## Friday, November 26, 2004



# Part III


# Department of Health and Human Services

Centers for Medicare & Medicaid Services

42 CFR Part 416 Medicare Program; Update of Ambulatory Surgical Center List of Covered Procedures; Proposed Rule


### 69178 Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Proposed Rules

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 416

[CMS–1478–P]

RIN: 0938–AM85

Medicare Program; Update of Ambulatory Surgical Center List of Covered Procedures

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

ACTION : Proposed rule.

SUMMARY : This proposed rule would make additions to and deletions from the current list of Medicare approved ambulatory surgical center (ASC) procedures.

DATES : To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on January 25, 2005.

ADDRESSES : In commenting, please refer to file code CMS–1478–P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. You may submit comments in one of three ways (no duplicates, please): 1. Electronically. You may submit electronic comments to http:// www.cms.hhs.gov/regulations/
ecomments or to http:// www.regulations.gov (attachments should be in Microsoft Word, WordPerfect, or Excel; however, we prefer Microsoft Word).

2. By mail. You may mail written comments (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–1478–P, P.O. Box 8013, Baltimore, MD 21244–8013.

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

3. By hand or courier. If you prefer, you may deliver (by hand or courier) your written comments (one original and two copies) before the close of the comment period to one of the following addresses. If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786– 7195 in advance to schedule your arrival with one of our staff members. Room 445–G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security Boulevard, Baltimore, MD 21244–1850. (Because access to the interior of the HHH Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)

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

For information on viewing public comments, see the beginning of the

SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT : Bob Cereghino, (410) 786–4645.

SUPPLEMENTARY INFORMATION :

Submitting Comments: We welcome comments from the public on all issues set forth in this proposed rule to assist us in fully considering issues and developing policies. You can assist us by referencing the file code CMS–1478– P and the specific ‘‘issue identifier’’ that precedes the section on which you choose to comment.

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. After the close of the comment period, CMS posts all electronic comments received before the close of the comment period on its public Web site. Comments received timely will be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone (410) 786–7195.
Copies

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.

This Federal Register document is also available from the Federal Register online database through GPO Access , a service of the U.S. Government Printing Office. The Web site address is: http:// www.gpoaccess.gov/fr/index.html I. Background A. Legislative History

Section 1832(a)(2)(F)(i) of the Social Security Act (the Act) provides that benefits under the Medicare Supplementary Medical Insurance program (Part B) include payment for facility services furnished in connection with surgical procedures we specify and which are performed in an ambulatory surgical center (ASC). To participate in the Medicare program as an ASC, a facility must meet the standards specified in section 1832(a)(2)(F)(i) of the Act; in 42 CFR 416.25, which sets forth general conditions and requirements for ASCs; and, in 42 CFR 416, Subpart C, which provides specific conditions for coverage for ASCs.

There are two primary elements in the total cost of performing a surgical procedure—the cost of the physician’s professional services in performing the procedure and the cost of items and services furnished by the facility where the procedure is performed (for example, surgical supplies and equipment and nursing services). This proposed notice addresses the second element, the coverage and payment of facility fees for ASC services under the current payment system. As we note below, section 626(b) of the Medicare Prescription, Improvement and Modernization Act of 2003 (MMA) requires that we develop a revised payment system for ASC facility services that would be implemented no earlier than January 1, 2006. This proposed rule addresses additions to and deletions from the list of Medicare approved ASC procedures prior to the implementation of that revised payment system.

Under the current ASC facility services payment system, the ASC payment rate is a standard overhead amount established on the basis of our estimate of a fair fee that takes into account the costs incurred by ASCs generally in providing facility services in connection with performing a specific procedure. The report of the Conference Committee accompanying


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section 934 of the Omnibus Budget Reconciliation Act of 1980 (OBRA) (Pub. L. 96

– 499), which enacted the ASC benefit in December 1980, states that this overhead factor is expected to be calculated on a prospective basis using sample survey and similar techniques to establish reasonable estimated overhead allowances, which take account of volume (within reasonable limits), for each of the listed procedures. (See H.R. Rep. No. 96

– 1479, at 134 (1980)).

To establish those reasonable estimated allowances for services furnished prior to implementation of the revised payment system mandated by the MMA, we are required by section 1833(i)(2)(A)(i) of the Act, as amended by section 626(b)(1) of MMA, to take into account the audited costs incurred by ASCs to perform a procedure, in accordance with a survey. Payment for ASC facility services is subject to the usual Medicare Part B deductible and coinsurance requirements, and the amounts paid by Medicare must be 80 percent of the standard fee.

Section 1833(i)(1) of the Act requires us to specify, in consultation with appropriate medical organizations, surgical procedures that can be safely performed in an ASC and to review and update the list of ASC procedures at least every two years.

Section 141(b) of the Social Security Act Amendments of 1994 (SSAA 1994) requires us to establish a process for reviewing the appropriateness of the payment amount provided under section 1833(i)(2)(A)(iii) of the Act forIOLs with respect to a class of newtechnology IOLs. That process was the subject of a separate final rule entitled

‘‘ Adjustment in Payment Amounts for New Technology Intraocular Lenses Furnished by Ambulatory Surgical Centers, ’’ published on June 16, 1999 in the Federal Register (64 FR 32198). B. Summary of Updates of the ASC List

Section 934 of the Omnibus Budget Reconciliation Act of 1980 amended sections 1832(a)(2) and 1833 of the Act to authorize the Secretary to specify surgical procedures that, although appropriately performed in an inpatient hospital setting, can also be performed safely on an ambulatory basis in an ASC, a hospital outpatient department, or a rural primary care hospital. The report accompanying the legislation explained that the Congress intended procedures currently performed on an ambulatory basis in a physician ’ s office that do not generally require the more elaborate facilities of an ASC not be included in the list of covered procedures (H.R. Rep. No. 96

– 1167, at 390, reprinted in 1980 U.S.C.C.A.N. 5526, 5753). In a final rule published August 5, 1982 in the Federal Register (47 FR 34082), we established regulations that included criteria for specifying which surgical procedures were to be included for purposes of implementing the ASC facility benefit.

Subsequently, in accordance with 42 CFR 416.65(c), we published updates of the ASC list in the Federal Register on April 21, 1987 (52 FR 13176), June 1, 1989 (54 FR 23540), December 31, 1991 (56 FR 67666), January 26, 1995 (60 FR 5185), and March 28, 2003 (68 FR 15268).

During years when we do not update the list through the proposed rule and comment process in the Federal Register , we revise the list to be consistent with annual calendar year changes in codes established by the American Medical Association (AMA) Current Procedural Terminology (CPT), removing from the ASC list codes that are deleted by CPT and adding new codes that replace codes already on the ASC list. These annual CPT updates are implemented through program instructions to carriers who process ASC claims. C. Regulatory Requirements
1. Sections 416.65(a) and (b)

Section 416.65(a) specifies general standards for procedures on the ASC list. ASC procedures are those surgical and medical procedures that are:

• Commonly performed on an inpatient basis but may be safely performed in an ASC;

• Not of a type that are commonly performed or that may be safely performed in physicians ’ offices;

• Limited to procedures requiring a dedicated operating room or suite and generally requiring a post-operative recovery room or short term (not overnight) convalescent room; and

• Not otherwise excluded from Medicare coverage.

Specific standards in § 416.65(b) limit ASC procedures to those that do not generally exceed 90 minutes operating time and a total of 4 hours recovery or convalescent time. If anesthesia is required, the anesthesia must be local or regional anesthesia, or general anesthesia of not more than 90 minutes duration.

Section 416.65(c) excludes from the ASC list procedures that generally result in extensive blood loss, that require major or prolonged invasion of body cavities, that directly involve major blood vessels, or that are generally emergency or life-threatening in nature. 2. Criteria for Additions to or Deletions From the ASC List

In April 1987, we adopted quantitative criteria as a tool for identifying procedures that were commonly performed either in a hospital inpatient setting or in a physician ’ s office. Collectively, commenters responding to a notice published on February 16, 1984 in the Federal Register (49 FR 6023) had recommended that virtually every surgical CPT code be included on the ASC list. Consulting with other specialist physicians and medical organizations as appropriate, our medical staff reviewed the recommended additions to the list to determine which code or series of codes were appropriately performed on an ambulatory basis within the framework of the regulatory criteria in § 416.65. However, when we arrayed the proposed procedures by the site where they were most frequently performed according to our claims payment data files (1984 Part B Medicare Data (BMAD)), we found that many codes were not commonly performed on an inpatient basis or were performed in a physician ’ s office the majority of the time, and, thus, would not meet the standards in our regulations. Therefore, we decided that if a procedure was performed on an inpatient basis 20 percent of the time or less, or in a physician ’ s office 50 percent of the time or more, it would be excluded from the ASC list. (See Federal Register April 21, 1987 (52 FR 13176).)

At the time, we believed that these utilization thresholds best reflected the legislative objectives of moving procedures from the more expensive hospital inpatient setting to the less expensive ASC setting without encouraging the migration of procedures from the less expensive physician ’ s office setting to the ASC. We applied these quantitative standards not only to codes proposed for addition to the ASC list, but also to the codes that were currently on the list, to delete codes that did not meet the thresholds.

The trend towards performing surgery on an ambulatory or outpatient basis grew steadily, and, by 1995, we discovered that a number of procedures that were on the ASC list at the time fell short of the 20 percent and 50 percent thresholds even though the procedures were obviously appropriate in the ASC setting. The most notable of these was cataract extraction with intraocular lens insertion, very few cases of which were being performed on an inpatient basis by the early 1990s. We were also excluding from the ASC list certain


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newer procedures, such as CPT code 66825, Repositioning of intraocular lens prosthesis, requiring an incision (separate procedure), that were rarely performed on a hospital inpatient basis but that were appropriate for the ASC setting. Strict adherence to the same 20 percent and 50 percent thresholds both to add and remove procedures did not provide latitude for minor fluctuations in utilization across settings or errors that could occur in the site-of-service data drawn from the National Claims History File that we were then using, replacing BMAD data, for analysis.

In an effort to avoid these anomalies but still retain a relatively objective standard for determining which procedures should comprise the ASC list, we adopted in the Federal Register notice published on January 26, 1995 (60 FR 5185) a modified standard for deleting procedures already on the list. We deleted from the list only those procedures whose combined inpatient, hospital outpatient, and ASC site of service volume was less than 46 percent of the procedure ’ s total volume and that were either performed 50 percent of the time or more in the physician ’ s office or 10 percent of the time or less in an inpatient hospital setting. We retained the 20 percent and 50 percent standard to determine which procedures would be appropriate additions to the ASC list. D. Office of the Inspector General Recommendations, January 2003

In January 2003, the Office of the Inspector General (OIG) issued the results of a study entitled ‘‘ Payments for Procedures in Outpatient Departments and Ambulatory Surgical Centers ’ (OEI

– 05

– 00

– 00340). The objective of that study was to determine the extent to which Medicare payments for the same procedure codes continue to vary between hospital outpatient departments and ambulatory surgical centers and to assess the effect of this variance on the Medicare program.

The OIG concluded, as a result of its study, that there should be a greater parity of payments for services performed in an outpatient setting and those performed in ASCs. The OIG based this conclusion both on its belief that the Congress intended Medicare to be a prudent purchaser of services and to pay only for those costs that are necessary for the efficient delivery of needed health services and on its finding that disparities in Medicare payment amounts for the same services furnished in ASCs and hospital outpatient departments resulted in an estimated $1.1 billion in additional Medicare program payments. The OIG also found that CMS ’ s failure to remove certain procedure codes from the list of ASC-approved procedures resulted in an estimated $8 to $14 million in additional Medicare program payments.

The OIG recommended that we

—

• Seek authority to set rates that are consistent across sites and reflect only the costs necessary for the efficient delivery of health services,

• Conduct and use timely ASC-survey data to reevaluate ASC-payment rates, and

• Remove the procedure codes that meet our criteria for removal from the ASC list of covered procedures. (In its final report, the OIG included a list of 72 CPT codes that it found, based on its analysis of calendar year 1999 data, met our criteria for deletion from the ASC list.)

In our response to the OIG ’ s recommendations, we indicated that we would consider the OIG ’ s first recommendation as we develop future legislative proposals. In response to the second recommendation, we indicated our concerns about using survey data as the basis for setting ASC payment rates and that we were considering how to implement the survey requirement. (Enactment of section 626(b) of the MMA repealing the survey requirement and mandating implementation of a revised payment system in accordance with certain requirements set forth in the MMA supersedes our earlier response to this OIG recommendation.)

In this proposed notice, we are taking action to address the OIG ’ s third recommendation, that we remove codes that meet our criteria for deletion from the ASC list. We did not address this recommendation in the March 28, 2003 final rule with comment period, because we had not provided an opportunity for public comment on the OIG ’ s recommended deletions prior to issuance of the March 28, 2003 final rule. However, in this proposed notice, we are proposing to remove 54 of the 72 procedure codes recommended by the OIG for deletion from our current list. These codes are included in the list of proposed deletions in Table 2. In section II.C. of this proposed notice, we discuss why we are proposing to retain 11 of the procedures recommended for deletion by the OIG. Seven codes proposed for deletion by the OIG were removed from the ASC list effective July 1, 2003. E. Current ASC Payment Rates

Procedures on the ASC list are assigned to one of nine payment groups based on our estimate of the costs incurred by the facility to perform a procedure. Payment groups 1 through 8 were first implemented in September 1990, based on a survey of ASC costs conducted in 1986 (55 FR 4539). Payment group 9 was added on December 31, 1991 (56 FR 67666) to establish a payment rate for extracorporeal shockwave lithotripsy (ESWL). There is no clinical consistency among the procedures in a payment group. Rather, assignment to a payment group is based solely on an estimate of facility costs associated with performing the procedures.

In a proposed rule published on June 12, 1998 in the Federal Register (63 FR 32290), we proposed a new ratesetting methodology based on ambulatory payment classification (APC) groups that were proposed for the new hospital outpatient prospective payment system (OPPS). We used data from a survey of ASC costs collected in 1994 as the basis for the APC payment rates in the June 12, 1998 proposed rule. The Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106

– 113) required us to phase in full implementation of the proposed ASC rates over a 3-year period. The Medicare, Medicaid and SCHIP Benefit Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106

– 554) prohibited implementation of a revised prospective payment system for ASCs before January 1, 2002 and required that, by January 1, 2003, ASC rates be rebased using data from a 1999 or later Medicare survey of ASC costs.

We discuss in the final rule published on March 28, 2003 in the Federal Register (68 FR 15270) the reasons why we did not implement the requirements set forth in BBRA and BIPA with regard to rebasing ASC payment rates. The March 28, 2003 final rule with comment period implemented additions to and deletions from the ASC list that had been proposed in the June 12, 1998 proposed rule, but did not implement any of the other proposed changes, including the proposed ratesetting methodology. We indicated that we were studying approaches to ratesetting, some of which may require legislative changes.

Section 626(b) of MMA repeals the requirement that we conduct a survey of ASC costs as the basis for rebasing ASC rates and requires us to implement a revised payment system between January 1, 2006 and January 1, 2008, that takes into account recommendations in the report to the Congress that is to be submitted by January 1, 2005 by the Comptroller General of the United States. Section 626(b)(1) amends section 1833(i)(2) of Act, requiring us to base payment for ASC services on survey data prior to implementation of the revised payment system. Therefore, the proposed


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additions to the ASC list in this proposed notice are assigned to one of the existing nine ASC payment groups and rates that are derived from data collected in the 1986 survey of ASC costs, updated for inflation. The proposed payment group for each addition to the ASC list in this proposed notice is based on the payment group to which procedures currently on the list, which our medical advisors judged to be similar in terms of time and resource inputs, are assigned. As of April 1, 2004, in accordance with the requirements in section 626(a) of MMA and instructions that we issued to our contractors who process ASC claims in Transmittal 51, Change Request 3082, on February 6, 2004, the ASC payment rates are the following: Group 1, $333 Group 2, $446 Group 3, $510 Group 4, $630 Group 5, $717 Group 6, $826 ($676 plus $150 for IOL) Group 7, $995 Group 8, $973 ($823 plus $150 for IOL) Group 9, $1339 II. Provisions of the Proposed Notice A. Proposed Additions
(If you choose to comment on issues in this section, please include the caption

‘‘ PROPOSED ADDITIONS ’’ at the beginning of your comments.) 1. Proposed Additions Recommended by Commenters and Other Interested Parties

Commenters recommended that the codes in Table 1 be added to the list of Medicare-approved ASC procedures. These proposed additions are based on comments and recommendations that have been communicated to us by trade associations, medical specialty societies, physicians, ASC staff, and other individuals and organizations since the close of the extended comment period for the June 12, 1998 proposed rule, which ended July 30, 1999. After careful review by our medical staff to determine whether these procedures are consistent with our criteria (see section I.C.2 of this proposed notice), we agree with commenters that the procedures in Table 1 are appropriate and safely performed in an ASC setting. Therefore, we are proposing to add the following CPT codes to the ASC list and to assign them to the payment group that is designated for each code:



### T ABLE 

### 1.—P ROPOSED 

### A DDITIONS 

### R ECOMMENDED BY 

### C OMMENTERS AND 

### O THER 

### I NTERESTED 

### P ARTIES

HCPCS code Short descriptor Payment group Payment amount

15001 ........................................................................................ Skin graft add-on ................. ..................... 1 $333 15836 ........................................................................................ Excise excessive skin tissue ...... .............. 3 510 15839 ........................................................................................ Excise excessive skin tissue ...... .............. 3 510 21120 ........................................................................................ Reconstruction of chin ............ .................. 7 995 21125 ........................................................................................ Augmentation, lower jaw bone ...... ........... 7 995 29873 ........................................................................................ Knee arthroscopy/surgery .......... ............... 3 510 30220 ........................................................................................ Insert nasal septal button ........ ................. 3 510 31500 ........................................................................................ Insert emergency airway ........... ............... 1 333 31603 ........................................................................................ Incision of windpipe .............. .................... 1 333 35475 ........................................................................................ Repair arterial blockage .......... .................. 9 1,339 35476 ........................................................................................ Repair venous blockage ............ ............... 9 1,339 36834 ........................................................................................ Repair AV aneurysm ................ ................ 3 510 37205 ........................................................................................ Transcatheter stent ............... .................... 9 1,339 37206 ........................................................................................ Transcatheter stent add-on ........ .............. 9 1,339 37500 ........................................................................................ Endoscopy ligate perf veins ....... .............. 3 510 42665 ........................................................................................ Ligation of salivary duct ......... ................... 7 995 44397 ........................................................................................ Colonoscopy w/stent ............... .................. 1 333 45327 ........................................................................................ Proctosigmoidoscopy w/stent ....... ............ 1 333 45341 ........................................................................................ Sigmoidoscopy w/ultrasound ........ ............ 1 333 45342 ........................................................................................ Sigmoidoscopy w/us guide bx ....... ........... 1 333 45345 ........................................................................................ Sigmoidoscopy w/stent ............. ................ 1 333 45387 ........................................................................................ Colonoscopy w/stent ............... .................. 1 333 57288 ........................................................................................ Repair bladder defect ............. .................. 5 717 62264 ........................................................................................ Epidural lysis on single day ...... ................ 1 333 67343 ........................................................................................ Release eye tissue ................ ................... 7 995

2. CPT Code Changes in 2004

Effective for services furnished on or after January 1, 2004, we revised the ASC list to reflect changes in the 2004 CPT (Transmittal AB

– 03

– 137, Change Request 2890, issued August 29, 2003). We deleted from the ASC list the following codes that were discontinued in the 2004 CPT:

HCPCS code Short descriptor

36488 .......................................................................................................................... ......................... Insertion of catheter, vein. 36489 .......................................................................................................................... ......................... Insertion of catheter, vein. 36490 .......................................................................................................................... ......................... Insertion of catheter, vein. 36491 .......................................................................................................................... ......................... Insertion of catheter, vein. 36530 .......................................................................................................................... ......................... Insertion of infusion pump. 36531 .......................................................................................................................... ......................... Revision of infusion pump. 36532 .......................................................................................................................... ......................... Removal of infusion pump. 36533 .......................................................................................................................... ......................... Insertion of access device. 36534 .......................................................................................................................... ......................... Revision of access device. 36535 .......................................................................................................................... ......................... Removal of access device.


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We added to the ASC list the following new codes created in the 2004 CPT to replace the discontinued codes:

HCPCS code Short descriptor Payment group Payment amount

36555 ........................................................................................ Insert non-tunnel cv cath ......... ................. 1 $333 36556 ........................................................................................ Insert non-tunnel cv cath ......... ................. 1 333 36557 ........................................................................................ Insert tunneled cv cath ........... .................. 2 446 36558 ........................................................................................ Insert tunneled cv cath ........... .................. 2 446 36560 ........................................................................................ Insert tunneled cv cath ........... .................. 3 510 36561 ........................................................................................ Insert tunneled cv cath ........... .................. 3 510 36563 ........................................................................................ Insert tunneled cv cath ........... .................. 3 510 36565 ........................................................................................ Insert tunneled cv cath ........... .................. 3 510 36566 ........................................................................................ Insert tunneled cv cath ........... .................. 3 510 36568 ........................................................................................ Insert tunneled cv cath ........... .................. 1 333 36569 ........................................................................................ Insert tunneled cv cath ........... .................. 1 333 36570 ........................................................................................ Insert tunneled cv cath ........... .................. 3 510 36571 ........................................................................................ Insert tunneled cv cath ........... .................. 3 510 36575 ........................................................................................ Repair tunneled cv cath ........... ................. 2 446 36576 ........................................................................................ Repair tunneled cv cath ........... ................. 2 446 36578 ........................................................................................ Replace tunneled cv cath .......... ............... 2 446 36580 ........................................................................................ Replace tunneled cv cath .......... ............... 1 333 36581 ........................................................................................ Replace tunneled cv cath .......... ............... 2 446 36582 ........................................................................................ Replace tunneled cv cath .......... ............... 3 510 36583 ........................................................................................ Replace tunneled cv cath .......... ............... 3 510 36584 ........................................................................................ Replace tunneled cv cath .......... ............... 1 333 36585 ........................................................................................ Replace tunneled cv cath .......... ............... 3 510 36589 ........................................................................................ Removal tunneled cv cath .......... .............. 1 333 36590 ........................................................................................ Removal tunneled cv cath .......... .............. 1 333

B. Proposed Deletions
(If you choose to comment on issues in this section, please include the caption

‘‘ PROPOSED DELETIONS ’’ at the beginning of your comments.)

Our medical advisors, in accordance with the statutory requirement that we review and update the ASC list at least every two years, reviewed the current ASC list against the criteria discussed in section I.C.2 of this proposed rule. We also carefully considered and took into account deletions recommended by medical specialty societies and other commenters. Further, we reviewed the codes that the OIG recommended be deleted from the ASC list. (See section I.D. of this proposed rule). In most cases, our medical advisors agreed that the procedures recommended by the OIG for deletion no longer meet the criteria for ASC procedures, and we are proposing to delete most of those codes from the ASC list, as indicated in Table 2. We removed the following seven codes recommended for deletion by the OIG from the ASC list effective July 1, 2003: 21920, 42104, 51725, 56405, 56605, 62367, and 62368. However, there are 11 codes the OIG recommended for deletion that we believe should remain on the ASC list for reasons that we discuss in section II.C of this proposed notice. Based on our review, we are proposing to delete from the ASC list the codes listed in Table 2, for the reasons specified.

Rationale for deletion is indicated as follows: 1. Procedure is performed in physician ’ s office more than 50 percent of the time.

2. Medical specialty organizations recommended deletion because of safety

concerns.

3. Procedure is performed predominantly in the inpatient setting.

4. OIG recommended for deletion and CMS medical advisors concur.



### T ABLE 

### 2.

— P ROPOSED 

### D ELETIONS 

### F ROM THE 

### ASC L IST

HCPCS code Short descriptor Rationale

11404 ................................................................................................................... Removal of skin lesion .................................. 4 11424 ................................................................................................................... Removal of skin lesion .................................. 4 11444 ................................................................................................................... Removal of skin lesion .................................. 4 11446 ................................................................................................................... Removal of skin lesion .................................. 4 11604 ................................................................................................................... Removal of skin lesion .................................. 4 11624 ................................................................................................................... Removal of skin lesion .................................. 4 11644 ................................................................................................................... Removal of skin lesion .................................. 4 12021 ................................................................................................................... Closure of split wound .................................. 4 13100 ................................................................................................................... Repair of wound or lesion ............................. 4 13101 ................................................................................................................... Repair of wound or lesion ............................. 4 13120 ................................................................................................................... Repair of wound or lesion ............................. 4 13121 ................................................................................................................... Repair of wound or lesion ............................. 4 13131 ................................................................................................................... Repair of wound or lesion ............................. 4 13132 ................................................................................................................... Repair of wound or lesion ............................. 4 13150 ................................................................................................................... Repair of wound or lesion ............................. 4 13151 ................................................................................................................... Repair of wound or lesion ............................. 4 13152 ................................................................................................................... Repair of wound or lesion ............................. 4 14000 ................................................................................................................... Skin ti ssue rearrangement ............................ 4 14020 ................................................................................................................... Skin ti ssue rearrangement ............................ 4


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T ABLE 

### 2.

— P ROPOSED 

### D ELETIONS 

### F ROM THE 

### ASC L IST



### — Continued

HCPCS code Short descriptor Rationale

14021 ................................................................................................................... Skin ti ssue rearrangement ............................ 4 14040 ................................................................................................................... Skin ti ssue rearrangement ............................ 4 14041 ................................................................................................................... Skin ti ssue rearrangement ............................ 4 14060 ................................................................................................................... Skin ti ssue rearrangement ............................ 4 14061 ................................................................................................................... Skin ti ssue rearrangement ............................ 4 15732 ................................................................................................................... Muscle- skin graft, head/neck ........................ 2 15734 ................................................................................................................... Muscle- skin graft, trunk ................................. 2 15738 ................................................................................................................... Muscle- skin graft, leg .................................... 2 15740 ................................................................................................................... Island pedicle flap graft ................................. 4 19100 ................................................................................................................... Bx brea st percut w/o image .......................... 4 20670 ................................................................................................................... Removal of support implant .......................... 4 21040 ................................................................................................................... Removal of jaw bone lesion .......................... 1 21050 ................................................................................................................... Removal of jaw joint ...................................... 2 21206 ................................................................................................................... Reconst ruct upper jaw bone ......................... 1 21210 ................................................................................................................... Face bo ne graft ............................................. 1 21249 ................................................................................................................... Reconst ruction of jaw .................................... 1 21325 ................................................................................................................... Treatme nt of nose fracture ........................... 1 21355 ................................................................................................................... Treat c heek bone fracture ............................. 1 21440 ................................................................................................................... Treat d ental ridge fracture ............................ 1 21485 ................................................................................................................... Reset d islocated jaw ..................................... 1 22305 ................................................................................................................... Treat s pine process fracture ......................... 4 23600 ................................................................................................................... Treat h umerus fracture ................................. 4 23620 ................................................................................................................... Treat h umerus fracture ................................. 4 24576 ................................................................................................................... Treat h umerus fracture ................................. 1 24670 ................................................................................................................... Treat u lnar fracture ....................................... 4 25505 ................................................................................................................... Treat f racture of radius ................................. 1 26605 ................................................................................................................... Treat m etacarpal fracture .............................. 4 27520 ................................................................................................................... Treat k neecap fracture .................................. 4 27760 ................................................................................................................... Treatme nt of ankle fracture ........................... 4 27780 ................................................................................................................... Treatme nt of fibula fracture ........................... 4 27786 ................................................................................................................... Treatme nt of ankle fracture ........................... 4 27808 ................................................................................................................... Treatme nt of ankle fracture ........................... 4 28400 ................................................................................................................... Treatme nt of heel fracture ............................ 4 30801 ................................................................................................................... Cauteri zation, inner nose .............................. 4 30915 ................................................................................................................... Ligatio n, nasal sinus artery ........................... 2 30920 ................................................................................................................... Ligatio n, upper jaw artery ............................. 2 31233 ................................................................................................................... Nasal/s inus endoscopy, dx ........................... 4 31235 ................................................................................................................... Nasal/s inus endoscopy, dx ........................... 4 31237 ................................................................................................................... Nasal/s inus endoscopy, surg ........................ 4 31238 ................................................................................................................... Nasal/s inus endoscopy, surg ........................ 4 38505 ................................................................................................................... Needle biopsy, lymph nodes ......................... 4 40700 ................................................................................................................... Repair cleft lip/nasal ...................................... 2 40701 ................................................................................................................... Repair cleft lip/nasal ...................................... 2 40814 ................................................................................................................... Excise/ repair mouth lesion ............................ 4 41009 ................................................................................................................... Drainag e of mouth lesion .............................. 1 41010 ................................................................................................................... Incisio n of tongue fold ................................... 1 41112 ................................................................................................................... Excisio n of tongue lesion .............................. 4 41520 ................................................................................................................... Reconst ruction, tongue fold .......................... 1 41800 ................................................................................................................... Drainag e of gum lesion ................................. 1 41827 ................................................................................................................... Excisio n of gum lesion .................................. 1 42000 ................................................................................................................... Drainag e mouth roof lesion ........................... 1 42107 ................................................................................................................... Excisio n lesion, mouth roof ........................... 1 42200 ................................................................................................................... Reconst ruct cleft palate ................................ 2 42205 ................................................................................................................... Reconst ruct cleft palate ................................ 2 42210 ................................................................................................................... Reconst ruct cleft palate ................................ 2 42215 ................................................................................................................... Reconst ruct cleft palate ................................ 2 42220 ................................................................................................................... Reconst ruct cleft palate ................................ 2 42409 ................................................................................................................... Drainag e of salivary cyst ............................... 1 42425 ................................................................................................................... Excise parotid gland/lesion ........................... 3 42860 ................................................................................................................... Excisio n of tonsil tags ................................... 1 42892 ................................................................................................................... Revisio n pharyngeal walls ............................ 3 52000 ................................................................................................................... Cystosc opy .................................................... 4 52281 ................................................................................................................... Cystosc opy and treatment ............................ 4 53850 ................................................................................................................... Prostat ic microwave thermotx ....................... 1 55700 ................................................................................................................... Biopsy of prostate ......................................... 4 58820 ................................................................................................................... Drain o vary abscess, open ........................... 3 60000 ................................................................................................................... Drain t hyroid/tongue cyst .............................. 1 64420 ................................................................................................................... N block inj, intercost, sng .............................. 4 64430 ................................................................................................................... N block inj, pudendal .................................... 1 64736 ................................................................................................................... Incisio n of chin nerve .................................... 1 65800 ................................................................................................................... Drainag e of eye ............................................. 1 65805 ................................................................................................................... Drainag e of eye ............................................. 4


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T ABLE 

### 2.

— P ROPOSED 

### D ELETIONS 

### F ROM THE 

### ASC L IST



### — Continued

HCPCS code Short descriptor Rationale

67141 ................................................................................................................... Treatme nt of retina ........................................ 4 68340 ................................................................................................................... Separat e eyelid adhesions ............................ 1 68810 ................................................................................................................... Probe n asolacrimal duct ............................... 4 69145 ................................................................................................................... Remove ear canal lesion(s) .......................... 4 69450 ................................................................................................................... Eardrum revision ........................................... 2 69725 ................................................................................................................... Release facial nerve ..................................... 1 69740 ................................................................................................................... Repair facial nerve ........................................ 2 69745 ................................................................................................................... Repair facial nerve ........................................ 2 69840 ................................................................................................................... Revise inner ear window ............................... 1

C. Procedures Recommended for Deletion by OIG That We Propose To Retain on the ASC List

(If you choose to comment on issues in this section, please include the caption

‘‘ DELETIONS RECOMMENDED BY OIG ’’ at the beginning of your comments.) Our medical staff carefully reviewed the 72 codes recommended by the OIG for deletion from the ASC list to determine if they meet the criteria for ASC procedures. We agreed that 54 of the codes on the current ASC list recommended for deletion by the OIG no longer meet our criteria, and we are proposing to delete them from the ASC list (see Table 2). However, our medical advisors determined that for health and safety reasons, the following codes should be retained on the list:

HCPCS code Short descriptor

30802 .......................................................................................................................... ......................... Cauterization, inner nose. 31525 .......................................................................................................................... ......................... Diagnostic laryngoscopy. 31570 .......................................................................................................................... ......................... Laryngoscopy with injection. 45305 .......................................................................................................................... ......................... Proctosigmoidoscopy w/bx. 46050 .......................................................................................................................... ......................... Incision of anal abscess. 51710 .......................................................................................................................... ......................... Change of bladder tube. 51726 .......................................................................................................................... ......................... Complex cystometrogram. 51772 .......................................................................................................................... ......................... Urethra pressure profile. 52285 .......................................................................................................................... ......................... Cystoscopy and treatment. 67031 .......................................................................................................................... ......................... Laser surgery, eye strands. 67921 .......................................................................................................................... ......................... Repair eyelid defect.

CPT codes 30802, 31525 and 31570, according to our 2002 claims data, are being performed less than 50 percent in a physician office. Therefore, we are retaining these codes on the ASC list. While the remaining eight procedures may be safely performed in a physician ’ s office for the majority of patients, our medical advisors believe that, in certain cases, the patient ’ s health or medical condition may demand the more extensive services afforded by ASCs in order to ensure a safe surgical outcome. Therefore, we are proposing not to delete these codes from the ASC list. D. Proposed Changes in Response to Public Comments on the March 28, 2003 Final Rule With Comment Period

Only certain designated codes that we identified in the Addendum of the March 28, 2003 final rule with comment period published in the Federal Register (68 FR 15268) were subject to public comment during the 60-day comment period following publication of the rule. That is, we solicited comment on new codes created by CPT in 1999, 2000, 2001, 2002, and 2003 that we believe meet our criteria for the ASC list, but were not included in the additions to the ASC list that we proposed in the June 12, 1998 proposed rule and, therefore, were not among the proposed additions to the ASC list that we made final in the March 2003 final rule with comment period. We received more than 100 timely comments, the overwhelming majority of which addressed payment rates, codes, and issues other than the designated codes for which comments were solicited. Because these other issues were not subject to public comment, we are not responding to comments on them in this proposed notice. However, we did review recommended additions to and deletions from the ASC list and, where appropriate, we included those codes in Table 1 and Table 2, above. Only seven commenters addressed the designated codes that were subject to public
comment.

None of the commenters disagreed with the designated codes for which we requested comment on as additions to the ASC list. However, the seven commenters that addressed the designated codes that were subject to public comment disagreed with the payment group assignments for several of those codes. We address those comments below. Comment: Seven commenters recommended that the following CPT codes be assigned to a higher payment group for which we requested comment in the March 28, 2003 final rule with comment period: CPT codes 29827, 43231, 43232, 43240, 43242, 43256, 52344, 52345, and 52346.

Response: We did not make final the payment groups and rates based on data collected in a 1994 survey of ASC costs that we had proposed in the June 12, 1998 proposed rule. Because provisions in BIPA prohibited us from using the 1994 survey data to set rates, we had no data upon which to base payment rate assignments or changes in the March 28, 2003 final rule with comment period. Therefore, we assigned both the proposed and final additions to the ASC list in the March 28 final rule with comment period to payment groups to which related codes already on the list, that are similar in terms of time and resource inputs, are assigned. Although commenters expressed concern that the payment group assignments for the nine codes listed above were too low, they did not furnish information or data to demonstrate that resource costs for the codes were similar to resource costs associated with codes in higher


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payment groups. We reviewed the payment group assignments proposed for the nine codes cited by the commenters, and our medical advisors determined that, in the absence of corroborative data to the contrary, the payment groups proposed for the codes were appropriate and consistent with the method we explained in the March 28, 2003 final rule. Therefore, we are not proposing changes based on these comments in this proposed rule.

III. Collection of Information Requirements

This document does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 35).
IV. Response to Comments

Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the ‘‘ DATES ’’ section of this preamble, and, when we proceed with a subsequent document, we will respond to the comments in the preamble to that document. V. Regulatory Impact Statement A. Overall Impact

We have examined the impact of this proposed rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 16, 1980, Pub. L. 96

– 354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104

– 4), and Executive Order 13132.

Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). Our Actuary has prepared a fiscal impact estimate. As shown in the table below, for fiscal years 2005 through 2009, the effect on Medicare program expenditures if we implement the additions to and deletions from the ASC list proposed in this proposed rule is estimated to have zero impact in 2005, increasing to $20 million savings per year from 2007 through 2009. We expect the estimated savings to result from procedures proposed for deletion moving to a less costly office or clinic setting, and proposed additions shifting to ASCs from the more costly hospital setting. Therefore, this notice will not have a major impact on the Medicare budget.

FY Cost (tens of $ millions)

2005 .......................................... 0 2006 ..........................................

¥ 10 2007 ..........................................

¥ 20 2008 ..........................................

¥ 20 2009 ..........................................

¥ 20

The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and government agencies. Most hospitals and most other providers and suppliers are small entities, either because of their nonprofit status or because they have revenues of $6 million to $29 million in any 1 year. According to small business associations, approximately 73 percent of all ASCs are considered small entities because they have revenues of $11.5 million or less. Individuals and States are not included in the definition of a small entity.

Section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a proposed rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area and has fewer than 100 beds. This notice does not have a significant impact on the operations of small rural hospitals.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule that may result in expenditure in any 1 year by State, local or tribal governments, in the aggregate, or by the private sector, of $110 million. This proposed rule will not have an effect on the governments mentioned, and the private sector costs will be less than the $110 million threshold.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a final rule that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. This rule will not have a substantial effect on State or local governments. B. Anticipated Effects

The entities affected by this proposed notice are Medicare certified ASCs, physician offices and clinics, hospitals, and beneficiaries. No other providers are affected. This proposed rule will not affect State or local governments. There are more than 3,000 ASCs currentlycertified by Medicare, nearly threequarters of which fit the definition of a

‘‘ small entity ’’

.

This proposed rule would add 25 CPT codes to the ASC list of approved procedures. Professional societies, physicians, ASC administrators, and ASC associations recommended most of the codes proposed for addition to the ASC list. Currently, the procedures that we propose to add to the ASC list are performed predominantly in a hospital outpatient setting. Our medical advisors agree that the proposed additions meet the criteria for ASC procedures that are discussed in section I.C.2 of this preamble and that they can be safely and appropriately performed in an ASC.

Currently, if ASCs perform the 25 procedures proposed for addition, Medicare does not allow payment of an ASC facility fee. By adding these procedures to the ASC list, ASCs would benefit because Medicare would allow payment of a facility fee for the procedures. ASCs could serve a greater number of beneficiaries if they are able to offer an increased number of surgical services, and beneficiaries would have an additional setting from which to choose were it necessary for them to have one of these surgical procedures performed. We expect that most of the physician office volume for the proposed additions will, to the limited extent they are performed in physician offices, migrate to an ASC setting. This would increase Medicare program spending and beneficiary copayment amounts because the ASC facility fee for these procedures exceeds the practice expense payment that is allowed when the procedures are performed in an office setting. However, cases would also move to the ASC setting from hospital outpatient departments. To the extent that hospital outpatient utilization decreases and ASC utilization increases, the Medicare program will realize a savings because the ASC facility fee for most of the proposed additions to the ASC list is lower than the payment rate for the same procedures under the OPPS. Beneficiary copayments will also decrease for those procedures for which


### 69186 Federal Register / Vol. 69, No. 227 / Friday, November 26, 2004 / Proposed Rules

the beneficiary coinsurance under the OPPS exceeds 20 percent. Because hospitals perform a much higher volume of ambulatory surgeries overall than are performed in ASCs, we do not expect significant hospital revenue losses from procedures proposed for addition to the ASC list shifting to the ASC setting.

In addition, we are proposing to delete 105 procedures from the existing ASC list. There are a few codes that we are proposing to delete on the basis of recommendations from physicians or specialty societies because the procedures do not meet our safety criteria; however, these codes are very seldom performed in ASCs, so deleting these codes from the list will have no effect on ASCs or beneficiaries. As we explained above, most of the codes that we are proposing to delete are procedures that are being performed primarily in a physician office setting, and they do not require the more elaborate resources of an ASC to be safely performed. Because many of the procedures that we propose to delete from the ASC list are for reconstructive surgery, ASCs that limit their services to this specialty would no longer receive a Medicare facility fee for these procedures and could be adversely affected. However, we do not believe that deleting these procedures from the ASC list would limit beneficiary access or compromise patient safety because the procedures are being widely and safely performed in either an office or hospital outpatient setting. Further, the Medicare program would realize substantial savings from discontinuing payment to ASCs for the codes that we propose to delete from the ASC list because payment when these procedures are performed in a hospital or physician office setting is lower than the current ASC payments for the same procedures.

For the above reasons, we are not preparing analyses for either the RFA or section 1102(b) of the Act because we have determined, and we certify, that this notice would not have a significant economic impact on a substantial number of small entities or a significant impact on the operations of a substantial number of small rural hospitals.

C. Alternatives Considered

We are issuing this proposed notice to meet a statutory requirement to update the list of approved ASC procedures biennially. We last updated the ASC list effective July 1, 2003. We implement the biennial update of the list through notice in the Federal Register and give interested parties an opportunity to comment on proposed additions to and deletions from the ASC list. If we do not update the ASC list by July 2005, we would be out of compliance with the statute, and we would be denying beneficiary access to surgical procedures in the ASC setting that meet our criteria and are safely and appropriately performed in an ASC.

In accordance with the provisions of Executive Order 12866, this proposed regulation was reviewed by the Office of Management and Budget.

Authority: (Catalog of Federal Domestic Assistance Program No. 93.774, Medicare

— Supplementary Medical Insurance Program)

Dated: June 10, 2004. Mark B. McClellan, Administrator, Centers for Medicare Medicaid Services.

Approved: August 6, 2004. Tommy G. Thompson, Secretary.

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[FR Doc. 04

– 25968 Filed 11

– 19

– 04; 4:09 pm]

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