correction is made. In the FY 2006 IPPS final rule (70 FR 47385 through 47387 and 47485), we revised § 412.64(k)(2) to specify that, effective on October 1, 2005, that is, beginning with the FY 2006 wage index, a change to the wage index can be made retroactive to the beginning of the Federal fiscal year only when CMS determines all of the following: (1) The MAC or CMS made an error in tabulating data used for the wage index calculation; (2) the hospital knew about the error and requested that the MAC and CMS correct the error using the established process and within the established schedule for requesting corrections to the wage index data, before the beginning of the fiscal year for the applicable IPPS update (that is, by the May 30, 2025, deadline for the FY 2026 wage index); and (3) CMS agreed before October 1 that the MAC or CMS made before the beginning of the fiscal year for the applicable IPPS update (that is, by the May 30, 2025, deadline for the FY 2026 wage index); and (3) CMS agreed before October 1 that the MAC or CMS made an error in tabulating the hospital’s wage index data and the wage index should be corrected. In those circumstances where a hospital requested a correction to its wage index data before CMS calculated the final wage index (that is, by the May 30, 2025 deadline for the FY 2026 wage index), and CMS acknowledges that the error in the hospital’s wage index data was caused by CMS’ or the MAC’s mishandling of the data, we believe that the hospital should not be penalized by our delay in publishing or implementing the correction. As with our current policy, we indicated that the provision is not available to a hospital seeking to revise another hospital’s data. In addition, the provision cannot be used to correct prior years’ wage index data; it can only be used for the current Federal fiscal year. In situations where our policies would allow midyear corrections other than those specified in § 412.64(k)(2)(ii), we continue to believe that it is appropriate to make prospective-only correctio ear. In situations where our policies would allow midyear corrections other than those specified in § 412.64(k)(2)(ii), we continue to believe that it is appropriate to make prospective-only corrections to the wage index. We note that, as with prospective changes to the wage index, the final retroactive correction will be made irrespective of whether the change increases or decreases a hospital’s payment rate. In addition, we note that the policy of retroactive adjustment will still apply in those instances where a final judicial decision reverses a CMS denial of a hospital’s wage index data revision request. b. Process for Data Corrections by CMS After the January 31, 2025, Public Use File (PUF) The process set forth with the wage index timetable discussed in section III.C.4. of the preamble of this final rule allows hospitals to request corrections to their wage index data within prescribed timeframes. In addition to hospitals’ opportunity to request corrections of wage index data errors or MACs’ mishandling of data, CMS has the authority under section 1886(d)(3)(E) of the Act to make corrections to hospital wage index and occupational mix data to ensure the accuracy of the wage rors or MACs’ mishandling of data, CMS has the authority under section 1886(d)(3)(E) of the Act to make corrections to hospital wage index and occupational mix data to ensure the accuracy of the wage index. As we explained in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49490 through 49491) and the FY 2017 IPPS/LTCH PPS final rule (81 FR 56914), section 1886(d)(3)(E) of the Act requires the Secretary to adjust the proportion of hospitals’ costs attributable to wages and wage-related costs for area differences reflecting the relative hospital wage level in the geographic areas of the hospital compared to the national average hospital wage level. We believe that, under section 1886(d)(3)(E) of the Act, we have discretion to make corrections to hospitals’ data to help VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00305 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36840 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations ensure that the costs attributable to wages and wage-related costs in fact accurately reflect the relative hospital wage level in the hospitals’ geographi onday, August 4, 2025 / Rules and Regulations ensure that the costs attributable to wages and wage-related costs in fact accurately reflect the relative hospital wage level in the hospitals’ geographic areas. We have an established multistep, 15- month process for the review and correction of the hospital wage data that is used to create the IPPS wage index for the upcoming fiscal year. Since the origin of the IPPS, the wage index has been subject to its own annual review process, first by the MACs, and then by CMS. As a standard practice, after each annual desk review, CMS reviews the results of the MACs’ desk reviews and focuses on items flagged during the desk review, requiring that, if necessary, hospitals provide additional documentation, adjustments, or corrections to the data. This ongoing communication with hospitals about their wage data may result in the discovery by CMS of additional items that were reported incorrectly or other data errors, even after the posting of the January 31, 2025, PUF, and throughout the remainder of the wage index development process. In addition, the fact that CMS analyzes the data from a regional and even national level, unlike the review perf uary 31, 2025, PUF, and throughout the remainder of the wage index development process. In addition, the fact that CMS analyzes the data from a regional and even national level, unlike the review performed by the MACs that review a limited subset of hospitals, can facilitate additional editing of the data the need for which may not be readily apparent to the MACs. In these occasional instances, an error may be of sufficient magnitude that the wage index of an entire CBSA is affected. Accordingly, CMS uses its authority to ensure that the wage index accurately reflects the relative hospital wage level in the geographic area of the hospital compared to the national average hospital wage level, by continuing to make corrections to hospital wage data upon discovering incorrect wage data, distinct from instances in which hospitals request data revisions. We note that CMS corrects errors to hospital wage data as appropriate, regardless of whether that correction will raise or lower a hospital’s average hourly wage. For example, as discussed in section III.C. of the preamble of the FY 2019 IPPS/LTCH PPS final rule (83 FR 41364), in situations where a hospital did not have documentable sal l’s average hourly wage. For example, as discussed in section III.C. of the preamble of the FY 2019 IPPS/LTCH PPS final rule (83 FR 41364), in situations where a hospital did not have documentable salaries, wages, and hours for housekeeping and dietary services, we imputed estimates, in accordance with policies established in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49965 through 49967). Furthermore, if CMS discovers after conclusion of the desk review, for example, that a MAC inadvertently failed to incorporate positive adjustments resulting from a prior year’s wage index appeal of a hospital’s wage-related costs such as pension, CMS will correct that data error, and the hospital’s average hourly wage will likely increase as a result. While we maintain CMS’ authority to conduct additional review and make resulting corrections at any time during the wage index development process, in accordance with the policy finalized in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38154 through 38156) and as first implemented with the FY 2019 wage index (83 FR 41389), hospitals are able to request further review of a correction made by CMS that did not arise from a hospital’s request for a wag 156) and as first implemented with the FY 2019 wage index (83 FR 41389), hospitals are able to request further review of a correction made by CMS that did not arise from a hospital’s request for a wage index data correction. Instances where CMS makes a correction to a hospital’s data after the January 31, 2025, PUF based on a different understanding than the hospital about certain reported costs, for example, could potentially be resolved using this process before the final wage index is calculated. We believe this process and the timeline for requesting review of such corrections (as described earlier and in the FY 2018 IPPS/LTCH PPS final rule) promote additional transparency in instances where CMS makes data corrections after the January 31, 2025 PUF and provide opportunities for hospitals to request further review of CMS changes in time for the most accurate data to be reflected in the final wage index calculations. These additional appeals opportunities are described earlier and in the FY 2026 Hospital Wage Index Development Time Table, as well as in the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38154 through 38156). C. Method for Computing the FY 2026 Unadjusted Wage Index The n the FY 2026 Hospital Wage Index Development Time Table, as well as in the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38154 through 38156). C. Method for Computing the FY 2026 Unadjusted Wage Index The method used to compute the FY 2026 wage index without an occupational mix adjustment follows the same methodology that we used to compute the wage indexes without an occupational mix adjustment in the FY 2021 IPPS/LTCH PPS final rule (see 85 FR 58758 through 58761), and we did not propose any changes to this methodology. We have restated our methodology in this section the preamble of this final rule. Step 1.—We gathered data from each of the non-Federal, short-term, acute care hospitals for which data were reported on the Worksheet S–3, Parts II and III of the Medicare cost report for the hospital’s cost reporting period relevant to the wage index (in this case, for FY 2026, these were data from cost reports for cost reporting periods beginning on or after October 1, 2021, and before October 1, 2022). In addition, we included data from hospitals that had cost reporting periods beginning prior to the October 1, 2021, begin date and extending into FY 2022 but that did not have any cost ober 1, 2022). In addition, we included data from hospitals that had cost reporting periods beginning prior to the October 1, 2021, begin date and extending into FY 2022 but that did not have any cost report with a begin date on or after October 1, 2021, and before October 1, 2022. We include this data because no other data from these hospitals will be available for the cost reporting period as previously described, and because particular labor market areas might be affected due to the omission of these hospitals. However, we generally describe these wage data as data applicable to the fiscal year wage data being used to compute the wage index for those hospitals. We note that, if a hospital had more than one cost reporting period beginning during FY 2022 (for example, a hospital had two short cost reporting periods beginning on or after October 1, 2021, and before October 1, 2022), we include wage data from only one of the cost reporting periods, the longer, in the wage index calculation. If there was more than one cost reporting period and the periods were equal in length, we included the wage data from the later period in the wage index calculation. Step 2.—Salaries.—The method ion. If there was more than one cost reporting period and the periods were equal in length, we included the wage data from the later period in the wage index calculation. Step 2.—Salaries.—The method used to compute a hospital’s average hourly wage excludes certain costs that are not paid under the IPPS. (We note that, beginning with FY 2008 (72 FR 47315), we included what were then Lines 22.01, 26.01, and 27.01 of Worksheet S– 3, Part II of CMS Form 2552–96 for overhead services in the wage index. Currently, these lines are lines 28, 33, and 35 on CMS Form 2552–10. However, we note that the wages and hours on these lines are not incorporated into Line 101, Column 1 of Worksheet A, which, through the electronic cost reporting software, flows directly to Line 1 of Worksheet S–3, Part II. Therefore, the first step in the wage index calculation is to compute a ‘‘revised’’ Line 1, by adding to the Line 1 on Worksheet S–3, Part II (for wages and hours respectively) the amounts on Lines 28, 33, and 35.) In calculating a hospital’s Net Salaries (we note that we previously used the term ‘‘average’’ salaries in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51592), but we now use the term ‘‘ne 33, and 35.) In calculating a hospital’s Net Salaries (we note that we previously used the term ‘‘average’’ salaries in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51592), but we now use the term ‘‘net’’ salaries) plus wage- related costs, we first compute the following: Subtract from Line 1 (total salaries) the GME and CRNA costs reported on CMS Form 2552–10, Lines 2, 4.01, 7, and 7.01, the Part B salaries reported on Lines 3, 5 and 6, home office salaries reported on Line 8, and exclude salaries reported on Lines 9 and 10 (that is, direct salaries attributable to SNF services, home health services, and other subprovider components not subject to the IPPS). We also subtract VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00306 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36841 from Line 1 the salaries for which no hours were reported. Therefore, the formula for Net Salaries (from Worksheet S–3, Part II) is the following: ((Line 1 + Line 28 + Line 33 + Line 35)¥(Line 2 + Line 3 + Line 4.01 + Line 5 + Line 6 + Line 7 + ere reported. Therefore, the formula for Net Salaries (from Worksheet S–3, Part II) is the following: ((Line 1 + Line 28 + Line 33 + Line 35)¥(Line 2 + Line 3 + Line 4.01 + Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + Line 10)). To determine Total Salaries plus Wage-Related Costs, we add to the Net Salaries the costs of contract labor for direct patient care, certain top management, pharmacy, laboratory, and nonteaching physician Part A services (Lines 11, 12 and 13), home office salaries and wage-related costs reported by the hospital on Lines 14.01, 14.02, and 15, and nonexcluded area wage- related costs (Lines 17, 22, 25.50, 25.51, and 25.52). We note that contract labor and home office salaries for which no corresponding hours are reported are not included. In addition, wage-related costs for nonteaching physician Part A employees (Line 22) are excluded if no corresponding salaries are reported for those employees on Line 4. The formula for Total Salaries plus Wage-Related Costs (from Worksheet S–3, Part II) is the following: ((Line 1 + Line 28 + Line 33 + Line 35)¥(Line 2 + Line 3 + Line 4.01 + Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + Line 10)) + (L ted Costs (from Worksheet S–3, Part II) is the following: ((Line 1 + Line 28 + Line 33 + Line 35)¥(Line 2 + Line 3 + Line 4.01 + Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + Line 10)) + (Line 11 + Line 12 + Line 13 + Line 14.01 + 14.02 + Line 15) + (Line 17 + Line 22 + 25.50 + 25.51 + 25.52). Step 3.—Hours.—With the exception of wage-related costs, for which there are no associated hours, we compute total hours using the same methods as described for salaries in Step 2. The formula for Total Hours (from Worksheet S–3, Part II) is the following: ((Line 1 + Line 28 + Line 33 + Line 35)¥(Line 2 + Line 3 + Line 4.01 + Line 5 + Line 6 + Line 7 + Line 7.01 + Line 8 + Line 9 + Line 10)) + (Line 11 + Line 12 + Line 13 + Line 14.01 + 14.02 + Line 15). Step 4.—For each hospital reporting both total overhead salaries and total overhead hours greater than zero, we then allocate overhead costs to areas of the hospital excluded from the wage index calculation. First, we determine the ‘‘excluded rate’’, which is the ratio of excluded area hours to Revised Total Hours (from Worksheet S–3, Part II) with the following formula: (Line 9 + Line 10)/(Line 1 + Line 28 + Line 33 + Line 35)¥(Li xcluded rate’’, which is the ratio of excluded area hours to Revised Total Hours (from Worksheet S–3, Part II) with the following formula: (Line 9 + Line 10)/(Line 1 + Line 28 + Line 33 + Line 35)¥(Lines 2, 3, 4.01, 5, 6, 7, 7.01, and 8 and Lines 26 through 43). We then compute the amounts of overhead salaries and hours to be allocated to the excluded areas by multiplying the previously discussed ratio by the total overhead salaries and hours reported on Lines 26 through 43 of Worksheet S–3, Part II. Next, we compute the amounts of overhead wage-related costs to be allocated to the excluded areas using three steps: • We determine the ‘‘overhead rate’’ (from Worksheet S–3, Part II), which is the ratio of overhead hours (Lines 26 through 43 minus the sum of Lines 28, 33, and 35) to revised hours excluding the sum of lines 28, 33, and 35 (Line 1 minus the sum of Lines 2, 3, 4.01, 5, 6, 7, 7.01, 8, 9, 10, 28, 33, and 35). We note that, for the FY 2008 and subsequent wage index calculations, we have been excluding the overhead contract labor (Lines 28, 33, and 35) from the determination of the ratio of overhead hours to revised hours because hospitals typically do not provide fringe ben , we have been excluding the overhead contract labor (Lines 28, 33, and 35) from the determination of the ratio of overhead hours to revised hours because hospitals typically do not provide fringe benefits (wage-related costs) to contract personnel. Therefore, it is not necessary for the wage index calculation to exclude overhead wage-related costs for contract personnel. Further, if a hospital does contribute to wage-related costs for contracted personnel, the instructions for Lines 28, 33, and 35 require that associated wage-related costs be combined with wages on the respective contract labor lines. The formula for the Overhead Rate (from Worksheet S–3, Part II) is the following: (Lines 26 through 43—Lines 28, 33 and 35)/ ((((Line 1 + Lines 28, 33, 35)¥(Lines 2, 3, 4.01, 5, 6, 7, 7.01, 8, and 26 through 43))¥(Lines 9 and 10)) + (Lines 26 through 43¥Lines 28, 33, and 35)). • We compute overhead wage-related costs by multiplying the overhead hours ratio by wage-related costs reported on Part II, Lines 17, 22, 25.50, 25.51, and 25.52. • We multiply the computed overhead wage-related costs by the previously described excluded area hours ratio. Finally, we subtract the computed overh on Part II, Lines 17, 22, 25.50, 25.51, and 25.52. • We multiply the computed overhead wage-related costs by the previously described excluded area hours ratio. Finally, we subtract the computed overhead salaries, wage-related costs, and hours associated with excluded areas from the total salaries (plus wage- related costs) and hours derived in Steps 2 and 3. Step 5.—For each hospital, we adjust the total salaries plus wage-related costs to a common period to determine total adjusted salaries plus wage-related costs. To make the wage adjustment, we estimate the percentage change in the employment cost index (ECI) for compensation for each 30-day increment from October 14, 2021, through April 15, 2023, for private industry hospital workers from data obtained from the Bureau of Labor Statistics’ (BLS’) Office of Compensation and Working Conditions. We use the ECI because it reflects the price increase associated with total compensation (salaries plus fringe benefits) rather than just the increase in salaries. In addition, the ECI includes managers as well as other hospital workers. This methodology to compute the monthly update factors uses actual quarterly ECI data and assures that increase in salaries. In addition, the ECI includes managers as well as other hospital workers. This methodology to compute the monthly update factors uses actual quarterly ECI data and assures that the update factors match the actual quarterly and annual percent changes. We also note that, since April 2006 with the publication of March 2006 data, the BLS’ ECI uses a different classification system, the North American Industrial Classification System (NAICS), instead of the Standard Industrial Codes (SICs), which no longer exist. We have consistently used the ECI as the data source for our wages and salaries and other price proxies in the IPPS market basket, and we did not propose to make any changes to the usage of the ECI for FY 2026. The factors used to adjust the hospital’s data are based on the midpoint of the cost reporting period, as indicated in this final rule. Step 6.—Each hospital is assigned to its appropriate urban or rural labor market area before any reclassifications under section 1886(d)(8)(B), 1886(d)(8)(E), or 1886(d)(10) of the Act. Within each urban or rural labor market area, we add the total adjusted salaries plus wage-related costs obtained in Step 5 for al nder section 1886(d)(8)(B), 1886(d)(8)(E), or 1886(d)(10) of the Act. Within each urban or rural labor market area, we add the total adjusted salaries plus wage-related costs obtained in Step 5 for all hospitals in that area to determine the total adjusted salaries plus wage-related costs for the labor market area. Step 7.—We divide the total adjusted salaries plus wage-related costs obtained under Step 6 by the sum of the corresponding total hours (from Step 4) for all hospitals in each labor market area to determine an average hourly wage for the area. Step 8.—We add the total adjusted salaries plus wage-related costs obtained in Step 5 for all hospitals in the Nation and then divide the sum by the national sum of total hours from Step 4 to arrive at a national average hourly wage. Step 9.—For each urban or rural labor market area, we calculate the hospital wage index value, unadjusted for occupational mix, by dividing the area average hourly wage obtained in Step 7 by the national average hourly wage computed in Step 8. Step 10.—For each urban labor market area for which we do not have any hospital wage data (either because there are no IPPS hospitals in that labor market area, verage hourly wage computed in Step 8. Step 10.—For each urban labor market area for which we do not have any hospital wage data (either because there are no IPPS hospitals in that labor market area, or there are IPPS hospitals in that area but their data are either too new to be reflected in the current year’s wage index calculation, or their data are aberrant and are deleted from the wage index), we finalized in the FY 2020 IPPS/LTCH PPS final rule (84 FR 42305) that, for FY 2020 and subsequent years’ wage index calculations, such CBSAs’ wage index will be equal to total urban VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00307 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36842 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations salaries plus wage-related costs (from Step 5) in the State, divided by the total urban hours (from Step 4) in the State, divided by the national average hourly wage from Step 8 (see 84 FR 42305 and 42306). We believe that, in the absence of wage data for an urban labor market area, it is reasonable to use a statewide urban average, which is al average hourly wage from Step 8 (see 84 FR 42305 and 42306). We believe that, in the absence of wage data for an urban labor market area, it is reasonable to use a statewide urban average, which is based on actual, acceptable wage data of hospitals in that State, rather than impute some other type of value using a different methodology. For calculation of the FY 2026 wage index, we note there is one urban CBSA for which we do not have IPPS hospital wage data. In Table 3 (which is available via the internet on the CMS website and contains the area wage indexes), we include a footnote to indicate to which CBSA this policy applies. This CBSA’s wage index is calculated as described, based on the FY 2020 IPPS/LTCH PPS final rule methodology (84 FR 42305). Under this step, we also apply our policy with regard to how dollar amounts, hours, and other numerical values in the wage index calculations are rounded. We refer readers to section II. of Appendix B of this final rule for the policy regarding rural areas that do not have IPPS hospitals. Step 11.—Section 4410 of Public Law 105–33 provides that, for discharges on or after October 1, 1997, the area wage index applicable to any hospit egarding rural areas that do not have IPPS hospitals. Step 11.—Section 4410 of Public Law 105–33 provides that, for discharges on or after October 1, 1997, the area wage index applicable to any hospital that is located in an urban area of a State may not be less than the area wage index applicable to hospitals located in rural areas in that State. The areas affected by this provision are identified in Table 2 listed in section VI. of the Addendum to this final rule and available via the internet on the CMS website. The following is our policy with regard to rounding of the wage data (dollar amounts, hours, and other numerical values) in the calculation of the unadjusted and adjusted wage index, as finalized in the FY 2020 IPPS/ LTCH final rule (84 FR 42306). For data that we consider to be ‘‘raw data,’’ such as the cost report data on Worksheets S– 3, Parts II and III, and the occupational mix survey data, we use such data ‘‘as is,’’ and do not round any of the individual line items or fields. However, for any dollar amounts within the wage index calculations, including any type of summed wage amount, average hourly wages, and the national average hourly wage (both the unadjusted a fields. However, for any dollar amounts within the wage index calculations, including any type of summed wage amount, average hourly wages, and the national average hourly wage (both the unadjusted and adjusted for occupational mix), we round the dollar amounts to 2 decimals. For any hour amounts within the wage index calculations, we round such hour amounts to the nearest whole number. For any numbers not expressed as dollars or hours within the wage index calculations, which could include ratios, percentages, or inflation factors, we round such numbers to 5 decimals. However, we continue rounding the actual unadjusted and adjusted wage indexes to 4 decimals, as we have done historically. As discussed in the FY 2012 IPPS/ LTCH PPS final rule, in ‘‘Step 5,’’ for each hospital, we adjust the total salaries plus wage-related costs to a common period to determine total adjusted salaries plus wage-related costs. To make the wage adjustment, we estimate the percentage change in the ECI for compensation for each 30-day increment from October 14, 2021, through April 15, 2023, for private industry hospital workers from the BLS’ Office of Compensation and Working Conditions data. We have c compensation for each 30-day increment from October 14, 2021, through April 15, 2023, for private industry hospital workers from the BLS’ Office of Compensation and Working Conditions data. We have consistently used the ECI as the data source for our wages and salaries and other price proxies in the IPPS market basket, and we did not propose any changes to the usage of the ECI for FY 2026. The factors used to adjust the hospital’s data were based on the midpoint of the cost reporting period, as indicated in the following table. 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k For example, the midpoint of a cost reporting period beginning January 1, 2022, and ending December 31, 2022, is June 30, 2022. An adjustment factor of 1.03412 was applied to the wages of a VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00308 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00309 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36844 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations methodology, the proposed UR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36844 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations methodology, the proposed FY 2026 occupational mix adjusted national average hourly wage was $57.63. We did not receive any comments on our proposed calculation of the occupational mix adjustment to the FY 2026 wage index. Thus, for the reasons discussed in this final rule and in the FY 2026 IPPS/LTCH PPS proposed rule, we are finalizing our proposal without modification to calculate the occupational mix adjustment factor using the same methodology that we have used since the FY 2012 wage index and to apply the occupational mix adjustment to 100 percent of the FY 2026 wage index. we are using the occupational mix surveys of 2,952 hospitals for which we also had Worksheet S–3 wage data, which represented a ‘‘response’’ rate of 97 percent (2,952/3,036). For the final FY 2026 wage index, we are applying proxy data for noncompliant hospitals, new hospitals, or hospitals that submitted erroneous or aberrant data in the same manner that we applied proxy data for such hospitals in the FY 2012 wage index occupational m noncompliant hospitals, new hospitals, or hospitals that submitted erroneous or aberrant data in the same manner that we applied proxy data for such hospitals in the FY 2012 wage index occupational mix adjustment (76 FR 51586). As a result of applying this methodology, the final FY 2026 occupational mix adjusted national average hourly wage is the following: For the final FY 2026 wage index, we Final FY 2026 Occupational Mix are using the Worksheet S–3, Parts II and III wage data of 3,036 hospitals, and Adjusted National Average Hourly Wage: $57.86 3. Occupational Mix Adjustment and the FY 2026 Occupational Mix Adjusted Wage Index As discussed in section III.E. of the preamble of this final rule, for FY 2026, we are applying the occupational mix adjustment to 100 percent of the FY 2026 wage index. We calculated the occupational mix adjustment using data from the 2022 occupational mix survey, using the methodology described in the FY 2012 IPPS/LTCH PPS final rule (76 FR 51582–51586). Based on the 2022 occupational mix survey data, the FY 2026 national average hourly wages for each occupational mix nursing subcategory as calculated in Step 2 of the occupational mix calculation are a ased on the 2022 occupational mix survey data, the FY 2026 national average hourly wages for each occupational mix nursing subcategory as calculated in Step 2 of the occupational mix calculation are as follows: The national average hourly wage for the entire nurse category is computed in Step 5 of the occupational mix calculation. Hospitals with a nurse category average hourly wage (as calculated in Step 4) of greater than the national nurse category average hourly wage receive an occupational mix adjustment factor (as calculated in Step 6) of less than 1.0. Hospitals with a nurse category average hourly wage (as calculated in Step 4) of less than the national nurse category average hourly wage receive an occupational mix adjustment factor (as calculated in Step 6) of greater than 1.0. Based on the 2022 occupational mix survey data, we determined (in Step 7 of the occupational mix calculation) the following: National Percentage of Hospital Employees in the Nurse Category: 45% National Percentage of Hospital Employees in the All Other Occupations Category: 55% E. Hospital Redesignations and Reclassifications The following sections III.E.1 through III.E.4 discuss revisions to the wag Percentage of Hospital Employees in the All Other Occupations Category: 55% E. Hospital Redesignations and Reclassifications The following sections III.E.1 through III.E.4 discuss revisions to the wage index based on hospital redesignations and reclassifications. Specifically, hospitals may have their geographic area changed for wage index payment by applying for urban to rural reclassification under section 1886(d)(8)(E) of the Act (implemented at § 412.103), reclassification by the Medicare Geographic Classification Review Board (MGCRB) under section 1886(d)(10) of the Act, Lugar status redesignations under section 1886(d)(8)(B) of the Act, or a combination of the foregoing. 1. Urban to Rural Reclassification Under Section 1886(d)(8)(E) of the Act, Implemented at § 412.103 Under section 1886(d)(8)(E) of the Act, a qualifying prospective payment hospital located in an urban area may apply for rural status for payment purposes separate from reclassification through the MGCRB. Specifically, section 1886(d)(8)(E) of the Act provides that, not later than 60 days after the receipt of an application (in a form and manner determined by the Secretary) from a subsection (d) hospital that s lly, section 1886(d)(8)(E) of the Act provides that, not later than 60 days after the receipt of an application (in a form and manner determined by the Secretary) from a subsection (d) hospital that satisfies certain criteria, the Secretary shall treat the hospital as being located in the rural area (as defined in paragraph (2)(D)) of the State in which the hospital is located. We refer readers to the regulations at § 412.103 for the general criteria and application requirements for a subsection (d) hospital to reclassify from urban to rural status in accordance with section 1886(d)(8)(E) of the Act (such hospitals are referred to herein as ‘‘§ 412.103 hospitals’’). The FY 2012 IPPS/LTCH PPS final rule (76 FR 51595 through 51596) includes our policies regarding the effect of wage data from reclassified or redesignated hospitals. We refer readers to the FY 2024 IPPS/LTCH final rule (88 FR 58971 through 58977) for a review of our policy finalized in the FY 2023 IPPS/LTCH PPS final rule (87 FR 49004) to calculate the rural floor with the wage data of urban hospitals reclassifying to rural areas under § 412.103, and discussion of our modification to the calculation of the rural wage in 87 FR 49004) to calculate the rural floor with the wage data of urban hospitals reclassifying to rural areas under § 412.103, and discussion of our modification to the calculation of the rural wage index and its implications for the rural floor. In the FY 2019 IPPS/LTCH PPS final rule (83 FR 41369 through 41374), we codified certain policies regarding multicampus hospitals in the regulations at §§ 412.92, 412.96, 412.103, and 412.108. We stated that reclassifications from urban to rural under § 412.103 apply to the entire hospital (that is, the main campus and its remote location(s)). We also stated that a main campus of a hospital cannot obtain Sole Community Hospital (SCH), Rural Referral Center (RRC), or Medicare Dependent Hospital (MDH) status, or rural reclassification under § 412.103, independently or separately from its remote location(s), and vice versa. In the VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00310 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00311 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k / > H P G 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00311 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36846 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations (Medicare provisions such as payments to disproportionate share hospitals (DSHs), and non-Medicare payment provisions, such as the 340B Drug Pricing Program administered by HRSA) besides the wage index under section 1886(d) of the Act or a reclassification under the MGCRB to solely increase its wage index. Under the amended regulations, a hospital that has an active MGCRB reclassification and is then approved for an urban to rural reclassification under § 412.103 will not lose its MGCRB reclassification. Additionally, a hospital is no longer required to cancel its § 412.103 reclassification in order to be approved for an MGCRB reclassification. By amending the regulations and allowing a hospital to pursue reclassification under the MGCRB while also maintaining a rural reclassification under § 412.103, hospitals are accorded the benefits of a § 412.103 urban regulations and allowing a hospital to pursue reclassification under the MGCRB while also maintaining a rural reclassification under § 412.103, hospitals are accorded the benefits of a § 412.103 urban to rural reclassification and the ability to use distance and average hourly wage criteria designated for rural hospitals to obtain a higher wage index value through an MGCRB reclassification. We note, for wage index calculation and payment purposes, when there is both a § 412.103 reclassification and an MGCRB reclassification, the MGCRB reclassification controls for wage index calculation and payment purposes. Prior to FY 2024, we excluded hospitals with § 412.103 urban to rural redesignations from the calculation of the reclassified rural wage index if they also have an active MGCRB reclassification to another area. That is, if an application for urban reclassification through the MGCRB is approved and is not withdrawn or terminated by the hospital within the established timelines, we considered the hospital’s geographic CBSA and the urban CBSA to which the hospital is reclassified under the MGCRB for the wage index calculation. We refer readers to the April 21, 2016, IFC (81 FR 234 onsidered the hospital’s geographic CBSA and the urban CBSA to which the hospital is reclassified under the MGCRB for the wage index calculation. We refer readers to the April 21, 2016, IFC (81 FR 23428 through 23438) and the FY 2017 IPPS/ LTCH PPS final rule (81 FR 56922 through 56930), in which we finalized the April 21, 2016, IFC, for a full discussion of the effect of simultaneous reclassifications under both the § 412.103 and the MGCRB processes on wage index calculations. For FY 2024 and subsequent years, we refer readers to the FY 2024 IPPS/LTCH PPS final rule for discussion of our policy to include hospitals with a § 412.103 reclassification that also have an active MGCRB reclassification to another area in the calculation of the reclassified rural wage index (88 FR 58971 through 58977). 3. MGCRB Reclassification Issues for FY 2026 a. FY 2026 Reclassification Application Requirements and Approvals As previously stated, under section 1886(d)(10) of the Act, the MGCRB considers applications by hospitals for geographic reclassification for purposes of payment under the IPPS. The specific procedures and rules that apply to the geographic reclassification process are outlined in pplications by hospitals for geographic reclassification for purposes of payment under the IPPS. The specific procedures and rules that apply to the geographic reclassification process are outlined in regulations under 42 CFR 412.230 through 412.280. There are 465 hospitals approved for wage index reclassifications by the MGCRB starting in FY 2026. Because MGCRB wage index reclassifications are effective for 3 years, for FY 2026, hospitals reclassified beginning in FY 2024 or FY 2025 are eligible to continue to be reclassified to a particular labor market area based on such prior reclassifications for the remainder of their 3-year period. There were 309 hospitals approved for wage index reclassifications in FY 2024 that will continue for FY 2026, and 335 hospitals approved for wage index reclassifications in FY 2025 that will continue for FY 2026. Of all the hospitals approved for reclassification for FY 2024, FY 2025, and FY 2026, 1,109 hospitals (approximately 30 percent of IPPS hospitals) are in a MGCRB reclassification status for FY 2026 (with 258 of these hospitals reclassified back to their urban geographic location). We noted in the proposed rule that several hospitals appro itals) are in a MGCRB reclassification status for FY 2026 (with 258 of these hospitals reclassified back to their urban geographic location). We noted in the proposed rule that several hospitals approved for MGCRB reclassifications may opt to withdraw this status after the proposed rule,139 and in some cases prior year reclassification would become effective in its place. There are 88 fewer hospitals in MGCRB reclassification status in this final rule than in the proposed rule due to withdrawals and terminations of MGCRB status. We refer readers to section III.F.3.b. of the preamble of this final rule for information on the effects of implementation of new OMB labor market area delineations on reclassified hospitals. Under the regulations at § 412.273, hospitals that have been reclassified by the MGCRB are permitted to withdraw their applications if the request for withdrawal is received by the MGCRB any time before the MGCRB issues a decision on the application, or after the MGCRB issues a decision, provided the 139 We note that in the FY 2026 IPPS/LTCH PPS proposed rule (82 FR 18228), we inadvertently stated that hospitals approved for MGCRB reclassifications beginning in FY 2026 ues a decision, provided the 139 We note that in the FY 2026 IPPS/LTCH PPS proposed rule (82 FR 18228), we inadvertently stated that hospitals approved for MGCRB reclassifications beginning in FY 2026 may opt to withdraw this status after the final rule. This was an error, and the correct statement should have read ‘‘after the proposed rule’’. request for withdrawal is received by the MGCRB within 45 days of the date of filing for public inspection of the proposed rule at the website of the Office of the Federal Register, or within 7 calendar days of receiving a decision of the Administrator’s in accordance with § 412.273, whichever is later. For information about the current process for withdrawing, terminating, or canceling a previous withdrawal or termination of a 3-year reclassification for wage index purposes, we refer readers to § 412.273, as well as section III.E.3.b. of the preamble of this final rule, and the FY 2002 IPPS final rule (66 FR 39887 through 39888) and the FY 2003 IPPS final rule (67 FR 50065 through 50066). Additional discussion on withdrawals and terminations was included in the FY 2008 IPPS final rule (72 FR 47333) and the FY 2018 IPPS/ LTCH PPS final rule ( IPPS final rule (67 FR 50065 through 50066). Additional discussion on withdrawals and terminations was included in the FY 2008 IPPS final rule (72 FR 47333) and the FY 2018 IPPS/ LTCH PPS final rule (82 FR 38148 through 38150). Applications for FY 2027 reclassifications are due to the MGCRB by September 2, 2025 (Note: While the deadline for reclassification applications is not later than 13 months prior to the start of the fiscal year for which reclassification is sought, usually by September 1, the Board has historically allowed submission up to the first business day in September, which is September 2, 2025, due to Labor Day). This is also the current deadline for canceling a previous wage index reclassification withdrawal or termination under § 412.273(d) for the FY 2026 cycle. Applications and other information about MGCRB reclassifications may be obtained beginning in mid-July 2025 via the internet on the CMS website at https://www.cms.gov/medicare/ regulations-guidance/geographic- classification-review-board. This collection of information was previously approved under OMB Control Number 0938–0573, which expired on January 31, 2021. A reinstatement of this PRA package is curr - classification-review-board. This collection of information was previously approved under OMB Control Number 0938–0573, which expired on January 31, 2021. A reinstatement of this PRA package is currently being developed. The public will have an opportunity to review and submit comments regarding the reinstatement of this PRA package through a public notice and comment period separate from this rulemaking. Comment: A commenter stated that the MGCRB decisions for FY 2026 were rendered earlier than in the past, which prevented hospitals from submitting rural or rural referral center (RRC) approval letters prior to the MGCRB’s decision. The commenter stated that while the Administrator reversed the MGCRB ruling on appeal, it did not do so in time for the approved reclassification to be reflected in the proposed rule datasets. Therefore, the VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00312 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36847 commenter contended that the FY 2026 proposed rule included inaccurate or inco W 9 K S D n o d n o m m a h k Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations 36847 commenter contended that the FY 2026 proposed rule included inaccurate or incomplete information that hospitals relied upon for withdrawal decisions. Consequently, the commenter requested that CMS allow hospitals a 15-day window following the release of the final rule to withdraw MGCRB reclassification requests without penalty after reassessing their decisions using the corrected and finalized data. Response: As we stated in response to a comment in the FY 2024 IPPS/LTCH PPS final rule (88 FR 58983), we believe hospitals should submit applications complete with supporting documentation at the time MGCRB applications are due. We stated that hospitals taking advantage of the MGCRB’s practice of accepting supporting documentation to supplement applications until the date of the MGCRB’s review are aware that the review is not held on the same date annually. Furthermore, rural reclassification may be obtained at any time, and hospitals seeking the benefits of rural status for MGCRB reclassification purposes should plan accordingly. In response to the commenter’s spec rural reclassification may be obtained at any time, and hospitals seeking the benefits of rural status for MGCRB reclassification purposes should plan accordingly. In response to the commenter’s specific request for CMS to allow hospitals a 15-day window following the release of the final rule to withdraw MGCRB reclassification requests, we stated in response to a similar comment in the FY 2021 IPPS/LTCH PPS final rule (85 FR 58769 through 58770) that we maintain that the information provided in the proposed rule constitutes the best available data to assist hospitals in making reclassification decisions. In addition, section 1886(d)(8)(D) of the Act requires the Secretary to adjust the standardized amounts to ensure that aggregate payments under the IPPS after implementation of the provisions of certain sections of the Act, including section 1886(d)(10) of the Act for geographic reclassifications by the MGCRB, are equal to the aggregate prospective payments that would have been made absent these provisions. If hospitals were to withdraw or terminate reclassification statuses after the publication of the final rule, as the commenter suggested CMS permit, any resulting changes in t absent these provisions. If hospitals were to withdraw or terminate reclassification statuses after the publication of the final rule, as the commenter suggested CMS permit, any resulting changes in the wage index would not have been taken into account when calculating the IPPS standardized amounts in the final rule in accordance with the statutory budget neutrality requirement. Therefore, it is necessary that the values published in the final rule represent the final wage index values reflective of reclassification decisions. b. Revisions to § 412.273 To Simplify MGCRB Reinstatements As discussed in the previous section, under the regulations at § 412.273, hospitals that have been reclassified by the MGCRB are permitted to withdraw their applications if the request for withdrawal is received by the MGCRB any time before the MGCRB issues a decision on the application, or after the MGCRB issues a decision, provided the request for withdrawal is received by the MGCRB within 45 days of the date of filing for public inspection of the proposed rule at the website of the Office of the Federal Register, or within 7 calendar days of receiving a decision of the Administrator’s in accordance e date of filing for public inspection of the proposed rule at the website of the Office of the Federal Register, or within 7 calendar days of receiving a decision of the Administrator’s in accordance with § 412.273, whichever is later. Hospitals may also terminate an existing approved reclassification, effective for the second and third year of the three year reclassification period or both, provided the request for termination is received by the MGCRB within 45 days of the date of filing for public inspection of the proposed rule at the website of the Office of the Federal Register, or within 7 calendar days of receiving a decision of the Administrator’s in accordance with § 412.273, whichever is later. Furthermore, these withdrawal and termination requests may be cancelled by submitting a request by the next application deadline for MGCRB application, reinstating the withdrawn or terminated reclassification for the remaining years of the reclassification. We believe this process allows hospitals to maintain flexibility in choosing the optimal reclassification status for any given fiscal year, while balancing the need for consistency and predictability of the wage index system. H ows hospitals to maintain flexibility in choosing the optimal reclassification status for any given fiscal year, while balancing the need for consistency and predictability of the wage index system. However, we also believe the regulations § 412.273 can be confusing and contain complicated definitions and language. We proposed revisions to multiple paragraphs of § 412.273 to clarify current policy and revise definitions in a more straightforward and understandable manner. The first consideration is CMS’s definitions of a withdrawal and a termination in § 412.273(a). Termination refers to the termination of an already existing 3-year MGCRB reclassification where such reclassification has already been in effect for 1 or 2 years, and there are 1 or 2 years remaining on the 3-year reclassification. A termination is effective only for the full fiscal year(s) remaining in the 3-year period at the time the request is received. Requests for terminations for part of a fiscal year are not considered. Withdrawal refers to the withdrawal of a 3-year MGCRB reclassification that has not yet gone into effect or where the MGCRB has not yet issued a decision on the application. Stated generally, a ered. Withdrawal refers to the withdrawal of a 3-year MGCRB reclassification that has not yet gone into effect or where the MGCRB has not yet issued a decision on the application. Stated generally, a withdrawal is an action taken upon a reclassification that has either not yet been reviewed by the MGCRB, or an approved reclassification due to go into effect in that upcoming fiscal year, and a termination is an action taken on an approved reclassification that has already gone into effect. There are policy considerations for defining withdrawals and terminations separately. For example, county group reclassification withdrawals must include all parties to the application, while a termination may be submitted by any individual hospital that is party to the application. For reasons discussed later in this section, we stated in the proposed rule that we continue to believe this is the appropriate policy. However, we also stated that we believe that specifically citing this policy exception in regulation is more straightforward than maintaining differing definitions for substantially similar actions. Therefore, for consistency and simplicity we proposed to modify the definition of a wit in regulation is more straightforward than maintaining differing definitions for substantially similar actions. Therefore, for consistency and simplicity we proposed to modify the definition of a withdrawal to only include requests made prior to a decision being made by the MGCRB. The definition of termination would encompass all post- decision actions to forgo the upcoming years of an approved reclassification. Specifically, we proposed to modify § 412.273(a) to provide that a termination refers to the termination of an approved 3-year MGCRB reclassification. A termination is effective only for the full fiscal year(s) remaining in the 3-year period at the time the request is received. Requests for terminations for part of a fiscal year are not considered. We also specified that a withdrawal refers to the withdrawal of a 3-year MGCRB reclassification where the MGCRB has not yet issued a decision on the application. We also proposed to remove § 412.273(c)(1)(i) and (ii) and revise paragraph (c)(1) to indicate that a request for withdrawal must be received by the MGCRB at any time before the MGCRB issues a decision on the application. There is also a current process for cancelling a graph (c)(1) to indicate that a request for withdrawal must be received by the MGCRB at any time before the MGCRB issues a decision on the application. There is also a current process for cancelling an eligible withdrawal or termination in order to make the reclassification effective for any remaining years of the 3-year reclassification period. We noted that this process is widely referring to as a request for ‘‘reinstatement.’’ To provide clarity and consistency, we proposed to modify several references in VerDate Sep 2014 00:36 Aug 02, 2025 Jkt 265001 PO 00000 Frm 00313 Fmt 4701 Sfmt 4700 E:\FR\FM\04AUR2.SGM 04AUR2 2 S E L U R h t i w D O R P 4 4 1 S 7 W 9 K S D n o d n o m m a h k 36848 Federal Register / Vol. 90, No. 147 / Monday, August 4, 2025 / Rules and Regulations § 412.273(d) from ‘‘cancelling’’ or a ‘‘cancellation’’ to ‘‘reinstating’’ or ‘‘reinstatement.’’ As we proposed that withdrawals be limited to applications prior to approval, a proposed reinstatement will only apply to the proposed modified definition of a termination. Therefore, we proposed to delete the references to withdrawals from § 412.273(d)(1). As discussed earlier in this section, we continue to believe to the proposed modified definition of a termination. Therefore, we proposed to delete the references to withdrawals from § 412.273(d)(1). As discussed earlier in this section, we continue to believe that all parties to a county group reclassification must participate on any action prior to the effective date of a group reclassification. Under current policy, this will include whether to withdraw a reclassification in the timeframe described at § 412.273(c)), and whether to cancel an approved reclassification withdrawal request to reinstate the remaining second and third year of the approved group reclassification, as described at § 412.273(d)(2). In the proposed rule, we stated that we believe that requiring these actions to include all parties to the group reclassification reduces the possibility of one or more parties withdrawing from a reclassification to the benefit or detriment of other hospitals reclassified to that labor market area. For example, a hospital may be incentivized to withdraw a potentially beneficial reclassification if the exclusion of its wage data in the reclassified area will increase the wage index value. This type of manipulation of reclassification polic to withdraw a potentially beneficial reclassification if the exclusion of its wage data in the reclassified area will increase the wage index value. This type of manipulation of reclassification policy does not encourage stability or predictability of wage index system and is contrary to the concept of providing hospitals in a county an opportunity to obtain a reclassification that they may not be able to obtain through an individual reclassification. Therefore, we proposed to continue the current policy by modifying the current regulation to explicitly state that the proposed modified withdrawal requests and proposed modified termination and reinstatement requests made prior to the effective date of the reclassification (that is, any request made prior to the first year the reclassification goes into effect), must include all parties to the application. Specifically, we proposed to modify § 412.273(e), by modifying paragraph (e)(2) to state that a request to terminate an approved individual reclassification must be submitted in writing to the MGCRB according to the method prescribed by the MGCRB and adding a new paragraph (e)(3) specifying that a request to terminate or reinstate vidual reclassification must be submitted in writing to the MGCRB according to the method prescribed by the MGCRB and adding a new paragraph (e)(3) specifying that a request to terminate or reinstate an approved group reclassification must be submitted in writing to the MGCRB according to the method prescribed by the MGCRB. A request to terminate or reinstate an approved group reclassification that has not yet gone into effect must include all hospitals party to the reclassification. Termination requests for group reclassification for the second or third year of the 3-year wage index reclassification period and reinstatement requests for a group reclassification effective for the third year of the 3-year wage index reclassification period may be submitted by any individual hospital that is party to the reclassification. We stated that we believe that this proposal to explicitly state this policy regarding county group reclassification in regulation reduces confusion for hospitals and more clearly addresses our intent. To provide clarity, we also proposed to state that a termination of a 3-year reclassification defined at § 412.273(d)(4) is not eligible to be reinstated. This type o ore clearly addresses our intent. To provide clarity, we also proposed to state that a termination of a 3-year reclassification defined at § 412.273(d)(4) is not eligible to be reinstated. This type of termination of an approved reclassification occurs when a hospital receives a different MGCRB reclassification in a subsequent fiscal year. Under current policy, hospitals may effectively choose between accepting a newly approved reclassification, or to withdraw it and ‘‘fallback’’ to a previously approved reclassification. We stated in the proposed rule that we believe this provides sufficient flexibility for hospitals to obtain the most beneficial reclassification. However, once an approved reclassification goes into effect, we believe it is appropriate to permanently terminate other previously approved reclassifications. Doing so provides a degree of predictability and consistency in the wage index calculations by limiting hospitals to a total of two potential MGCRB reclassification options. This is the current policy of CMS and the current practice of the MGCRB. We proposed specifically to state this policy in regulation by providing in § 412.273(d)(4) that the terminated reclass ptions. This is the current policy of CMS and the current practice of the MGCRB. We proposed specifically to state this policy in regulation by providing in § 412.273(d)(4) that the terminated reclassification in such a case is not eligible for reinstatement. We proposed the preceding changes to become effective for requests made beginning in FY 2026. The current policies and definitions will continue for the remainder of FY 2025. We noted that hospitals currently use the Office of Hearings Case and Document Management System (OH CDMS) to enter and maintain their MGCRB cases, and to correspond with the Office of Hearings. We are aware that the proposed changes would require system changes to the OH CDMS, and there could be some delay in revising certain terminology. However, these changes are not intended to significantly modify current policies and practices. Instead, they serve to clarify and simplify the process of determining whether an approved reclassification should be accepted and applied in a given fiscal year. We also stated that we believe that in making these changes, the regulation will provide clearer instructions to hospitals. Finally, we noted that under the current